Chemical Leaman Corp/FL – ‘S-4/A’ on 9/18/97

As of:  Thursday, 9/18/97   ·   Accession #:  950115-97-1453   ·   File #:  333-32863

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Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Registration Statement Amendment No. 1               130    799K 
 2: EX-5.1      Opinion re: Legality                                   3     13K 
 3: EX-10.41    Independent Contractor Service Agreement              15     47K 
 4: EX-23.1     Consent of Arthur Andersen LLP                         1      5K 

S-4/A   —   Registration Statement Amendment No. 1
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1997

                                                      REGISTRATION NO. 333-32863

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------- 

AMENDMENT NO. 1 

TO

FORM S-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
--------------------------- 

CHEMICAL LEAMAN CORPORATION 
(Exact name of registrant as specified in its charter)

                                                        [Enlarge/Download Table]
                                                                                       
      PENNSYLVANIA                    4213                        23-2021808           
(State of Incorporation)  (Primary Standard Industrial  (I.R.S. Employer Identification
                           Classification Code Number)               No.)              


102 PICKERING WAY 
EXTON, PENNSYLVANIA 19341-0200
(610) 363-4200
(Address, Including Zip Code, and Telephone Number, 
Including Area Code, of Registrant's Principal Executive Offices) 
--------------------------- 

DAVID M. BOUCHER
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER & SECRETARY
CHEMICAL LEAMAN CORPORATION 
102 PICKERING WAY 
EXTON, PENNSYLVANIA 19341-0200
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------------------- 

Copies to all communications to:

BARRY M. ABELSON, ESQUIRE 
ROBERT A. FRIEDEL, ESQUIRE
PEPPER, HAMILTON & SCHEETZ LLP
3000 TWO LOGAN SQUARE 
PHILADELPHIA, PA 19103
(215) 981-4000

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective and all other    
conditions to the exchange offer described in the enclosed Prospectus have been 
satisfied or waived.                                                            

     If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with 
General Instruction G, check the following box. / /                             

 If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and   
list the Securities Act registration statement number of the earlier effective  
registration statement for the same offering. / /                               

--------------------------- 

  If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering. / /                                                      

--------------------------- 

  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION       
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF  
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT     
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID  
SECTION 8(A), MAY DETERMINE.                                                    
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PROSPECTUS SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1997

CHEMICAL LEAMAN CORPORATION 
10 3/8% SENIOR NOTES DUE 2005 
($100,000,000 PRINCIPAL AMOUNT OUTSTANDING) 
FOR 10 3/8% SENIOR NOTES DUE 2005 

------------------------

 The Exchange Offer (defined below) and withdrawal rights will expire at
5:00 p.m., New York City time, on                  , 1997 (as such date may be  
extended, the "Expiration Date").                                               

    Chemical Leaman Corporation ("Chemical" and together with its subsidiaries
the "Company") hereby offers (the "Exchange Offer"), upon the terms and subject 
to the conditions set forth in this Prospectus and the accompanying letter of   
transmittal (the "Letter of Transmittal"), to exchange $1,000 in principal      
amount of its 10 3/8% Senior Notes due 2005 (the "New Notes") for each $1,000 in
principal amount of its outstanding 10 3/8% Senior Notes due 2005 (the "Old     
Notes") (the Old Notes and the New Notes are sometimes collectively referred to 
herein as the "Notes") held by Eligible Holders (defined below). An aggregate   
principal amount of $100 million of Old Notes is outstanding. See "The Exchange 
Offer." After the issuance of the Old Notes, the Company's ratio of indebtedness
to total capital was 85% as of June 29, 1997. For purposes of the Exchange      
Offer, "Eligible Holder" shall mean the registered owner of any Old Notes that  
remain Registrable Securities (defined below) as reflected on the records of    
First Union National Bank, as registrar for the Old Notes (in such capacity, the
"Registrar"), or any person whose Old Notes are held of record by the depository
of the Old Notes. For purposes of the Exchange Offer, "Registrable Securities"  
means each Old Note until the earliest to occur of (i) the date on which such   
Old Note has been exchanged for a New Note in the Exchange Offer and is         
thereafter freely tradeable by the holder thereof not an affiliate of the       
Company, (ii) the date on which such Old Note is registered under the Securities
Act of 1933, as amended (the "Securities Act"), and disposed of in accordance   
with a registration statement, (iii) the date on which such Old Note is eligible
for distribution to the public pursuant to Rule 144(k) under the Securities Act,
or (iv) the date on which such Old Note shall have ceased to be outstanding.    

     The Company will accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders
of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City     
time, on the Expiration Date. The Exchange Offer is not conditioned upon any    
minimum principal amount of the Old Notes being tendered for exchange. However, 
the Exchange Offer is subject to certain customary conditions, which may be     
waived by the Company, and to the terms and provisions of the Registration      
Rights Agreement, dated as of June 10, 1997 (the "Registration Rights           
Agreement") among the Company, Merrill Lynch, Pierce, Fenner & Smith            
Incorporated and Schroder Wertheim & Co. Incorporated (collectively, the        
"Initial Purchasers"). The Old Notes may be tendered only in multiples of       
$1,000. See "The Exchange Offer."                                               

    SEE "RISK FACTORS" BEGINNING ON PAGE 12 HEREIN FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE EXCHANGE  
OFFER.                                                                          

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE          
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND    
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON    
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE. 

------------------------

The date of this Prospectus is ____________   , 1997. 

Information contained herein is subject to completion or amendment. A           
registration statement relating to these securities has been filed with the     
Securities and Exchange Commission. These securities may not be sold nor may    
offers to buy be accepted prior to the time the registration statement becomes  
effective. This prospectus shall not constitute an offer to sell or the         
solicitation of an offer to buy nor shall there be any sale of these securities 
in any state in which such offer, solicitation or sale would be unlawful prior  
to registration or qualification under the securities laws of any such state.   

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 The Old Notes were issued in a transaction (the "Offering") pursuant to
which the Company issued an aggregate of $100,000,000 principal amount of the   
Old Notes to the Initial Purchasers on June 16, 1997 (the "Closing Date")       
pursuant to a Purchase Agreement, dated June 10, 1997 (the "Purchase Agreement")
among the Company and the Initial Purchasers. The Initial Purchasers            
subsequently resold the Old Notes in reliance on Rule 144A under the Securities 
Act and certain other exemptions under the Securities Act. The Company and the  
Initial Purchasers also entered into the Registration Rights Agreement, pursuant
to which the Company granted certain registration rights for the benefit of the 
holders of the Old Notes. The Exchange Offer is intended to satisfy certain of  
the Company's obligations under the Registration Rights Agreement with respect  
to the Old Notes. See "The Exchange Offer - Purpose and Effect."                

 The Old Notes were issued under an indenture, dated as of June 16, 1997
(the "Indenture"), among the Company and First Union National Bank, as trustee  
(in such capacity, the "Trustee"). The New Notes will be issued under the       
Indenture as it relates to the New Notes. The form and terms of the New Notes   
will be identical in all material respects to the form and terms of the Old     
Notes, except that (i) the New Notes have been registered under the Securities  
Act and, therefore, will not bear legends restricting the transfer thereof, (ii)
subject to certain limited exceptions, holders of New Notes will not be entitled
to Additional Interest (as defined in the Registration Rights Agreement)        
otherwise payable under the terms of the Registration Rights Agreement in       
respect of Old Notes held by such holders during any period in which a          
Registration Default (as defined in the Registration Rights Agreement) is       
continuing, and (iii) holders of New Notes will not be, and upon the            
consummation of the Exchange Offer Eligible Holders of Old Notes will no longer 
be, entitled to certain rights under the Registration Rights Agreement intended 
for the holders of unregistered securities. The Exchange Offer shall be deemed  
consummated upon the delivery by the Company to the Registrar under the         
Indenture of New Notes in the same aggregate principal amount as the aggregate  
principal amount of Old Notes that are validly tendered by holders thereof      
pursuant to the Exchange Offer. See "The Exchange Offer - Termination of Certain
Rights" and "- Procedures for Tendering Old Notes" and "Description of New      
Notes."                                                                         

    The New Notes will bear interest at a rate equal to 10 3/8% per annum from
and including their date of issuance. Interest on the New Notes is payable      
semi-annually on each June 15 and December 15 of each year (each, an "Interest  
Payment Date"). Eligible Holders whose Old Notes are accepted for exchange will 
have the right to receive interest accrued thereon from the date of their       
original issuance or the last Interest Payment Date, as applicable, to, but not 
including, the date of issuance of the New Notes, such interest to be payable   
with the first interest payment on the New Notes. Interest on the Old Notes     
accepted for exchange will cease to accrue on the day prior to the issuance of  
the New Notes. The New Notes will mature on June 15, 2005. See "Description of  
New Notes."                                                                     

  The New Notes will not be redeemable, in whole or in part, prior to June
15, 2001. Thereafter, the New Notes will be redeemable at the redemption prices 
set forth herein, plus accrued and unpaid interest thereon to the redemption    
date. In addition, on or prior to June 15, 2000, the Company may redeem up to   
25% of the originally issued aggregate principal amount of the Notes, at a      
redemption price of 110 3/8% of the principal amount thereof, plus accrued and  
unpaid interest thereon, if any, to the date of redemption, with the net        
proceeds of a Public Equity Offering (as defined herein); provided, however,    
that not less than $75 million in aggregate principal amount of the Notes is    
outstanding immediately after giving effect to such redemption. Upon the        
occurrence of a Change of Control (as defined herein), each Eligible Holder of  
the New Notes will have the right to require the Company to purchase all or a   
portion of such holder's New Notes for which a Change of Control Purchase Notice
(as defined herein) shall have been delivered as provided in the Indenture and  
not withdrawn at 101% of the aggregate principal amount thereof, plus accrued   
and unpaid interest thereon, if any, to the date of purchase. There can be no   
assurance that the Company will have funds sufficient to meet its obligation to 
purchase all or a portion of such holder's New Notes at the specified purchase  
price in the event of a Change of Control. See "Description of New Notes - Offer
to Purchase the Notes."                                                         

  The New Notes will rank pari passu in right of payment with all existing
and future unsecured and unsubordinated indebtedness of the Company and senior  
in right of payment to all existing and future subordinated indebtedness of the 
Company. The New Notes will be effectively subordinated to                      

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all secured indebtedness of the Company to the extent of the assets securing    
such indebtedness, including indebtedness under the $20 million New Revolving   
Credit Facility (as defined), and all existing and future indebtedness and other
obligations of the subsidiaries of the Company. As of June 29, 1997, the Company
and its subsidiaries had $6.1 million of indebtedness (excluding trade payables 
of $21.9 million) outstanding in addition to the New Notes. See "New Revolving  
Credit Facility," "Risk Factors," "Description of New Notes,"and "Management's  
Discussion and Analysis of Financial Condition and Results of Operations -      
Liquidity and Capital Resources." The Indenture permits the Company and its     
subsidiaries to incur additional Indebtedness, including additional secured     
Indebtedness, subject to certain limitations. See "Description of New Notes."   

Based on interpretations by the staff of the Securities and Exchange  
Commission (the "Commission") set forth in no-action letters issued to third    
parties, the Company believes that New Notes issued pursuant to the Exchange    
Offer to an Eligible Holder in exchange for Old Notes may be offered for resale,
resold and otherwise transferred by such Eligible Holder, other than as set     
forth below, without compliance with the registration and prospectus delivery   
provisions of the Securities Act, provided that the Eligible Holder is not an   
affiliate of the Company within the meaning of Rule 405 under the Securities    
Act, is acquiring the New Notes in the ordinary course of business and is not   
participating, and has no arrangement or understanding with any person to       
participate, in the distribution of the New Notes. Eligible Holders wishing to  
accept the Exchange Offer must represent to the Company, as required by the     
Registration Rights Agreement, that such conditions have been met. Each         
broker-dealer that acquired Old Notes directly from the Company and that        
receives New Notes for its own account pursuant to the Exchange Offer must      
comply with the registration and prospectus delivery requirements of the        
Securities Act in connection with any secondary resale transaction (unless an   
exemption from registration is otherwise available). See "The Exchange Offer -  
Resales of the New Notes." Each broker-dealer that receives New Notes in        
exchange for Old Notes that were acquired by such broker-dealer as a result of  
market-making or other trading activities must, in connection with any resale of
such New Notes, comply with the prospectus delivery requirements of the         
Securities Act and must acknowledge that it will deliver a prospectus in        
connection with any such resale. The Company has agreed that, for a period of   
180 days after the effective date of this Prospectus, it will make this         
Prospectus, as it may be amended or supplemented from time to time, available   
for use by any broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer 
as a result of market-making or other trading activities.                       

 As of June 16, 1997, Cede & Co. ("Cede"), as nominee for The Depository
Trust Company, New York, New York ("DTC"), was the registered holder of $98     
million aggregate principal amount of the Old Notes and held such Old Notes for 
its participants. The Company believes that no such participant is an affiliate 
(as such term is defined in Rule 405 of the Securities Act) of the Company.     
There has previously been only a limited secondary market, and no public market,
for the Old Notes. The Old Notes are eligible for trading in the Private        
Offering, Resales and Trading through Automatic Linkages ("PORTAL") market.     
There can be no assurance as to the liquidity of the trading market for either  
the New Notes or the Old Notes. The New Notes constitute securities for which   
there is no established trading market, and the Company does not currently      
intend to list the Notes on any securities exchange. If such a trading market   
develops for the New Notes, future trading prices will depend on many factors,  
including, among other things, prevailing interest rates, the Company's results 
of operations and the market for similar securities. Depending on such factors, 
the New Notes may trade at a discount from their face value. See "Risk Factors -
Absence of Public Market for the New Notes."                                    

The Company will not receive any proceeds from this Exchange Offer.   
Pursuant to the Registration Rights Agreement, the Company will bear all        
expenses incident to the Company's consummation of the Exchange Offer and       
compliance with the Registration Rights Agreement.                              

THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT  
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH 
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.                               

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$98 million aggregate principal amount of the Old Notes were issued   
originally in global form (the "Global Old Note"). The Global Old Note was      
deposited with, or on behalf of, DTC, as the initial depository with respect to 
the Old Notes (in such capacity, the "Depository"). The Global Old Note is      
registered in the name of Cede, as nominee of DTC, and beneficial interests in  
the Global Old Note are shown on, and transfers thereof are effected only       
through, records maintained by the Depository and its participants. The use of  
the Global Old Note to represent certain of the Old Notes permits the           
Depository's participants, and anyone holding a beneficial interest in an Old   
Note registered in the name of such a participant, to transfer interests in the 
Old Notes electronically in accordance with the Depository's established        
procedures without the need to transfer a physical certificate. Except as       
provided below, the New Notes will also be issued initially as a note in global 
form (the "Global New Note", and together with the Global Old Note, the "Global 
Notes") and deposited with, or on behalf of, the Depository. The remaining $2   
million in Old Notes was issued in Physical Certificates. Notwithstanding the   
foregoing, holders of Old Notes that are held, at any time, by a person that is 
not a qualified institutional buyer under Rule 144A under the Securities Act (a 
"Qualified Institutional Buyer"), and any Eligible Holder that is not a         
Qualified Institutional Buyer that exchanges Old Notes in the Exchange Offer,   
will receive the New Notes in certificated form and is not, and will not be,    
able to trade such securities through the Depository unless the New Notes are   
resold to a Qualified Institutional Buyer. After the initial issuance of the    
Global New Note, New Notes in certificated form will be issued in exchange for a
holder's proportionate interest in the Global New Note only as set forth in the 
Indenture.                                                                      

TABLE OF CONTENTS 

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
Available Information.......................................   iv 
Prospectus Summary..........................................    1 
Risk Factors................................................   13 
The Exchange Offer..........................................   20 
Capitalization..............................................   28 
Selected Consolidated Financial Data........................   29 
Management's Discussion and Analysis of Financial Condition       
  and Results of Operations.................................   31 
Business....................................................   36 
Management..................................................   49 
Certain Transactions........................................   53 
Principal Stockholders......................................   55 
New Revolving Credit Facility...............................   56 
Description of the New Notes................................   57 
Book-Entry; Delivery and Form...............................   83 
Certain U.S. Income Tax Considerations......................   85 
Plan of Distribution........................................   88 
Legal Matters...............................................   88 
Index to Consolidated Financial Statements..................  F-1 

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AVAILABLE INFORMATION 

   The Company has filed with the Commission a Registration Statement (which
term shall include any amendments thereto) on Form S-4 under the Securities Act 
(the "Registration Statement") with respect to the securities offered by this   
Prospectus. This Prospectus, which constitutes a part of the Registration       
Statement, does not contain all the information set forth in the Registration   
Statement and the exhibits and schedules thereto, to which reference is hereby  
made.                                                                           

Upon the effectiveness of the Registration Statement filed with the   
Commission, the Company will become subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in    
accordance therewith, the Company will file periodic reports and other          
information with the Commission relating to its business, financial statements  
and other matters. Any interested parties may inspect and/or copy the           
Registration Statement, its schedules and exhibits, and other information filed 
in connection therewith, at the public reference facilities maintained by the   
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,   
D.C. 20549 and at the Commission's regional offices located at Citicorp Center, 
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade   
Center, Suite 1300, New York, New York 10048. Copies of such materials can be   
obtained at prescribed rates by addressing written requests for such copies to  
the Public Reference Section of the Commission at its principal office at       
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The 
Commission also maintains a site on the World Wide Web, the address of which is 
http://www.sec.gov, that contains reports, proxy and information statements and 
other information regarding registrants that file electronically with the       
Commission.                                                                     

The obligations of the Company under the Exchange Act to file periodic
reports and other information with the Commission may, to the extent that such  
obligations arise from the registration of the New Notes, be suspended, under   
certain circumstances, if the New Notes are held of record by fewer than 300    
holders at the beginning of any fiscal year and are not listed on a national    
securities exchange. The Company has agreed that, whether or not it is required 
to do so by the rules and regulations of the Commission, for so long as any of  
the Notes remain outstanding, it will furnish to the holders of the Notes and   
file with the Commission (unless the Commission will not accept such a filing)  
all annual, quarterly and current reports that the Company is or would be       
required to file with the Commission pursuant to Section 13(a) or 15(d) of the  
Exchange Act. In addition, for so long as the Company is subject to the         
reporting requirements of Section 13 or 15 of the Exchange Act and any          
Registrable Securities remain outstanding, the Company has agreed that it will  
comply with its reporting obligations under Section 13(a) or 15(d) of the       
Exchange Act and the rules and regulations adopted by the Commission thereunder,
and that if it ceases to be required to file periodic reports thereunder, it    
will upon the request of any holder of Registrable Securities (a) make publicly 
available such information as is necessary to permit sales pursuant to Rule 144 
under the Securities Act, (b) deliver such information to a prospective         
purchaser as is necessary to permit sales pursuant to Rule 144A under the       
Securities Act, and (c) take such further action that is reasonable in the      
circumstances, in each case, to the extent required from time to time to enable 
such holder to sell its Registrable Securities without registration under the   
Securities Act within the limitation of the exemptions provided by (i) Rule 144 
under the Securities Act, as such rule may be amended from time to time, (ii)   
Rule 144A under the Securities Act, as such rule may be amended from time to    
time, or (iii) any similar rules or regulations hereafter adopted by the        
Commission.                                                                     

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY  
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR     
MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN 
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR      
SOLICITATION WITH RESPECT TO ANY SECURITY OTHER THAN THE SECURITIES OFFERED     
HEREBY OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS   
PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES HEREUNDER SHALL UNDER ANY         
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS   
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO  
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY     
SINCE THE DATE HEREOF.                                                          

FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS UNDER "SUMMARY,"      
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF     
OPERATIONS" AND "BUSINESS," IN ADDITION TO CERTAIN STATEMENTS CONTAINED         
ELSEWHERE IN THIS PROSPECTUS, ARE PROSPECTIVE. SUCH FORWARD-LOOKING STATEMENTS  
CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," 
"EXPECTS," "MAY," "WILL," "SHOULD" OR "ANTICIPATES" OR THE NEGATIVE THEREOF OR  
OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF        
STRATEGY. NO ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS COVERED BY THE      
FORWARD-LOOKING STATEMENTS WILL BE ACHIEVED. SUCH STATEMENTS ARE SUBJECT TO     
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO      
DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH              
FORWARD-LOOKING STATEMENTS. THE MOST SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES   
AND OTHER FACTORS ARE DISCUSSED UNDER THE HEADING "RISK FACTORS," BEGINNING ON  
PAGE 13 OF THIS PROSPECTUS, AND ELIGIBLE HOLDERS ARE URGED TO CAREFULLY CONSIDER
SUCH FACTORS.                                                                   

  QualaWash(Registered), Chemshuttle(Registered) and Bulkmodal(Registered)
are registered trademarks and servicemarks of the Company. OmniTRACS(Registered)
is a registered trademark of Qualcomm, Inc. BulkTainer(Registered) is a         
registered trademark of Union Pacific Railroad.                                 

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PROSPECTUS SUMMARY

 The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing    
elsewhere in this Prospectus. As used in this Prospectus, unless the context    
requires otherwise, the terms "Company" and "Chemical Leaman" refer to Chemical 
Leaman Corporation, its predecessor companies and its subsidiaries, including   
Chemical Leaman Tank Lines, Inc. ("CLTL"), Fleet Transport Company, Inc.        
("Fleet"), Quala Systems, Inc. ("QSI") and Power Purchasing, Inc. ("PPI").      

THE COMPANY 

Founded in 1913, Chemical Leaman Corporation is the largest tank truck
carrier in the United States. The Company offers a full range of specialized    
transportation services, including short and long-haul transportation,          
intermodal services, materials handling and third-party logistics, principally  
to the chemical industry. In addition, the Company provides tank cleaning and   
driver-related services to its own fleet as well as to independent              
owner-operators and third-party carriers. In 1996, approximately 91% of the     
Company's revenues were derived from transportation services, while             
approximately 9% were derived from tank cleaning and intermodal services. The   
specialized nature of the Company's services, the quality of its customer base  
and the stability of chemical industry output have allowed the Company to       
generate consistent levels of annual operating income. The Company believes that
these factors, coupled with the Company's current investment in a new           
information technology system, position Chemical Leaman for future revenue      
growth and profitability. For the twelve months ended June 29, 1997, the Company
had revenues, EBITDA (as defined herein), and a net loss of $310 million, $24.6 
million and $2.4 million, respectively. For the year ended December 31, 1996,   
the Company had revenues, EBITDA and a net loss of $281.1 million, $22.9 million
and $162,000, respectively. For the six months ended June 29, 1997, the Company 
had revenues, EBITDA and a net loss of $157 million, $12.6 million and $1.9     
million, respectively. As EBITDA is not calculated identically by all companies,
the presentation herein may not be comparable to other similarly titled measures
of other companies. The Company has experienced declining levels of net income  
since 1994 largely due to increased debt levels and related interest expense.   
Additional debt was incurred in order to complete the Fleet acquisition and in  
connection with the Company's computer technology system. While EBITDA has      
increased in each year since 1993, the EBITDA to interest expense ratio has     
declined from 3.8% in 1994 to 3.0% in 1996 and to 2.8% for the six months ended 
June 29, 1997. The net loss for the six months ended June 29, 1997 was mainly   
due to a $1.5 million charge for an insurance claim. See "Management's          
Discussion and Analysis of Financial Condition and Results of Operations -      
Results of Operations."                                                         

The Company operates in the U.S., Canada and Mexico and maintains a   
nationwide network of 105 terminals and 30 tank cleaning facilities. The Company
utilizes its network of terminals and facilities to transport liquid and dry    
bulk specialty and commodity chemicals and, to a lesser degree, petroleum and   
food grade products, throughout North America. The Company's terminals are      
strategically located near customers' plants, resulting in a consistently high  
percentage of on-time pick-ups and deliveries and effective utilization of      
drivers and equipment. At June 29, 1997, the Company's fleet included 1,813     
tractors (491 Company-owned tractors and 1,322 owner-operated tractors) and     
3,433 specialized trailers. The Company's extensive use of owner-operators      
increases the Company's asset utilization and lowers its fixed cost structure.  

 Chemical Leaman is a core carrier to some of the largest and best-known
chemical manufacturers, including Dow Chemical North America, E.I. DuPont de    
Nemours Co., Air Products and Chemicals, Inc., AlliedSignal Inc. and Union      
Carbide Corporation. The Company believes it has developed a superior reputation
among its customers due to its strong safety record, the strategic location of  
its facilities and the full range of transportation and logistics services      
offered. Through its national account marketing program, the Company seeks to   
grow the number of chemical producers for which it serves as a core carrier.    

The current size of the tank truck carrier market is estimated to be  
approximately $8 billion, with independent carriers representing approximately  
70% of the market. The independent tank truck                                   

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segment of the market is fragmented, consisting of approximately 200 carriers,  
with the top five carriers accounting for approximately 20% of the segment's    
1995 revenues, according to Modern Bulk Transporter. The Company believes there 
are significant growth opportunities as the industry continues to consolidate   
and as chemical producers outsource a greater percentage of their transportation
and logistics needs, increasingly through the use of a limited number of core   
carriers. Further, the capital requirements for the acquisition and maintenance 
of a fleet of tank trailers, the need for sophisticated information technology  
systems, generally rising insurance requirements, the focus of customers on     
quality control programs and the increasing complexity of environmental         
regulation all favor larger, better capitalized carriers. As a result of its    
leading market position, operating expertise and logistics capabilities, the    
Company believes it is well-positioned to benefit from these industry trends.   

BUSINESS STRATEGY                                                               

  The Company's objective is to continue to enhance its revenue growth and
profitability by pursuing the following key strategies: (i) expanding market    
share by marketing on both a national and regional level, (ii) focusing on      
improving operating efficiencies by continuing to shift to an owner-operator    
driver force, emphasizing safety and leveraging information technology, (iii)   
offering value-added related services, including tank cleaning, third-party     
logistics and driver-related services, and (iv) seeking selective acquisitions. 

  EXPAND MARKET SHARE.  Although Chemical Leaman is the largest tank truck
carrier in the U.S., the Company believes there are significant opportunities   
for it to gain market share. The Company believes it can handle an even larger  
proportion of its core customers' bulk transportation and logistics requirements
by building upon existing relationships and leveraging its reputation for       
high-quality customer service, competitive pricing and value-added services. The
Company also believes that it can generate additional revenue opportunities from
large chemical producers that are outsourcing a greater percentage of their     
transportation requirements. In addition, the Company aims to gain market share 
by targeting regional chemical producers located near the Company's terminals   
that can benefit from Chemical Leaman's national presence and extensive         
capabilities.                                                                   

FOCUS ON OPERATING EFFICIENCIES.  The Company continues to focus on   
increasing operating efficiencies without lowering the quality or range of its  
services by concentrating on the following key areas:                           

     o  Extensive Use of Owner-Operators.  The Company's percentage of
             owner-operators to total drivers has increased from 54% at December
             31, 1992 to 75% at June 29, 1997. Owner-operators provide their own
      tractors and pay their own operating expenses. The Company's
            extensive use of owner-operators increases the Company's operating
      and financial flexibility by improving asset utilization and
             reducing fixed costs. The Company is highly selective in its driver
          recruiting efforts and has invested substantial resources in its
      driver recruitment programs. The Company requires all of its
           drivers to participate in extensive training sessions held at its
          driver training center which it believes enhances the quality of
its drivers and improves its safety record.           

        o  Continuing Emphasis on Safety.  Because of the specialized nature
          of many of the products that the Company handles and transports,
            driver and equipment safety are critical in obtaining new business
             and in maintaining existing customer relationships. The Company has
     committed substantial resources to its Safety and Emergency
          Response Departments, and its emphasis on safety is reflected in
           the Company's low cost of risk and favorable accident experience.
           The Company has received national safety awards from the National
        Tank Truck Carriers Association in each of the past five years
       including first place as safest carrier in 1995 and 1996. The
Company received the                                  

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          American Trucking Association's first place safety award in 1995
          and has received the U.S. Department of Transportation's highest
safety rating for 20 years.                           

       o  Investment in Information Technology.  The Company believes that
  maximizing its use of information technology will create
             significant competitive advantages by reducing administrative costs
          and enhancing the utilization of tractors, trailers and drivers.
          The Company is investing in a proprietary information technology
      system which will provide the Company with a new order entry
           system, enhanced order tracking and continuous communication with
           drivers via satellite. The Company expects full implementation of
             its new information technology system by the first quarter of 1998.

 OFFER VALUE-ADDED RELATED SERVICES.  The Company provides tank cleaning
services to Chemical Leaman's fleet and to third-party tank truck carriers      
through a nationwide network of 30 tank cleaning facilities. By taking advantage
of its significant purchasing power, the Company facilitates the purchase of    
tractors, fuel and tires as well as a comprehensive line of insurance products  
by its owner-operator driver force and by third party owner-operators. Chemical 
producers continue to focus on their core competencies and therefore            
increasingly look to outsource their entire transportation and shipping         
functions. In order to capitalize on these opportunities, the Company has       
developed logistics capabilities including transportation, inventory and asset  
management. The Company is currently providing logistics services to third      
parties and believes there are additional opportunities to expand its           
third-party logistics business. The Company believes it can increase revenues   
and enhance its profitability by marketing these value-added                    
transportation-related services.                                                

SEEK SELECTIVE ACQUISITIONS. The Company believes that the tank truck 
carrier industry is consolidating and that it is well-positioned to take        
advantage of this trend. As the largest tank truck carrier in the U.S., the     
Company believes that acquisitions will allow it to leverage its operating and  
management expertise over a larger base of assets thereby increasing profit     
opportunities. In June 1996, Chemical Leaman acquired Fleet, which operated 30  
terminals located primarily in the southeastern U.S. Fleet contributed $57.3    
million of revenues for the twelve months ended June 29, 1997. The Fleet        
acquisition enhanced the Company's geographic terminal coverage and expanded its
customer base. Chemical Leaman will continue to evaluate acquisition            
opportunities of high-quality tank truck carrier companies, tank cleaning       
services companies and other companies engaged in related businesses that offer 
a strategic fit with the Company's existing business, provided that such        
acquisitions may require the consent of the Company's lenders. See "Risk Factors
- Substantial Leverage."                                                        

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ISSUANCE OF THE OLD NOTES 

  $100 million principal amount of 10 3/8% Senior Notes due 2005 (the "Old
Notes") were sold by the Company to the Initial Purchasers on June 16, 1997 (the
"Closing Date") pursuant to a Purchase Agreement, dated June 10, 1997 (the      
"Purchase Agreement"), among the Company and the Initial Purchasers. After      
deducting underwriting discounts and offering expenses, the approximately $95.8 
million received by the Company as net proceeds from the sale of the Old Notes  
was used to repay the Company's outstanding indebtedness in the amount of $81.8 
million, and the remaining balance of $14.0 million in net proceeds have been   
and are being used for working capital and general corporate purposes. The      
Initial Purchasers subsequently resold the Old Notes in reliance on Rule 144A   
under the Securities Act and other available exemptions under the Securities Act
(the "Offering"). The Company also entered into the Registration Rights         
Agreement, dated as of the Closing Date (the "Registration Rights Agreement"),  
among the Company and the Initial Purchasers, pursuant to which the Company     
granted certain registration rights for the benefit of the holders of the Old   
Notes. Under the Registration Rights Agreement, the Company agreed, for the     
benefit of the holders of the Old Notes that it would, at its own cost, (i)     
within 60 days after the Closing Date file a registration statement (the        
"Registration Statement") with the Commission with respect to a registered offer
to exchange the Old Notes for New Notes, which will have terms substantially    
identical to the Old Notes and (ii) use its best efforts to cause such          
Registration Statement to be declared effective under the Securities Act within 
120 days after the Closing Date. If for any reason the Exchange Offer is not    
consummated within 150 days after the Closing Date, the Company is obligated    
under the Registration Rights Agreement to file a shelf registration statement  
with the Commission covering resales of the Old Notes. If the Company defaults  
with respect to its obligations under the Registration Rights Agreement (as     
defined herein, a "Registration Default"), the Company will be obligated to pay 
Additional Interest of 0.25% per annum for the first 90-day period (or portion  
thereof) and an additional 0.25% per annum for each subsequent 90-day period (up
to a maximum aggregate increase of 1.00% per annum) until all Registration      
Defaults have been cured, whereupon the accrual of Additional Interest will     
cease and the interest rate on the Old Notes will revert to the original rate.  
The Exchange Offer is intended to satisfy certain of the Company's obligations  
under the Registration Rights Agreement with respect to the Old Notes. See "The 
Exchange Offer - Purpose and Effect."                                           

------------------------

    The Company was incorporated in Pennsylvania in 1977 to serve as a holding
company for its operating subsidiaries, which, together with their predecessors,
have conducted business as a transportation company since 1913. The Company's   
principal executive offices are located at 102 Pickering Way, Exton,            
Pennsylvania 19341-0200, and its telephone number is (610) 363-4200.            

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THE EXCHANGE OFFER

The Exchange Offer...............   The Company is offering, upon the terms and 
                                  subject to the conditions set forth herein
                         and in the accompanying letter of
                                  transmittal (the "Letter of Transmittal"),
                                 to exchange $1,000 in principal amount of
                                   its 10 3/8% Senior Notes due 2005 (the "New
                                Notes," and together with the Old Notes,
                                    sometimes collectively referred to herein as
                                 the "Notes") for each $1,000 in principal
                                amount of the outstanding Old Notes (the
                                 "Exchange Offer"). As of the date of this
                             Prospectus, $100 million in aggregate
                            principal amount of the Old Notes is
                                  outstanding, the maximum amount authorized
                             by the Indenture for all Notes. As of
                            September 16, 1997, there were three
                            registered holders of the Old Notes,
                                including Cede & Co. ("Cede") which held
                                    $98,750,000 of aggregate principal amount of
                                    the Old Notes for its participants. See "The
                              Exchange Offer - Terms of the Exchange
Offer." 

Expiration Date..................   5:00 p.m., New York City time, on           
                                  ________________, 1997, as the same may be
                           extended. See "The Exchange Offer -
                                 Expiration Date; Extensions; Amendments."

Conditions of the Exchange Offer.   The Exchange Offer is not conditioned upon  
                                 any minimum principal amount of Old Notes
                                 being tendered for exchange. However, the
                                  Exchange Offer is subject to the condition
                                   that it does not violate any applicable law
                             or interpretation of the staff of the
                             Commission. See "The Exchange Offer -
                          Conditions of the Exchange Offer."

Termination of Certain Rights....   Pursuant to the Registration Rights         
                             Agreement and the Old Notes, Eligible
                               Holders of Old Notes (i) have rights to
                                receive the Additional Interest and (ii)
                                    have certain rights intended for the holders
                               of unregistered securities. "Additional
                                    Interest" means the increase in the interest
                                   rate borne by Registrable Securities during
                                  the period in which a Registration Default
                                  is continuing pursuant to the terms of the
                                  Registration Rights Agreement (in general,
                                    one-quarter of one percent (0.25%) per annum
                               for the first 90-day period immediately
                                 after the first such Registration Default
                                    and an additional one-quarter of one percent
                                    (0.25%) per annum for each subsequent 90-day
                                  period (up to a maximum aggregate increase
                        of one percent (1.00%) until all
                             Registration Defaults have been cured
                                    whereupon the accrual of Additional Interest
                                   will cease and the interest rate on the Old
                                Notes will revert to the original rate).
                                  Holders of New Notes generally will not be
                              and, upon consummation of the Exchange
                                 Offer, Eligible Holders of Old Notes will
                                   generally no longer be, entitled to (i) the
                                 right to receive the Additional Interest,
                                    except in certain limited circumstances, and
                           (ii) certain other rights under the
                                  Registration Rights Agreement intended for
                                    holders of unregistered securities. See "The
        Exchange Offer -

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                             Termination of Certain Rights" and "-
                            Procedures for Tendering Old Notes."

Accrued Interest on the Old Notes.  The New Notes will bear interest at a rate  
                           equal to 10 3/8% per annum from and
                                  including their date of issuance. Eligible
                                Holders whose Old Notes are accepted for
                               exchange will have the right to receive
                                 interest accrued thereon from the date of
                                 original issuance of the Old Notes or the
                                  last Interest Payment Date, as applicable,
                                   to, but not including, the date of issuance
                             of the New Notes, such interest to be
                                  payable with the first interest payment on
                                the New Notes. Interest on the Old Notes
                                   accepted for exchange, which accrues at the
                                rate of 10 3/8% per annum, will cease to
                                  accrue on the day prior to the issuance of
      the New Notes.

Procedures for Tendering Old Notes. Unless a tender of Old Notes is effected    
                                 pursuant to the procedures for book-entry
                                  transfer as provided herein, each Eligible
                                    Holder desiring to accept the Exchange Offer
                            must complete and sign the Letter of
                               Transmittal, have the signature thereon
                               guaranteed if required by the Letter of
                                   Transmittal, and mail or deliver the Letter
                                   of Transmittal, together with the Old Notes
                                  or a Notice of Guaranteed Delivery and any
                                  other required documents (such as evidence
                             of authority to act, if the Letter of
                                    Transmittal is signed by someone acting in a
                                 fiduciary or representative capacity), to
                              the Exchange Agent (as defined) at the
                                   address set forth on the back cover page of
                                    this Prospectus prior to 5:00 p.m., New York
                              City time, on the Expiration Date. Any
                                Beneficial Owner (as defined) of the Old
                                   Notes whose Old Notes are registered in the
                                    name of a nominee, such as a broker, dealer,
                                commercial bank or trust company and who
                                  wishes to tender Old Notes in the Exchange
                                    Offer, should instruct such entity or person
                             to promptly tender on such Beneficial
                                 Owner's behalf. See "The Exchange Offer -
                               Procedures for Tendering Old Notes." By
                              tendering Old Notes for exchange, each
                               registered holder will represent to the
                             Company that, among other things, (i)
                           neither the Eligible Holder nor any
                               Beneficial Owner is an affiliate of the
                                    Company within the meaning of Rule 405 under
                                    the Securities Act, (ii) any New Notes to be
                              received by the Eligible Holder or any
                                  Beneficial Owner are being acquired in the
                                  ordinary course of business, (iii) neither
                                    the Eligible Holder nor any Beneficial Owner
                                    has an arrangement or understanding with any
                                    person to participate in the distribution of
                               the New Notes, and (iv) if the Eligible
                                  Holder or Beneficial Owner, as applicable,
                                  is a broker-dealer that acquired Old Notes
                                 for its own account as a result of market
                                making or other trading activities, such
                                Eligible Holder or Beneficial Owner must
                           comply with the prospectus delivery
                             requirements of the Securities Act in
                          connection with a secondary resale
              transaction of the New

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                                    Notes acquired by such person and must agree
                            that it will deliver a prospectus in
                        connection with any such resale.

Guaranteed Delivery Procedures...   Eligible Holders of Old Notes who wish to   
                                tender their Old Notes and (i) whose Old
                                   Notes are not immediately available or (ii)
                                 who cannot deliver their Old Notes or any
                                 other documents required by the Letter of
                                  Transmittal to the Exchange Agent prior to
                            the Expiration Date (or complete the
                              procedure for book-entry transfer on a
                                 timely basis), may tender their Old Notes
                            according to the guaranteed delivery
                             procedures set forth in the Letter of
                              Transmittal. See "The Exchange Offer -
                            Procedures for Tendering Old Notes -
                        Guaranteed Delivery Procedures."

Acceptance of Old Notes and                                                     
Delivery of New Notes............   Upon satisfaction or waiver of all          
                             conditions of the Exchange Offer, the
                                 Company will accept any and all Old Notes
                                  that are properly tendered in the Exchange
                               Offer prior to 5:00 p.m., New York City
                                   time, on the Expiration Date. The New Notes
                                  issued pursuant to the Exchange Offer will
                                 be delivered as soon as practicable after
                             acceptance of the Old Notes. See "The
                                    Exchange Offer - Acceptance of Old Notes for
                         Exchange; Delivery of New Notes."

Withdrawal Rights................   Tenders of Old Notes may be withdrawn at any
                                    time prior to 5:00 p.m., New York City time,
                                 on the Expiration Date. See "The Exchange
                   Offer - Withdrawal Rights."

Certain Federal Income Tax                                                      
Considerations...................   Generally, the exchange pursuant to the     
                                  Exchange Offer will not be a taxable event
                            for federal income tax purposes. See
                                  "Certain Federal Income Tax Consequences -
            The Exchange Offer."

The Exchange Agent...............   First Union National Bank is the exchange   
                              agent (in such capacity, the "Exchange
                                    Agent"). The address and telephone number of
                                the Exchange Agent are set forth in "The
                            Exchange Offer - The Exchange Agent;
    Assistance."

Fees and Expenses................   All expenses incident to the Company's      
                              consummation of the Exchange Offer and
                               compliance with the Registration Rights
                                   Agreement will be borne by the Company. See
                             "The Exchange Offer - Solicitation of
                    Tenders; Fees and Expenses."

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Resales of the New Notes.........   Based on interpretations by the staff of the
                                 Commission set forth in no-action letters
                            issued to third parties, the Company
                                  believes that New Notes issued pursuant to
                                   the Exchange Offer to an Eligible Holder in
                                 exchange for Old Notes may be offered for
                                   resale, resold and otherwise transferred by
                              such Eligible Holder (other than (i) a
                                 broker-dealer who purchased the Old Notes
                            directly from the Company for resale
                                  pursuant to Rule 144A under the Securities
                                  Act or any other available exemption under
                                   the Securities Act or (ii) a person that is
                              an affiliate of the Company within the
                                meaning of Rule 405 under the Securities
                         Act), without compliance with the
                            registration and prospectus delivery
                                  provisions of the Securities Act, provided
                                 that the Eligible Holder is acquiring the
                                    New Notes in the ordinary course of business
                            and is not participating, and has no
                                    arrangement or understanding with any person
                                    to participate, in a distribution of the New
                                   Notes. Each broker-dealer that receives New
                                 Notes for its own account in exchange for
                            Old Notes, where such Old Notes were
                              acquired by such broker as a result of
                                  market making or other trading activities,
                               must acknowledge that it will deliver a
                                   prospectus in connection with any resale of
                                 such New Notes. See "The Exchange Offer -
                              Resales of the New Notes" and "Plan of
     Distribution.

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DESCRIPTION OF NEW NOTES

The form and terms of the New Notes will be identical in all material 
respects to the form and terms of the Old Notes, except that (i) the New Notes  
have been registered under the Securities Act and, therefore, will not bear     
legends restricting the transfer thereof, (ii) holders of the New Notes, except 
in limited circumstances, will not be entitled to Additional Interest, and (iii)
holders of the New Notes will not be, and upon consummation of the Exchange     
Offer, Eligible Holders of the Old Notes will no longer be, entitled to certain 
rights under the Registration Rights Agreement intended for the holders of      
unregistered securities. See "Exchange Offer - Termination of Certain Rights."  
The Exchange Offer shall be deemed consummated upon the occurrence of the       
delivery by the Company to the Registrar under the Indenture of New Notes in the
same aggregate principal amount as the aggregate principal amount of Old Notes  
that are validly tendered by holders thereof pursuant to the Exchange Offer. See
"The Exchange Offer - Termination of Certain Rights" and "- Procedures for      
Tendering Old Notes" and "Description of New Notes."                            

Maturity Date....................   June 15, 2005.                              

Interest.........................   10 3/8% payable in cash semi-annually in    
                                  arrears, from June 15, 1997, calculated on
                                 the basis of a 360-day year consisting of
             twelve 30-day months.

Interest Payment Dates...........   June 15 and December 15 of each year,       
                     commencing December 15, 1997.

Optional Redemption..............   The New Notes will be redeemable at the     
                                   option of the Company, in whole or in part,
                                 at any time on or after June 15, 2001, at
                                    the redemption prices set forth herein, plus
                                    accrued and unpaid interest thereon, if any,
                                   to the date of redemption. See "Description
                              of the New Notes Optional Redemption."

                                  In addition, on or prior to June 15, 2000,
                               the Company may redeem up to 25% of the
                                    originally issued aggregate principal amount
                                  of the New Notes, at a redemption price of
                                 110 3/8% of the principal amount thereof,
                                    plus accrued and unpaid interest thereon, if
                                   any, to the date of redemption with the net
                             proceeds of a Public Equity Offering,
                                 provided, however, that not less than $75
                                    million in aggregate principal amount of the
                                  New Notes is outstanding immediately after
                             giving effect to such redemption. See
                                "Description of the New Notes - Optional
    Redemption."

Ranking..........................   The New Notes will rank pari passu in right 
                               of payment with all existing and future
                                    unsecured and unsubordinated indebtedness of
                                  the Company and senior in right of payment
                               to all existing and future subordinated
                                  indebtedness of the Company. The New Notes
                               will be effectively subordinated to all
                                  secured indebtedness of the Company to the
                          extent of the assets securing such
                                  indebtedness, including indebtedness under
                            the $20 million New Revolving Credit
                            Facility and all existing and future
                                 indebtedness and other obligations of the
                                   subsidiaries of the Company. As of June 29,
                                  1997, the Company and its subsidiaries had
                               $6.1 million of indebtedness (excluding
                                    trade payables of $21.9 million) outstanding
                                    in addition to the Notes, including stand-by
                           letters of credit and capital lease
                              obligations. See "New Revolving Credit
  Facility."

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Change of Control................   Following the occurrence of a Change of     
                                   Control, each holder of New Notes will have
                                    the right to require the Company to purchase
                                   all or a portion of such holder's New Notes
                                at a purchase price equal to 101% of the
                                  principal amount thereof, plus accrued and
                                    unpaid interest thereon, if any, to the date
                                   of purchase. There can be no assurance that
                                 the Company will have funds sufficient to
                                meet its obligation to purchase all or a
                                 portion of such holder's New Notes at the
                                  specified purchase price in the event of a
                                  Change of Control. See "Description of the
                       New Notes - Change of Control."

Certain Covenants................   The indenture under which the New Notes are 
                               being issued (the "Indenture") contains
                                   certain covenants that, among other things,
                              limit (i) the incurrence of additional
                           indebtedness by the Company and the
                                    Restricted Subsidiaries (as defined herein);
                             (ii) the payment of dividends on, and
                                   redemption of, capital stock of the Company
                               and the Restricted Subsidiaries and the
                          redemption of certain subordinated
                          obligations of the Company and the
                              Restricted Subsidiaries; (iii) certain
                          investments by the Company and the
                                   Restricted Subsidiaries; (iv) certain sales
                                  of assets and Restricted Subsidiary stock;
                               (v) the incurrence of liens, other than
                                   Permitted Liens (as defined herein), by the
                                Company and the Restricted Subsidiaries;
                                (vi) transactions with affiliates; (vii)
                                 consolidations and mergers of the Company
                                    and transfers of all or substantially all of
                                    the assets of the Company and the Restricted
                               Subsidiaries; and (viii) the Restricted
                            Subsidiaries from guaranteeing other
                               Indebtedness of the Company unless such
                                  Restricted Subsidiaries also guarantee the
                               New Notes. The Indenture also prohibits
                                  certain restrictions on distributions from
                                    Restricted Subsidiaries. These covenants are
                           subject to important exceptions and
                                   qualifications. See "Description of the New
                   Notes - Certain Covenants."

Absence of a Public Market                                                      
for the New Notes................   The New Notes are new securities for which  
                                 there is currently no established trading
                                    market. Although the Initial Purchasers have
                                informed the Company that they currently
                                 intend to make a market in the New Notes,
                                    they are not obligated to do so and any such
                                market making may be discontinued at any
                                   time without notice. Accordingly, there can
                                be no assurance as to the development or
                                  liquidity of any market for the New Notes.
                                The Company does not intend to apply for
                                  listing of the New Notes on any securities
                                    exchange or for quotation through The Nasdaq
     Stock Market.

RISK FACTORS

    An investment in the New Notes involves a high degree of risk. Prospective
investors should carefully consider the matters set forth under "Risk Factors"  
beginning on page 13.                                                           

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SUMMARY CONSOLIDATED FINANCIAL DATA 

    The following table sets forth certain summary consolidated financial data
for the periods indicated. The summary consolidated financial data as of and for
the years ended December 31, 1992 and 1993 have been derived from the Company's 
audited consolidated financial statements not included herein. The summary      
consolidated financial data as of and for the years ended December 31, 1994,    
1995, 1996, and as of June 29, 1997 and for the six month period then ended have
been derived from the Company's audited consolidated financial statements, which
are included in this Prospectus. The summary consolidated financial data as of  
June 30, 1996 and for the six month period ended June 30, 1996 have been derived
from the Company's unaudited consolidated financial statements included herein. 
The unaudited consolidated financial statements have been prepared on the same  
basis as the audited consolidated financial statements included herein and, in  
the opinion of management, include all adjustments (consisting only of normal   
recurring adjustments) necessary for a fair presentation of the Company's       
financial position and results of operations for the unaudited periods.         
Operating results for the six months ended June 29, 1997 are not necessarily    
indicative of the results that may be expected for the year ending December 31, 
1997. The summary consolidated financial data should be read in conjunction with
"Selected Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited consolidated     
financial statements and the notes thereto included elsewhere in this           
Prospectus.                                                                     

                                                        [Enlarge/Download Table]

                                                                                                   SIX MONTHS ENDED   
                                                         YEAR ENDED DECEMBER 31,                  ------------------- 
                                           ----------------------------------------------------   JUNE 30,   JUNE 29, 
                                             1992       1993       1994       1995     1996(A)      1996       1997   
                                           --------   --------   --------   --------   --------   --------   -------- 
                                                         (DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)                
                                                                                                                      
INCOME STATEMENT DATA:                                                                                                
Operating revenues.......................  $232,619   $231,190   $241,443   $245,706   $281,075   $127,612   $156,545 
Operating expenses.......................   225,971    226,057    234,630    239,287    274,433    123,867    154,796 
                                           --------   --------   --------   --------   --------   --------   -------- 
Operating income (loss)..................     6,648      5,133      6,813      6,419      6,642      3,745      1,749 
Other (income) expense                                                                                                
    Interest expense.....................     4,278      4,016      4,946      5,978      7,553      3,092      4,515 
    Other (income) expense, net..........       277        207         92       (110)      (795)       (11)       165 
                                           --------   --------   --------   --------   --------   --------   -------- 
Income (loss) before taxes...............     2,093        910      1,775        551       (116)       664     (2,931)
Provision (benefit) for income taxes.....       430        227        710        220         46        333     (1,223)
                                           --------   --------   --------   --------   --------   --------   -------- 
Income (loss) before extraordinary                                                                                    
  items..................................     1,663        683      1,065        331       (162)       331     (1,708)
                                           --------   --------   --------   --------   --------   --------   -------- 
Extraordinary loss on early                                                                                           
  extinguishment of debt, less applicable                                                                             
  income taxes of $133 (g)...............        --         --         --         --         --         --       (199)
                                           --------   --------   --------   --------   --------   --------   -------- 
Net Income (loss)........................  $  1,663   $    683   $  1,065   $    331   $   (162)  $    331   $ (1,907)
                                           --------   --------   --------   --------   --------   --------   -------- 
                                           --------   --------   --------   --------   --------   --------   -------- 
OTHER FINANCIAL DATA:                                                                                                 
EBITDA (b)...............................  $ 19,352   $ 16,453   $ 18,596   $ 20,150   $ 22,897   $ 10,918   $ 12,585 
EBITDA margin (c)........................      8.3%       7.1%       7.7%       8.2%       8.2%       8.6%       8.0% 
Cash flows provided by (used in)                                                                                      
  operating activities...................     5,992     11,197     16,567     17,444      4,677         21     (3,519)
Cash flows (used in) investing                                                                                        
  activities.............................    (9,855)    (9,892)   (18,755)   (10,490)   (34,273)   (23,981)   (10,255)
Cash flows provided by (used in)                                                                                      
  financing activities...................     3,465      6,994      4,120     (9,444)    26,861     23,632     22,709 
Depreciation and amortization............    12,704     11,320     11,783     13,731     16,255      7,173      9,336 
Capital expenditures (d).................    11,637     12,050     20,747     13,270     20,020      9,863     11,006 
Ratio of EBITDA to interest expense......      4.5x       4.1x       3.8x       3.4x       3.0x       3.5x       2.8x 
OPERATING DATA:                                                                                                       
Tractors operated                                                                                                     
    Company..............................       726        616        576        414        561        582        491 
    Owner-Operators (e)..................       735        774        969        954      1,194      1,248      1,322 
                                           --------   --------   --------   --------   --------   --------   -------- 
        Total tractors...................     1,461      1,390      1,545      1,368      1,755      1,830      1,813 
Drivers                                                                                                               
    Company employees....................       760        589        538        405        473        515        475 
    Owner-Operators (e)..................       889        844      1,057      1,117      1,277      1,305      1,430 
                                           --------   --------   --------   --------   --------   --------   -------- 
    Total drivers........................     1,649      1,433      1,595      1,522      1,750      1,820      1,905 
Trailers.................................     2,666      2,438      2,869      2,645      3,502      3,450      3,433 
Terminals................................        65         65         61         66        105        105        105 
Total miles traveled (000's).............   105,901    104,913    105,443    110,223    126,802     56,048     68,371 
Average revenue per mile.................  $   1.85   $   1.83   $   1.87   $   1.81   $   1.78   $   1.77   $   1.78 
Average length of haul (miles)...........       444        456        450        463        455        487        429 
Number of tank cleaning facilities.......        28         26         27         27         29         30         30 

                                                                [Download Table]

                                                                  JUNE 29, 1997     
                                                             -----------------------
                                                             (DOLLARS IN THOUSANDS) 
                                                                                    
BALANCE SHEET DATA:                                                                 
Working capital.............................................        $  8,825        
Total assets................................................         177,528        
Long-term debt, including current portion (f)...............         102,202        
Redeemable preferred stock..................................           5,318        
Stockholders' equity (g)....................................          13,153        

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(footnotes from previous page)                                                  
------------------                                                              

(a) Includes the results of Fleet from June 28, 1996, the date of the           
acquisition.                                                            

(b) EBITDA represents operating income (loss) for the respective period plus    
depreciation and amortization. For the first six months of 1997, a $1.5 
    million one-time charge was incurred relating to a self-insurance deductible
    and has been added back in the calculation of EBITDA. EBITDA is presented to
provide additional information about the Company's ability to meet its  
  future debt service, capital expenditure and working capital requirements.
 EBITDA is not a measure of financial performance under generally accepted
accounting principles ("GAAP") and should not be considered as an       
   alternative either to net income as an indicator of the Company's operating
performance, or to cash flows as a measure of the Company's liquidity.  

(c) EBITDA margin is defined as EBITDA as a percentage of revenues.             

(d) Capital expenditures for 1996 and for the six months ended June 30, 1996    
 consist of $6.2 million and $4.6 million, respectively, for the Company's
new information technology system and $13.8 million and $5.3 million,   
    respectively, for the acquisition of new trailers and capitalized repairs to
existing trailers.                                                      

(e) The Company utilizes the services of owner-operators, who are independent   
  contractors and provide their own tractors and pay for their own operating
expenses.                                                               

(f) The Company has an accounts receivable securitization facility in the amount
   of $28 million with an effective rate of interest of LIBOR plus .80%, which
  is accounted for as an off-balance sheet item as of June 29, 1997 pursuant
 to Statement of Financial Accounting Standards No. 125. Prior to June 29,
  1997, this facility was accounted for as long-term debt. See "Management's
  Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."                                       

(g) In connection with the repayment of indebtedness with the proceeds of the   
Offering, the Company incurred approximately $199,000 of prepayment     
    penalties net of tax benefit, which was recorded as an extraordinary item in
the quarter ended June 29, 1997.                                        

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RISK FACTORS

  Holders of the Notes should consider carefully, in addition to the other
information contained or incorporated by reference in this Prospectus, the      
following factors before investing in the New Notes.                            

SUBSTANTIAL LEVERAGE                                                            

    The tank truck industry is capital intensive. The Company will continue to
require capital in order to operate and expand its business. As of June 29,     
1997, the Company and its subsidiaries had $6.1 million of indebtedness         
(excluding trade payables of $21.9 million) outstanding in addition to the      
Notes, including stand-by letters of credit and capital lease obligations. After
the issuance of the Notes, the Company's ratio of indebtedness to total capital 
was 85% as of June 29, 1997. The Notes are not secured by the Company's assets, 
operating subsidiary stock, or any other security. In addition, the Indenture   
permits the Company to incur additional indebtedness, subject to certain        
limitations, from time to time to finance acquisitions or capital expenditures  
or for other purposes. See "Description of the New Notes." The degree to which  
the Company is leveraged could have important consequences to holders of the New
Notes, including the following: (i) a substantial portion of the Company's      
consolidated cash flow from operations must be dedicated to the payment of the  
principal of and interest on its outstanding indebtedness and will not be       
available for other purposes; (ii) the Company's ability to obtain additional   
financing in the future for working capital needs, capital expenditures,        
acquisitions and general corporate purposes may be materially limited or        
impaired or such financing may not be available on terms favorable to the       
Company; (iii) indebtedness under the New Revolving Credit Facility is secured  
and will mature prior to the maturity of the New Notes; (iv) certain of the     
Company's borrowings may be at variable rates of interest, including future     
borrowings under the New Revolving Credit Facility, which will expose the       
Company to the risk of increased interest rates; (v) the Company may be more    
highly leveraged than its competitors, which may place the Company at a         
competitive disadvantage; and (vi) the Company's high degree of leverage may    
reduce its ability to withstand competitive pressure and make it more vulnerable
to a downturn in its business or the economy in general. For the six months     
ended June 29, 1997, cash used in operating activities was $3.5 million.        
See "Capitalization" and "Management's Discussion and Analysis of Financial     
Condition and Results of Operations - Liquidity and Capital Resources."         

POTENTIAL INABILITY TO REPAY DEBT                                               

     The Company's ability to satisfy its interest payment obligations under its
indebtedness will depend largely on its future performance, which, in turn, is  
subject to prevailing economic conditions and to financial, business and other  
factors beyond its control. In addition, any amounts owing under the New        
Revolving Credit Facility will become due before any principal payments on the  
New Notes are scheduled to become due and such amounts may need to be           
refinanced. Furthermore, the Company does not expect to be able to repay the    
principal amount of the New Notes at maturity from available cash and           
accordingly will need to refinance the New Notes, or repay the New Notes with   
the proceeds of an equity offering, at or prior to their maturity. There can be 
no assurance that the Company will be able to generate sufficient cash flow to  
service its interest payment obligations under its indebtedness or that cash    
flows, future borrowings or equity financing will be available for the payment  
or refinancing of the Company's indebtedness. To the extent that the Company is 
not successful in repaying or negotiating renewals of its borrowings or in      
arranging new financings, it may have to sell significant assets, which could   
have a material adverse effect on the Company's business and results of         
operations. Among the factors that will affect the Company's ability to effect  
an offering of its capital stock or refinance the New Notes are financial market
conditions and the value and performance of the Company at the time of such     
offering or refinancing. There can be no assurance that any such offering or    
refinancing can be successfully completed. See "Management's Discussion and     
Analysis of Financial Condition and Results of Operations - Liquidity and       
Capital Resources" and "New Revolving Credit Facility."                         

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HOLDING COMPANY STRUCTURE                                                       

   Chemical Leaman Corporation is a holding company which derives all of its
operating income from its subsidiaries. In addition, substantially all of the   
Company's operating assets are held by its subsidiaries, except for $25 million 
of revenue equipment securing the New Revolving Credit Facility, to be held by  
Chemical Leaman Corporation. Accordingly, the Company will be dependent on      
dividends and other distributions from its subsidiaries to generate the funds   
necessary to meet its obligations, including the payment of principal and       
interest on the New Notes. Although the Company's subsidiaries do not have any  
outstanding indebtedness other than two capitalized leases in the amount of     
approximately $818,000 at June 29, 1997, the ability of the Company's           
subsidiaries to pay dividends to Chemical Leaman Corporation will be subject to,
among other things, the terms of any future debt instruments of its subsidiaries
and applicable law. Because the Company's subsidiaries are not guaranteeing the 
payment of the principal of and interest on the New Notes, the claims of the    
holders of the New Notes will be effectively subordinated to the claims of      
creditors of the Company's subsidiaries, including trade creditors. The         
Indenture, among other things, limits the incurrence of additional indebtedness 
by the Company's Restricted Subsidiaries, subject to a number of important      
qualifications, and limit the ability of the Restricted Subsidiaries to         
guarantee any other indebtedness of Chemical Leaman Corporation without         
simultaneously guaranteeing payment of the principal of and interest on the New 
Notes. See "Description of the Notes."                                          

RESTRICTIVE COVENANTS; ASSET ENCUMBRANCES                                       

The New Revolving Credit Facility contains certain financial and other
covenants, including, among others, covenants requiring the Company to maintain 
certain financial ratios and restricting the ability of the Company and its     
subsidiaries to incur indebtedness or to create or suffer to exist certain      
liens. Indebtedness under the New Revolving Credit Facility will also mature    
prior to the maturity of the New Notes. The ability of the Company to comply    
with such provisions may be affected by events beyond its control. Should the   
Company be unable to comply with the financial or other restrictive covenants   
under the New Revolving Credit Facility at any time in the future there can be  
no assurance that the lenders thereunder would agree to any necessary amendments
or waivers. In such a case, the failure to obtain amendments or waivers could   
have a material adverse effect upon the Company and its ability to meet its     
obligations in respect of the New Notes. A failure to make any required payment 
under the New Revolving Credit Facility or to comply with any of the financial  
and operating covenants included in the New Revolving Credit Facility could     
result in an event of default thereunder, permitting the lenders to accelerate  
the maturity of the indebtedness under the New Revolving Credit Facility. Such  
an acceleration would also permit the acceleration of the other indebtedness of 
the Company and its subsidiaries which contain cross-acceleration or            
cross-default provisions, including the Indenture. The Indenture also has       
certain covenants which, if not complied with, would result in an event of      
default thereunder permitting holders of the New Notes, under certain           
circumstances, to accelerate the New Notes. Any such event of default or        
acceleration could also result in an event of default or acceleration of other  
indebtedness of the Company. If the lenders under the New Revolving Credit      
Facility accelerate the maturity of the indebtedness thereunder there can be no 
assurance that the Company will have sufficient assets to satisfy its           
obligations under the New Notes. In addition, other indebtedness of the Company 
and its subsidiaries that may be incurred in the future may contain financial or
other covenants more restrictive than those applicable to the New Revolving     
Credit Facility or the New Notes. See "'Description of the New Notes."          

  The Company's indebtedness under the New Revolving Credit Facility bears
interest at rates that will fluctuate with changes in certain prevailing        
interest rates (although such rates may be fixed for limited periods of time).  
See "New Revolving Credit Facility."                                            

The New Notes will be unsecured and effectively subordinated to all   
existing and future secured indebtedness of the Company to the extent of the    
assets securing such indebtedness and to all existing and future indebtedness   
and other obligations of the subsidiaries of the Company. As of June 29, 1997,  
the Company had $6.1 million of indebtedness (excluding trade payables of $21.9 
million) outstanding in addition to the New Notes, consisting of $3.9 million of
stand-by letters of credit under the New                                        

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Revolving Credit Facility and $2.2 million of capital lease obligations. The New
Revolving Credit Facility is secured by $25 million of revenue equipment to be  
held by Chemical Leaman Corporation, and claims of holders of the New Notes will
be effectively subordinated to the extent of such assets securing the New       
Revolving Credit Facility. The claims of holders of the New Notes upon any      
distribution of assets of any subsidiary of the Company in the event of the     
liquidation or reorganization of such subsidiary will be subordinated to the    
prior claims of present and future creditors of such subsidiary. In such an     
event, there may not be sufficient assets remaining to pay amounts due on any or
all of the New Notes then outstanding. The Indenture permits subsidiaries of the
Company, under certain circumstances, to incur indebtedness and permits the     
Company and its subsidiaries, under certain circumstances, to secure            
indebtedness. See "New Revolving Credit Facility."                              

COMPETITIVE INDUSTRY                                                            

The tank truck industry is highly competitive and is fragmented. The  
Company faces competition from a substantial number of tank truck carriers which
have intrastate and interstate operating authority and, to a lesser extent, with
railroad and barge transportation companies. Competition is based primarily on  
rates and service. As a result of the federal Motor Carrier Act of 1980, the    
Staggers Rail Act of 1980, and other legislation, competition intensified,      
creating downward pressure on the industry's pricing structure. There can be no 
assurance that the Company will have sufficient resources to maintain its       
current competitive position or market share. See "Business - Competition" and  
"-Regulation."                                                                  

DEPENDENCE ON CERTAIN CUSTOMERS                                                 

    For the years ended December 31, 1995 and 1996 and the first six months of
1997, Dow Chemical North America ("Dow") accounted for approximately 14.1%,     
13.7% and 18.7%, respectively, of the Company's total revenues. The Company and 
Dow have entered into an agreement under which the Company provides interstate  
and intrastate motor carrier transportation for Dow between various geographic  
destinations. This contract renews automatically on an annual basis unless      
cancelled by either party upon 30 days' written notice to the other party, or by
Dow immediately upon written notice in the event the Company's authorization to 
operate its business is revoked by any federal or state regulatory agency having
authority over the Company's operations. Other than Dow, no other customer      
accounted for more than 5% of the Company's total annual revenues in 1996. The  
sudden loss of or reduction in demand for its services from Dow or from a       
significant customer of the Company could have a material adverse effect on the 
Company's business and results of operations. See "Business - Customers."       

EFFECTS OF ECONOMIC AND OTHER FACTORS                                           

The availability of qualified drivers, changes in fuel prices and the 
supply of fuel, increases in fuel or energy taxes, interest rate fluctuations,  
economic recession, change in the cost of insurance, customers' business cycles 
and the price and resale value of equipment are economic factors over which the 
Company has no control. See "Business - Fuel Availability and Cost." In         
addition, freight shipments, operating costs and earnings are also adversely    
affected by inclement weather conditions. To the extent that increased expenses 
resulting from these factors cannot be passed through to customers, there would 
be an adverse effect on the Company's profitability. Economic recessions or a   
downturn in customers' business cycles or in the liquid and dry bulk chemical   
industries also could have a material adverse effect on the Company's operating 
results. See "Management's Discussion and Analysis of Financial Condition and   
Results of Operations."                                                         

AVAILABILITY OF DRIVERS; PARTIALLY UNIONIZED WORK FORCE                         

    Attracting qualified drivers (principally owner-operators) is an important
factor in the Company's ability to continue to provide high-quality service to  
its customers and to efficiently utilize its assets. Although the Company       
currently retains an adequate number of drivers, industry-wide shortages of     
qualified drivers have occurred from time to time. There can be no assurance    
that the Company's                                                              

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business will not be affected by a shortage of qualified drivers in the future. 
See "Business - Owner-operators." At June 29, 1997, approximately 60% of the    
Company's employee-drivers (15% of the total driver force) were covered under   
collective bargaining agreements and no assurances can be given that this       
percentage will not increase in the future. A prolonged work stoppage or strike 
by its unionized driver work force would have a material adverse effect on the  
Company's results of operations. See "Business - Employees."                    

REGULATION                                                                      

     Tank truck carriers are subject to regulation by various federal, state and
local agencies, including the U.S. Department of Transportation ("DOT"), the    
Federal Highway Administration and the Surface Transportation Board which       
operates under DOT's auspices and exercises many of the regulatory powers       
previously delegated to the U.S. Interstate Commerce Commission. Interstate and 
intrastate motor carriage has been substantially deregulated as a result of the 
enactment of the Motor Carrier Act of 1980, the Trucking Industry Regulatory    
Reform Act of 1994 and other laws. Nevertheless, the federal regulatory agencies
retain substantial powers, and the tank truck industry is subject to regulatory 
and legislative changes that can affect the economics of the industry by        
requiring changes in operating practices or influencing the demand for, and the 
costs of providing, services to third parties. See "Business - Regulation." In  
addition, operations are subject to various safety laws and regulations, and    
environmental laws and regulations, including laws and regulations regarding    
underground fuel storage tanks and ownership of property that may contain       
hazardous substances and laws and regulations governing air emissions. See      
"Business - Environmental Matters" and "- Risk Management and Insurance;        
Safety." The tank truck industry may in the future become subject to stricter   
air emission standards regulation, including requirements that manufacturers    
produce cleaner-running tractors and that fleet operators perform more rigorous 
inspection and maintenance procedures.                                          

ENVIRONMENTAL CONSIDERATIONS                                                    

The Company transports certain chemicals and hazardous materials and  
operates tank wash facilities. As such, the Company's operations and properties 
are subject to various federal, state, local and foreign environmental laws and 
regulations relating to pollution and protection of the environment, including  
those dealing with the transportation, use, storage, handling, treatment,       
discharge and disposal of certain hazardous materials, substances and wastes,   
and petroleum (collectively, Hazardous Materials), ownership and operation of   
property that may contain Hazardous Materials, and underground storage tanks. In
the event of a release of a Hazardous Material as a result of an accident or    
otherwise, the Company could be held responsible for cleanup costs, natural     
resource damages and other damages and fines or other penalties, all of which   
could have a material adverse effect on the Company's operations and business   
reputation. See "Business - Risk Management and Insurance; Safety."             

Under certain environmental laws, the Company may be liable for the   
remediation of environmental pollution at owned and operated sites as well as   
third-party sites at which there has been a release or threatened release of a  
Hazardous Material. Under the federal Comprehensive Environmental Response,     
Compensation and Liability Act of 1980, as amended ("CERCLA" or "Superfund"),   
and similar state laws, the current and former owner or operator of real        
property may be strictly, jointly and severally liable under certain            
circumstances for the costs of investigation, cleanup and natural resource      
damages relating to Hazardous Materials on, under or emanating from such        
property, regardless of whether the owner or operator knew of, or was           
responsible for, the presence of such Hazardous Materials. In addition, CERCLA  
and similar state laws impose strict, joint and several liability under certain 
circumstances for investigation, cleanup and natural resource damages on persons
who disposed of or arranged for the disposal of Hazardous Materials at          
third-party sites. See "Management's Discussion and Analysis of Financial       
Condition and Results of Operations - Overview" and "- Liquidity and Capital    
Resources" and "Business - Environmental Matters." Under the federal Resource   
Conservation and Recovery Act of 1976, as amended ("RCRA"), the holder of a     
permit to treat, store or dispose of hazardous waste can be required to         
remediate                                                                       

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environmental pollution at or emanating from solid waste management areas at the
permitted facility regardless of when the contamination occurred. RCRA also     
imposes regulations on generators of hazardous wastes.                          

 The Company has expended, and will be required to expend in the future,
substantial funds for compliance with such laws and regulations, as well as for 
the investigation and remediation of sites at which a Hazardous Material has    
been released, or at which there exists a threatened release of a Hazardous     
Material. Some risk of environmental liability is inherent in the nature of the 
Company's business. No assurance can be given that additional material          
environmental costs will not arise as a result of compliance with and liability 
under existing and future legislation or other developments. Environmental laws 
and regulations are becoming increasingly more stringent. To the extent that the
cost of compliance increases and the Company cannot pass on future increases to 
its customers, such increases may have an adverse impact on the Company's       
profitability. From time to time, the Company has been cited for violations of  
environmental laws and regulations. The Company is currently remediating two    
Superfund sites at which it is the only performing party. The Company is also   
investigating or remediating approximately 35 other sites at which it is one of 
several performing parties. See "Business - Environmental Matters." As of       
December 31, 1996, the Company had reserves of approximately $13.1 million for  
environmental liabilities. The Company made cash payments of $4.5 million and   
$4.4 million with respect to environmental matters and incurred environmental   
charges of $2.4 million and $2.3 million in 1995 and 1996, respectively. The    
Company expects to continue to incur expenses for the foreseeable future on     
environmental matters. No assurance can be given that actual environmental      
expenditures will not exceed the Company's expectations or reserves or that any 
such expenditures will not have a material adverse effect on the Company's      
financial condition or results of operations. See "Management's Discussion and  
Analysis of Financial Condition and Results of Operations - Liquidity and       
Capital Resources."                                                             

FUEL AVAILABILITY AND COST                                                      

     Although the Company's owner-operators are responsible for paying their own
fuel costs, significant increases in these costs could result in their seeking  
higher purchased transportation fees from the Company or other contractual      
opportunities. With respect to the Company's employee drivers, fuel represents a
significant operating expense of the Company. There can be no assurance that the
Company will be able to pass any increases in fuel costs to its customers in the
form of price increases. Significant increases in the price of fuel, if not     
offset by increases in prices charged to customers, or any interruption in the  
supply of fuel, would have an adverse impact upon the profitability of the      
Company. See "Business - Fuel Availability and Cost."                           

CLAIMS EXPOSURE                                                                 

   The Company currently maintains liability insurance for bodily injury and
property damage in the amount of $100 million per incident. Until March 30,     
1997, the deductible for bodily injury and property damage was $2 million       
(subject to an aggregate annual stop loss of $9 million). The current deductible
for bodily injury and property damage is $1 million per incident (subject to an 
aggregate annual stop loss of $5.5 million), and the current deductible for     
workers' compensation insurance, in states where most of the Company's employees
are domiciled, is $500,000 per claim. To the extent that the Company experiences
a material increase in the frequency or severity of accidents or workers'       
compensation claims or unfavorable developments on existing claims, the         
Company's operating results and financial condition could be materially         
adversely affected. In addition, significant increases in insurance costs, to   
the extent not offset by price increases, would reduce the Company's future     
profitability. See "Business - Risk Management and Insurance; Safety."          

DEPENDENCE ON SENIOR MANAGEMENT TEAM                                            

     The success of the Company is dependent upon its senior management team, as
well as its ability to attract and retain qualified personnel. There is         
substantial competition for qualified personnel in the tank truck industry.     
There is no assurance that the Company will be able to retain its existing      
senior                                                                          
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management or to attract additional qualified personnel. The Company does not   
have any employment agreements with any of its executive officers other than    
with the President of CLTL. See "Management."                                   

CONTROLLING STOCKHOLDERS; CHANGE OF CONTROL                                     

As of June 29, 1997, David R. Hamilton, George McFadden and John H.   
McFadden beneficially owned an aggregate of 76.8% of the outstanding common     
stock of the Company, with certain directors and the management of the Company  
owning the balance. The interests of Messrs. Hamilton and McFadden as equity    
holders of the Company may differ from the interests of holders of Notes. See   
"Principal Stockholders."                                                       

There can also be no assurance that Messrs. Hamilton and McFadden will
continue to control the Company. A reduction in the beneficial ownership of the 
Company's common stock by Messrs. Hamilton and McFadden below 30% would         
constitute an event of default under the New Revolving Credit Facility,         
permitting the lenders under the New Revolving Credit Facility to exercise      
remedies. Further, if any person other than Messrs. Hamilton and McFadden       
acquires beneficial ownership of 50% or more of the Company's common stock, the 
Indenture requires the Company to make an offer to purchase all of the          
outstanding New Notes under the Indenture. The inability to repay indebtedness  
under the New Revolving Credit Facility, if accelerated, or to purchase all of  
the New Notes would also constitute an event of default under the Indenture. See
"New Revolving Credit Facility" and "Description of the New Notes - Change of   
Control." No assurance can be given that the Company will be able to comply with
its obligations under the New Revolving Credit Facility in the event of a change
of control or to refinance any of its obligations thereunder or other           
obligations that might become due by the reason of these provisions. Thus, in   
the event the Company were unable to meet its obligations, there may not be any 
resources available to meet claims for payment on the New Notes.                

SEASONALITY                                                                     

The business of the Company is subject to limited seasonality, with   
revenues generally declining slightly during winter months (namely the first and
fourth fiscal quarters) and over holidays. On a pro-forma basis, adjusted for   
the Fleet Acquisition, the Company had approximately 24.9% and 24.4% of its     
consolidated revenues in the first and fourth fiscal quarters, respectively, of 
1996 and 25.4% and 25.3% of its consolidated revenues in the second and third   
fiscal quarters of 1996, respectively. Highway transportation can be adversely  
affected depending upon the severity of the weather in various sections of the  
country during the winter months. The Company's operating expenses also have    
been somewhat higher in the winter months, due primarily to decreased fuel      
efficiency and increased maintenance costs of revenue equipment in colder       
months. Adjusted for the Fleet Acquisition, in 1996 the Company's average       
operating ratio for the first and fourth fiscal quarters was 98.4% compared to  
an average operating ratio of 97.1% for the second and third fiscal quarters. No
assurance can be given that the Company will have sufficient working capital or 
that borrowings under the New Revolving Credit Facility will be available to    
meet shortfalls in the Company's working capital during the winter months as a  
result of such seasonality.                                                     

CONSEQUENCES OF FAILURE TO EXCHANGE                                             

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions  
on transfer of such Old Notes as set forth in the legend thereon as a           
consequence of the issuance of the Old Notes pursuant to exemptions from, or in 
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be      
offered or sold, unless registered under the Securities Act, except pursuant to 
an exemption from, or in a transaction not subject to, the Securities Act and   
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes for resale under the Securities Act. New Notes   
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered  
for resale, resold or otherwise transferred by holders thereof (other than any  
such holder which is an "affiliate" of the Company within the meaning of Rule   
405                                                                             
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under the Securities Act and other than any broker-dealer who purchased Old     
Notes directly from the Company for resale pursuant to Rule 144A under the      
Securities Act or any other available exemption under the Securities Act)       
without compliance with the registration and prospectus delivery provisions of  
the Securities Act provided that such New Notes are acquired in the ordinary    
course of such holders' business and such holders have no arrangement with any  
person to participate in the distribution of such Notes. Each broker-dealer that
acquired Old Notes for its own account as a result of market making or other    
trading activities and that receives New Notes for its own account pursuant to  
the Exchange Offer must acknowledge that it will deliver a prospectus in        
connection with any resale of such New Notes. The Letter of Transmittal states  
that, by so acknowledging and by delivering a prospectus, a broker-dealer will  
not be deemed to admit that it is an "underwriter" within the meaning of the    
Securities Act. This Prospectus, as it may be amended or supplemented from time 
to time, may be used by a broker-dealer in connection with resales of New Notes 
received in exchange for Old Notes where such Old Notes were acquired by such   
broker-dealer as a result of market-making activities or other trading          
activities. The Company has agreed that, for a period of 180 days after the     
effective date of this Prospectus, it will make this Prospectus, as it may be   
amended or supplemented from time to time, available to any broker-dealer for   
use in connection with any such resale. See "Plan of Distribution." However, to 
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified  
for sale in such jurisdictions or an exemption from registration or             
qualification is available and is complied with. To the extent that Old Notes   
are tendered and accepted in the Exchange Offer, the trading market for         
untendered and tendered but unaccepted Old Notes will be adversely affected.    

ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES                                      

  The New Notes are a new issue of securities, have no established trading
market, and may not be widely distributed. The Company does not intend to list  
the New Notes on any national securities exchange or to seek the admission      
thereof to trading in The Nasdaq Stock Market. No assurance can be given that an
active public or other market will develop for the New Notes or as to the       
liquidity of or the trading market for the New Notes. In addition, the Company  
has not registered or qualified the New Notes under any state securities laws.  
If a trading market does not develop or is not maintained, holders of the New   
Notes may experience difficulty in reselling the New Notes or may be unable to  
sell them at all. If a market for the New Notes develops, any such market may be
discontinued at any time. If a public trading market develops for the New Notes,
future trading prices of the New Notes will depend on many factors, including,  
among other things, prevailing interest rates, the Company's results of         
operations and the market for similar securities, and the price at which the    
holders of New Notes will be able to sell such New Notes is not assured and the 
New Notes could trade at a premium or discount to their purchase price or face  
value. Depending on prevailing interest rates, the market for similar securities
and other facts, including the financial condition of the Company, the New Notes
may trade at a discount from their principal amount.                            

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THE EXCHANGE OFFER

PURPOSE AND EFFECT                                                              

  The Old Notes were sold by the Company to the Initial Purchasers on June
16, 1997, pursuant to the Purchase Agreement. The Initial Purchasers            
subsequently resold the Old Notes in reliance on Rule 144A under the Securities 
Act and certain other exemptions under the Securities Act. The Company and the  
Initial Purchasers also entered into the Registration Rights Agreement, pursuant
to which the Company agreed, with respect to the Old Notes and subject to the   
Company's determination that the Exchange Offer is permitted under applicable   
law, to (i) cause to be filed, on or prior to August 15, 1997, a registration   
statement with the Commission under the Securities Act concerning the Exchange  
Offer, (ii) use its reasonable best efforts to cause such registration statement
to be declared effective by the Commission on or prior to October 14, 1997, and 
(iii) to cause the Exchange Offer to remain open for a period of not less than  
30 days. This Exchange Offer is intended to satisfy the Company's exchange offer
obligations under the Registration Rights Agreement.                            

TERMS OF THE EXCHANGE OFFER                                                     

     The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000  
in principal amount of the New Notes for each $1,000 in principal amount of the 
outstanding Old Notes. The Company will accept for exchange any and all Old     
Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on
the Expiration Date. Tenders of the Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is 
not conditioned upon any minimum principal amount of Old Notes being tendered   
for exchange. However, the Exchange Offer is subject to the conditions, terms   
and provisions of the Registration Rights Agreement. The form and terms of the  
New Notes will be identical in all material respects to the form and terms of   
the Old Notes, except that (i) the New Notes have been registered under the     
Securities Act and, therefore, will not bear legends restricting the transfer   
thereof, (ii) subject to certain limited exceptions, holders of New Notes will  
not be entitled to Additional Interest, and (iii) holders of New Notes will not 
be, and upon consummation of the Exchange Offer, Eligible Holders of Old Notes  
will no longer be, entitled to certain rights under the Registration Rights     
Agreement intended for holders of unregistered securities. See "- Conditions of 
the Exchange Offer."                                                            

Old Notes may be tendered only in multiples of $1,000. Subject to the 
foregoing, Holders may tender less than the aggregate principal amount          
represented by the Old Notes held by them, provided that they appropriately     
indicate this fact on the Letter of Transmittal accompanying the tendered Old   
Notes (or so indicate pursuant to the procedures for book-entry transfer).      

As of the date of this Prospectus, $100 million in aggregate principal
amount of the Old Notes is outstanding, the maximum amount authorized by the    
Indenture for all Notes. As of September 16, 1997, there were three registered  
holders of the Old Notes, including Cede, which held $98,750,000 aggregate      
principal amount of the Old Notes for its participants. Solely for reasons of   
administration (and for no other purpose), the Company has fixed the close of   
business on _________ __, 1997, as the record date (the "Record Date") for      
purposes of determining the persons to whom this Prospectus and the Letter of   
Transmittal will be mailed initially. Only an Eligible Holder of the Old Notes  
(or such Eligible Holder's legal representative or attorney-in-fact) may        
participate in the Exchange Offer. There will be no fixed record date for       
determining Eligible Holders of the Old Notes entitled to participate in the    
Exchange Offer. The Company believes that, as of the date of this Prospectus, no
such Eligible Holder is an affiliate (as defined in Rule 405 under the          
Securities Act) of the Company.                                                 

 The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the     
Exchange Agent. The Exchange Agent will act as agent for the tendering Eligible 
Holders of Old Notes and for the purposes of receiving the New Notes from the   
Company.                                                                        

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If any tendered Old Notes are not accepted for exchange because of an 
invalid tender, the occurrence of certain other events set forth herein or      
otherwise, certificates for any such unaccepted Old Notes will be returned,     
without expense, to the tendering Eligible Holder thereof as promptly as        
practicable after the Expiration Date.                                          

EXPIRATION DATE; EXTENSIONS; AMENDMENTS                                         

     The Expiration Date shall be ____________, 1997 at 5:00 p.m., New York City
time, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the Expiration Date shall be the latest date and time to which the   
Exchange Offer is extended.                                                     

     In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public         
announcement thereof, each prior to 9:00 a.m., New York City time, on the next  
business day after the previously scheduled Expiration Date. Such notice and    
public announcement shall set forth the new Expiration Date of the Exchange     
Offer.                                                                          

The Company reserves the right, in its sole discretion, (i) to delay  
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the 
conditions set forth below under "Conditions of the Exchange Offer" shall not   
have been satisfied, to terminate the Exchange Offer by giving oral or written  
notice of such delay, extension, or termination to the Exchange Agent, and (iv) 
to amend the terms of the Exchange Offer in any manner. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,  
the Company will, in accordance with applicable law, file a post-effective      
amendment to the registration statement (a "Post-effective Amendment") and      
resolicit the registered holders of the Old Notes. If the Company files a       
Post-effective Amendment, it will notify the Exchange Agent of an extension of  
the Exchange Offer by oral or written notice, and will make a public            
announcement thereof, each prior to 9:00 a.m., New York City time, on the next  
business day after the effectiveness of such Post-effective Amendment. Such     
notice and public announcement shall set forth the new Expiration Date, which   
new Expiration Date shall be no less than five days after the then applicable   
Expiration Date.                                                                

CONDITIONS OF THE EXCHANGE OFFER                                                

    The Exchange Offer is not conditioned upon any minimum principal amount of
the Old Notes being tendered for exchange. However, notwithstanding any other   
provisions of the Exchange Offer, the Company shall not be required to accept   
for exchange, or to issue the New Notes in exchange for, any Old Notes, if the  
Exchange Offer violates any applicable law or interpretation of the staff of the
Commission. The Company expects that the foregoing conditions will be satisfied.

TERMINATION OF CERTAIN RIGHTS                                                   

The Registration Rights Agreement provides that, subject to certain   
exceptions, in the event of a Registration Default (as defined below), Eligible 
Holders of Old Notes are entitled to receive Additional Interest. Additional    
Interest means the increase in the interest rate borne by Registrable Securities
during the period in which a Registration Default is continuing pursuant to the 
terms of the Registration Rights Agreement (in general, one-quarter of one      
percent (0.25%) per annum for the first 90-day period immediately after the     
first such Registration Default and an additional one-quarter of one percent    
(0.25%) per annum for each subsequent 90-day period (up to a maximum aggregate  
increase of one percent (1.00%) per annum until all Registration Defaults have  
been cured, whereupon the accrual of Additional Interest will cease and the     
interest rate on the Old Notes will revert to the original rate). A             
"Registration Default" with respect to the Exchange Offer shall generally occur 
if: (i) the registration statement concerning the exchange offer (the           
"Registration Statement") has not been filed with the Commission on or prior to 
August 15, 1997; (ii) the Registration Statement is not declared effective on or
prior to October 14, 1997, or (iii) the Company fails to issue New Notes in     
exchange for all Old Notes properly tendered and not withdrawn in the Exchange  
Offer on or prior to November 13, 1997. Holders of New Notes will not be and,   
upon consummation of the Exchange                                               

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Offer, Holders of Old Notes will no longer be, entitled to (i) the right to     
receive Additional Interest, except in certain limited circumstances, and (ii)  
certain other rights under the Registration Rights Agreement intended for       
holders of Registrable Securities. The Exchange Offer shall be deemed           
consummated upon the occurrence of the delivery by the Company to the Registrar 
under the Indenture of New Notes in the same aggregate principal amount as the  
aggregate principal amount of Old Notes that are validly tendered by holders    
thereof pursuant to the Exchange Offer.                                         

ACCRUED INTEREST ON THE OLD NOTES                                               

    The New Notes will bear interest at a rate equal to 10 3/8% per annum from
and including their date of issuance. Eligible Holders whose Old Notes are      
accepted for exchange will have the right to receive interest accrued thereon   
from the date of their original issuance or the last Interest Payment Date, as  
applicable, to, but not including, the date of issuance of the New Notes, such  
interest to be payable with the first interest payment on the New Notes.        
Interest on the Old Notes accepted for exchange, which interest accrued at the  
rate of 10 3/8% per annum, will cease to accrue on the day prior to the issuance
of the New Notes. See "Description of New Notes - General."                     

PROCEDURES FOR TENDERING OLD NOTES                                              

 The tender of an Eligible Holder's Old Notes as set forth below and the
acceptance thereof by the Company will constitute a binding agreement between   
the tendering Eligible Holder and the Company upon the terms and subject to the 
conditions set forth in this Prospectus and in the accompanying Letter of       
Transmittal. Except as set forth below, an Eligible Holder who wishes to tender 
Old Notes for exchange pursuant to the Exchange Offer must transmit such Old    
Notes, together with a properly completed and duly executed Letter of           
Transmittal, including all other documents required by such Letter of           
Transmittal, to the Exchange Agent at the address set forth on the back cover   
page of this Prospectus prior to 5:00 p.m., New York City time, on the          
Expiration Date. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE ELIGIBLE HOLDER.
IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY   
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT
IS RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY       
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY       
DELIVERY.                                                                       

     Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange   
pursuant hereto are tendered (i) by a registered holder of the Old Notes who has
not completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" in the Letter of Transmittal or (ii) by
an Eligible Institution (as defined). In the event that a signature on a Letter 
of Transmittal or a notice of withdrawal, as the case may be, is required to be 
guaranteed, such guarantee must be by a firm which is a member of a registered  
national securities exchange or The Nasdaq Stock Market, a commercial bank or   
trust company having an office or correspondent in the United States or         
otherwise be an "eligible guarantor institution" within the meaning of Rule     
17Ad-15 under the Exchange Act (collectively, "Eligible Institutions"). If the  
Letter of Transmittal is signed by a person other than the registered holder of 
the Old Notes, the Old Notes surrendered for exchange must either (i) be        
endorsed by the registered holder, with the signature thereon guaranteed by an  
Eligible Institution or (ii) be accompanied by a bond power, in satisfactory    
form as determined by the Company in its sole discretion, duly executed by the  
registered holder, with the signature thereon guaranteed by an Eligible         
Institution. The term "registered holder" as used herein with respect to the Old
Notes means any person in whose name the Old Notes are registered on the books  
of the Registrar.                                                               

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be  
determined by the Company in its sole                                           

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discretion, which determination shall be final and binding. The Company reserves
the absolute right to reject any and all Old Notes not properly tendered and to 
reject any Old Notes the Company's acceptance of which might, in the judgment of
the Company or its counsel, be unlawful. The Company also reserves the absolute 
right to waive any defects or irregularities or conditions of the Exchange Offer
as to particular Old Notes either before or after the Expiration Date (including
the right to waive the ineligibility of any holder who seeks to tender Old Notes
in the Exchange Offer). The interpretation of the terms and conditions of the   
Exchange Offer (including the Letter of Transmittal and the instructions        
thereto) by the Company shall be final and binding on all parties. Unless       
waived, any defects or irregularities in connection with tenders of Old Notes   
for exchange must be cured within such period of time as the Company shall      
determine. The Company will use reasonable efforts to give notification of      
defects or irregularities with respect to tenders of Old Notes for exchange but 
shall not incur any liability for failure to give such notification. Tenders of 
the Old Notes will not be deemed to have been made until such irregularities    
have been cured or waived.                                                      

     If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, corporation or other person acting in a fiduciary or representative   
capacity, such person should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company, in its sole discretion, of
such person's authority to so act must be submitted.                            

Any beneficial owner of the Old Notes (a "Beneficial Owner") whose Old
Notes are registered in the name of a broker, dealer, commercial bank, trust    
company or other nominee and who wishes to tender Old Notes in the Exchange     
Offer should contact such registered holder promptly and instruct such          
registered holder to tender on such Beneficial Owner's behalf. If such          
Beneficial Owner wishes to tender directly, such Beneficial Owner must, prior to
completing and executing the Letter of Transmittal and tendering Old Notes, make
appropriate arrangements to register ownership of the Old Notes in such         
Beneficial Owner's name. Beneficial Owners should be aware that the transfer of 
registered ownership may take considerable time.                                

  By tendering, each registered holder will represent to the Company that,
among other things (i) the New Notes to be acquired in connection with the      
Exchange Offer by the Eligible Holder and each Beneficial Owner of the Old Notes
are being acquired by the Eligible Holder and each Beneficial Owner in the      
ordinary course of business of the Eligible Holder and each Beneficial Owner,   
(ii) the Eligible Holder and each Beneficial Owner are not participating, do not
intend to participate, and have no arrangement or understanding with any person 
to participate, in the distribution of the New Notes, (iii) the Eligible Holder 
and each Beneficial Owner acknowledge and agree that any person participating in
the Exchange Offer for the purpose of distributing the New Notes must comply    
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction of the New Notes acquired by  
such person and cannot rely on the position of the staff of the Commission set  
forth in no-action letters that are discussed herein under "Resales of New      
Notes," (iv) that if the Eligible Holder is a broker-dealer that acquired Old   
Notes as a result of market making or other trading activities, it will deliver 
a prospectus in connection with any resale of New Notes acquired in the Exchange
Offer, (v) the Eligible Holder and each Beneficial Owner understand that a      
secondary resale transaction described in clause (iii) above should be covered  
by an effective registration statement containing the selling security holder   
information required by Item 507 of Regulation S-K of the Commission, and (vi)  
neither the Eligible Holder nor any Beneficial Owner is an "affiliate," as      
defined under Rule 405 of the Securities Act, of the Company except as otherwise
disclosed to the Company in writing. In connection with a book-entry transfer,  
each participant will confirm that it makes the representations and warranties  
contained in the Letter of Transmittal.                                         

    Guaranteed Delivery Procedures.  Eligible Holders who wish to tender their
Old Notes and (i) whose Old Notes are not immediately available or (ii) who     
cannot deliver their Old Notes or any other documents required by the Letter of 
Transmittal to the Exchange Agent prior to the Expiration Date (or complete the 
procedure for book-entry transfer on a timely basis), may tender their Old Notes

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according to the guaranteed delivery procedures set forth in the Letter of      
Transmittal. Pursuant to such procedures: (i) such tender must be made by or    
through an Eligible Institution and a Notice of Guaranteed Delivery (as defined 
in the Letter of Transmittal) must be signed by such Eligible Holder, (ii) on or
prior to the Expiration Date, the Exchange Agent must have received from the    
Eligible Holder and the Eligible Institution a properly completed and duly      
executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand 
delivery) setting forth the name and address of the Eligible Holder, the        
certificate number or numbers of the tendered Old Notes, and the principal      
amount of tendered Old Notes, stating that the tender is being made thereby and 
guaranteeing that, within three (3) business days after the date of delivery of 
the Notice of Guaranteed Delivery, the tendered Old Notes, a duly executed      
Letter of Transmittal and any other required documents will be deposited by the 
Eligible Institution with the Exchange Agent, and (iii) such properly completed 
and executed documents required by the Letter of Transmittal and the tendered   
Old Notes in proper form for transfer (or confirmation of a book-entry transfer 
of such Old Notes into the Exchange Agent's account at DTC) must be received by 
the Exchange Agent within three (3) business days after the Expiration Date. Any
Eligible Holder who wishes to tender Old Notes pursuant to the guaranteed       
delivery procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery and Letter of Transmittal relating to such Old
Notes prior to 5:00 p.m., New York City time, on the Expiration Date.           

 Book-Entry Delivery.  The Exchange Agent will establish an account with
respect to the Old Notes at the DTC ("Book-Entry Transfer Facility") for        
purposes of the Exchange Offer promptly after the date of this Prospectus. Any  
financial institution that is a participant in the Book-Entry Transfer          
Facility's system may make book-entry delivery of the Old Notes by causing such 
facility to transfer Old Notes into the Exchange Agent's account in accordance  
with such facility's procedure for such transfer. Even though delivery of Old   
Notes may be effected through book-entry transfer into the Exchange Agent's     
account at the Book-Entry Transfer Facility, a properly completed and duly      
executed Letter of Transmittal (or a manually signed facsimile thereof), with   
any required signature guarantees, or an Agent's Message (as defined below) in  
connection with a book-entry transfer, and other documents required by the      
Letter of Transmittal, must, in any case, be transmitted to and received by the 
Exchange Agent at one of its addresses set forth on the back cover of this      
Prospectus before the Expiration Date, or the guaranteed delivery procedure set 
forth above must be followed. Delivery of the Letter of Transmittal and any     
other required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent. The term "Agent's Message" means a message      
transmitted by the Book-Entry Transfer Facility to, and received by, the        
Exchange Agent and forming a part of a book-entry confirmation, which states    
that such Book-Entry Transfer Facility has received an express acknowledgment   
from the participant in such Book-Entry Transfer Facility tendering the Old     
Notes that such participant has received and agrees to be bound by the terms of 
the Letter of Transmittal and that the Company may enforce such agreement       
against such participant.                                                       

ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES                     

  Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Notes that are properly tendered in the 
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.  
The New Notes issued pursuant to the Exchange Offer will be delivered as soon as
practicable after acceptance of the Old Notes. For purposes of the Exchange     
Offer, the Company shall be deemed to have accepted validly tendered Old Notes, 
when, as, and if the Company has given oral or written notice thereof to the    
Exchange Agent.                                                                 

  In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt  
by the Exchange Agent of such Old Notes, a properly completed and duly executed 
Letter of Transmittal and all other required documents (or of confirmation of a 
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC);
provided, however, that the Company reserves the absolute right to waive any    
defects or irregularities in the tender or conditions of the Exchange Offer. If 
any tendered Old Notes are not accepted for any                                 

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reason, such unaccepted Old Notes will be returned without expense to the       
tendering Eligible Holder thereof as promptly as practicable after the          
expiration or termination of the Exchange Offer.                                

WITHDRAWAL RIGHTS                                                               

   Tenders of the Old Notes may be withdrawn by delivery of a written notice
to the Exchange Agent, at its address set forth on the back cover page of this  
Prospectus, at any time prior to 5:00 p.m., New York City time, on the          
Expiration Date. Any such notice of withdrawal must (i) specify the name of the 
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)   
identify the Old Notes to be withdrawn (including the certificate number or     
numbers and principal amount of such Old Notes, as applicable), (iii) be signed 
by the Eligible Holder in the same manner as the original signature on the      
Letter of Transmittal by which such Old Notes were tendered (including any      
required signature guarantees) or be accompanied by a bond power in the name of 
the person withdrawing the tender, in satisfactory form as determined by the    
Company in its sole discretion, duly executed by the registered holder, with the
signature thereon guaranteed by an Eligible Institution together with the other 
documents required upon transfer by the Indenture, and (iv) specify the name in 
which such Old Notes are to be re-registered, if different from the Depositor,  
pursuant to such documents of transfer. Any questions as to the validity, form  
and eligibility (including time of receipt) of such notices will be determined  
by the Company, in its sole discretion. The Old Notes so withdrawn will be      
deemed not to have been validly tendered for exchange for purposes of the       
Exchange Offer. Any Old Notes which have been tendered for exchange but which   
are withdrawn will be returned to the Eligible Holder thereof without cost to   
such Eligible Holder as soon as practicable after withdrawal. Properly withdrawn
Old Notes may be retendered by following one of the procedures described under  
"The Exchange Offer - Procedures for Tendering Old Notes" at any time on or     
prior to the Expiration Date.                                                   

THE EXCHANGE AGENT; ASSISTANCE                                                  

  First Union National Bank is the Exchange Agent. All tendered Old Notes,
executed Letters of Transmittal and other related documents should be directed  
to the Exchange Agent. Questions and requests for assistance and requests for   
additional copies of the Prospectus, the Letter of Transmittal and other related
documents should be addressed to the Exchange Agent as follows:                 

                                                        [Enlarge/Download Table]
                                                                                           
            By Mail:                 By Hand/Overnight Express:     Facsimile Transmission:
    First Union National Bank         First Union National Bank          (704) 590-7628    
1525 West W. T. Harris Blvd. 3C3  1525 West W. T. Harris Blvd. 3C3                         
 Charlotte, North Carolina 28288   Charlotte, North Carolina 28288    To confirm receipt:  
    Attention: Michael Klotz          Attention: Michael Klotz           (704) 590-7408    

SOLICITATION OF TENDERS; FEES AND EXPENSES                                      

No person has been authorized to give any information or to make any  
representation in connection with the Exchange Offer other than those contained 
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the        
delivery of this Prospectus nor any exchange made hereunder shall, under any    
circumstances, create any implication that there has been no change in the      
affairs of the Company since the respective dates as of which information is    
given herein. The Exchange Offer is not being made to (nor will offers be       
accepted from or on behalf of) holders of Notes in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in          
compliance with the laws of such jurisdiction. However, the Company may, at its 
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Notes in   
such jurisdiction.                                                              

   All expenses incident to the Company's consummation of the Exchange Offer
and compliance with the Registration Rights Agreement will be borne by the      
Company, including, without limitation:                                         

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(i) all registration and filing fees (including, without limitation, fees and   
expenses of compliance with state securities or Blue Sky laws), (ii) printing   
expenses (including, without limitation, expenses of printing certificates for  
the New Notes in a form eligible for deposit with DTC and of printing           
Prospectuses), (iii) messenger, telephone and delivery expenses, (iv) fees and  
disbursements of counsel for the Company, (v) fees and disbursements of         
independent certified public accountants, (vi) rating agency fees, (vii)        
internal expenses of the Company (including, without limitation, all salaries   
and expenses of officers and employees of the Company performing legal or       
accounting duties), and (viii) fees and expenses incurred in connection with the
listing, if any, of the New Notes on a securities exchange.                     

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others     
soliciting acceptance of the Exchange Offer. The Company, however, will pay the 
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.           

ACCOUNTING TREATMENT                                                            

     The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.   
Accordingly, no gain or loss will be recognized by the Company for accounting   
purposes upon the exchange of New Notes for Old Notes. The expenses of the      
Exchange Offer will be amortized over the term of the New Notes.                

RESALES OF THE NEW NOTES                                                        

Based on interpretations by the staff of the Commission set forth in  
no-action letters issued to third parties, the Company believes that the New    
Notes issued pursuant to the Exchange Offer to an Eligible Holder in exchange   
for Old Notes may be offered for resale, resold and otherwise transferred by    
such Eligible Holder (other than (i) a broker-dealer who purchased Old Notes    
directly from the Company for resale pursuant to Rule 144A under the Securities 
Act or any other available exemption under the Securities Act, or (ii) a person 
that is an affiliate of the Company within the meaning of Rule 405 under the    
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the Eligible Holder is acquiring
the New Notes in the ordinary course of business and is not participating, and  
has no arrangement or understanding with any person to participate, in the      
distribution of the New Notes. The Company has not requested or obtained an     
interpretive letter from the Commission staff with respect to this Exchange     
Offer, and the Company and the Eligible Holders are not entitled to rely on     
interpretive advice provided by the staff to other persons, which advice was    
based on the facts and conditions represented in such letters. However, the     
Exchange Offer is being conducted in a manner intended to be consistent with the
facts and conditions represented in such letters. If any Eligible Holder        
acquires New Notes in the Exchange Offer for the purpose of distributing or     
participating in a distribution of the New Notes, such Eligible Holder cannot   
rely on the position of the staff of the Commission enunciated in Morgan Stanley
& Co., Incorporated (available June 5, 1991) and Exxon Capital Holdings         
Corporation (available May 13, 1988), or interpreted in the Commission's letters
to Shearman and Sterling (available July 2, 1993) and K-III Communications      
Corporation (available May 14, 1993), or similar no-action or interpretive      
letters and must comply with the registration and prospectus delivery           
requirements of the Securities Act in connection with a secondary resale        
transaction, unless an exemption from registration is otherwise available. Each 
broker-dealer that receives New Notes for its own account in exchange for Old   
Notes, where such Old Notes were acquired by such broker-dealer as a result of  
market making or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such New Notes. The Company has   
agreed that for a period of 180 days after the effective date of this           
Prospectus, it will make this Prospectus, as amended and supplemented, available
to any broker-dealer who receives New Notes in the Exchange Offer for use in    
connection with any such resale. See "Plan of Distribution."                    

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CONSEQUENCE OF FAILURE TO EXCHANGE                                              

Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions  
on transfer of such Old Notes as set forth in the legend thereon as a           
consequence of the offer or sale of the Old Notes pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the        
Securities Act and applicable state securities laws. In general, the Old Notes  
may not be offered or sold, unless registered under the Securities Act, except  
pursuant to an exception from, or in a transaction not subject to, the          
Securities Act and applicable states securities laws. The Company does not      
currently anticipate that it will register the Old Notes under the Securities   
Act. See "Risk Factors - Consequences of Failure to Exchange."                  

OTHER                                                                           

    Participation in the Exchange Offer is voluntary, and holders of Old Notes
should carefully consider whether to participate. Holders of the Old Notes are  
urged to consult their financial and tax advisers in making their own decisions 
on what action to take.                                                         

As a result of the making of, and upon acceptance for exchange of all 
validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the   
Company will have fulfilled a covenant contained in the Registration Rights     
Agreement. Holders of Old Notes who do not tender their Old Notes in the        
Exchange Offer will continue to hold such Notes and will be entitled to all the 
rights, and limitations applicable thereto, under the Indenture, except for any 
such rights under the Registration Rights Agreement that by their terms         
terminate or cease to have further effectiveness as a result of the making of   
this Exchange Offer. See "Description of New Notes." All untendered Old Notes   
will continue to be subject to the restrictions on transfer set forth in the    
Indenture. To the extent that Old Notes are tendered and accepted in the        
Exchange Offer, the trading market for untendered Old Notes could be adversely  
affected.                                                                       

    The Company may in the future seek to acquire untendered Old Notes in open
market or privately negotiated transactions, through subsequent exchange offers 
or otherwise. The Company has no present plan to acquire any Old Notes which are
not tendered in the Exchange Offer.                                             

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CAPITALIZATION

The following table sets forth the Company's short-term debt and      
capitalization as of June 29, 1997 on an actual basis. This table should be read
in conjunction with the consolidated financial statements of the Company and the
notes thereto included elsewhere in this Prospectus.                            

                                                                [Download Table]

                                                                 JUNE 29, 1997     
                                                             ----------------------
                                                             (DOLLARS IN THOUSANDS)
                                                                                   
Short-term debt:                                                                   
  Current maturities of long-term debt......................        $    638(c)    
  Current maturities of equipment obligations...............              --       
                                                                    --------       
Total short-term debt.......................................        $    638(c)    
                                                                    --------       
                                                                    --------       
Long-term debt (excluding current maturities) (a):                                 
  Existing revolving credit debt............................        $     --       
  New Revolving Credit Facility (b).........................              --       
  Mortgage debt.............................................              --       
  Long-term equipment obligations and capital leases........           1,564(c)    
  Notes offered hereby......................................         100,000       
                                                                    --------       
Total long-term debt........................................         101,564       
                                                                    --------       
Redeemable preferred stock (d)..............................           5,318       
Stockholders' equity (e)....................................          13,153       
                                                                    --------       
Total capitalization........................................        $120,673       
                                                                    --------       
                                                                    --------       

------------------                                                              

(a) The Company has an accounts receivable securitization facility in the amount
    of $28 million with an effective interest rate of LIBOR plus .80%, which was
   accounted for as an off-balance sheet item as of March 30, 1997 pursuant to
Statement of Financial Accounting Standards No. 125. Prior to March 30, 
1997, this facility was accounted for as long-term debt and the related 
  interest as interest expense. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital   
Resources."                                                             

(b) The New Revolving Credit Facility provides for revolving credit loans of up 
  to $20 million, has an initial term of three years, will be secured by $25
  million of revenue equipment to be held by Chemical Leaman Corporation and
 has an interest rate of the prime rate plus 1/2% or LIBOR plus 1.80%. The
New Revolving Credit Facility will be undrawn at the time of the        
  consummation of the Offering, except for stand-by letters of credit in the
amount of $3.9 million which will be carried forward from one of the    
 Company's existing revolving credit facilities. See "New Revolving Credit
Facility."                                                              

(c) Relates to capital lease obligations which were not repaid in connection    
with the Offering.                                                      

(d) The Company has three issues of Preferred Stock outstanding. The Company's  
   Series A Preferred Stock is redeemable at the option of the holders thereof
    after August 1, 2002 at stated value of $2.6 million plus accrued and unpaid
    dividends and is redeemable at the option of the Company at a premium at any
    time after issuance. The Company's Series B Cumulative Convertible Preferred
   Stock is redeemable at the option of the Company or the holders thereof, in
    each case after May 2006 at stated value of $900,000 plus accrued and unpaid
  dividends. The Company's Series C Cumulative Preferred Stock is redeemable
   at the option of the holders thereof after May 2006 or at the option of the
Company at any time after issuance, in each case at stated value of $1.8
million plus accrued and unpaid dividends.                              

(e) In connection with the repayment of indebtedness with the proceeds of the   
Offering, the Company incurred approximately $199,000 of prepayment     
    penalties net of tax benefit, which was recorded as an extraordinary item in
the quarter ended June 29, 1997.                                        

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SELECTED CONSOLIDATED FINANCIAL DATA

     The following table sets forth selected consolidated financial data for the
periods indicated. The selected consolidated financial data as of and for the   
years ended December 31, 1992 and 1993 have been derived from the Company's     
audited consolidated financial statements not included herein. The selected     
consolidated financial data as of and for the years ended December 31, 1994,    
1995, 1996, and as of June 29, 1997 and for the six month period then ended have
been derived from the Company's audited consolidated financial statements, which
are included in this Prospectus. The selected consolidated financial data as of 
June 30, 1996 and for the six month period ended June 30, 1996 have been derived
from the Company's unaudited consolidated financial statements included herein. 
The selected consolidated financial data as of June 30, 1996 has been derived   
from the Company's unaudited consolidated financial statements not included     
herein. The unaudited consolidated financial statements have been prepared on   
the same basis as the audited consolidated financial statements included herein 
and, in the opinion of management, include all adjustments (consisting only of  
normal recurring adjustments) necessary for a fair presentation of the Company's
financial position and results of operations for the unaudited periods.         
Operating results for the six months ended June 29, 1997 are not necessarily    
indicative of the results that may be expected for the year ending December 31, 
1997. The selected consolidated financial data should be read in conjunction    
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited consolidated financial statements and the notes     
thereto included elsewhere in this Prospectus.                                  

                                                        [Enlarge/Download Table]

                                                                                                            SIX MONTHS ENDED   
                                                               YEAR ENDED DECEMBER 31,                    -------------------- 
                                               --------------------------------------------------------   JUNE 30,    JUNE 29, 
                                                 1992        1993        1994        1995      1996(A)      1996        1997   
                                               --------    --------    --------    --------    --------   --------    -------- 
                                                                            (DOLLARS IN THOUSANDS)                             
                                                                                                                               
INCOME STATEMENT DATA:                                                                                                         
Operating revenues                             $232,619    $231,190    $241,443    $245,706    $281,075   $127,612    $156,545 
Operating expenses:                                                                                                            
  Purchased transportation...................    74,582      77,985      85,470      98,903     122,635     54,542      69,131 
  Salaries, wages and benefits...............    72,762      71,507      71,499      63,546      67,737     32,531      34,947 
  Depreciation and amortization..............    12,704      11,320      11,783      13,731      16,255      7,173       9,336 
  Operations and maintenance.................    49,979      50,304      52,768      50,240      52,924     22,696      32,158 
  Taxes and licenses.........................     5,868       4,600       2,829       2,755       2,613      1,175       1,457 
  Insurance and claims.......................     5,129       5,334       4,870       3,483       4,766      2,015       4,402 
  Communication and utilities................     5,028       4,889       5,417       6,056       7,213      3,594       3,320 
  Loss (gain) on disposition of revenue                                                                                        
    equipment, net...........................       (81)        118          (6)        573         290        141          45 
                                               --------    --------    --------    --------    --------   --------    -------- 
    Total operating expenses.................   225,971     226,057     234,630     239,287     274,433    123,867     154,796 
Operating income (loss)                           6,648       5,133       6,813       6,419       6,642      3,745       1,749 
Other (income) expense                                                                                                         
  Interest expense...........................     4,278       4,016       4,946       5,978       7,553      3,092       4,515 
  Other (income) expense, net................       277         207          92        (110)       (795)       (11)        165 
                                               --------    --------    --------    --------    --------   --------    -------- 
Income (loss) before taxes...................     2,093         910       1,775         551        (116)       664      (2,931)
Provision (benefit) for income taxes.........       430         227         710         220          46        333      (1,223)
                                               --------    --------    --------    --------    --------   --------    -------- 
Income (loss) before extraordinary item......     1,663         683       1,065         331        (162)       331      (1,708)
                                               --------    --------    --------    --------    --------   --------    -------- 
Extraordinary loss on early extinguishment of                                                                                  
  debt less applicable income taxes of                                                                                         
  $133(h)....................................        --          --          --          --          --         --        (199)
                                               --------    --------    --------    --------    --------   --------    -------- 
Net income (loss)............................  $  1,663    $    683    $  1,065    $    331    $   (162)  $    331    $ (1,907)
                                               --------    --------    --------    --------    --------   --------    -------- 
                                               --------    --------    --------    --------    --------   --------    -------- 
OTHER FINANCIAL DATA:                                                                                                          
EBITDA (b)...................................  $ 19,352    $ 16,453    $ 18,596    $ 20,150    $ 22,897   $ 10,918    $ 12,585 
EBITDA margin (c)............................      8.3%        7.1%        7.7%        8.2%        8.2%       8.6%        8.0% 
Cash flows provided by (used in) operating                                                                                     
  activities.................................     5,992      11,197      16,567      17,444       4,677         21      (3,519)
Cash flows (used in) investing activities....    (9,855)     (9,892)    (18,755)    (10,490)    (34,273)   (23,981)    (10,255)
Cash flows provided by (used in) financing                                                                                     
  activities.................................     3,465       6,994       4,120      (9,444)     26,861     23,632      22,709 
Capital expenditures (d).....................    11,637      12,050      20,747      13,270      20,020      9,863      11,006 
Ratio of EBITDA to interest expense..........      4.5x        4.1x        3.8x        3.4x        3.0x       3.5x        2.8x 
Ratio of earnings to fixed charges (e).......      1.42        1.19        1.32        1.08          --       1.19          -- 

                                                   (continued on following page)

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(continued from previous page)                                                  

                                                        [Enlarge/Download Table]

                                                                                                            SIX MONTHS ENDED  
                                                              YEAR ENDED DECEMBER 31,                     --------------------
                                              --------------------------------------------------------    JUNE 30,    JUNE 29,
                                                1992        1993        1994        1995      1996(A)       1996        1997  
                                              --------    --------    --------    --------    --------    --------    --------
                                                               (DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)                  
                                                                                                                              
OPERATING DATA:                                                                                                               
Tractors operated                                                                                                             
  Company....................................      726         616         576         414         561         582         491
  Owner-Operators (f)........................      735         774         969         954       1,194       1,248       1,322
                                              --------    --------    --------    --------    --------    --------    --------
    Total tractors...........................    1,461       1,390       1,545       1,368       1,755       1,830       1,813
Drivers                                                                                                                       
  Company employees..........................      760         589         538         405         473         515         475
  Owner-Operators (f)........................      889         844       1,057       1,117       1,277       1,305       1,430
                                              --------    --------    --------    --------    --------    --------    --------
  Total drivers..............................    1,649       1,433       1,595       1,522       1,750       1,820       1,905
Trailers.....................................    2,666       2,438       2,869       2,645       3,502       3,450       3,433
Terminals....................................       65          65          61          66         105         105         105
Total loaded miles traveled (000's)..........  105,901     104,913     105,443     110,223     126,802      56,048      68,371
Average revenue per mile..................... $   1.85    $   1.83    $   1.87    $   1.81    $   1.78    $   1.77    $   1.78
Average length of haul (miles)...............      444         456         450         463         455         487         429
Number of tank cleaning facilities...........       28          26          27          27          29          30          30

BALANCE SHEET DATA:                                                                                                           
Working capital.............................. $ 10,641    $ 16,697    $ 12,886    $ 10,732    $ 12,426    $ 12,757    $  8,825
Property and equipment, net..................   59,698      59,153      74,869      76,771     108,789     106,634     110,637
Total assets.................................  111,603     127,176     146,536     136,405     182,544     180,534     177,528
Long-term debt, including current portion                                                                                     
  (g)........................................   43,267      53,386      69,223      67,821     109,024     105,083     102,202
Redeemable preferred stock...................    2,600       2,600       2,600       2,600       5,318       5,318       5,318
Stockholders' equity (h).....................   24,017      22,917      20,245      19,779      15,723      16,334      13,153

------------------                                                              

(a) Includes the results of Fleet from June 28, 1996, the date of the           
acquisition.                                                            

(b) EBITDA represents operating income (loss) for the respective period plus    
depreciation and amortization. For the first six months of 1997, a $1.5 
    million one-time charge was incurred relating to a self-insurance deductible
    and has been added back in the calculation of EBITDA. EBITDA is presented to
provide additional information about the Company's ability to meet its  
  future debt service, capital expenditure and working capital requirements.
  EBITDA is not a measure of financial performance under GAAP and should not
   be considered as an alternative either to net income as an indicator of the
Company's operating performance, or to cash flows as a measure of the   
Company's liquidity.                                                    

(c) EBITDA margin is defined as EBITDA as a percentage of revenues.             

(d) Capital expenditures for 1996 and for the six months ended June 30, 1996    
 consist of $6.2 million and $4.6 million, respectively, for the Company's
new information technology system and $13.8 million and $5.3 million,   
    respectively, for the acquisition of new trailers and capitalized repairs to
existing trailers.                                                      

(e) Calculated as the ratio of the sum of income (loss) before income taxes and 
  fixed charges to fixed charges. Fixed charges consist of interest expense,
preferred stock dividends, deferred finance expense, minority interest  
 expense, capitalized interest expense and that portion of operating lease
expense representative of the interest factor (deemed to be one-third of
   operating lease expense). Earnings were insufficient to cover fixed charges
   by $116,000 for the year ended December 31, 1996 and $2,931,000 for the six
 months ended June 29, 1997. For the periods presented, the Company had no
   deferred finance expense, minority interest expense or capitalized interest
expense.                                                                

(f) The Company utilizes the services of owner-operators, who are independent   
  contractors and provide their own tractors and pay for their own operating
expenses.                                                               

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(g) The Company has an accounts receivable securitization facility in the amount
   of $28 million with an effective rate of interest of LIBOR plus .80%, which
  is accounted for as an off-balance sheet item as of June 29, 1997 pursuant
  to Statement of Financial Accounting Standards No. 125. Prior to March 30,
  1997, this facility was accounted for as long-term debt. See "Management's
  Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."                                       

(h) In connection with the repayment of indebtedness with the proceeds of the   
Offering, the Company incurred approximately $199,000 of prepayment     
    penalties net of tax benefit, which was recorded as an extraordinary item in
the quarter ended June 29, 1997.                                        

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

OVERVIEW                                                                        

Chemical Leaman is the largest tank truck carrier in the U.S. with a  
nationwide network of 105 terminals and 30 tank cleaning facilities as of June  
29, 1997. At that date, the Company's fleet consisted of 1,813 tractors and     
3,433 specialized trailers. The Company offers a full range of specialized      
transportation services, including short and long-haul transportation,          
intermodal services, materials handling and third-party logistics, principally  
to the chemical industry. As a result, the Company's operating results are      
affected by the level of overall chemical output and, in particular, the level  
of shipments in the liquid chemical and dry bulk commodity industries. The      
Company's customer base includes many of the major chemical producers in the    
U.S., such as Dow Chemical North America, E.I. DuPont de Nemours Co., Air       
Products and Chemicals, Inc., AlliedSignal, Inc. and Union Carbide Corporation. 

In 1996, approximately 91% of the Company's revenues were derived from
short and long-haul transportation and materials handling, while approximately  
9% were derived from tank cleaning and intermodal services. The Company operates
30 tank cleaning facilities throughout the U.S., which not only support the     
Company's trucking operations, but also provide tank cleaning services for other
tank truck carriers. In 1996, the Company generated $17.7 million in revenues   
from tank cleaning services provided to non-affiliated companies. The Company is
marketing its tank cleaning capabilities to third-party carriers with the       
objective of increasing tank cleaning revenues, which result in higher operating
margins than the Company's tank truck operations.                               

   Over the last three years, the Company has continued to focus on shifting
its driver force from Company-employed drivers to owner-operator drivers. At    
June 29, 1997 the number of owner-operators was 1,430, as compared to 889 at    
December 31, 1992. Because owner-operators are required to provide their own    
tractors and pay all expenses associated with their tractors, this shift has    
resulted in a steady decline in the level of certain operating expenses as a    
percentage of revenues, including salaries, wages, benefits, maintenance, fuel  
and insurance. At the same time, purchased transportation and rents have        
correspondingly increased as a percentage of revenues. In addition to reducing  
the Company's fixed cost structure, the shift from Company-employed drivers to  
owner-operators provides the Company with added operating and financial         
flexibility.                                                                    

The Company's strong safety record has enabled the Company to recently
reset its automobile, general and excess liability coverages at an annual       
savings of $600,000 commencing in 1997. In addition, the Company improved its   
insurance liability coverages, including a reduction in deductible limits per   
occurrence from $2 million to $1 million and a reduction in annual aggregate    
deductible limits from $9.0 million to $5.5 million, in each case for           
occurrences after March 30, 1997.                                               

     The Company's exposure to fuel price increases is minimal as most contracts
include fuel price escalation clauses. In addition, the Company's extensive use 
of owner-operators further minimizes fuel cost risk as the cost of fuel is borne
by each individual owner-operator. Accordingly, the Company does not participate
in any fuel hedging activities.                                                 

   The Company acquired the assets of Fleet in June 1996, adding 30 terminal
locations, 762 trailers and 440 tractors (including 264 owner-operator          
tractors). The purchase price of $22.9 million consisted of $15.5 million in    
cash and the assumption of $7.4 million of capital lease obligations. The Fleet 
acquisition provides the Company with a strong presence in the southeastern U.S.
and adds customers with little or no overlap with the Company's existing        
customer base. During the last six months of 1996 and the first six months of   
1997, Fleet generated $27.5 million and $29.8 million in revenues. The Fleet    
acquisition provides the opportunity for cost savings associated with Fleet's   
operations by taking advantage of the Company's vertically integrated           
capabilities such as tank cleaning and independent contractor services and by   
consolidating certain Fleet and CLTL terminals which are located in close       
proximity to one another. Additionally, the Company has realized significant    
insurance savings as a result of adding Fleet to its existing insurance programs
at no increase in premium.                                                      

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  The Company's new information technology system will provide the Company
with a new order entry system, enhanced order tracking and continuous           
communication with drivers via satellite. The new system is expected to be fully
implemented in the first quarter of 1998 and provide productivity and cost      
benefits to the Company. The Company has capitalized $11 million of costs as of 
June 29, 1997 in connection with this system. These costs will be depreciated   
over seven years upon completion of certain of the phases of the project. See   
Note 2 of "Notes to Consolidated Financial Statements."                         

The Company owns property in Bridgeport, New Jersey which has been    
designated a Superfund site by the U.S. Environmental Protection Agency. The    
Company has certain obligations for the remediation of environmental            
contamination at this site. In 1993, the Company obtained a judgment in the U.S.
District Court for the District of New Jersey against its insurers for recovery 
of its costs incurred in connection with this remediation effort. In June 1996, 
the U.S. Court of Appeals for the Third Circuit affirmed the U.S. District      
Court's judgment in favor of the Company in all material respects and remanded  
the matter to the District Court for the reallocation of liability among        
applicable policies. In November 1996, the U.S. Supreme Court denied the        
insurers' petition to review the Court of Appeals' decision, resulting in a     
non-appealable judgment against the insurers. The Company has capitalized all of
the costs in connection with the Bridgeport site, which totaled $14.1 million at
June 29, 1997, as these amounts are expected to be recovered from the Company's 
insurers. See "Business - Environmental Matters" and Note 11 of "Notes to       
Consolidated Financial Statements."                                             

RESULTS OF OPERATIONS                                                           

 The following table sets forth revenues and expenses as a percentage of
revenues for the periods indicated:                                             

                                                        [Enlarge/Download Table]

                                                                      SIX MONTHS ENDED   
                                         YEAR ENDED DECEMBER 31      ------------------- 
                                       ---------------------------   JUNE 30,   JUNE 29, 
                                       1994       1995       1996      1996       1997   
                                       ----       ----       ----    --------   -------- 
                                                                                         
Total Operating Revenues.............. 100.0%     100.0%     100.0%   100.0%     100.0%  
Operating expenses:                                                                      
  Purchased transportation & rents....  35.4       40.3       43.6     42.7       44.2   
  Salaries, wages and benefits........  29.6       25.9       24.1     25.5       22.3   
  Depreciation and amortization.......   4.9        5.6        5.8      5.6        6.0   
  Operations and maintenance..........  21.9       20.4       18.8     17.8       20.5   
  Taxes and licenses..................   1.2        1.1         .9       .9         .9   
  Insurance and claims................   2.0        1.4        1.7      1.6        2.8(a)
  Communications & utilities..........   2.2        2.5        2.6      2.8        2.1   
  Loss (gain) on disposition of                                                          
     revenue equipment, net...........    --         .2         .1       .1         .1   
                                       -----      -----      -----    -----      -----   
        Total operating expenses......  97.2       97.4       97.6     97.0       98.9   

------------------                                                              
(a) Includes a one-time charge of $1.5 million (1.0% of revenues) relating to a 
self-insurance deductible.                                                      

SIX MONTHS ENDED JUNE 29, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996       

 Operating Revenues.  Operating revenues increased by $28.9 million from
$127.6 million in the first six months of 1996 to $156.5 million in the first   
six months of 1997. Of this increase, $29.8 million resulted from the           
acquisition of Fleet, partially offset by a decline of $0.9 million from        
existing operations. Average revenue per mile increased from $1.77 in the first 
six months of 1996 to $1.78 in the first six months of 1997, while average      
length of haul was 429 miles for the first six months of 1997 as compared to 487
miles for the first six months of 1996. This reduction in length of haul is     
attributable to the acquisition of Fleet, which typically hauls shorter         
distances than CLTL as a result of its regional focus. In the first six months  
of 1997, short and long-haul transportation accounted for 92% of revenues while 
tank cleaning and intermodal services accounted for 8%, consistent with the     
first six months of 1996.                                                       

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     Operating Expenses.  Operating expenses totaled $154.8 million in the first
six months of 1997 as compared to $123.9 million in the first six months of     
1996, an increase of $30.9 million. Of this increased amount, $29.3 million was 
attributable to the Fleet acquisition. The balance of the increase is           
attributable to a one-time charge of $1.5 million for an insurance claim for    
personal injury arising from a trucking accident. Operating expenses as a       
percentage of revenue increased from 97.1% for the first six months of 1996 to  
98.9% for the first six months of 1997. This increase in operating expenses of  
1.8% of revenue was primarily attributable to increases in operations and       
maintenance expense and insurance and claims expense, offset by decreases in    
salaries, wages and benefits expense and decreases in communications and        
utilities expense.                                                              

     Interest Expense.  Interest expense increased from $3.1 million, or 2.4% of
revenues, in the first six months of 1996 to $4.5 million, or 2.9% of revenues, 
in the first six months of 1997. The increase in net interest expense is        
attributable to the additional debt incurred in connection with the Fleet       
acquisition.                                                                    

Net Income (Loss).  The net loss in the first six months of 1997 was  
attributable to the one-time insurance charge of $1.5 million, increased        
interest, depreciation and operating lease expense in connection with the Fleet 
acquisition.                                                                    

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995           

     Operating Revenues.  Operating revenues increased by $35.4 million or 14.4%
to $281.1 million in 1996 from $245.7 million in 1995. Of this increase, $27.5  
million primarily resulted from the inclusion of six months of revenues of      
Fleet, which was acquired in June 1996. The balance of the increase of revenues 
in 1996 of $7.9 million came from internal growth. Average revenue per mile     
decreased from $1.81 per mile in 1995, to $1.78 per mile in 1996, as a result of
downward pricing pressure from the Company's chemical producing customers.      
Average length of haul decreased from 463 miles in 1995 to 455 miles in 1996    
largely due to the acquisition of Fleet, which typically has a shorter length of
haul given its regional focus. Despite the decrease in average revenue per mile 
and average length of haul, total miles traveled increased 16.6 million in 1996 
to 126.8 million from 110.2 miles in 1995. In addition, tank cleaning revenues  
increased approximately $3.2 million in 1996 to $17.7 million from $14.5        
million. In 1996, short and long-haul transportation accounted for 91.4% of     
revenues while tank cleaning and intermodal services accounted for 8.6%. In     
1995, 92.8% of revenues were derived from transportation services and 7.2% were 
derived from tank cleaning and intermodal services.                             

  Operating Expenses.  Operating expenses increased by $35.1 million, from
$239.3 million in 1995 to $274.4 million in 1996. This increase is attributable 
to the inclusion of the operating expenses of Fleet for the last half of 1996 as
well as increased fuel costs. Fleet's operating expenses as a percentage of     
revenues are higher than the Company's taken as a whole as Fleet utilizes       
operating leases to finance a substantial portion of its revenue equipment. The 
Fleet depreciation and operating lease expense together with Company-wide       
increased fuel costs caused total operating expenses as a percentage of revenue 
to increase to 97.6% in 1996 as compared to 97.4% in 1995. Salaries, wages and  
benefits declined as a percentage of revenue, while purchased transportation and
rents increased, reflecting an increase in the number of owner-operator drivers 
relative to employee drivers. Depreciation expense increased from $13.7 million 
in 1995 to $16.2 million in 1996. Of this increase, $1.8 million is attributable
to the Fleet acquisition and the balance results from a higher level of revenue 
equipment in 1996 as compared to 1995 levels. Depreciation expense as a         
percentage of revenue remained relatively constant at 5.8% in 1996 and 5.6% in  
1995. Insurance and claims expense was $4.8 million in 1996, representing an    
increase of $1.3 million as compared to 1995 levels. Insurance and claims as a  
percentage of revenue increased from 1.4% in 1995 to 1.7% in 1996. These        
increases are attributable to the Fleet acquisition as well as additional       
expense associated with an insurance claim.                                     

    Interest Expense.  Interest expense increased from $6.0 million in 1995 to
$7.6 million in 1996, increasing from 2.4% of revenues in 1995 to 2.7% of       
revenues in 1996. The Company received insurance settlement proceeds of $11.5   
million in late 1995, which were applied to reduce outstanding                  

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revolving credit debt. The increase in 1996 is the result of new borrowings and 
debt incurred in connection with the Fleet acquisition.                         

Net Income (Loss).  The Company had a net loss of $162,000 in 1996 as 
compared to net income of $331,000 in 1995. The net loss in 1996 reflects the   
increased depreciation, operating lease expense and interest expense resulting  
from the Fleet acquisition, increased fuel costs and a slight reduction of      
revenue per mile. In 1996, the Company recorded tax expense of $46,000 despite a
pre-tax loss due to state taxes and certain non-deductible expenses. This       
compares to a 40% effective tax rate for 1995.                                  

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994           

Operating Revenue.  Revenues increased by $4.3 million, or 1.8%, from 
$241.4 million in 1994 to $245.7 million in 1995, all of which resulted from    
internal growth as the Company expanded its relationships with its major        
customers. In 1995, 92.8% of the Company's revenues were generated by short and 
long-haul transportation and 7.2% were generated by tank cleaning and intermodal
services. In 1994, transportation services accounted for 93.4% of the Company's 
revenues and tank cleaning and intermodal services accounted for 6.6%.          

 Operating Expense.  Operating expenses increased from $234.6 million in
1994 to $239.3 million in 1995. However, operating expenses as a percentage of  
revenue remained relatively stable at 97.2% and 97.4% in 1994 and 1995,         
respectively.                                                                   

    Interest Expense.  Interest expense increased from $5.0 million in 1994 to
$6.0 million in 1995 as the average balance of funded debt was higher in 1995   
than in 1994.                                                                   

     Net Income.  Income before tax was $551,000 in 1995, representing a decline
of $1.2 million from the 1994 level. This decline is a result of higher         
depreciation and interest expense in 1995. After giving effect to income taxes, 
the Company reported net income of $331,000 and $1.1 million in 1995 and 1994,  
respectively. The Company's effective income tax rate of 40% in 1995 was        
consistent with the 1994 level.                                                 

LIQUIDITY AND CAPITAL RESOURCES                                                 

   Following the Offering, the Company's primary source of liquidity will be
cash flows from operations and the New Revolving Credit Facility. The New       
Revolving Credit Facility provides for revolving credit loans up to $20 million,
has an initial term of three years, is secured by $25 million of revenue        
equipment held by Chemical Leaman Corporation and has an interest rate of the   
prime rate plus 1/2% or LIBOR plus 1.80%. The New Revolving Credit Facility was 
undrawn at the time of the consummation of the Offering, except for standby     
letters of credit in the amount of $3.9 million which were carried forward from 
one of the Company's existing revolving credit facilities. See "New Revolving   
Credit Facility."                                                               

  The Company used the net proceeds of the Offering to repay substantially
all of its outstanding indebtedness in the amount of $84 million, consisting of 
revolving lines of credit, letters of credit, equipment debt obligations,       
capital lease obligations and mortgage indebtedness, together with accrued      
interest and prepayment penalties. The balance of the net proceeds of the       
Offering were retained for working capital and general corporate purposes. The  
Company expects that its ongoing cash requirements will consist primarily of    
interest payments on its outstanding indebtedness, including the New Notes and  
any borrowings under the New Revolving Credit Facility.                         

The Company has a $28 million off-balance sheet accounts receivable   
securitization facility into which the Company's accounts receivable are sold.  
The facility is non-recourse to the Company and provides for advances of 85%    
against eligible receivables. The facility, which expires in December 1999, is  
rated "A" by Duff & Phelps and carries an interest rate of LIBOR plus 80 basis  
points. Prior to March 30, 1997, this facility had been accounted for as        
indebtedness on the Company's consolidated balance sheet. See Note 5 of "Notes  
to Consolidated Financial Statements."                                          

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     Net cash provided by (used in) operating activities totaled $4.7 million in
1996 and $(3.5) million in the first six months of 1997, as compared to $17.4   
million and $21,000 in 1995 and the first six months of 1996, respectively.     
After giving effect to net changes in assets and liabilities of $(12.8) million 
in 1996 and $(10.2) million in the first six months of 1997, respectively, cash 
declined by $2.7 million during 1996 and increased by $8.9 million during the   
first six months of 1997, respectively. The $8.3 million increase in accounts   
receivable in 1996 is largely attributable to the Fleet acquisition. The Company
utilized $34.3 million for investing activities in 1996 including the Fleet     
Acquisition funded in part by $26.9 million from financing activities. The $7.4 
million difference was funded by $4.7 million from operating activities and the 
$2.7 million balance from cash.                                                 

     Net cash used by operating activities totaled $3.5 million in the six-month
period ended June 29, 1997. Net cash utilized for investing activities totaled  
$10.3 million in this period. After giving effect to the issuance of the notes  
of $100 million and the repayment of long term debt of $83.8 million, financing 
activities provided $22.7 million. Cash increased by $8.9 million to $14.7      
million at June 29, 1997.                                                       

     Capital expenditures in 1996 and 1995 were $35.5 million and $13.3 million,
respectively. The 1996 amount consists of $15.5 million with respect to the     
Fleet acquisition, $6.2 million for the Company's investment in its new         
information technology system and $13.8 million with respect to                 
the acquisition of new revenue equipment and capitalized repairs to existing    
trailers, net of sales of property and equipment. The 1995 amount consists of   
revenue equipment acquisitions and capitalized repairs, net of sales of property
and equipment. In the first six months of 1997, the Company had capital         
expenditures totaling $11 million, which consisted of $7.9 million in           
acquisitions of revenue equipment and capitalized repairs and $3.1 million with 
respect to the Company's investment in its new information technology system.   
The Company anticipates spending approximately $10 million for the remainder of 
1997 and approximately $15 million in 1998.                                     

The Company made cash payments of $4.5 million, $4.4 million and $1.0 
million with respect to environmental matters in 1995, 1996, and the first six  
months of 1997 respectively, of which $1.6 million, $4.2 million and $0.4       
million, respectively, is expected to be recovered from insurers. In 1995, the  
Company received $11.5 million in insurance proceeds relating to environmental  
matters. The Company expects to make cash payments of $6.3 million with respect 
to environmental matters in 1997, of which $1.8 million is expected to be       
recovered from the Company's insurers. The Company expects to make cash payments
of $7.9 million with respect to environmental matters in 1998, of which $5.8    
million is expected to be recovered from the Company's insurers. The Company    
expects to continue to expend funds with respect to environmental matters for   
the foreseeable future. See "Business - Environmental Matters" and Note 11 of   
"Notes to Consolidated Financial Statements."                                   

  The Company expects that the net proceeds of the Offering, together with
cash flows from operations and available borrowings under the New Revolving     
Credit Facility, will be sufficient to fund the Company's working capital, debt 
service, capital and environmental expenditure requirements and anticipated     
growth plans for the foreseeable future.                                        

SEASONALITY                                                                     

The business of the Company is subject to limited seasonality, with   
revenues generally declining slightly during winter months (namely the first and
fourth fiscal quarters) and over holidays. Highway transportation can be        
adversely affected depending upon the severity of the weather in various        
sections of the country during the winter months. The Company's operating       
expenses also have been somewhat higher in the winter months, due primarily to  
decreased fuel efficiency and increased maintenance costs of revenue equipment  
in colder months.                                                               

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BUSINESS

OVERVIEW                                                                        

Founded in 1913, Chemical Leaman Corporation is the largest tank truck
carrier in the United States. The Company offers a full range of specialized    
transportation services, including short and long-haul transportation,          
intermodal services, materials handling and third-party logistics, principally  
to the chemical industry. In addition, the Company provides tank cleaning and   
driver-related services to its own fleet as well as to independent              
owner-operators and third-party carriers. In 1996, approximately 91% of the     
Company's revenues were derived from transportation services, while             
approximately 9% were derived from tank cleaning and intermodal services. The   
specialized nature of the Company's services, the quality of its customer base  
and the stability of chemical industry output have allowed the Company to       
generate consistent levels of annual operating income. The Company believes that
these factors, coupled with the Company's current investment in a new           
information technology system, position Chemical Leaman for future revenue      
growth and profitability. For the twelve months ended June 29, 1997, the Company
had revenues, EBITDA (as defined herein), and a net loss of $310 million, $24.6 
million, and $2.4 million, respectively. For the year ended December 31, 1996,  
the Company had revenues, EBITDA and net loss of $281.1 million, $22.9 million  
and $162,000, respectively. For the six months ended June 29, 1997, the Company 
had revenues, EBITDA and net loss of $157 million, $12.6 million and $1.9       
million, respectively. The Company has experienced declining levels of net      
income since 1994 largely due to increased debt levels and related interest     
expense. Additional debt was incurred in order to complete the Fleet acquisition
and in connection with the Company's computer technology system. While EBITDA   
has increased in each year since 1993, the EBITDA to interest expense ratio has 
declined from 3.8% in 1994 to 3.0% in 1996 and to 2.8% for the six months ended 
June 29, 1997. The net loss for the six-months ended June 29, 1997 was mainly   
due to a $1.5 million charge for an insurance claim.                            

   Substantially all of the Company's revenues are derived from three wholly
owned subsidiaries - Chemical Leaman Tank Lines, Inc. ("CLTL"), Fleet Transport 
Company, Inc. ("Fleet"), and Quala Systems, Inc. ("QSI"). CLTL offers a broad   
range of transportation and logistics services for the chemical, petroleum,     
building materials, and food industries. CLTL maintains a nationwide network of 
terminals. CLTL's revenues and total assets comprised approximately 74% and 73%,
respectively, of consolidated assets and revenues as of and for the six months  
ended June 29, 1997. Fleet transports liquid and dry bulk products in the       
petrochemical, industrial chemicals, resins and food industries. Fleet maintains
30 terminal locations primarily in the southeastern United States. Fleet's      
revenues and total assets comprised approximately 17% and 12%, respectively, of 
consolidated assets and revenues as of and for the six months ended June 29,    
1997. CLTL and Fleet together maintain a fleet of 1,813 tractors (491           
Company-owned tractors and 1,322 owner-operator tractors) and 3,433 trailers at 
June 29, 1997. The Company's extensive use of owner-operators increases the     
Company's asset utilization and lowers its fixed cost structure. QSI provides   
tank cleaning services for the Company's trailers and to third-party carriers.  
QSI operates 30 tank cleaning facilities located throughout the country in areas
of high chemical bulk transportation traffic. QSI's revenues and total assets   
comprised approximately 6% and 8%, respectively, of consolidated assets and     
revenues as of and for the six months ended June 29, 1997.                      

 Chemical Leaman is a core carrier to some of the largest and best-known
chemical manufacturers, including Dow Chemical North America, E.I. DuPont de    
Nemours Co., Air Products and Chemicals,                                        

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Inc., AlliedSignal Inc. and Union Carbide Corporation. The Company believes it  
has developed a superior reputation among its customers due to its strong safety
record, the strategic location of its facilities and the full range of          
transportation and logistics services offered. Through its national account     
marketing program, the Company seeks to grow the number of chemical producers   
for which it serves as a core carrier.                                          

INDUSTRY OVERVIEW                                                               

The current size of the tank truck carrier market is estimated to be  
approximately $8 billion. Of that amount, the independent tank truck carrier    
segment, in which the Company competes, accounts for approximately 70% of the   
market, with the balance represented by captive or private fleets. The          
independent tank truck segment of the market is fragmented, consisting of       
approximately 200 carriers, with the top five carriers accounting for           
approximately 20% of the segment's 1995 revenues according to Modern Bulk       
Transporter. With 1996 revenues of $281 million, Chemical Leaman is the largest 
tank truck carrier in the U.S. Substantially all of the independent tank truck  
segment involves the transportation of liquid and dry bulk chemicals. Chemical  
output in the U.S. has been stable, with the dollar value of organic chemical   
shipments, as reported by the U.S. Department of Commerce, increasing from $96.2
billion in 1987 to $121.4 billion in 1994.                                      

     The Company believes there are significant growth opportunities as chemical
producers outsource a greater percentage of their transportation and logistics  
needs, increasingly through the use of a limited number of core carriers.       
Further, the barriers to entry, which include the capital requirements for the  
acquisition and maintenance of a fleet of tank trailers, the need for           
sophisticated information technology systems, generally rising insurance        
requirements, the focus of customers on quality control programs and the        
increasing complexity of environmental regulation, all favor larger, better     
capitalized carriers. These barriers to entry have restricted the ability of    
smaller carriers to expand and in some cases have forced smaller carriers out of
the industry. A number of acquisitions by larger carriers of smaller, regional  
carriers have occurred over the past two years, and the Company expects this    
consolidation to continue.                                                      

    The independent tank truck segment is capital intensive and is affected by
a number of factors in addition to those confronting the trucking industry as a 
whole. Specialized liquid tank trailers typically cost from $50,000 to $60,000  
not including optional equipment such as temperature control systems. Dry bulk  
trailers can cost up to $80,000 each. The use of owner-operators can help defray
certain of these expenses, as owner-operators supply their own tractors and pay 
all expenses associated with the tractors. Since tank trailers require cleaning 
on a frequent basis, tank truck carriers must own or have access to tank        
cleaning facilities in order to minimize empty mileage and to ensure            
contamination free conditions. In addition, tank washing facilities must comply 
with stringent environmental regulations.                                       

Chemical producers are increasingly outsourcing their transportation  
logistics function to providers of third party logistics services. These        
logistics services involve the coordination of transportation, inventory        
management, warehousing, materials management and customer service in a manner  
which optimizes the profit contribution of these functions. In order to         
capitalize on this trend, the Company recently founded Leaman Logistics for the 
purpose of providing third party logistics.                                     

As a result of its leading market position, operating expertise and   
logistics capabilities, the Company believes it is well-positioned to benefit   
from current industry trends.                                                   

BUSINESS STRATEGY                                                               

  The Company's objective is to continue to enhance its revenue growth and
profitability by pursuing the following key strategies: (i) expanding market    
share by marketing on both a national and regional level, (ii) focusing on      
improving operating efficiencies by continuing to shift to an owner-operator    
driver force, emphasizing safety and leveraging information technology, (iii)   
offering value-added related services, including tank cleaning, third-party     
logistics and driver-related services, and (iv) seeking selective acquisitions. 

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  EXPAND MARKET SHARE.  Although Chemical Leaman is the largest tank truck
carrier in the U.S., the Company believes there are significant opportunities   
for it to gain market share. The Company believes it can handle an even larger  
proportion of its core customers' bulk transportation and logistics requirements
by building upon existing relationships and leveraging its reputation for       
high-quality customer service, competitive pricing and value-added services. The
Company also believes that it can generate additional revenue opportunities from
large chemical producers that are outsourcing a greater percentage of their     
transportation requirements. In addition, the Company aims to gain market share 
by targeting regional chemical producers located near the Company's terminals   
that can benefit from Chemical Leaman's national presence and extensive         
capabilities.                                                                   

FOCUS ON OPERATING EFFICIENCIES.  The Company continues to focus on   
increasing operating efficiencies without lowering the quality or range of its  
services by concentrating on the following key areas:                           

    o Extensive Use of Owner-Operators.  The Company's percentage of
           owner-operators to total drivers has increased from 54% at December
           31, 1992 to 75% at June 29, 1997. Owner-operators provide their own
    tractors and pay their own operating expenses. The Company's
          extensive use of owner-operators increases the Company's operating
    and financial flexibility by improving asset utilization and
           reducing fixed costs. The Company is highly selective in its driver
        recruiting efforts and has invested substantial resources in its
            driver recruitment programs. The Company requires all of its drivers
        to participate in extensive training sessions held at its driver
     training center which it believes enhances the quality of its
drivers and improves its safety record.                 

          o Continuing Emphasis on Safety.  Because of the specialized nature of
            many of the products that the Company handles and transports, driver
          and equipment safety are critical in obtaining new business and in
    maintaining existing customer relationships. The Company has
            committed substantial resources to its Safety and Emergency Response
   Departments, and its emphasis on safety is reflected in the
         Company's low cost of risk and favorable accident experience. The
          Company has received national safety awards from the National Tank
           Truck Carriers Association in each of the past five years including
            first place as safest carrier in 1995 and 1996. The Company received
            the American Trucking Association's first place safety award in 1995
        and has received the U.S. Department of Transportation's highest
safety rating for 20 years.                             

      o Investment in Information Technology.  The Company believes that
            maximizing its use of information technology will create significant
   competitive advantages by reducing administrative costs and
        enhancing the utilization of tractors, trailers and drivers. The
           Company is investing in a proprietary information technology system
     which will provide the Company with a new order entry system,
         enhanced order tracking and continuous communication with drivers
         via satellite. The Company expects full implementation of its new
   information technology system by the first quarter of 1998.

 OFFER VALUE-ADDED RELATED SERVICES.  The Company provides tank cleaning
services to Chemical Leaman's fleet and to third-party tank truck carriers      
through a nationwide network of 30 tank cleaning facilities. By taking advantage
of its significant purchasing power, the Company facilitates the purchase of    
tractors, fuel and tires as well as a comprehensive line of insurance products  
by its owner-operator driver force and by third party owner-operators. Chemical 
producers continue to focus on their core competencies and therefore            
increasingly look to outsource their entire transportation and shipping         
functions. In order to capitalize on these opportunities, the Company has       
developed logistics capabilities including transportation, inventory and asset  
management. The Company is currently providing logistics services to third      
parties and believes there are additional opportunities to expand its           
third-party logistics business. The Company believes it can increase revenues   
and enhance its profitability by marketing these value-added                    
transportation-related services.                                                

SEEK SELECTIVE ACQUISITIONS.  The Company believes that the tank truck
carrier industry is consolidating and that it is well-positioned to take        
advantage of this trend. As the largest tank truck                              

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carrier in the U.S., the Company believes that acquisitions will allow it to    
leverage its operating and management expertise over a larger base of assets,   
thereby increasing profit opportunities. In June 1996, Chemical Leaman acquired 
Fleet, which operated 30 terminals located primarily in the southeastern U.S.   
Fleet contributed $57.3 million of revenues for the twelve months ended June 29,
1997. The Fleet acquisition enhanced the Company's geographic terminal coverage 
and expanded its customer base. Chemical Leaman will continue to evaluate       
acquisition opportunities of high-quality tank truck carrier companies, tank    
cleaning services companies and other companies engaged in related businesses   
that offer a strategic fit with the Company's existing business, provided that  
such acquisitions may require the consent of the Company's lenders. See "Risk   
Factors - Substantial Leverage."                                                

SERVICES PROVIDED                                                               

Chemical Leaman operates through its transportation, tank cleaning,   
owner-operator services and third-party logistics business units. Each business 
unit is led by an experienced senior manager with specific asset management and 
profit responsibility. The Company believes that organizing its operations      
through these business units, supplemented by technology as an enabler of       
operating efficiencies, positions the Company to achieve its goal of enhanced   
revenue growth and profitability.                                               

Transportation Services                                                     

  The Company's trucking operations serve two distinctly different product
groupings, liquid chemicals and dry bulk chemicals, each of which is managed on 
a separate basis. Within the liquid chemical portion of the Company's business, 
the Company performs two distinctly different types of trucking activity. The   
first, which accounts for most of the Company's liquid chemical trucking        
revenues, involves relatively short haul movements with little or no opportunity
for back haul (i.e., a loaded return trip to the point of origination), and     
generally is provided to a limited number of chemical-producing customers served
by a strategically located terminal. The second trucking activity involves a    
more traditional long haul, reloadable trucking business using standardized     
equipment and coordinated through a central dispatch and control operation.     

  The Company's dry bulk business primarily involves the transportation of
plastic resins throughout the U.S., Canada and Mexico, and to a lesser degree   
the transportation of food grade products and cement. Plastics are produced     
predominantly on the U.S. Gulf Coast due to the availability of natural gas and 
ethylene feed stocks, both of which are critical components of plastic          
production. Consumption of plastics occurs throughout the U.S., with a strong   
concentration in the Northeast and Midwest U.S. Accordingly, producers of       
plastic pellets normally transport their products in large quantity via rail to 
regional transloading terminals where the product is transferred to dry bulk    
truck trailers for delivery to end users.                                       

    As an adjunct to its trucking business, the Company operates an intermodal
business that involves an alliance with Union Pacific Railroad's                
Bulktainer(Registered) division, which uses a container product that can be     
carried on a flatbed truck and transloaded onto railcars for further            
transportation to the consignee. This relationship gives the Company's customers
a gateway from trucking to an extensive rail network and provides an attractive 
economic alternative for the hauling of liquid chemicals over great distances.  

Tank Cleaning                                                               

   The Company is the second largest U.S. provider of tank cleaning services
to the U.S. trucking industry and provides its tank cleaning services under the 
QualaWash(Registered) service mark. In addition to cleaning the Company's       
trailers, $17.7 million and $9.6 million in revenues were generated in 1996 and 
the first six months of 1997, respectively, by providing tank cleaning services 
to third-party carriers. The Company operates 30 tank cleaning facilities       
strategically located throughout the country in areas of high chemical bulk     
transportation traffic, affording customers easy access to cleaning services.   

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Owner-Operator Services                                                     

The Company offers products and services to its owner-operators at    
favorable prices. By offering purchasing programs which take advantage of the   
Company's significant purchasing power for products and services such as        
tractors, fuel and tires as well as automobile, general liability and workers'  
compensation insurance, the Company believes it strengthens its relationships   
with its owner-operators and results in improved driver recruitment.            

Third-Party Logistics                                                       

Chemical Leaman's experience and leadership position in the tank truck
industry has led to its recent implementation of a third-party logistics and    
load brokerage business unit which complements the Company's core trucking      
activities.                                                                     

   An increasing number of chemical producers are seeking to outsource their
transportation logistics functions in order to focus on their core competencies.
In order to capitalize on this trend, the Company has established third-party   
logistics capabilities. As a result of the Company's size and reputation in the 
industry, as well as a strategic focus on the provision of logistics services as
a value added service, a number of opportunities have arisen allowing the       
Company the opportunity to provide a broader range of logistics management      
services to selected chemical producers. Among these services are mode and      
carrier selection for truck, rail, ocean and air transportation as well as rate 
negotiation, carrier performance evaluation, cost analysis and, in some cases,  
on site management of the shipper's captive transportation function.            

   The Company has developed load brokerage capabilities in order to enhance
its ability to handle its customers' trucking requirements. To the extent that  
the Company does not have the equipment necessary to service a particular       
shipment, the Company will broker the load to another carrier, thereby meeting  
the customer's shipping needs and generating additional revenues for the        
Company, in the form of commissions, at attractive margins. Through its         
relationship with over sixty bulk carriers, the Company can assure timely       
response to customer needs.                                                     

MARKETING AND SALES                                                             

  The Company conducts its marketing efforts at the national, regional and
local level. In addition to its 10 national account salespeople and 10 regional 
salespeople, a large part of the Company's marketing is conducted locally by the
Company's terminal managers.                                                    

Customers with a national presence operate at numerous plant locations
throughout the U.S. The national accounts salespeople are responsible for the   
development of existing customer relationships in an ongoing effort to increase 
business at customer locations at which the Company is not the primary provider 
of transportation services. In addition, the national accounts salespeople are  
responsible for developing new customer relationships with national chemical    
producers. Historically, the Company has had a very loyal customer base, which  
makes the national accounts development approach particularly successful.       

The regional sales force concentrates primarily on the development and
maintenance of customers in geographic areas in which the Company already has   
established operations. The regional sales persons are further supported by the 
sales efforts of terminal managers who also have responsibility for business    
development in their respective markets.                                        

     The Company markets its tank cleaning services through a sales organization
comprised of three regional sales managers reporting to a Vice President of     
Sales and Marketing. The regional sales managers are responsible for increasing 
sales revenues within their respective territories. Territories are organized   
geographically with each encompassing two operating regions and between six and 
eleven cleaning facilities. The sales effort is enhanced by the active          
participation of seven regional general managers and 30 facility managers.      

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     The Company's third-party logistics marketing effort, which is conducted by
four people, targets chemical producers and related companies that have         
significant transportation expenses.                                            

CUSTOMERS                                                                       

The Company's client base consists of many of the largest chemical    
producers in the U.S. The Company is a core carrier for Dow Chemical North      
America, E.I. DuPont de Nemours Co., Air Products and Chemicals, Inc.,          
AlliedSignal, Inc. and Union Carbide Corporation. During 1996, the Company's top
twenty-five customers accounted for approximately 55% of total revenues. Other  
than Dow Chemical North America which accounted for 13.7% of the Company's      
revenues in 1996, no other customer represented more than 5% of the Company's   
1996 revenues.                                                                  

Most business is priced on a revenue per mile or per load basis and   
includes an adjustable fuel surcharge. The Company provides electronic data     
interchange capability for orders and billing and maintains a centralized       
customer satisfaction center which furnishes logistics services, rate quotes and
research.                                                                       

    The Company's customer service function is operated on a centralized basis
in order to ensure that each customer's order or inquiry is handled on an       
expeditious and consistent basis.                                               

OWNER-OPERATORS                                                                 

   The Company had a force of 1,905 drivers at June 29, 1997, of which 1,430
were owner-operators and 475 were Company employees. The Company enters into    
standard contractual agreements with its owner-operators. Under these           
agreements, the owner-operators supply one or more tractors to the Company and  
are compensated on the basis of a fixed percentage of the revenue generated from
the shipments they haul. In addition, owner-operators pay all expenses          
associated with their tractors, including wages, benefits, fuel, insurance,     
maintenance, highway use taxes and debt service. While under contract with the  
Company, owner-operators must drive exclusively for the Company. In addition,   
the contracts with owner-operators require the owner-operators to indemnify the 
Company from and against any and all claims brought against the Company,        
including claims on account of bodily injury, property damage or under          
environmental laws and regulations, arising out of any act or omission of the   
owner-operators or their employees in the ownership, maintenance, use or        
operation of the equipment or the conduct of the owner-operators' business.     

 The Company dedicates significant resources to recruiting and retaining
owner-operators and employee drivers. The Company's 1996 driver turnover ratio  
of approximately 30% is considered low by industry standards. All drivers are   
subject to specified guidelines relating to driving experience, safety records  
and tank truck experience. In addition, all drivers must participate in the     
Company's driving school and must pass a physical examination in accordance with
DOT guidelines.                                                                 

INFORMATION TECHNOLOGY                                                          

The Company is currently investing approximately $10 million in a     
proprietary information technology system to support the Company's operations.  
The information technology project will: (i) centralize customer service order  
taking, load scheduling and provide a computerized load optimization model,     
which is designed to lower Company costs and improve driver and asset           
utilization, (ii) provide field operating personnel with customer account and   
profitability data on a real time basis, and (iii) improve the speed and        
accuracy of billing and customer load status reporting through utilization of   
satellite transmission of information to the Company's customer service center. 
The new system is expected to be fully implemented by the first quarter of 1998 
and provide productivity and cost benefits to the Company.                      

Most of the Company's tractor fleet, including both Company-owned and 
owner-operator tractors, are equipped with OmniTRACS(Registered) mobile         
satellite communications systems which provide continuous monitoring and two-way
communications with tractors in transit. This information is used to track load 
status, optimize the use of drivers and equipment and respond to emergency      
situations.                                                                     

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The Company's Internet Website enables customers to access the                  
OmniTRACS(Registered) system to view the exact status of their loads in transit 
at their convenience.                                                           

REVENUE EQUIPMENT                                                               

The Company's equipment consists primarily of tractors and specialized
trailers which can accommodate a broad range of specialty and commodity         
chemicals. At June 29, 1997, the Company's fleet was comprised of 1,813         
tractors, of which 491 were owned by the Company and the remaining 1,322 were   
owned or leased by owner-operators. The Company owned 3,433 tank trailers at    
June 29, 1997 which have an average age of 14 years. Tractors and trailers are  
typically financed with either debt or capital lease financing. A significant   
portion of tractors are rebuilt after 500,000 miles of service which is a cost  
effective alternative to purchasing new tractors. Tank trailers have a useful   
life of more than 20 years. A typical tank trailer measures 42.5 feet in length,
eight feet in width and 10.5 feet in height. The volume of the trailer ranges   
from 5,000 to 7,000 gallons with a payload capacity of up to 55,000 pounds. The 
cost of a new standard stainless steel tank trailer ranges from $47,000 to      
$85,000, depending on specifications.                                           

SUPPLIERS                                                                       

   The number of vendors used by the Company has been reduced over the years
in an effort to achieve operating efficiencies. There is no concentration of    
goods and services procured from any one supplier. Fuel, tires and hoses are    
sourced from a variety of vendors and there are no national contracts covering  
these purchases. Brenner Tank, Inc. is the supplier of choice for tank trailers,
and Pentron, Inc. performs substantially all of the Company's tank repairs.     
Tractor rebuilding is handled by Lehigh Consolidated Industries. Communications 
equipment is purchased from a variety of sources.                               

PATENTS AND TRADEMARKS                                                          

  The Company owns patents, trademarks, tradenames and service marks which
assist in maintaining its competitive position. QualaWash(Registered), a service
mark used in the Company's tank cleaning operations, is of primary importance to
the Company. Other significant rights include the trademarks                    
Chemshuttle(Registered) and Bulkmodal(Registered). The Company believes that    
other than QualaWash, no single patent, trademark or other individual right is  
of such importance, and, accordingly, the expiration or termination thereof     
would not materially affect its business.                                       

TERMINALS AND FACILITIES                                                        

 The Company maintains a network of 105 terminals located throughout the
U.S. and Canada, which are strategically located near customers' plants.        
Terminals are staffed with two to six people including a terminal manager,      
driver manager and administrative support personnel. Each terminal manager is   
responsible for profitability and asset utilization. Administrative personnel   
perform billing and payroll functions, process accounts payable and review      
driver logs. The Company conducts                                               

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equipment maintenance services at 39 terminal locations. The Company also       
operates 30 tank cleaning facilities, of which 24 are co-located with Company   
trucking terminals.                                                             

    Set forth below are the locations of the Company's terminals and QualaWash
facilities as of June 29, 1997:                                                 

                                                        [Enlarge/Download Table]

                                  NUMBER OF                                     NUMBER OF 
                       NUMBER OF  QUALAWASH                          NUMBER OF  QUALAWASH 
       LOCATION        TERMINALS  FACILITIES         LOCATION        TERMINALS  FACILITIES
       --------        ---------  ----------         --------        ---------  ----------
                                                                                          
Alabama...............     2         --       Missouri..............     1         --     

California............     4          2       New Jersey............     8          3     

Connecticut...........     3          1       New York..............     6          2     

Delaware..............     1         --       North Carolina........     4          2     

Florida...............     1         --       Ohio..................     3          1     

Georgia...............     7          3       Oregon................     1         --     

Illinois..............     6          1       Pennsylvania..........    14         --     

Kentucky..............     4          1       South Carolina........     4          3     

Louisiana.............     6          2       Tennessee.............     5          2     

Maine.................     1         --       Texas.................     9          3     

Maryland..............     2         --       Virginia..............     1         --     

Massachusetts.........     1         --       West Virginia.........     5          2     

Michigan..............     3          2       Canada................     3         --     

QUALITY ASSURANCE                                                               

    EnviroPower, Inc., a subsidiary of the Company, provides an audit function
for the Company's tank cleaning facilities which is intended to ensure          
disposition of tank cleaning waste materials in compliance in all material      
respects with applicable environmental laws and regulations. EnviroPower, Inc.  
also provides the same audit function for any tank cleaning facility which      
provides tank cleaning services to the Company.                                 

EMPLOYEES                                                                       

   At June 29, 1997, the Company had 1,461 employees, including 475 drivers,
136 mechanics, 203 tank cleaning personnel and 647 support personnel including  
clerical, administrative, dispatch and executive personnel. In addition, at June
29, 1997 the Company's driver force included 1,430 owner-operators, who are     
independent contractors.                                                        

    As of June 29, 1997, employees covered under various collective bargaining
agreements included 284 drivers, 75 mechanics and 122 tank cleaning personnel.  
All other personnel are non-union employees. Owner-operators operate under      
standardized lease agreements and are responsible for their own equipment and   
benefits.                                                                       

  The Company believes that relations with its employees are satisfactory.

RISK MANAGEMENT AND INSURANCE; SAFETY                                           

    The primary risks associated with the Company's business are bodily injury
and property damage, workers' compensation claims and to a lesser extent cargo  
loss and damage. The Company maintains insurance against these risks and is     
subject to liability as a self insurer to the extent of deductible amounts under
each policy. The Company currently maintains liability insurance for bodily     
injury and                                                                      

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property damage in the amount of $100 million per incident, subject to a        
deductible per incident of $1 million (reduced from $2 million for occurrences  
after March 30, 1997) and an aggregate annual stop loss of $5.5 million (reduced
from $9.0 million for occurrences after March 30, 1997). The Company's current  
deductible for workers' compensation is $500,000 per claim. As a result of the  
Company's favorable safety record, the Company recently reset its insurance     
programs and improved its liability coverages effective March 30, 1997 at an    
annual fixed cost reduction of $600,000.                                        

    The Company's cost of risk was 1.7% of revenue for 1996, which the Company
believes is low as compared to the industry average. This performance is the    
result of careful driver recruiting, extensive driver training and the emphasis 
on a safety conscious culture throughout the Company. In 1996, the Company had  
.65 reportable accidents per million miles, as compared to .80 for the tank   
truck industry as a whole. The Company has received national safety awards from 
the National Tank Truck Carriers Association in each of the past five years     
including first place as safest carrier in 1995 and 1996. The Company received  
the American Trucking Association's first place safety award in 1995 and for 20 
years has received the U.S. Department of Transportation's highest safety       
rating.                                                                         

The Company employs a safety staff of 12 professionals who manage the 
Company's Safety and Emergency Response System that is deployed throughout the  
Company's terminals and other facilities nationwide. The Company also employs   
safety specialists to perform compliance checks and conduct safety tests        
throughout the Company's operations. Chemical Leaman's safety programs include  
training seminars, mandatory preemployment drug testing, random post employment 
drug testing, driver safety meetings, safety bulletins and participation in     
national safety associations. In addition, every new driver is required to      
attend a one week program at the Company's driver training school in            
Indianapolis, Indiana, which includes intensive safety instruction.             

FUEL AVAILABILITY AND COST                                                      

     The Company has fuel surcharge provisions in many of its customer contracts
which limit the Company's risk with respect to changing fuel prices. In         
addition, the Company's owner-operators are responsible for supplying their own 
fuel. The Company has a fuel purchase program for owner-operators pursuant to   
which the Company negotiates fuel discounts which are passed along to owner-    
operators. However, any increase in fuel taxes or fuel prices that are not able 
to be passed along to the Company's customers, or any interruption in the supply
of fuel, could have a material adverse impact on the Company's operating        
results.                                                                        

COMPETITION                                                                     

The tank truck industry is highly competitive and is fragmented. The  
Company competes primarily with other tank truck carriers which have intrastate 
and interstate operating authority and, to a lesser extent, with railroad and   
barge transportation companies. Intermodal transportation has increased in      
recent years as reductions in train crew size and the development of new rail   
technology have reduced costs of intermodal shipping. Competition from          
non-trucking modes of transportation and from intermodal transportation would   
likely increase if state or federal fuel taxes were to increase without a       
corresponding increase in taxes imposed upon other modes of transportation.     

   Competition is based primarily on rates and service. The Company believes
that it enjoys competitive advantages over other tank truck carriers due to its 
overall fleet size, its reputation in the industry for service, the wide range  
of equipment it offers, its offering of value-added services and its nationwide 
network of terminals and tank cleaning facilities.                              

     The Company's largest competitors in the transportation of liquid chemicals
are Trimac Transportation, Montgomery Tank Lines, Matlack Systems Inc., DSI     
Transports Inc., Superior Carriers and Central Transport. The Company competes  
in the dry bulk transportation segment primarily with Bulkmatic Transport Co.   
and A&R Transport Inc.                                                          

 The Company also competes with other motor carriers for the services of
Company drivers and owner-operators. The Company's overall size and its         
reputation for good relations with owner-                                       

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operators have enabled it to attract an adequate number of qualified            
professional drivers and owner-operators. See "Risk Factors - Availability of   
Drivers; Partially Unionized Work Force."                                       

Competition in the tank cleaning services industry comes from         
independently-owned and operated facilities and certain large bulk carriers that
also conduct tank cleaning operations. The Company competes for tank cleaning   
business on a national scale primarily with Allwaste Tank Cleaning Inc. and     
Brite-Sol, a division of Matlack, Inc. The Company competes primarily based on  
its ability to provide high quality tank cleaning with quick turnaround time,   
utilizing environmentally sound procedures, at facilities located in close      
proximity to major interstate highways and central dispatching points for tank  
trailers.                                                                       

REGULATION                                                                      

     Interstate and intrastate motor carriage has been substantially deregulated
as a result of the enactment of the Motor Carrier Act of 1980, the Trucking     
Industry Regulatory Reform Act of 1994, the Federal Aviation Administration     
Authorization Act of 1994 and the ICC Termination Act of 1995. Carriers can now 
readily enter the trucking industry and rates and services are largely free of  
regulatory controls. However, interstate motor carriers do remain subject to    
certain regulatory controls imposed by agencies within the DOT, such as the     
Federal Highway Administration and the Surface Transportation Board. In         
addition, the Company's operations are subject to various environmental laws and
regulations, including laws and regulations dealing with underground fuel       
storage tanks and ownership of property that may contain hazardous substances   
and laws and regulations governing air emissions. The trucking industry may in  
the future become subject to stricter air emission standards regulation,        
including requirements that manufacturers produce cleaner-running tractors and  
that fleet operators perform more rigorous inspection and maintenance           
procedures.                                                                     

  There are additional regulations specifically relating to the tank truck
industry including testing and specifications of equipment and product handling 
requirements. Interstate motor carriers are also subject to regulations relating
to noise emissions standards. The Company may transport most types of freight to
and from any point within the contiguous 48 states over any route selected by   
the Company. The trucking industry is subject to possible regulatory and        
legislative changes (such as increasingly stringent environmental regulations or
limits on vehicle weight and size) that may affect the economics of the industry
by requiring changes in operating practices or by changing the demand for common
or contract carrier services or the cost of providing truckload services. In    
addition, the Company's tank wash facilities are subject to stringent local,    
state and federal environmental regulations.                                    

Interstate motor carrier operations are subject to safety requirements
prescribed by the DOT. For example, the DOT has issued regulations governing the
transportation of hazardous materials. Such matters as weight and dimension of  
equipment are also subject to federal and state regulations. Since 1989, DOT    
regulations have imposed mandatory drug testing of drivers. To date, the DOT's  
national commercial driver's license and drug testing requirement have not      
adversely affected the availability to the Company of qualified drivers. New    
alcohol testing rules adopted by the DOT in January 1994 became effective in    
January 1995. These rules require certain tests for alcohol levels in drivers   
and other safety personnel. The Company does not believe the rules will         
adversely affect the availability of qualified drivers.                         

     The Federal Aviation Administration Authorization Act of 1994, which became
effective on January 1, 1995, essentially deregulated intrastate transportation 
by motor carriers. This Act preserves state authority to impose highway route   
controls or limitations based upon the size or weight of a motor vehicle or     
limitations based upon the hazardous nature of the cargo. More importantly, this
Act prohibits individual states from regulating pricing or service levels and   
strictly limits state regulation over entry or exit. The states retained the    
right to continue to require certification of carriers, but this certification  
is based only upon two primary fitness criteria: safety and insurance. Prior to 
January 1, 1995, the Company had intrastate authority in many of the contiguous 
48 states. Since that date, the Company has either been "grandfathered in" or   
has obtained the necessary certification to continue to operate in the states in
which the Company provides intrastate service. In states that the Company was   

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not previously authorized to operate, it has obtained certificates (or permits) 
allowing it to operate or is in the process of obtaining such certificates. The 
Company does not have authority to provide intrastate operations in Alaska,     
Arizona, Colorado, Hawaii, Idaho, Minnesota, Montana, Nebraska, New Mexico,     
North Dakota, Oklahoma, South Dakota, Utah, Vermont, and Wyoming.               

     From time to time, various legislative proposals are introduced to increase
federal, state, or local taxes, including taxes on motor fuels. The Company     
cannot predict whether, or in what form, any increase in such taxes applicable  
to the Company will be enacted.                                                 

ENVIRONMENTAL MATTERS                                                           

  The Company's operations and properties are subject to a wide variety of
increasingly complex and stringent federal, state, local and foreign laws and   
regulations, including those governing the use, storage, handling, transport,   
generation, treatment, release, discharge and disposal of certain hazardous     
materials, substances and wastes, and petroleum (collectively "Hazardous        
Materials"), the remediation of contaminated soil and groundwater, and the      
health and safety of employees (collectively, "Environmental Laws"). As such,   
the nature of the Company's operations exposes it to the risk of claims with    
respect to such matters and there can be no assurance that material costs or    
liabilities will not be incurred in connection with such claims.                

     The Company believes that it is in compliance in all material respects with
all applicable Environmental Laws. Changes in Environmental Laws have resulted  
in claims against the Company which arise from unintentional contamination as a 
consequence of past waste disposal and treatment practices. Company management  
has instituted policies and procedures intended to achieve compliance with all  
applicable Environmental Laws. Compliance with such Environmental Laws is one of
the principal cornerstones of its business strategy due to its critical         
importance to both the customer and the Company's operations.                   

Environmental issues confronting the Company may be separated into two
separate and distinct categories. The first category is exposure to remedial and
investigatory costs associated with the Company's historic operations. The      
second is exposure to costs associated with ongoing environmental compliance.   
The Company's wholly-owned subsidiary, EnviroPower, Inc., is staffed with       
environmental experts who manage the Company's environmental exposure relating  
to historical operations and develop policies and procedures, including periodic
audits of the Company's terminals and tank cleaning facilities, in order to     
minimize the existence of circumstances that could lead to future environmental 
exposure. None of the current audits has identified any material potential      
liability under Environmental Laws at or involving existing Company facilities, 
except for the Bridgeport, New Jersey site and certain other sites discussed    
below. EnviroPower manages and oversees the Company's involvement in two sites  
located in Bridgeport, New Jersey and West Caln Township, Pennsylvania, which   
have been designated as Superfund Sites by the U.S. Environmental Protection    
Agency ("EPA"). EnviroPower is also the Company's principal interface with the  
EPA and various state environmental agencies. The Company is currently solely   
responsible for remediation of the following two sites:                         

  Bridgeport, New Jersey.  During 1991, the Company entered into a Consent
Decree with the EPA filed in the U.S. District Court for the District of New    
Jersey, U.S. v. Chemical Leaman Tank Lines, Inc., Civil Action No. 91-2637 (JFG)
(D.N.J.), with respect to its site located in Bridgeport, New Jersey, requiring 
the Company to remediate groundwater contamination. The Consent Decree required 
the Company to undertake Remedial Design and Remedial Action ("RD/RA") related  
to the groundwater operable unit of the cleanup. Costs associated with          
performing the RD/RA were $1.2 million in 1996. No decision has been made as to 
the extent of soil remediation to be required, if any.                          

 In August 1994, the EPA issued a Record of Decision ("ROD") selecting a
remedy for the wetlands operable unit at the Bridgeport site at a cost estimated
by the EPA to be approximately $7 million. The Company has submitted comments to
the EPA that dispute the merits of the EPA's remedy. In the last quarter of     
1996, the EPA issued demands to the Company for reimbursement of approximately  
$2.5 million in alleged EPA past response costs at the site for the groundwater 
and wetlands operable units, and the Company expects that additional demands may
be issued in the future.                                                        

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The Company is involved in settlement negotiations related to the matter. The   
government has not made a claim against the Company for natural resource        
damages, if any.                                                                

The Company is in litigation with its insurers to recover its costs in
connection with the environmental cleanup at the Bridgeport site. Chemical      
Leaman Tank Lines, Inc. v. Aetna Casualty & Surety Co., et al., Civil Action No.
89-1543 (SSB) (D.N.J.). On April 7, 1993, the U.S. District Court for the       
District of New Jersey entered a judgment requiring the insurers to reimburse   
the Company for substantially all past and future environmental cleanup costs at
the Bridgeport site. The insurers appealed the judgment to the U.S. Court of    
Appeals for the Third Circuit, but before the appeal was decided the Company and
its primary insurer settled all of the Company's claims, including claims       
asserted or to be asserted at other sites, for $11.5 million. This insurer      
dismissed its appeal, but the excess carriers did not. On June 20, 1996, the    
U.S. Court of Appeals affirmed the judgment against the excess insurance        
carriers, except for the allocation of liability among applicable policies, and 
remanded the case for an allocation of damage liability among the insurers and  
applicable policies on a several basis. On September 15, 1997, the District     
Court issued an order allocating damage liability among the applicable policies.
The Company expects to receive insurance proceeds sufficient to recover         
substantially all of the costs of remediating the Bridgeport site, including    
attorney fees and expenses.                                                     

 West Caln Township, Pennsylvania.  The EPA has alleged that the Company
disposed of Hazardous Materials at the William Dick Lagoons Superfund Site      
located in West Caln Township, Pennsylvania. In 1991, the EPA issued ROD I,     
requiring the installation of a public water supply for some residents near the 
site. In November 1991, the EPA issued special notice letters to the Company and
another potentially responsible party ("PRP") soliciting implementation of ROD  
I. In March 1992, the EPA issued a unilateral order to the Company and the other
party directing them to implement ROD I. The Company declined to comply based on
its belief that it had sufficient cause not to comply.                          

In April 1993, the EPA issued ROD II, selecting a remedy for the soil 
remediation phase of this cleanup program. The EPA and the Company agreed that  
the Company would be afforded the opportunity to implement its preferred remedy 
for the soil remediation phase and to settle its differences with the EPA       
regarding the public water supply issue. Pursuant to a Consent Decree lodged    
with the U.S. District Court for the Eastern District of Pennsylvania on October
10, 1995, U.S. v. Chemical Leaman Tank Lines, Inc., Civil Action No. 95-CV-4264 
(RJB) (E.D.P.A.), the Company paid the EPA $713,674 in June 1996, $713,674 in   
October 1996, and approximately $300,000 in November 1995, and established a    
$300,000 irrevocable standby letter of credit. These payments settled the EPA's 
claim relating to past response costs and failure to install a public water     
supply in accordance with ROD I. The Consent Decree requires the Company to make
an additional payment to the EPA of $700,000 in October 1997, perform an interim
groundwater remedy at the site, and finance the soil remedy. The Consent Decree 
does not cover the final groundwater remedy or other site remedies, or claims,  
if any, for natural resource damages.                                           

 Other Environmental Matters.  The Company has been named as a PRP under
CERCLA and similar state laws at approximately 35 former waste treatment and/or 
disposal sites. In general, the Company is among several PRPs named at these    
sites. Based on the information known at this time, the Company's involvement at
these sites generally arises from shipment of wastes by or for the Company in   
the ordinary course of business over many years to sites, now contaminated, that
are owned and operated by third parties. Given the nature of the Company's      
involvement and the expected participation of a number of other PRPs at these   
sites, the Company does not believe its liability at these third party sites    
will be material. There can be no assurance, however, that costs associated with
these sites, individually or in the aggregate, will not be material. The Company
is also incurring expenses resulting from the remediation of certain            
Company-owned sites. In April 1997, the Company received a request from the New 
York State Department of Environmental Conservation to perform a Remedial       
Investigation and Feasibility Study relating to certain former surface          
impoundments previously closed by the Company at its Tonawanda, New York        
Terminal. The Company has indicated its willingness to perform a mutually       
acceptable Remedial Investigation and Feasibility Study. In 1994,               

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the Company entered into an Administrative Consent Order ("ACO") with the West  
Virginia Division of Environmental Protection ("DEP") to undertake the          
investigation and remediation of a former lagoon at its former facility in      
Putnam County, West Virginia. In accordance with the ACO, the Company has       
submitted a workplan to DEP to address potential sludge and soil contamination. 
The extent of groundwater remediation to be required, if any, has not been      
determined.                                                                     

The Company has also undertaken the removal of all underground storage
tanks at its owned and operated facilities. This project is being managed by    
EnviroPower staff and will be completed by the end of 1998 at an estimated cost 
of $2 million, of which $1.5 million has been expended to date.                 

   Although the extent and timing of the litigation, settlement and possible
cleanup costs at the foregoing sites, other than certain phases of the          
Bridgeport and West Caln Township sites, are not reasonably estimable at this   
time, it is anticipated that the Company will continue to incur costs with      
respect to such sites and there can be no assurance that such costs will not    
have a material adverse effect on the Company's financial condition or results  
of operations. The Company has recorded total charges to income of $2.3 million 
and $2.4 million in 1996 and 1995, respectively, with regard to the foregoing   
environmental matters and expects to continue to incur costs for environmental  
matters generally for the foreseeable future.                                   

LEGAL PROCEEDINGS                                                               

   The Company is a party to a lawsuit filed in 1987 against the Company and
approximately 25 other defendants in the Superior Court of New Jersey, Passaic  
County (A.L.U. Textile Combining Corp. et al. v. Texaco Chemical Co., et al.,   
No. L-23905-87). The approximately 175 plaintiffs seek damages claimed to exceed
$100 million resulting from a fire set to a building by trespassing arsonists.  
The plaintiffs allege that the Company was negligent by delivering a shipment of
naphthalene to an outdoor facility where it could be ignited by trespassers. The
Company has denied any liability and has asserted cross-claims against the other
defendants. Discovery in the lawsuit has not yet been concluded. The Company had
applicable insurance coverage at the time of the incident of $53 million,       
subject to a deductible of $250,000 per incident. The plaintiffs have made a    
settlement offer in an amount falling within the coverage limit, which the      
Company has not accepted, and settlement negotiations are continuing. A portion 
of the insurance coverage is carried by insurers which are currently insolvent, 
which could result in the Company being required to pay amounts in excess of the
deductible limit to settle or otherwise resolve the lawsuit. If a settlement    
cannot be successfully concluded, the Company intends to defend against the     
lawsuit. There can be no assurance that any settlement will be successfully     
concluded or that the terms of any settlement or other resolution of the lawsuit
would not have a material adverse effect on the Company's financial condition or
results of operations.                                                          

In addition to the matters described above and under "Environmental   
Matters," the Company is a party to routine litigation incidental to its        
business, primarily involving claims for personal injury or property damages    
incurred in the transportation of chemicals. Except as described above and under
"Environmental Matters," the Company is not a party to any litigation, and is   
not aware of any threatened claims, that could materially adversely affect the  
Company's financial condition or results of operations.                         

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MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES                                 

The executive officers and directors of the Company are as follows:   

                                                                [Download Table]

               NAME                AGE                    POSITION                
               ----                ---                    --------                
                                                                                  
David R. Hamilton................. 57   Chairman of the Board, Chief Executive    
                                          Officer and President                   
Philip J. Ringo................... 55   President and Chief Executive Officer of  
                                          CLTL; Director                          
Eugene C. Parkerson............... 53   Executive Vice President, Administration; 
                                          President of PPI; Director              
David M. Boucher.................. 48   Senior Vice President, Chief Financial    
                                          Officer, Secretary; Director            
Reuben M. Rosenthal............... 51   President of QSI and EnviroPower; Director
Fernando C. Colon-Osorio.......... 48   Director                                  
G. Michael Cronk.................. 54   Director                                  
Charles E. Fernald, Jr............ 57   Director                                  
Samuel C. Hamilton, Jr............ 66   Director                                  
John H. McFadden.................. 50   Director                                  
George McFadden................... 56   Director                                  
Samuel F. Niness, Jr.............. 62   Director                                  

 David R. Hamilton is the Company's Chairman of the Board, President and
Chief Executive Officer. He has been a director of the Company since 1978 and   
has been the Company's Chief Executive Officer since 1987. Mr. Hamilton was     
previously Chief Executive Officer of Szabo Food Services, Inc., Oak Brook,     
Illinois. He is a graduate of Rice University (AB) and the Harvard Business     
School (MBA). He is the brother of Samuel C. Hamilton, Jr., a director of the   
Company.                                                                        

    Philip J. Ringo has served as the President and Chief Executive Officer of
CLTL and a director of the Company since 1995. He joined the Company in 1995,   
having previously served as President of The Morgan Group, Inc. and Chief       
Executive Officer of Morgan Drive Away, Inc., Elkhart, Indiana from 1992 to     
1995. Mr. Ringo is a graduate of Princeton University (BA) and the Harvard      
Business School (MBA). He has served as a director of Genesee and Wyoming       
Industries since 1978.                                                          

Eugene C. Parkerson is Executive Vice President, Administration of the
Company. He has served as a director of the Company since 1987 and as the       
President of PPI since 1990. Prior to joining the Company as Senior Vice        
President in 1987, Mr. Parkerson served as Executive Vice President of Szabo    
Food Services, Inc. He is a graduate of the University of Utah (BS) and the     
University of Kansas (MBA).                                                     

     David M. Boucher joined the Company in 1994 as Senior Vice President, Chief
Financial Officer, Secretary and a director of the Company. Prior to that, he   
was the Chairman of the Board and Chief Executive Officer of IVT Group, Inc., a 
company engaged in title insurance underwriting, from 1989 to 1994 and Chairman 
of the Board and Chief Executive Officer of Fidelity Bond and Mortgage Company  
from 1987 to 1989. From 1974 to 1987, Mr. Boucher served in various capacities  
with Fidelity Bank, N.A., most recently as Senior Vice President and Head of    
Merchant Banking. He is a graduate of Susquehanna University (BS) and Drexel    
University (MBA).                                                               

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Reuben M. Rosenthal has been the President of QSI since 1996 and the  
President of EnviroPower, Inc. since 1993, and he serves as a director of the   
Company. From 1989 to 1993, Mr. Rosenthal was the Company's Senior Vice         
President, Sales and Marketing. Prior to that, he was Senior Vice President at  
Emery Worldwide/Purolator Courier. Mr. Rosenthal is a graduate of the University
of Maryland (BA).                                                               

Fernando C. Colon-Osorio is a director of the Company. He has been the
President and Chief Executive Officer of Acumen Consulting Group, Inc. since    
1994. From 1993 to 1994, Mr. Colon-Osorio was President of Advanced Modular     
Solutions. From 1992 to 1993, he served as Executive Vice President of Kendall  
Square Research. Mr. Colon-Osorio is a graduate of the University of Puerto Rico
(BS) and the University of Massachusetts (MS, PhD).                             

     G. Michael Cronk is a director of the Company. He is currently President of
International, ARAMARK Global Food and Support Services. Mr. Cronk joined       
ARAMARK in 1980, where he has held a variety of management and executive        
positions. He is a graduate of St. Martin's College (BS) and attended the       
Advanced Management Program at the Harvard Business School.                     

     Charles E. Fernald, Jr. has served as a director of the Company since 1976.
He is currently President of Transport Capital Advisors, a transportation       
consulting firm. Mr. Fernald served as Chief Financial Officer of the Company   
from 1974 until 1994. He is a graduate of the University of Notre Dame (BBA) and
Drexel University (MBA).                                                        

   Samuel C. Hamilton, Jr. has been a director of the Company since 1991. He
is a self-employed petroleum geologist and real estate investor. Mr. Hamilton is
a graduate of the University of Texas (BA, BS, MA). He is the brother of David  
R. Hamilton, the Chairman of the Board, Chief Executive Officer and President of
the Company.                                                                    

     John H. McFadden has been a director of the Company since 1988. Since 1995,
he has been a partner in the law firm of McFadden, Pilkington & Ward. From 1987 
to 1995, he was a partner in the law firm of Pepper, Hamilton & Scheetz, LLP. He
is a graduate of Harvard University (AB), Columbia University (MBA) and Fordham 
University (JD). Mr. McFadden is the brother of George McFadden, a director of  
the Company.                                                                    

    George McFadden is a director of the Company. He has been a partner in the
investment firm of McFadden Brothers since 1978. He is a graduate of Vanderbilt 
University (BA) and Columbia University (MBA). Mr. McFadden is also a director  
of Triangle Pharmaceuticals, Inc. and Ball Corporation. Mr. McFadden is the     
brother of John McFadden, a director of the Company.                            

  Samuel F. Niness, Jr. has been a director of the Company since 1971. Mr.
Niness retired as Chairman of the Board and President of the Company in October 
of 1987. He is a graduate of Trinity College (BA).                              

DIRECTOR COMPENSATION                                                           

 The Company pays cash compensation to outside board members who are not
otherwise consultants to the Company. Each such board member is entitled to     
receive $4,000 for each meeting of the Board of Directors, or any committee     
thereof, attended by such board member in person or by telephone.               

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EXECUTIVE COMPENSATION                                                          

The following table sets forth, for the fiscal year ended December 31,
1996, certain compensation information with respect to the Company's Chief      
Executive Officer and the four other executive officers whose total annual      
salary and bonus exceeded $100,000 during 1996 (the "named executive officers").

                                                        [Enlarge/Download Table]

                                                               ANNUAL COMPENSATION                       
                                                          -----------------------------     ALL OTHER    
               NAME AND PRINCIPAL POSITION                YEAR   SALARY ($)   BONUS ($)  COMPENSATION ($)
               ---------------------------                ----   ----------   ---------  ----------------
                                                                                                         
David R. Hamilton........................................ 1996   $1,365,559   $375,000       $ 35,561(1) 
  Chairman, Chief Executive Officer and President                                                        

Eugene C. Parkerson...................................... 1996      272,058          0        188,922(2) 
  Executive Vice President - Administration; and                                                         
    President of PPI                                                                                     

David M. Boucher......................................... 1996      222,673    100,000              0    
  Senior Vice President, Chief Financial Officer and                                                     
    Secretary                                                                                            

Philip J. Ringo.......................................... 1996      324,035     96,278              0    
  President and Chief Executive Officer of CLTL                                                          

Reuben M. Rosenthal...................................... 1996      230,769    110,000        144,470(3) 
  President and Chief Executive Officer of QSI and                                                       
    EnviroPower                                                                                          

------------------                                                              
(1) Consists of $3,535 in split dollar life insurance premiums and $32,026 in   
death benefit only life insurance premiums.                             

(2) Consists of $180,000 in additional compensation paid to Mr. Parkerson in    
  connection with the Company's repurchase of stock options; $3,097 in split
dollar life insurance premiums; and $5,825 in death benefit only life   
insurance premiums.                                                     

(3) Consists of $135,000 in additional compensation paid to Mr. Rosenthal in    
  connection with the Company's repurchase of stock options; $2,852 in split
dollar life insurance premiums; and $6,618 in death benefit only life   
insurance premiums.                                                     

EMPLOYMENT CONTRACT                                                             

     The Company has entered into an Employment Agreement (the "Agreement") with
Mr. Ringo, the President of CLTL, effective July 14, 1995, which provides for a 
minimum annual base salary of $300,000, a bonus based on the attainment of      
certain operating goals, and certain fringe benefits. In the event Mr. Ringo's  
employment is terminated due to disability, Mr. Ringo will continue to receive  
his annual compensation until disability payments commence. In the event that   
Mr. Ringo's employment is terminated by the Company within the first three years
for any reason other than just cause, the Agreement requires the Company to pay 
Mr. Ringo one year's base salary and to continue health insurance benefits for  
Mr. Ringo and his dependents for one year; provided, however, that if Mr. Ringo 
is reemployed within a one-year period after termination, these severance       
benefits will be reduced by the amount of compensation Mr. Ringo receives from  
such employment. If there is a change of control of the Company within five     
years from the date of the Agreement such that David Hamilton and George        
McFadden no longer control the Company, the Agreement allows Mr. Ringo to       
terminate his employment and receive two years' base salary, plus health        
benefits for up to two years.                                                   

     The Agreement also entitles Mr. Ringo to various rights with respect to his
Company Common Stock, including registration rights, tag-along rights in the    
event David Hamilton and George McFadden elect to sell their shares in the      
Company to a third-party, and preemptive rights. In the event the Company elects
to redeem certain outstanding shares of its capital stock, the Agreement gives  
Mr. Ringo the right to purchase additional shares of Common Stock to increase   
his equity ownership in the Company to 3% on a fully-diluted basis. In addition,
the Agreement (i) requires the Company to buy back Mr. Ringo's shares upon      
termination of his employment due to his death or disability, and (ii) grants   
the Company the right to purchase any or all of Mr. Ringo's stock if his        
employment is terminated at any time for just cause. In addition, the Agreement 
provides that the Company will indemnify Mr. Ringo for reasonable attorneys'    
fees and litigation costs in the event his former employer commences a lawsuit  
based on alleged violations of the non-compete agreement entered into by Mr.    
Ringo and his former employer.                                                  

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Under the provisions of separate stock purchase agreements between the
Company and Messrs. Boucher, Parkerson and Rosenthal, pursuant to which they    
purchased certain shares of Common Stock of the Company (see "Certain           
Transactions" below), if during their term of employment with the Company,      
either David Hamilton ceases to serve as the Company's Chairman and Chief       
Executive Officer or David Hamilton and George McFadden cease to control the    
Company, each of Messrs. Boucher, Parkerson and Rosenthal will be entitled to   
terminate his employment with the Company and receive his base salary and       
benefits for twelve months after such termination.                              

PENSION PLAN                                                                    

  Substantially all salaried non-union employees of the Company, including
the Company's executive officers, are eligible to participate in a Company      
pension plan. The plan is a qualified plan under the Internal Revenue Code and  
provides benefits funded by Company contributions. Contributions are paid to a  
Master Trustee for investment. Benefits are subject to maximum limitations under
the Internal Revenue Code. Therefore, with regard to 1996, the maximum salary   
that can be recognized under the plan is $150,000 and the maximum benefit at age
65 is limited to $120,000. The following table is representative of the annual  
benefits payable under the Company's pension plan to an employee currently age  
65, whose remuneration remained unchanged during the last five years of         
employment and whose benefits will be paid for the remainder of the employee's  
life.                                                                           

PENSION PLAN TABLE

                                                        [Enlarge/Download Table]

                                                                          YEARS OF SERVICE                 
COVERED                                                   -------------------------------------------------
REMUNERATION*                                               10            20            30            40   
-------------                                             -------       -------       -------       -------
                                                                                                           
$ 75,000................................................. $ 9,375       $18,750       $28,125       $37,500
 100,000.................................................  12,500        25,000        37,500        50,000
 125,000.................................................  15,625        31,250        46,875        62,500
 150,000.................................................  18,750        37,500        56,250        75,000
 175,000.................................................  18,750        37,500        56,250        75,000
 200,000.................................................  18,750        37,500        56,250        75,000
 300,000.................................................  18,750        37,500        56,250        75,000
 400,000.................................................  18,750        37,500        56,250        75,000

------------------                                                              
* "Covered Remuneration" for the named executive officers means the amount shown
  in the salary column of the Summary Compensation Table. Credited full years of
service for the named executive officers are as follows: Mr. Hamilton, 9    
years; Mr. Parkerson, 9 years; Mr. Rosenthal, 6 years; Mr. Boucher, 2 years;
and Mr. Ringo, 1 year. The amounts shown in the Pension Plan Table do not   
reflect any deduction for Social Security or other offset amounts.          

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CERTAIN TRANSACTIONS

     In 1995 and 1996, the Company sold shares of Common Stock to certain of its
officers and directors. As consideration for these shares, certain executive    
officers and directors executed promissory notes in favor of the Company. In    
September 1996, Mr. Boucher purchased 8,750 shares for $262,500, payable under a
promissory note bearing interest at an annual rate of 7.25% and maturing in     
September 2006. In September 1996, Mr. Parkerson purchased 11,650 shares for    
$349,500, of which $104,656 was paid in cash and $244,844 is payable under a    
promissory note bearing interest at an annual rate of 7.25% and maturing in     
September 2006. In August 1995 and September 1996, Mr. Ringo purchased a total  
of 17,450 shares for $523,500, payable under (i) a promissory note for $67,500, 
bearing interest at an annual rate of 7.25% and maturing in December 2005, and  
(ii) a promissory note for $456,000, bearing interest at an annual rate of 6.83%
and maturing in December 2004. In September 1996, Mr. Rosenthal purchased 8,750 
shares for $262,500, of which $74,412 was paid in cash and $188,088 is payable  
under a promissory note bearing interest at an annual rate of 7.25% and maturing
in September 2006. In September 1996, Mr. Colon-Osorio purchased 6,975 shares   
for $209,250, payable under a promissory note bearing interest at an annual rate
of 7.25% and maturing in September 2006.                                        

In September 1996, the Company paid $180,000 to Eugene Parkerson in   
consideration of the cancellation of an option for the purchase of 10,000 shares
of the Company's Common Stock. Also, in September 1996, the Company paid        
$135,000 to Reuben Rosenthal in consideration of the cancellation of an option  
for the purchase of 7,500 shares of the Company's Common Stock.                 

   On January 25, 1995, the Company extended a loan to David Hamilton in the
principal amount of $2,500,000 pursuant to a promissory note with a maturity    
date of December 31, 2004 and interest payable annually at the rate of 8.25%. On
January 2, 1996, the Company extended a loan to Mr. Hamilton in the principal   
amount of $1,000,000 pursuant to a promissory note with a maturity date of      
December 31, 2004 and interest payable annually at the rate of 6.5%. Mr.        
Hamilton paid interest to the Company with respect to these loans in the amount 
of $91,605 in 1995 and $260,388 in 1996.                                        

  In 1988, David Hamilton purchased Common Stock from the Company and paid
for the stock by executing a $1,520,000 promissory note in favor of the Company.
The promissory note matures in 1998 and bears interest at an annual rate of     
9.39%. Mr. Hamilton made interest payments to the Company under the note in the 
amount of $142,728 in each of 1994, 1995 and 1996.                              

   As of June 29, 1997, the Company advanced $683,116 to David Hamilton, its
Chairman, President and Chief Executive Officer. The non-interest bearing       
advance is repayable on demand.                                                 

On January 1, 1995, the Company and George McFadden, a director of the
Company, entered into a consulting agreement under which Mr. McFadden renders   
advice and assistance with respect to investment banking matters, general       
corporate finance matters and the management of the Company's pension plans. The
agreement provides for Mr. McFadden to receive a monthly consulting fee of      
$60,000, plus additional amounts as determined from time to time by the Board of
Directors of the Company. The agreement is terminable by either party upon 18   
months prior written notice. Payments to Mr. McFadden for these services        
included $720,000 in 1994, $730,000 in 1995 and $1,251,000 in 1996.             

 On December 11, 1995, Chemical Leaman and Acumen Consulting Group, Inc.
("Acumen") entered into a Service Agreement under which Acumen agreed to assist 
in the development and implementation of the Company's new information          
technology system on a fee for service basis. The president, controlling        
stockholder and a director of Acumen is Fernando Colon-Osorio, a director of the
Company. In 1995 and 1996, Chemical Leaman paid $670,000 and $2,525,000,        
respectively, to Acumen for services rendered under the Service Agreement. In   
addition, on July 1, 1996, the Company and Mr. Colon-Osorio entered into a      
Consulting Agreement for Mr. Colon-Osorio to assist the Company with the        
management of its new information technology system. The Consulting Agreement   
provides for Mr. Colon-Osorio to receive a consulting fee of $20,834 per month  
and the potential to                                                            

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receive a bonus of up to 100% of the base consulting fee, payable at the end of 
1996 and 1997. The Consulting Agreement has a termination date of December 31,  
1997.                                                                           

 On June 10, 1994, in connection with the termination of his position as
Chief Financial Officer of the Company, Charles Fernald, Jr., a director of the 
Company, entered into an agreement under which the Company agreed to pay Mr.    
Fernald $131,729 from June 18, 1994 until June 17, 1995, $100,000 per year from 
June 18, 1995 until June 17, 1998 and $10,000 per year from June 18, 1998 until 
December 31, 2004. Under the agreement, the Company also reimburses Mr. Fernald 
for payment of medical insurance premiums.                                      

On July 1, 1992, the Company and Samuel Niness, Jr., a director of the
Company, entered into a consulting agreement under which Mr. Niness renders     
advice to the Company and agreed not to compete with the Company in exchange for
a monthly fee of $4,500. The consulting agreement terminates on June 30, 1999.  

   In 1994 and 1995, John McFadden, a director of the Company, was a partner
of Pepper, Hamilton & Scheetz LLP, which renders legal services to the Company. 

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PRINCIPAL STOCKHOLDERS

  The following table sets forth the beneficial ownership of the Company's
Common Stock as of June 29, 1997 with respect to each of the Company's          
directors, the named executive officers, all directors and executive officers as
a group and each person who owns more than 5% of the Company's Common Stock.    

                                                        [Enlarge/Download Table]

                                                    NUMBER OF          PERCENTAGE OF   
                                               SHARES BENEFICIALLY   OUTSTANDING SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1)               OWNED           OF COMMON STOCK  
---------------------------------------        --------------------  ------------------
                                                                                       
David R. Hamilton.............................        216,600(2)            37.3%      
George McFadden...............................        186,200(3)            32.0%      
John H. McFadden..............................         43,400                7.5%      
G. Michael Cronk..............................         13,600                2.3%      
Samuel F. Niness, Jr..........................             --                 --       
David M. Boucher..............................          8,750                1.5%      
Philip J. Ringo...............................         17,450                3.0%      
Eugene C. Parkerson...........................         11,650                2.0%      
Samuel C. Hamilton, Jr........................          1,000                 .2%      
Charles E. Fernald, Jr........................             --                 --       
Reuben M. Rosenthal...........................          8,750                1.5%      
Fernando C. Colon-Osorio......................          6,975                1.2%      
Karen Szabo Lloyd.............................         30,200(4)             5.2%      
Directors and executive officers as a group                                            
  (12 persons)................................        518,445               89.2%      

------------------                                                              

(1) Unless otherwise specified, the address of each listed beneficial owner is  
102 Pickering Way, Exton, PA 19341.                                     

(2) Includes 61,200 shares held in trust for the benefit of Mr. Hamilton's      
children.                                                               

(3) Includes 35,800 shares owned by other family members and 105,200 shares     
owned in trust for the benefit of Mr. McFadden and other family members.

(4) Issuable upon conversion of preferred stock.                                

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NEW REVOLVING CREDIT FACILITY 

In connection with the Offering of the Old Notes, Chemical Leaman     
Corporation entered into a revolving credit facility with CoreStates Bank, N.A. 
(the "New Revolving Credit Facility"). The material terms of the New Revolving  
Credit Facility are discussed below.                                            

The New Revolving Credit Facility provides for up to $20 million of   
revolving loans and letters of credit. Borrowings under the New Revolving Credit
Facility may be used for general corporate purposes, including for working      
capital and the purchase of revenue equipment. Amounts outstanding under the New
Revolving Credit Facility will bear interest at a variable rate at the Company's
election of (i) the Base Rate (as defined therein) plus 1/2% or (ii) LIBOR (as  
defined therein) plus 1.80%. The Company will be required to pay a letter of    
credit fee of 1.80% per annum of letters of credit outstanding and a commitment 
fee of 3/8% per annum of the unused portion of the facility. In addition, a     
$100,000 administrative fee was payable at the closing. The New Revolving Credit
Facility will mature in June 2000, subject to a maximum of two annual extensions
at the option of the Company upon the approval of CoreStates. The New Revolving 
Credit Facility was undrawn at the closing of the Offering, except for $3.9     
million of stand-by letters of credit which were rolled over from an existing   
facility.                                                                       

     The New Revolving Credit Facility will be secured by $25 million of revenue
equipment to be held by Chemical Leaman Corporation and leased to certain of its
subsidiaries and availability under the facility is limited to 80% of the value 
of such equipment. Borrowings under the New Revolving Credit Facility are       
subject to the further condition that a material adverse change has not         
occurred.                                                                       

    The New Revolving Credit Facility contains financial covenants including a
minimum net worth test and a minimum fixed charge coverage ratio. In addition,  
the New Revolving Credit Facility contains covenants that restrict certain      
mergers, acquisitions and sales of assets, the incurrence of indebtedness and   
making of guarantees, the payment of dividends, the repurchase of stock, the    
making of loans to shareholders and the granting of liens. In addition, the New 
Revolving Credit Facility prohibits a redemption or repurchase of the New Notes 
while a default exists under the New Revolving Credit Facility, and will require
a prepayment of the New Revolving Credit Facility in the event of a repurchase  
of the New Notes upon a Change of Control under the Indenture. See "Description 
of the Notes - Change of Control" and "- Certain Definitions."                  

 The New Revolving Credit Facility contains customary events of default,
including failure to pay principal, interest or fees when due, non-compliance   
with covenants, a representation or warranty shall prove to be false in any     
material respect, the occurrence of certain bankruptcy events, cross-defaults to
other indebtedness, the existence of certain unstayed and undischarged          
judgments, the occurrence of a change of control under the New Revolving Credit 
Facility and the occurrence of a material adverse change. A change of control   
would occur under the New Revolving Credit Facility if the beneficial ownership 
of the Company's common stock by David R. Hamilton, George McFadden and John H. 
McFadden and the Estate of Joseph C. Szabo were to fall below 30%.              

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DESCRIPTION OF THE NEW NOTES

    The New Notes will be issued under an Indenture dated as of June 16, 1997,
(the "Indenture") among the Company and First Union National Bank, as trustee   
(the "Trustee"). For purposes of this section, references to the "Company" mean 
only Chemical Leaman Corporation and not any of its subsidiaries. References to 
the New Notes, Old Notes or Notes include the Exchange Notes unless the context 
otherwise requires. Upon the issuance of the Exchange Notes, if any, or the     
effectiveness of a Shelf Registration Statement, the Indenture will be subject  
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The 
following summary of the material provisions of the Indenture does not purport  
to be complete and is subject to, and qualified by, reference to the provisions 
of the Indenture, including the definitions of certain terms contained therein  
and those terms made part of the Indenture by reference to the Trust Indenture  
Act, as in effect on the date of the Indenture. The definition of certain terms 
used in the following summary are set forth below under "-Certain Definitions." 

GENERAL                                                                         

   The New Notes will be general unsecured senior obligations of the Company
limited to $100,000,000 aggregate principal amount. The New Notes will be issued
only in fully registered form without coupons, in denominations of $1,000 and   
integral multiples thereof. Principal of, premium, if any, and interest on the  
New Notes are payable, and the New Notes are transferable, at the office or     
agency of the Company in The City of New York maintained for such purposes      
(which initially will be the corporate trust office of the Trustee); provided,  
however, that payment of interest may be made at the option of the Company by   
check mailed to the Person entitled thereto as shown on the security register.  
No service charge will be made for any registration of transfer, exchange or    
redemption of the Notes, except in certain circumstances for any tax or other   
governmental charge that may be imposed in connection therewith.                

MATURITY, INTEREST AND PRINCIPAL                                                

    The New Notes will mature on June 15, 2005. Interest on the New Notes will
accrue at the rate of 10 3/8% per annum and will be payable semi-annually on    
each June 15 and December 15, commencing December 15, 1997, to the holders of   
record of New Notes at the close of business on the June 1 and December 1,      
respectively, immediately preceding such interest payment date. Interest on the 
New Notes will accrue from the most recent date to which interest has been paid 
or, if no interest has been paid, from the Issue Date. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. The interest rate on the
Notes is subject to increase under certain circumstances if the Company is not  
in compliance with its obligations under the Registration Rights Agreement. See 
"Exchange Offer."                                                               

OPTIONAL REDEMPTION                                                             

     Optional Redemption.  The New Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after June 15, 2001, at the     
redemption prices (expressed as percentages of principal amount) set forth      
below, plus accrued and unpaid interest thereon, if any, to the date of         
redemption, if redeemed during the 12-month period beginning on June 15 of the  
years indicated below:                                                          

                                                                [Download Table]

                                                              REDEMPTION
YEAR                                                            PRICE   
----                                                          ----------
                                                                        
2001........................................................   105.188% 
2002........................................................   103.458% 
2003........................................................   101.729% 
2004 and thereafter.........................................   100.000% 

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   Optional Redemption upon Public Equity Offering.  On or prior to June 15,
2000, the Company may, at its option, use the net proceeds of a Public Equity   
Offering to redeem up to 25% of the originally issued aggregate principal amount
of the New Notes, at a redemption price in cash equal to 110 3/8% of the        
principal amount thereof, plus accrued and unpaid interest thereon, if any, to  
the date of redemption; provided, however, that not less than $75 million in    
aggregate principal amount of Notes is outstanding following such redemption.   
Notice of any such redemption must be given not later than 60 days after the    
consummation of the Public Equity Offering.                                     

 As used in the preceding paragraph, a "Public Equity Offering" means an
underwritten public offering of Capital Stock (other than Redeemable Capital    
Stock) of the Company made on a primary basis by the Company pursuant to a      
registration statement filed with and declared effective by the Commission in   
accordance with the Securities Act resulting in net cash proceeds to the Company
(after deducting any underwriting discounts and commissions) of at least $50    
million.                                                                        

     Selection and Notice.  In the event that less than all of the New Notes are
to be redeemed at any time, selection of New Notes for redemption shall be made 
by the Trustee in compliance with the requirements of the principal national    
securities exchange, if any, on which the New Notes are listed or, if the New   
Notes are not listed on a national securities exchange, on a pro rata basis, by 
lot or by such method as the Trustee will deem fair and appropriate; provided,  
however, that no New Notes of a principal amount of $1,000 or less shall be     
redeemed in part; provided, further, however, that any such redemption made with
the net proceeds of a Public Equity Offering shall be made on a pro rata basis  
or on as nearly a pro rata basis as practicable (subject to the procedures of   
The Depository Trust Company or any other depositary). Notice of redemption will
be mailed by first class mail at least 30 but not more than 60 days before the  
redemption date to each holder of New Notes to be redeemed at its registered    
address. If any New Note is to be redeemed in part only, the notice of          
redemption that relates to such New Note will state the portion of the principal
amount thereof to be redeemed. A New Note in a principal amount equal to the    
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the Old Note. On and after the redemption date, interest will   
cease to accrue on Notes or portions thereof called for redemption so long as   
the Company has deposited with the paying agent for the New Notes funds in      
satisfaction of the applicable redemption price pursuant to the Indenture.      

CHANGE OF CONTROL                                                               

The Indenture provides that, following the occurrence of a Change of  
Control (the date of such occurrence being the "Change of Control Date"), the   
Company will be obligated, within 20 days after the Change of Control Date, to  
make an offer to purchase (a "Change of Control Offer") all of the then         
outstanding New Notes at a purchase price (the "Change of Control Purchase      
Price") in cash equal to 101% of the principal amount thereof, plus accrued and 
unpaid interest thereon, if any, to the purchase date. The Company will be      
required to purchase all New Notes properly tendered into the Change of Control 
Offer and not withdrawn.                                                        

In order to effect such Change of Control Offer, the Company will, not
later than the 20th business day after the Change of Control Date, be obligated 
to mail to each holder of New Notes notice of the Change of Control Offer, which
notice will govern the terms of the Change of Control Offer and will state,     
among other things, the procedures that holders must follow to accept the Change
of Control Offer. The Change of Control Offer will be required to be kept open  
for a period of at least 20 business days.                                      

  If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the purchase price for all  
of the New Notes that might be tendered by holders of New Notes seeking to      
accept the Change of Control Offer. If the Company fails to repurchase all of   
the New Notes tendered for purchase, such failure will constitute an Event of   
Default under the Indenture. See "- Events of Default" below.                   

   The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act, and any other applicable securities laws  
or regulations and any applicable requirements                                  

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of any securities exchange on which the Notes are listed, in connection with the
repurchase of Notes pursuant to a Change of Control Offer, and any violation of 
the provisions of the Indenture relating to such Change of Control Offer        
occurring as a result of such compliance shall not be deemed a Default.         

CERTAIN COVENANTS                                                               

The Indenture contains the following covenants, among others:                   

    Limitation on Indebtedness.  The Company shall not, and shall not cause or
permit any of the Restricted Subsidiaries to, directly or indirectly, create,   
incur, assume, issue, guarantee or in any manner become liable for or with      
respect to, contingently or otherwise (in each case, to "incur"), the payment of
any Indebtedness (including any Acquired Indebtedness); provided, however, that 
(i) the Company may incur Indebtedness (including Acquired Indebtedness) and    
(ii) a Restricted Subsidiary may incur Acquired Indebtedness, if, in either     
case, immediately after giving pro forma effect thereto, the Consolidated Fixed 
Charge Coverage Ratio of the Company is at least equal to (i) if the date of    
such incurrence is on or prior to December 31, 2000, 2.00:1.0, and (ii) if the  
date of such incurrence is after December 31, 2000, 2.25:1.0.                   

    Notwithstanding the foregoing, the Company and, to the extent specifically
set forth below, the Restricted Subsidiaries may incur each and all of the      
following (collectively, "Permitted Indebtedness"):                             

  (i) Indebtedness of the Company under the New Revolving Credit
  Facility in an aggregate principal amount at any time outstanding not to
    exceed $20.0 million (it being understood that additional Indebtedness may
be incurred under the New Revolving Credit Facility pursuant to other 
provisions of this covenant);                                         

         (ii) Indebtedness of the Company or any Guarantor under the Indenture
and the Notes;                                                        

      (iii) Indebtedness of the Company or any Restricted Subsidiary not
  otherwise referred to in this paragraph that is outstanding on the issue
   date of the Old Notes ("Issue Date"), except Indebtedness to be repaid in
connection with the issuance of the Old Notes;                        

    (iv) Indebtedness of the Company or any Restricted Subsidiary in
  respect of performance bonds, bankers' acceptances, letters of credit of
   the Company or any Restricted Subsidiary and surety bonds provided by the
  Company or any Restricted Subsidiary in the ordinary course of business,
not to exceed $10.0 million in the aggregate at any time outstanding; 

         (v) Indebtedness of any Restricted Subsidiary owed to and held by the
    Company or any Restricted Subsidiary, and Indebtedness of the Company owed
to and held by any Restricted Subsidiary which is unsecured and       
subordinated in right of payment to the payment and performance of the
Company's obligations under the Indenture and the New Notes; provided,
   however, that an incurrence of Indebtedness that is not permitted by this
clause (v) shall be deemed to have occurred upon (a) any sale or other
     disposition of any Indebtedness of the Company or any Restricted Subsidiary
   referred to in this clause (v) to a Person (other than the Company or any
    Restricted Subsidiary), (b) any sale or other disposition of Capital Stock
 of any Restricted Subsidiary which holds Indebtedness of the Company or
   another Restricted Subsidiary such that such Restricted Subsidiary ceases
to be a Restricted Subsidiary and (c) the designation of a Restricted 
    Subsidiary which holds Indebtedness of the Company or any other Restricted
Subsidiary as an Unrestricted Subsidiary;                             

          (vi) any guarantee of Indebtedness by a Restricted Subsidiary incurred
in compliance with the covenant described under "- Limitations on     
Guarantees by Restricted Subsidiaries;"                               

    (vii) Interest Rate Protection Obligations of the Company or any
Restricted Subsidiary covering Indebtedness of the Company or such    
     Restricted Subsidiary (which Indebtedness (a) bears interest at fluctuating
 interest rates and (b) is otherwise permitted to be incurred under this
     covenant) to the extent the notional principal amount of such Interest Rate
Protection                                                            

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 Obligations does not exceed the principal amount of the Indebtedness to
which such Interest Rate Protection Obligations relate;               

         (viii) Indebtedness of the Company or any Restricted Subsidiary under
 Currency Agreements relating to (a) Indebtedness of the Company or such
    Restricted Subsidiary and/or (b) obligations to purchase or sell assets or
  properties, in each case, incurred in the ordinary course of business of
the Company; provided, however, that such Currency Agreements do not  
   increase the Indebtedness or other obligations of the Company outstanding
   other than as a result of fluctuations in foreign currency exchange rates
or by reason of fees, indemnities and compensation payable thereunder;

         (ix) Purchase Money Indebtedness and Capitalized Lease Obligations of
     the Company or any Restricted Subsidiary not to exceed $10.0 million in the
aggregate outstanding at any time;                                    

          (x) (a) Indebtedness of the Company or any Guarantor to the extent the
   proceeds thereof are used to Refinance Indebtedness of the Company or any
Guarantor or any Restricted Subsidiary and (b) Indebtedness of any    
  Restricted Subsidiary that is not a Guarantor to the extent the proceeds
 thereof are used to Refinance Indebtedness of any Restricted Subsidiary
     that is not a Guarantor, in each case incurred under the first paragraph of
  this covenant or Indebtedness referred to under clause (iii) (other than
     the Indebtedness to be repaid as described under "Use of Proceeds") of this
 paragraph; provided, however, that, in the case of either clause (a) or
 (b), (1) the principal amount of Indebtedness incurred pursuant to this
   clause (x) (or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of  
acceleration of the maturity thereof, the original issue price of such
Indebtedness) shall not exceed the sum of the principal amount of     
     Indebtedness so refinanced (or, if such Indebtedness provides for an amount
less than the principal amount thereof to be due and payable upon a   
 declaration of acceleration of the maturity thereof, the original issue
  price of such Indebtedness, plus any accreted value attributable thereto
   since the original issuance of such Indebtedness), plus the amount of any
     premium required to be paid in connection with such Refinancing pursuant to
the terms of such Indebtedness or the amount of any premium reasonably
 determined by the Company or a Restricted Subsidiary, as applicable, as
necessary to accomplish such Refinancing by means of a tender offer or
  privately negotiated purchase, plus the amount of expenses in connection
    therewith; and (2) Indebtedness incurred pursuant to this clause (x) shall
not reduce the Average Life to Stated Maturity of the Indebtedness so 
refinanced; and                                                       

        (xi) in addition to the items referred to in clauses (i) through (x)
    above, additional Indebtedness of the Company or any Restricted Subsidiary
not to exceed an aggregate principal amount at any time outstanding of
$10.0 million.                                                        

  Limitation on Restricted Payments.  The Company shall not, and shall not
cause or permit any of the Restricted Subsidiaries to, directly or indirectly:  

     (i) declare or pay any dividend or make any other distribution or
    payment on or in respect of Capital Stock of the Company or any Restricted
    Subsidiary or any payment made to the direct or indirect holders (in their
capacities as such) of Capital Stock of the Company or any Restricted 
    Subsidiary (other than dividends or distributions made to the Company or a
 Restricted Subsidiary and dividends and distributions payable solely in
  Capital Stock of the Company (other than Redeemable Capital Stock) or in
rights to purchase Capital Stock of the Company (other than Redeemable
Capital Stock)); or                                                   

     (ii) purchase, redeem, defease or otherwise acquire or retire for
    value any Capital Stock of the Company or any Restricted Subsidiary (other
than any such Capital Stock owned by the Company or a Restricted      
Subsidiary); or                                                       

          (iii) make any principal payment on, or purchase, defease, repurchase,
 redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other
     Stated Maturity, any Subordinated Indebtedness (other than any Subordinated
   Indebtedness owed to and held by the Company or a Restricted Subsidiary);
or                                                                    

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       (iv) make any Investment (other than a Permitted Investment) in any
  Person (other than in the Company, any Restricted Subsidiary or a Person
that becomes a Restricted Subsidiary, or is merged with or into or    
consolidated with the Company or a Restricted Subsidiary (provided the
   Company or a Restricted Subsidiary is the survivor), as a result of or in
connection with such Investment)                                      

(each such payment or Investment (other than an exception thereto) described in 
the preceding clauses (i), (ii), (iii) and (iv) is referred to as a "Restricted 
Payment"), unless, at the time of and after giving effect to the proposed       
Restricted Payment (the amount of any such Restricted Payment, if other than in 
cash, shall be the Fair Market Value of the asset(s) proposed to be transferred 
by the Company or such Restricted Subsidiary, as the case may be, pursuant to   
such Restricted Payment):                                                       

(A) no Default shall have occurred and be continuing;       

       (B) the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the "Limitation on Indebtedness"   
covenant described above; and                                         

        (C) the aggregate amount of all Restricted Payments declared or made
from and after the Issue Date would not exceed the sum of (1) 50% of  
cumulative Consolidated Net Income of the Company during the period   
   (treated as one accounting period) beginning on the Issue Date and ending
    on the last day of the fiscal quarter of the Company immediately preceding
the date of such proposed Restricted Payment for which consolidated   
   financial information of the Company is available (or, if such cumulative
    Consolidated Net Income of the Company for such period shall be a deficit,
minus 100% of such deficit), plus (2) the aggregate net cash proceeds 
    received by the Company either (x) as capital contributions in the form of
    common equity to the Company after the Issue Date or (y) from the issuance
    or sale of Capital Stock (excluding Redeemable Capital Stock but including
  Capital Stock issued upon the conversion of convertible Indebtedness, in
exchange for outstanding Indebtedness or from the exercise of options,
     warrants or rights to purchase Capital Stock (other than Redeemable Capital
     Stock)) of the Company to any Person (other than to a Restricted Subsidiary
    of the Company) after the Issue Date (excluding the net cash proceeds from
  any issuance and sale of Capital Stock financed, directly or indirectly,
  using funds borrowed from the Company or any Restricted Subsidiary until
  and to the extent such borrowing is repaid), plus (3) in the case of the
disposition or repayment of any Investment constituting a Restricted  
     Payment made after the Issue Date, an amount (to the extent not included in
 Consolidated Net Income and to the extent such disposition or repayment
   does not reduce the amount of Investments outstanding under clause (viii)
  of the second succeeding paragraph hereunder) equal to the lesser of the
     return of capital with respect to such Investment and the initial amount of
    such Investment which was treated as a Restricted Payment, in either case,
    less the cost of the disposition of such Investment and net of taxes, plus
    (4) so long as the Designation thereof was treated as a Restricted Payment
     made after the Issue Date, with respect to any Unrestricted Subsidiary that
  has been redesignated as a Restricted Subsidiary after the Issue Date in
     accordance with "- Limitation on Designations of Unrestricted Subsidiaries"
   below, the Fair Market Value of the Company's interest in such Subsidiary
    calculated in accordance with GAAP, provided that such amount shall not in
any case exceed the Designation Amount with respect to such Restricted
     Subsidiary upon its Designation, minus (5) the Designation Amount (measured
as of the date of Designation) with respect to any Subsidiary of the  
   Company which has been designated as an Unrestricted Subsidiary after the
     Issue Date in accordance with "- Limitation on Designations of Unrestricted
Subsidiaries" below.                                                  

   For purposes of the preceding clause (C)(2), upon the issuance of Capital
Stock either from the conversion of convertible Indebtedness or exchange for    
outstanding Indebtedness or upon the exercise of options, warrants or rights,   
the amount counted as net cash proceeds received will be the cash amount        
received by the Company at the original issuance of the Indebtedness that is so 
converted or exchanged or from the issuance of options, warrants or rights, as  
the case may be, plus the incremental amount of cash received by the Company, if
any, upon the conversion, exchange or exercise thereof.                         

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 None of the foregoing provisions of this covenant will prohibit (i) the
payment of any dividend within 60 days after the date of its declaration, if at 
the date of declaration such payment would be permitted by the provisions of the
Indenture; (ii) so long as no Default shall have occurred and be continuing or  
would arise therefrom, the redemption, repurchase or other acquisition or       
retirement of any shares of any class of Capital Stock of the Company in        
exchange for, or out of the net cash proceeds of, a substantially concurrent    
issue and sale of other shares of Capital Stock (other than Redeemable Capital  
Stock) of the Company to any Person (other than to a Restricted Subsidiary);    
provided, however, that any such net proceeds and the value of any Capital Stock
issued in exchange for such retired Capital Stock are excluded from clause      
(C)(2) of the second preceding paragraph; (iii) so long as no Default shall have
occurred and be continuing or would arise therefrom, any redemption, repurchase 
or other acquisition or retirement of Subordinated Indebtedness made by exchange
for, or out of the net cash proceeds of, a substantially concurrent issue and   
sale of (A) Capital Stock (other than Redeemable Capital Stock) of the Company  
to any Person (other than to a Restricted Subsidiary); provided, however, that  
any such net cash proceeds and the value of any Capital Stock issued in exchange
for Subordinated Indebtedness are excluded from clause (C)(2) of the second     
preceding paragraph; or (B) Indebtedness of the Company or any Guarantor so long
as such Indebtedness (1) is subordinated to the Notes and the Note Guarantees of
such Guarantor, as the case may be, at least to the same extent as the          
Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased,       
acquired or retired, (2) has no Stated Maturity earlier than the Stated Maturity
for the final scheduled principal payment of the Notes and (3) shall not reduce 
the Average Life to Stated Maturity of the Subordinated Indebtedness so         
redeemed, repurchased, acquired or retired; (iv) Investments constituting       
Restricted Payments made as a result of the receipt of non-cash consideration   
from any Asset Sale made pursuant to and in compliance with the covenant "-     
Disposition of Proceeds of Asset Sales"; (v) the purchase, redemption or other  
acquisition, cancellation or retirement for value of Capital Stock, or options, 
warrants, equity appreciation rights or other rights to purchase or acquire     
Capital Stock, of the Company or any Restricted Subsidiary, or similar          
securities, held by officers or employees or former officers or employees of the
Company or any Restricted Subsidiary (or their estates or beneficiaries under   
their estates), upon death, disability, retirement or termination of employment,
not to exceed $1.0 million in any consecutive 12-month period; (vi) the payment 
of dividends on the Outstanding Preferred Stock as required pursuant to the     
terms of the Company's Articles of Incorporation as in effect on the Issue Date;
(vii) the redemption of shares of the Company's Series A Preferred Stock, no par
value per share, outstanding on the Issue Date required by the holder thereof   
after August 1, 2002 pursuant to the Company's Articles of Incorporation as in  
effect on the Issue Date; or (viii) Investments not to exceed $5.0 million in   
the aggregate outstanding at any time. In computing the amount of Restricted    
Payments previously made for purposes of clause (C) of the second preceding     
paragraph, Restricted Payments under the immediately preceding clauses (i),     
(iv), (v), (vi), (vii) and (viii) shall be included.                            

 Limitation on Transactions with Affiliates.  The Company shall not, and
shall not cause or permit any of the Restricted Subsidiaries to, directly or    
indirectly, conduct any business or enter into or suffer to exist any           
transaction or series of related transactions with, or for the benefit of, any  
of their respective Affiliates or any beneficial holder of 10% or more of any   
class of Capital Stock of the Company or any officer, director or employee of   
the Company or any Restricted Subsidiary (each, an "Affiliate Transaction"),    
unless (i) such Affiliate Transaction is on terms that are no less favorable to 
the Company or the Restricted Subsidiary, as the case may be, than those which  
could have been obtained in a comparable transaction at such time from Persons  
who do not have such a relationship, (ii) with respect to any Affiliate         
Transaction or series of Affiliate Transactions involving aggregate payments or 
value equal to or greater than $1.0 million, the Company shall have delivered an
officers' certificate to the Trustee certifying that such Affiliate Transaction 
or series of Affiliate Transactions has been approved by a majority of the Board
of Directors of the Company, including a majority of the disinterested directors
of the Board of Directors of the Company, and (iii) with respect to any         
Affiliate Transaction or series of Affiliate Transactions involving aggregate   
payments or value equal to or greater than $5.0 million, the Company shall have 
obtained a written opinion from an Independent Financial Advisor stating that   
the terms of such Affiliate Transaction or series of Affiliate Transactions     

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are fair, from a financial point of view, to the Company or the Restricted      
Subsidiary involved, as the case may be.                                        

    Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and the Restricted
Subsidiaries; (ii) customary directors' fees, indemnification and similar       
arrangements, consulting fees, employee salaries, bonuses or employment         
agreements, compensation or employee benefit arrangements and incentive         
arrangements with any officer, director or employee of the Company or any       
Restricted Subsidiary entered into in the ordinary course of business (including
customary benefits thereunder) and payments under any indemnification           
arrangements permitted by applicable law; (iii) the issue and sale by the       
Company to its stockholders of Capital Stock (other than Redeemable Capital     
Stock); (iv) any dividends made in compliance with "- Limitation on Restricted  
Payments" above; (v) loans and advances to officers, directors and employees of 
the Company or any Restricted Subsidiary for travel, entertainment, moving and  
other relocation expenses, in each case made in the ordinary course of business;
(vi) the incurrence of intercompany Indebtedness permitted pursuant to clause   
(v) of the second paragraph of "- Limitation on Indebtedness" above; (vii)      
Affiliate Transactions consummated prior to the Issue Date and any renewal or   
replacement thereof on terms and conditions no less favorable in any respect    
than that existing on the Issue Date; (viii) payments to George McFadden        
pursuant to the Consulting Agreement (as in effect on the Issue Date) not to    
exceed $1.25 million in any fiscal year (exclusive of reimbursement of expenses)
of; (ix) loans and advances to David R. Hamilton made after the Issue Date not  
to exceed $350,000 in the aggregate at any one time outstanding; and (x)        
payments to Acumen Consulting Group, Inc. as required by and pursuant to the    
terms of the Service Agreement (as in effect on the Issue Date).                

   Disposition of Proceeds of Asset Sales.  The Company shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or indirectly, make  
any Asset Sale, unless (i) the Company or such Restricted Subsidiary, as the    
case may be, receives consideration at the time of such Asset Sale at least     
equal to the Fair Market Value of the assets sold or otherwise disposed of and  
(ii) at least 85% of such consideration consists of (A) cash or Cash            
Equivalents, (B) properties and capital assets to be used in the same line of   
business being conducted by the Company or any Restricted Subsidiary on the     
Issue Date or (C) Capital Stock in any Person which thereby becomes a Restricted
Subsidiary whose assets consist primarily of properties and capital assets used 
in the same line of business being conducted by the Company or any Restricted   
Subsidiary on the Issue Date. The amount of any (i) Indebtedness (other than any
Subordinated Indebtedness) of the Company or any Restricted Subsidiary that is  
actually assumed by the transferee in such Asset Sale and from which the Company
and the Restricted Subsidiaries are fully released shall be deemed to be cash   
for purposes of determining the percentage of cash consideration received by the
Company or the Restricted Subsidiaries and (ii) notes or other similar          
obligations received by the Company or the Restricted Subsidiaries from such    
transferee that are converted, sold or exchanged within thirty days of the      
related Asset Sale by the Company or the Restricted Subsidiaries into cash shall
be deemed to be cash, in an amount equal to the net cash proceeds realized upon 
such conversion, sale or exchange for purposes of determining the percentage of 
cash consideration received by the Company or the Restricted Subsidiaries.      

The Company or such Restricted Subsidiary, as the case may be, may (i)
apply the Net Cash Proceeds of any Asset Sale within 365 days of receipt thereof
to (x) repay Indebtedness of the Company or any Restricted Subsidiary which is  
secured by a Lien on the assets or property of the Company or a Restricted      
Subsidiary which was the subject of such Asset Sale and permanently reduce any  
related commitment or (y) repay any Indebtedness (other than Subordinated       
Indebtedness and other than any Indebtedness owed to the Company or any         
Restricted Subsidiary) of the Company or any Guarantor in an amount not to      
exceed the Other Senior Debt Pro Rata Share and permanently reduce any related  
commitment, or (ii) commit in writing to acquire, construct or improve          
properties and capital assets to be used in the same line of business as being  
conducted by the Company or any Restricted Subsidiary on the Issue Date and so  
apply such Net Cash Proceeds within 365 days after the receipt thereof.         

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  To the extent all or part of the Net Cash Proceeds of any Asset Sale are
not applied, or the Company determines not to so apply such Net Cash Proceeds,  
within 365 days of such Asset Sale as described in clause (i) or (ii) of the    
immediately preceding paragraph (such Net Cash Proceeds, the "Unutilized Net    
Cash Proceeds"), the Company shall, within 20 days after such 365th day or at   
any earlier time after such Asset Sale, make an offer to purchase (the "Asset   
Sale Offer") all outstanding Notes up to a maximum principal amount (expressed  
as a multiple of $1,000) of Notes equal to such Unutilized Net Cash Proceeds, at
a purchase price in cash equal to 100% of the principal amount thereof, plus    
accrued and unpaid interest thereon, if any, to the Purchase Date; provided,    
however, that the Asset Sale Offer may be deferred until there are aggregate    
Unutilized Net Cash Proceeds equal to or in excess of $10.0 million, at which   
time the entire amount of such Unutilized Net Cash Proceeds, and not just the   
amount in excess of $10.0 million, shall be applied as required pursuant to this
paragraph. An Asset Sale Offer will be required to be kept open for a period of 
at least 20 business days.                                                      

  With respect to any Asset Sale Offer effected pursuant to this covenant,
among the Notes, to the extent the aggregate principal amount of Notes tendered 
pursuant to such Asset Sale Offer exceeds the Unutilized Net Cash Proceeds to be
applied to the repurchase thereof, such Notes shall be purchased pro rata based 
on the aggregate principal amount of such Notes tendered by each Holder. To the 
extent the Unutilized Net Cash Proceeds exceed the aggregate amount of Notes    
tendered by the Holders of the Notes pursuant to such Asset Sale Offer, the     
Company may retain and utilize any portion of the Unutilized Net Cash Proceeds  
not applied to repurchase the Notes for any purpose consistent with the other   
terms of the Indenture.                                                         

    In the event that the Company makes an Asset Sale Offer, the Company shall
comply, to the extent applicable, with the requirements of Section 14(e) of the 
Exchange Act, and any other applicable securities laws or regulations and any   
applicable requirements of any securities exchange on which the Notes are       
listed, and any violation of the provisions of the Indenture relating to such   
Asset Sale Offer occurring as a result of such compliance shall not be deemed a 
Default.                                                                        

    Limitation on Liens.  The Company shall not, and shall not cause or permit
any Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien 
(except Permitted Liens) of any kind, upon any of its property or assets,       
whether now owned or acquired after the Issue Date, or any proceeds therefrom,  
or assign or convey any right to receive income therefrom; provided, however,   
the Company or any Guarantor may secure either (i) Subordinated Indebtedness, if
the Notes, in the case of the Company, and the Note Guarantee, in the case of a 
Restricted Subsidiary that is a Guarantor, are secured by a Lien on such        
property, assets or proceeds that is senior in priority to the Lien securing    
such Subordinated Indebtedness or (ii) any other Indebtedness, if the New Notes,
in the case of the Company, and the Note Guarantee, in the case of a Restricted 
Subsidiary that is a Guarantor, are equally and ratably secured thereby.        

     Limitation on Guarantees by Restricted Subsidiaries.  The Company shall not
cause or permit any of the Domestic Subsidiaries, directly or indirectly, to    
guarantee the payment of any Indebtedness of the Company ("Other Indebtedness") 
unless such Domestic Subsidiary (A) is a Guarantor or (B) simultaneously        
executes and delivers a supplemental indenture to the Indenture pursuant to     
which it will become a Guarantor under the Indenture; provided, however, that if
such Other Indebtedness is (i) pari passu in right of payment with the New      
Notes, the Note Guarantee of such Domestic Subsidiary shall be pari passu in    
right of payment with the guarantee of the Other Indebtedness; or (ii)          
Subordinated Indebtedness, the Note Guarantee of such Domestic Subsidiary shall 
be senior in right of payment to the guarantee of the Other Indebtedness (which 
guarantee of such Subordinated Indebtedness shall provide that such guarantee is
subordinated to the Note Guarantee of such Domestic Subsidiary to the same      
extent and in the same manner as the Other Indebtedness is subordinated to the  
Notes); provided, further, however, that each Domestic Subsidiary issuing a Note
Guarantee will be automatically and unconditionally released and discharged from
its obligations under such Note Guarantee upon the release or discharge of the  
guarantee of the Other Indebtedness that resulted in the creation of such Note  
Guarantee, except a discharge or release by, or as a result of, any payment     
under the guarantee of such Other Indebtedness by such Domestic Subsidiary.     
Notwithstanding the                                                             

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foregoing, but subject to the requirements of "- Consolidation, Merger, Sale of 
Assets, Etc.," any Note Guarantee by a Domestic Subsidiary shall be             
automatically and unconditionally released and discharged upon any sale,        
exchange or transfer, to any Person not an Affiliate of the Company, of all of  
the Capital Stock of such Domestic Subsidiary, or all or substantially all the  
assets of such Restricted Subsidiary, pursuant to a transaction which is in     
compliance with the Indenture (including, but not limited to, the covenant      
described in "- Disposition of Proceeds of Asset Sales" above). The Company may,
at any time, cause a Domestic Subsidiary to become a Guarantor by executing and 
delivering a supplemental indenture providing for the guarantee of payment of   
the New Notes by such Domestic Subsidiary on the basis provided in the          
Indenture.                                                                      

  Restrictions on Preferred Stock of Restricted Subsidiaries.  The Company
shall not sell, and shall not cause or permit any of the Restricted Subsidiaries
to issue, any Preferred Stock of any Restricted Subsidiary (other than to the   
Company or to a Wholly-Owned Restricted Subsidiary) or permit any Person (other 
than the Company or a Wholly-Owned Restricted Subsidiary) to own any Preferred  
Stock of any Restricted Subsidiary.                                             

     Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries.  The Company shall not, and shall not cause or permit any         
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or  
suffer to exist, or enter into any agreement with any Person that would cause to
become effective, any consensual encumbrance or restriction of any kind, on the 
ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise,
or make any other distribution on or in respect of its Capital Stock or any     
other interest or participation in, or measured by, its profits, to the Company 
or any other Restricted Subsidiary, (b) pay any Indebtedness owed to the Company
or any other Restricted Subsidiary, (c) make loans or advances to, or guarantee 
any Indebtedness or other obligations of, the Company or any other Restricted   
Subsidiary or (d) transfer any of its property or assets to the Company or any  
other Restricted Subsidiary, except any encumbrance or restriction (i) existing 
under the New Revolving Credit Facility as in effect on the Issue Date relating 
to assets subject to a Lien created thereby; (ii) with respect to a Restricted  
Subsidiary that is not a Restricted Subsidiary on the Issue Date, in existence  
at the time such Person becomes a Restricted Subsidiary (but not created in     
contemplation thereof); provided, however, that such encumbrances and           
restrictions are not applicable to the Company or any other Restricted          
Subsidiary, or the properties or assets of the Company or any other Restricted  
Subsidiary; (iii) customary non-assignment provisions in leases entered into in 
the ordinary course of business and consistent with past practices; (iv)        
Purchase Money Indebtedness for property acquired in the ordinary course of     
business that only imposes encumbrances and restrictions on the property so     
acquired; (v) any agreement for the sale or disposition of the Capital Stock or 
assets of any Restricted Subsidiary; provided, however, that such encumbrances  
and restrictions described in this clause (v) are only applicable to such       
Restricted Subsidiary or assets, as applicable, and any such sale or disposition
is made in compliance with "- Disposition of Proceeds of Asset Sales" above to  
the extent applicable thereto; and (vi) any encumbrance or restriction existing 
under any agreement that Refinances the agreements containing the encumbrance or
restrictions in the foregoing clauses (i) and (ii); provided, however, that the 
terms and conditions of any such restrictions permitted under this clause (vi)  
are not materially less favorable to the holders of the New Notes than those    
under or pursuant to the agreement evidencing the Indebtedness Refinanced.      

   Limitation on Designations of Unrestricted Subsidiaries.  The Company may
designate after the Issue Date any Subsidiary (other than a Guarantor) as an    
"Unrestricted Subsidiary" under the Indenture (a "Designation") only if:        

          (i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;                              

         (ii) the Company would be permitted to make an Investment (other than
a Permitted Investment) at the time of Designation (assuming the      
  effectiveness of such Designation) pursuant to the first paragraph of "-
 Limitation on Restricted Payments" above in an amount (the "Designation
   Amount") equal to the Fair Market Value of the Company's interest in such
Subsidiary on such date calculated in accordance with GAAP; and       

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     (iii) the Company would be permitted under the Indenture to incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness)  
    pursuant to the covenant described under "- Limitation on Indebtedness" at
the time of such Designation (assuming the effectiveness of such      
Designation).                                                         

   In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant "-
Limitation on Restricted Payments" for all purposes of the Indenture in the     
Designation Amount.                                                             

The Company shall not, and shall not cause or permit any Restricted   
Subsidiary to, at any time (x) provide credit support for or subject any of its 
property or assets (other than the Capital Stock of any Unrestricted Subsidiary)
to the satisfaction of, any Indebtedness of any Unrestricted Subsidiary         
(including any undertaking, agreement or instrument evidencing such             
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of any 
Unrestricted Subsidiary or (z) be directly or indirectly liable for any         
Indebtedness which provides that the holder thereof may (upon notice, lapse of  
time or both) declare a default thereon or cause the payment thereof to be      
accelerated or payable prior to its final scheduled maturity upon the occurrence
of a default with respect to any Indebtedness of any Unrestricted Subsidiary    
(including any right to take enforcement action against such Unrestricted       
Subsidiary), except any non-recourse guarantee given solely to support the      
pledge by the Company or any Restricted Subsidiary of the Capital Stock of an   
Unrestricted Subsidiary. No Unrestricted Subsidiary shall at any time guarantee 
or otherwise provide credit support for any obligation of the Company or any    
Restricted Subsidiary. All Subsidiaries of Unrestricted Subsidiaries shall      
automatically be deemed to be Unrestricted Subsidiaries.                        

   The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") if:                                                 

       (i) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation;                           

   (ii) all Liens and Indebtedness of such Unrestricted Subsidiary
 outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the 
Indenture; and                                                        

          (iii) any transaction (or series of related transactions) between such
  Subsidiary and any of its Affiliates that occurred while such Subsidiary
was an Unrestricted Subsidiary would be permitted by "- Limitation on 
  Transactions with Affiliates" above as if such transaction (or series of
related transactions) had occurred at the time of such Revocation.    

    All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Trustee certifying compliance with the foregoing   
provisions.                                                                     

Reporting Requirements.  For so long as the New Notes are outstanding,
whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange 
Act, or any successor provision thereto, the Company shall file with the        
Commission (if permitted by Commission practice and applicable law and          
regulations) the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such   
Section 13(a) or 15(d) or any successor provision thereto if the Company were so
subject, such documents to be filed with the Commission on or prior to the      
respective dates (the "Required Filing Dates") by which the Company would have  
been required so to file such documents if the Company were so subject. The     
Company shall also in any event (a) within 15 days after each Required Filing   
Date (whether or not permitted or required to be filed with the Commission) (i) 
transmit (or cause to be transmitted) by mail to all holders of Notes, as their 
names and addresses appear in the Note register, without cost to such Holders,  
and (ii) file with the Trustee, copies of the annual reports, quarterly reports 
and other documents which the Company is required to file with the Commission   
pursuant to the preceding sentence, or, if such filing is not so permitted,     
information and data of a similar nature, and (b) if, notwithstanding the       
preceding sentence, filing such documents by the Company with the Commission is 
not permitted by Commission practice or applicable law or regulations, promptly 
upon written request supply copies of                                           

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such documents to any holder of New Notes. In addition, for so long as any New  
Notes remain outstanding, the Company will furnish to the holders of New Notes  
and to securities analysts and prospective investors, upon their request, the   
information required to be delivered pursuant to Rule 144A(d)(4) under the      
Securities Act, and, to any beneficial holder of New Notes, if not obtainable   
from the Commission, information of the type that would be filed with the       
Commission pursuant to the foregoing provisions, upon the request of any such   
holder.                                                                         

CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.                                     

  The Indenture provides that the Company shall not, in any transaction or
series of related transactions, merge or consolidate with or into, or sell,     
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets as an entirety to, any Person or Persons, and the  
Company shall not permit any of the Restricted Subsidiaries to enter into any   
such transaction or series of related transactions if such transaction or series
of related transactions, in the aggregate, would result in a sale, assignment,  
conveyance, transfer, lease or other disposition of all or substantially all of 
the properties and assets of the Company and the Restricted Subsidiaries        
(determined on a consolidated basis for the Company and the Restricted          
Subsidiary), to any Person or Persons, unless at the time and after giving      
effect thereto (i) either (A)(1) if the transaction or transactions is a merger 
or consolidation involving the Company, the Company shall be the Surviving      
Person of such merger or consolidation or (2) if the transaction or transactions
is a merger or consolidation involving a Restricted Subsidiary, such Restricted 
Subsidiary shall be the Surviving Person of such merger or consolidation, or    
(B)(1) the Surviving Person shall be a corporation organized and existing under 
the laws of the United States of America, any State thereof or the District of  
Columbia and (2)(x) in the case of a transaction involving the Company, the     
Surviving Person shall expressly assume by a supplemental indenture executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the          
obligations of the Company under the Notes and the Indenture and the            
Registration Rights Agreement, and in each case, the Indenture and the          
Registration Rights Agreement shall remain in full force and effect, or (y) in  
the case of a transaction involving a Restricted Subsidiary that is a Guarantor,
the Surviving Person shall expressly assume by a supplemental indenture executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the      
obligations of such Restricted Subsidiary under its Note Guarantee and the      
Indenture and the Registration Rights Agreement, and in each case, such         
Indenture and the Registration Rights Agreement shall remain in full force and  
effect; (ii) immediately after giving effect to such transaction or series of   
related transactions on a pro forma basis, no Default shall have occurred and be
continuing; (iii) the Company, or the Surviving Person, as the case may be,     
immediately after giving effect to such transaction or series of related        
transactions on a pro forma basis (including, without limitation, any           
Indebtedness incurred or anticipated to be incurred in connection with or in    
respect of such transaction or series of transactions), could incur $1.00 of    
additional Indebtedness (other than Permitted Indebtedness) under the "-        
Limitation on Indebtedness" covenant described above; and (iv) immediately after
giving effect to such transaction or series of related transactions on a pro    
forma basis, the Company, or the Surviving Person, as the case may be, shall    
have a Consolidated Net Worth not less than the Consolidated Net Worth of the   
Company immediately prior to such transaction or series of related transactions.

     No Guarantor (other than a Guarantor whose Note Guarantee is to be released
in accordance with the terms of its Note Guarantee and the Indenture as provided
in the second sentence under "- Certain Covenants - Limitation on Guarantees by 
Restricted Subsidiaries" above) shall, in any transaction or series of related  
transactions, consolidate with or merge with or into another Person, whether or 
not such Person is affiliated with such Guarantor and whether or not such       
Guarantor is the Surviving Person, unless (i) the Surviving Person (if other    
than such Guarantor) is a corporation organized and validly existing under the  
laws of the United States, any State thereof or the District of Columbia; (ii)  
the Surviving Person (if other than such Guarantor) expressly assumes by a      
supplemental indenture all the obligations of such Guarantor under its Note     
Guarantee and the performance and observance of every covenant of the Indenture 
and the Registration Rights Agreement to be performed or observed by such       
Guarantor; (iii) immediately after giving effect to such transaction or series  
of related transactions                                                         

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on a pro forma basis, no Default shall have occurred and be continuing; and (iv)
immediately after giving effect to such transaction or series of related        
transactions on a pro forma basis, such Guarantor, or the Surviving Person, as  
the case may be, shall have a Consolidated Net Worth not less than the          
Consolidated Net Worth of such Guarantor immediately prior to such transaction  
or series of related transactions.                                              

In connection with any consolidation, merger, transfer, lease or other
disposition contemplated hereby, the Company shall deliver, or cause to be      
delivered, to the Trustee, in form and substance reasonably satisfactory to the 
Trustee, an officers' certificate and an opinion of counsel, each stating that  
such consolidation, merger, transfer, lease or other disposition and the        
supplemental indenture in respect thereof comply with the requirements under the
Indenture. In addition, each Guarantor, in the case of a transaction described  
in the first paragraph hereunder, unless it is the other party to the           
transaction or unless its Note Guarantee will be released and discharged in     
accordance with its terms as a result of the transaction, will be required to   
confirm, by supplemental indenture, that its Note Guarantee will continue to    
apply to the obligations of the Company or the Surviving Person under the       
Indenture.                                                                      

 Upon any consolidation or merger of the Company or any Guarantor or any
transfer of all or substantially all of the assets of the Company in accordance 
with the foregoing, in which the Company or a Guarantor is not the Surviving    
Person, the Surviving Person shall succeed to, and be substituted for, and may  
exercise every right and power of, the Company under the Indenture and the Notes
and the Registration Rights Agreement or such Guarantor under the Indenture, the
Note Guarantee of such Guarantor and the Registration Rights Agreement, as the  
case may be, with the same effect as if such successor corporation had been     
named as the Company or Guarantor, as the case may be, therein; and thereafter, 
except in the case of (a) a lease or (b) any sale, assignment, conveyance,      
transfer, lease or other disposition to a Restricted Subsidiary of the Company  
or such Guarantor, the Company shall be discharged from all obligations and     
covenants under the Indenture and the New Notes and such Guarantor shall be     
discharged from all obligations and covenants under the Indenture and the Note  
Guarantee of such Guarantor, as the case may be.                                

   The Indenture will provide that for all purposes of the Indenture and the
New Notes (including the provision of this covenant and the covenants described 
in "- Limitation on Indebtedness", "- Limitation on Restricted Payments" and "- 
Limitation on Liens"), Subsidiaries of any Surviving Person shall, upon such    
transaction or series of related transactions, become Restricted Subsidiaries   
unless and until designated as Unrestricted Subsidiaries pursuant to and in     
accordance with "- Limitation on Designations of Unrestricted Subsidiaries" and 
all Indebtedness, and all Liens on property or assets, of the Company and the   
Restricted Subsidiaries in existence immediately prior to such transaction or   
series of related transactions will be deemed to have been incurred upon such   
transaction or series of related transactions.                                  

EVENTS OF DEFAULT                                                               

The following are "Events of Default" under the Indenture:            

      (i) default in the payment of the principal of or premium, if any,
     when due and payable, on any of the New Notes (at its Stated Maturity, upon
   optional redemption, required purchase, sinking fund, scheduled principal
payment or otherwise); or                                             

       (ii) default in the payment of an installment of interest on any of
the New Notes, when due and payable, continued for 30 days or more; or

      (iii) the Company or any Guarantor fails to comply with any of its
obligations described under "- Consolidation, Merger, Sale of Assets, 
    Etc.," "- Certain Covenants - Change of Control" or "- Certain Covenants -
Disposition of Proceeds of Asset Sales"; or                           

     (iv) the Company or any Guarantor fails to perform or observe any
other term, covenant or agreement contained in the New Notes, the Note
     Guarantees or the Indenture (other than a default specified in (i), (ii) or
   (iii) above) for a period of 30 days after written notice of such failure

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   requiring the Company to remedy the same shall have been given (x) to the
     Company by the Trustee or (y) to the Company and the Trustee by the holders
    of 25% in aggregate principal amount of the New Notes then outstanding; or

       (v) default or defaults under one or more agreements, indentures or
   instruments under which the Company or any Restricted Subsidiary then has
   outstanding Indebtedness in excess of $5.0 million individually or in the
  aggregate and either (a) such Indebtedness is already due and payable in
 full or (b) such default or defaults results in the acceleration of the
maturity of such Indebtedness; or                                     

       (vi) any Note Guarantee ceases to be in full force and effect or is
declared null and void or any Guarantor denies that it has any further
   liability under any Note Guarantee, or gives notice to such effect (other
  than by reason of the termination of the Indenture or the release of any
     such Note Guarantee in accordance with "- Certain Covenants - Limitation on
Guarantees by Restricted Subsidiaries"); or                           

  (vii) one or more judgments, orders or decrees of any court or
   regulatory or administrative agency for the payment of money in excess of
$5.0 million either individually or in the aggregate shall have been  
   rendered against the Company or any Restricted Subsidiary or any of their
     respective properties and shall not have been discharged and either (a) any
     creditor shall have commenced an enforcement proceeding upon such judgment,
 order or decree or (b) there shall have been a period of 60 consecutive
    days during which a stay of enforcement of such judgment, order or decree,
by reason of a pending appeal or otherwise, shall not be in effect; or

          (viii) certain events of bankruptcy, insolvency or reorganization with
     respect to the Company or any Material Subsidiary of the Company shall have
occurred; or                                                          

    (ix) any holder of at least $10.0 million in aggregate principal
  amount of Indebtedness of the Company or any Restricted Subsidiary shall
  commence judicial proceedings to foreclose upon assets of the Company or
   any of its Restricted Subsidiaries having an aggregate Fair Market Value,
    individually or in the aggregate, in excess of $10.0 million or shall have
   exercised any right under applicable law or applicable security documents
to take ownership of any such assets in lieu of foreclosure.          

If an Event of Default (other than as specified in clause (viii) with 
respect to the Company), shall occur and be continuing, the Trustee, by notice  
to the Company, or the holders of at least 25% in aggregate principal amount of 
the Notes then outstanding, by notice to the Trustee and the Company, may       
declare the principal of, premium, if any, and accrued interest on all of the   
outstanding New Notes due and payable immediately, upon which declaration, all  
such amounts payable in respect of the New Notes will become and be immediately 
due and payable. If an Event of Default specified in clause (viii) above with   
respect to the Company occurs and is continuing, then the principal of, premium,
if any, and accrued interest on all of the outstanding Notes will ipso facto    
become and be immediately due and payable without any declaration or other act  
on the part of the Trustee or any holder of New Notes.                          

  After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a     
majority in aggregate principal amount of the outstanding New Notes, by written 
notice to the Company and the Trustee, may rescind such declaration if (a) the  
Company has paid or deposited with the Trustee a sum sufficient to pay (i) all  
sums paid or advanced by the Trustee under the Indenture and the reasonable     
compensation, expenses, disbursements and advances of the Trustee, its agents   
and counsel, (ii) all overdue interest on all New Notes, (iii) the principal of 
and premium, if any, on any New Notes which have become due otherwise than by   
such declaration of acceleration and interest thereon at the rate borne by the  
New Notes, and (iv) to the extent that payment of such interest is lawful,      
interest upon overdue interest at the rate borne by the New Notes; and (b) all  
Events of Default, other than the non-payment of principal of, premium, if any, 
and interest on the New Notes that has become due solely by such declaration of 
acceleration, have been cured or waived.                                        

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     No holder of any of the New Notes has any right to institute any proceeding
with respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in aggregate principal amount of the outstanding New Notes have made  
written request, and offered reasonable indemnity, to the Trustee to institute  
such proceeding as Trustee under the New Notes and the Indenture, the Trustee   
has failed to institute such proceeding within 15 days after receipt of such    
notice and the Trustee, within such 15-day period, has not received directions  
inconsistent with such written request by holders of a majority in aggregate    
principal amount of the outstanding New Notes. Such limitations do not apply,   
however, to a suit instituted by a holder of a New Note for the enforcement of  
the payment of the principal of, premium, if any, or interest on such New Note  
on or after the respective due dates expressed in such New Note.                

 During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the    
same degree of care and skill in its exercise thereof as a prudent Person would 
exercise under the circumstances in the conduct of such Person's own affairs.   
Subject to the provisions of the Indenture relating to the duties of the        
Trustee, in case an Event of Default shall occur and be continuing, the Trustee 
under the Indenture is not under any obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders    
unless such holders shall have offered to the Trustee reasonable security or    
indemnity. Subject to certain provisions concerning the rights of the Trustee,  
the holders of a majority in aggregate principal amount of the outstanding New  
Notes have the right to direct the time, method and place of conducting any     
proceeding for any remedy available to the Trustee, or exercising any trust or  
power conferred on the Trustee under the Indenture.                             

The Company is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Company and the Guarantors of their     
respective obligations under the Indenture and as to any default in such        
performance. The Company is also required to notify the Trustee within five     
business days of any event which is, or after notice or lapse of time or both   
would become, an Event of Default.                                              

DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE                                  

   The Company may, at its option and at any time, terminate the obligations
of the Company and the Guarantors with respect to the outstanding Notes         
("defeasance"). Such defeasance means that the Company will be deemed to have   
paid and discharged the entire Indebtedness represented by the outstanding New  
Notes, except for (i) the rights of holders of outstanding New Notes to receive 
payment in respect of the principal of, premium, if any, and interest on such   
New Notes when such payments are due, (ii) the Company's obligations to issue   
temporary New Notes, register the transfer or exchange of any New Notes, replace
mutilated, destroyed, lost or stolen New Notes and maintain an office or agency 
for payments in respect of the New Notes, (iii) the rights, powers, trusts,     
duties and immunities of the Trustee, and (iv) the defeasance provisions of the 
Indenture. In addition, the Company may, at its option and at any time, elect to
terminate the obligations of the Company and any Guarantor with respect to      
certain covenants that are set forth in the Indenture, some of which are        
described under "- Certain Covenants" above, and any omission to comply with    
such obligations will not constitute a Default or an Event of Default with      
respect to the New Notes ("covenant defeasance").                               

In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of 
the holders of the New Notes, cash in United States dollars, U.S. Government    
Obligations (as defined in the Indenture), or a combination thereof, in such    
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and   
interest on the outstanding New Notes at maturity; (ii) the Company shall have  
delivered to the Trustee an opinion of counsel to the effect that the holders of
the outstanding New Notes will not recognize income, gain or loss for federal   
income tax purposes as a result of such defeasance or covenant defeasance and   
will be subject to federal income tax on the same amounts, in the same manner   
and at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred (in the case of defeasance, such                    

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opinion must refer to and be based upon a ruling of the Internal Revenue Service
or a change in applicable federal income tax laws); (iii) no Default shall have 
occurred and be continuing on the date of such deposit or insofar as clause     
(viii) under the first paragraph under "- Events of Default" is concerned, at   
any time during the period ending on the 91st day after the date of deposit;    
(iv) such defeasance or covenant defeasance shall not cause the Trustee to have 
a conflicting interest with respect to any securities of the Company or any     
Guarantor; (v) such defeasance or covenant defeasance shall not result in a     
breach or violation of, or constitute a default under, any material agreement or
instrument to which the Company or any Guarantor is a party or by which it is   
bound; (vi) the Company shall have delivered to the Trustee an opinion of       
counsel to the effect that after the 91st day following the deposit, the trust  
funds will not be subject to the effect of any applicable bankruptcy,           
insolvency, reorganization or similar laws affecting creditors' rights          
generally; and (vii) the Company shall have delivered to the Trustee an         
officers' certificate and an opinion of counsel, each stating that all          
conditions precedent under the Indenture to either defeasance or covenant       
defeasance, as the case may be, have been complied with.                        

SATISFACTION AND DISCHARGE                                                      

 The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer of the New Notes, as 
expressly provided for in the Indenture) as to all outstanding New Notes when   
(i) either (a) all the New Notes theretofore authenticated and delivered (except
lost, stolen or destroyed New Notes which have been replaced or paid and New    
Notes for whose payment money has theretofore been deposited in trust or        
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for           
cancellation or (b) all New Notes not theretofore delivered to the Trustee for  
cancellation have become due and payable and the Company or any Guarantor has   
irrevocably deposited or caused to be deposited with the Trustee funds in an    
amount sufficient to pay and discharge the entire Indebtedness on the New Notes 
not theretofore delivered to the Trustee for cancellation, for principal of,    
premium, if any, and interest on the New Notes to the date of deposit together  
with irrevocable instructions from the Company directing the Trustee to apply   
such funds to the payment thereof at maturity or redemption, as the case may be;
(ii) the Company or any Guarantor has paid all other sums payable under the     
Indenture by the Company and the Guarantors; and (iii) the Company and each of  
the Guarantors have delivered to the Trustee an officers' certificate and an    
opinion of counsel each stating that all conditions precedent under the         
Indenture relating to the satisfaction and discharge of the Indenture have been 
complied with.                                                                  

AMENDMENTS AND WAIVERS                                                          

From time to time, the Company and the Guarantors, when authorized by 
resolutions of their boards of directors, and the Trustee may, without the      
consent of the holders of any outstanding Notes, amend, waive or supplement the 
Indenture or the New Notes for certain specified purposes, including, among     
other things, curing ambiguities, defects or inconsistencies, qualifying, or    
maintaining the qualification of, the Indenture under the Trust Indenture Act,  
or making any change that does not materially adversely affect the legal rights 
of any holder; provided, however, that the Company has delivered to the Trustee 
an Opinion of Counsel (as such term is defined in the Indenture) stating that   
such change does not materially adversely affect the legal rights of any holder.
Other amendments and modifications of the Indenture or the New Notes may be made
by the Company, the Guarantors and the Trustee with the consent of the holders  
of not less than a majority of the aggregate principal amount of the outstanding
New Notes; provided, however, that no such modification or amendment may,       
without the consent of the holder of each outstanding New Note affected thereby,
(i) change the maturity of the principal of or any installment of interest on   
any such New Note or alter the optional redemption or repurchase provisions of  
any such New Note or the Indenture in a manner adverse to the Holders of the New
Notes; (ii) reduce the principal amount of (or the premium) of any such New     
Note; (iii) reduce the rate of or extend the time for payment of interest on any
such New Note; (iv) change the place or currency of payment of principal of (or 
premium) or interest on any such New Note; (v) modify any provisions of the     
Indenture relating to the waiver of past defaults (other than to add sections of
the                                                                             

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Indenture or the New Notes subject thereto) or the right of the holders of New  
Notes to institute suit for the enforcement of any payment on or with respect to
any such New Note or any Note Guarantee or the modification and amendment       
provisions of the Indenture and the New Notes (other than to add sections of the
Indenture or the New Notes which may not be amended, supplemented or waived     
without the consent of each Holder therein affected); (vi) reduce the percentage
of the principal amount of outstanding New Notes necessary for amendment to or  
waiver of compliance with any provision of the Indenture or the Notes or for    
waiver of any Default in respect thereof; (vii) waive a default in the payment  
of principal of, premium, if any, or interest on, or redemption payment with    
respect to, the New Notes (except a rescission of acceleration of the New Notes 
by the holders thereof as provided in the Indenture and a waiver of the payment 
default that resulted from such acceleration); (viii) modify the ranking or     
priority of any New Note or the Note Guarantee of any Guarantor; (ix) modify the
provisions of any covenant (or the related definitions) in the Indenture        
requiring the Company to make and consummate a Change of Control Offer upon a   
Change of Control or an Asset Sale Offer in respect of an Asset Sale or modify  
any of the provisions or definitions with respect thereto in a manner materially
adverse to the Holders of New Notes affected thereby otherwise than in          
accordance with the Indenture; or (x) release any Guarantor from any of its     
obligations under its Note Guarantee or the Indenture otherwise than in         
accordance with the Indenture.                                                  

    The holders of a majority in aggregate principal amount of the outstanding
New Notes, on behalf of all holders of New Notes, may waive compliance by the   
Company and the Guarantors with certain restrictive provisions of the Indenture.
Subject to certain rights of the Trustee, as provided in the Indenture, the     
holders of a majority in aggregate principal amount of the New Notes, on behalf 
of all holders of the Notes, may waive any past default under the Indenture     
(including any such waiver obtained in connection with a tender offer or        
exchange offer for the New Notes), except a default in the payment of principal,
premium or interest or a default arising from failure to purchase any New Notes 
tendered pursuant to an Offer to Purchase pursuant thereto, or a default in     
respect of a provision that under the Indenture cannot be modified or amended   
without the consent of the Holder of each New Note that is affected.            

GOVERNING LAW                                                                   

     The Indenture and the New Notes and the Note Guarantees are governed by the
laws of the State of New York, without regard to the principles of conflicts of 
law.                                                                            

CERTAIN DEFINITIONS                                                             

    "Accounts Receivable Subsidiary" means Pickering Way Funding Corp. and any
other present or future Subsidiary of the Company that is, directly or          
indirectly, wholly owned by the Company (other than director qualifying shares) 
and organized for the purpose of and engaged in (i) purchasing, financing, and  
collecting accounts receivable obligations of customers of the Company or its   
Subsidiaries, (ii) the sale or financing of such accounts receivable or         
interests therein and (iii) other activities incident thereto.                  

"Acquired Indebtedness" means Indebtedness of a Person (i) assumed in 
connection with an Asset Acquisition from such Person or (ii) existing at the   
time such Person becomes a Restricted Subsidiary of any other Person (other than
any Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such Person becoming such a Restricted Subsidiary).              

   "Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect 
common control with such specified Person. For the purposes of this definition, 
"control" when used with respect to any specified Person means the power to     
direct the management and policies of such Person, directly or indirectly,      
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.

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  "Affiliate Transaction" has the meaning set forth under "- Limitation on
Transactions with Affiliates."                                                  

"Asset Acquisition" means (i) an Investment by the Company or any     
Restricted Subsidiary in any other Person pursuant to which such Person will    
become a Restricted Subsidiary or will be merged or consolidated with or into   
the Company or any Restricted Subsidiary or (ii) the acquisition by the Company 
or any Restricted Subsidiary of the assets of any Person which constitute       
substantially all of the assets of such Person, or any division or line of      
business of such Person, or which is otherwise outside of the ordinary course of
business.                                                                       

"Asset Sale" means any direct or indirect sale, issuance, conveyance, 
transfer, lease or other disposition (including, without limitation, any merger,
consolidation or sale-leaseback transaction) to any Person other than the       
Company or a Restricted Subsidiary, in one or a series of related transactions, 
of (i) any Capital Stock of any Restricted Subsidiary; (ii) all or substantially
all of the assets of any division or line of business of the Company or any     
Restricted Subsidiary; or (iii) any other properties or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" will not include (a) any     
sale, issuance, conveyance, transfer, lease or other disposition of properties  
or assets that is governed by the provisions described under "Consolidation,    
Merger, Sale of Assets, Etc."; provided, however, that any transaction          
consummated in compliance with "- Consolidation, Merger, Sale of Assets, etc."  
above involving a sale, conveyance, transfer, lease or other disposition of less
than all of the properties or assets of the Company shall be deemed to be an    
Asset Sale with respect to the properties or assets of the Company that are not 
so sold, conveyed, transferred, leased or otherwise disposed of in such         
transaction; (b) sales of property of equipment that have become worn out,      
obsolete or damaged or otherwise unsuitable for use in connection with the      
business of the Company or any Restricted Subsidiary, as the case may be; (c)   
any sale, conveyance, transfer, lease or other disposition of accounts          
receivables to an Accounts Receivable Subsidiary in the ordinary course of      
business; or (d) any transaction consummated in compliance with "- Certain      
Covenants - Limitation on Restricted Payments." For purposes of the covenant    
described under "- Certain Covenants - Disposition of Proceeds of Asset Sales," 
the term "Asset Sale" shall not include any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a     
series of related transactions, (i) involving assets with a Fair Market Value   
not in excess of $250,000 or (ii) constituting a Capitalized Lease Obligation.  

"Asset Sale Offer" has the meaning set forth under "- Disposition of  
Proceeds of Asset Sales."                                                       

    "Average Life to Stated Maturity" means, with respect to any Indebtedness,
as at any date of determination, the quotient obtained by dividing (i) the sum  
of the products of (a) the number of years from such date to the date or dates  
of each successive scheduled principal payment (including, without limitation,  
any sinking fund requirements) of such Indebtedness multiplied by (b) the amount
of each such principal payment by (ii) the sum of all such principal payments.  

"Capital Stock" means, with respect to any Person, any and all shares,
interests, participation, rights in or other equivalents (however designated) of
such Person's capital stock, and any rights (other than debt securities         
convertible into capital stock), warrants or options exchangeable for or        
convertible into such capital stock.                                            

  "Capitalized Lease Obligation" means any obligation under a lease of (or
other agreement conveying the right to use) any property (whether real, personal
or mixed) that is required to be classified and accounted for as a capital lease
obligation under GAAP, and, for the purpose of the Indenture, the amount of such
obligation at any date shall be the capitalized amount thereof at such date,    
determined in accordance with GAAP consistently applied.                        

 "Cash Equivalents" means, at any time, (i) any evidence of Indebtedness
with a maturity of not more than one year issued or directly and fully          
guaranteed or insured by the United States of America or any agency or          
instrumentality thereof (provided that the full faith and credit of the United  
States of America is pledged in support thereof); (ii) certificates of deposit  
or acceptances with a maturity of not                                           

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more than one year of any financial institution that is a member of the Federal 
Reserve System having combined capital and surplus and undivided profits of not 
less than $500,000,000; (iii) commercial paper with a maturity of not more than 
one year issued by a corporation that is not an Affiliate of the Company        
organized under the laws of any state of the United States or the District of   
Columbia and rated at least A-1 by Standard & Poor's Corporation or at least P-1
by Moody's Investors Service, Inc.; and (iv) repurchase obligations with a term 
of not more than seven days for underlying securities of the types described in 
clauses (i) and (ii) above entered into with any financial institution meeting  
the qualifications specified in clause (ii) above.                              

 "Change of Control" means the occurrence of any of the following events
(whether or not approved by the Board of Directors of the Company): (i) any     
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the  
Exchange Act), other than Permitted Holders, is or becomes the "beneficial      
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that 
a Person shall be deemed to have "beneficial ownership" of all securities that  
such Person has the right to acquire, whether such right is exercisable         
immediately or only after the passage of time), directly or indirectly, of 50%  
of the total voting power of the then outstanding Voting Stock of the Company;  
(ii) the Company consolidates with, or merges with or into, another Person      
(other than a Wholly-Owned Restricted Subsidiary) or sells, assigns, conveys,   
transfers, leases or otherwise disposes of all or substantially all of its      
assets to any Person (other than a Wholly Owned Restricted Subsidiary), other   
than any such transaction where the holders of the Voting Stock of the Company  
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the total voting power of the then outstanding Voting Stock of the
surviving or transferee corporation immediately after such transaction; (iii)   
during any consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors of the Company (together with any new 
directors whose election by such board or whose nomination for election by the  
stockholders of the Company was approved by a vote of 66 2/3% of the directors  
then still in office who were either directors at the beginning of such period  
or whose election or nomination for election was previously so approved) cease  
for any reason to constitute a majority of the Board of Directors of the Company
then in office; or (iv) any order, judgment or decree shall be entered against  
the Company decreeing the dissolution or split up of the Company and such order 
shall remain undischarged or unstayed for a period in excess of sixty days.     

"Change of Control Offer" has the meaning set forth under "- Change of
Control."                                                                       

     "Consolidated Cash Flow Available for Fixed Charges" means, for any period,
(i) the sum of, without duplication, the amounts for such period, taken as a    
single accounting period, of (a) Consolidated Net Income, (b) to the extent     
reducing Consolidated Net Income, Consolidated Non-cash Charges, (c) to the     
extent reducing Consolidated Net Income, Consolidated Interest Expense, and (d) 
to the extent reducing Consolidated Net Income, Consolidated Income Tax Expense 
less (ii) other non-cash items increasing Consolidated Net Income for such      
period.                                                                         

     "Consolidated Fixed Charge Coverage Ratio" means the ratio of the aggregate
amount of Consolidated Cash Flow Available for Fixed Charges of the Company for 
the four full fiscal quarters immediately preceding the date of the transaction 
(the "Transaction Date") giving rise to the need to calculate the Consolidated  
Fixed Charge Coverage Ratio for which consolidated financial information of the 
Company is available (such four full fiscal quarter period being referred to    
herein as the "Four Quarter Period") to the aggregate amount of Consolidated    
Fixed Charges of the Company for such Four Quarter Period. For purposes of this 
definition, "Consolidated Cash Flow Available for Fixed Charges" and            
"Consolidated Fixed Charges" will be calculated, without duplication, after     
giving effect on a pro forma basis for the period of such calculation to (i) the
incurrence of any Indebtedness of the Company or any of the Restricted          
Subsidiaries during the period commencing on the first day of the Four Quarter  
Period to and including the Transaction Date (the "Reference Period"),          
including, without limitation, the incurrence of the Indebtedness giving rise to
the need to make such calculation, as if such incurrence occurred on the first  
day of the Reference Period, (ii) an adjustment to eliminate or include, as     
applicable, the Consolidated Cash Flow Available for Fixed Charges and          
Consolidated Fixed Charges of the Company directly attributable to assets which 
are the subject of any Asset Sale or                                            

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Asset Acquisition (including, without limitation, any Asset Acquisition giving  
rise to the need to make such calculation as a result of the Company or one of  
the Restricted Subsidiaries (including any Person who becomes a Restricted      
Subsidiary as a result of the Asset Acquisition) incurring Acquired             
Indebtedness) occurring during the Reference Period, as if such Asset Sale or   
Asset Acquisition occurred on the first day of the Reference Period and (iii)   
the retirement of Indebtedness during the Reference Period which cannot         
thereafter be reborrowed occurring as if retired on the first day of the        
Reference Period. In calculating "Consolidated Fixed Charges" for purposes of   
determining the denominator (but not the numerator) of this "Consolidated Fixed 
Charge Coverage Ratio," (1) interest on Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined    
thereafter will be deemed to accrue at a fixed rate per annum equal to the rate 
of interest on such Indebtedness in effect on the Transaction Date; (2) if      
interest on any Indebtedness actually incurred on the Transaction Date may      
optionally be determined at an interest rate based upon a factor of a prime or  
similar rate, a eurocurrency interbank offered rate, or other rates, then the   
interest rate in effect on the Transaction Date shall be deemed to have been in 
effect during the Reference Period; and (3) notwithstanding clause (1) above,   
interest on Indebtedness determined on a fluctuating basis, to the extent such  
interest is covered by agreements relating to Interest Rate Protection          
Obligations, will be deemed to accrue at the rate per annum resulting after     
giving effect to the operation of such agreements. If the Company or any        
Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a     
third Person, the above definition will give effect to the incurrence of such   
guaranteed Indebtedness as if the Company or any Restricted Subsidiary had      
directly incurred or otherwise assumed such guaranteed Indebtedness. For        
purposes of this definition, with respect to any calculation pursuant to which  
the Four Quarter Period includes a fiscal quarter prior to March 30, 1997,      
"Consolidated Cash Flow Available for Fixed Charges" and "Consolidated Fixed    
Charges" will be calculated, without duplication, as if the Accounts Receivable 
Subsidiary was an Unrestricted Subsidiary at all times during such Four Quarter 
Period.                                                                         

 "Consolidated Fixed Charges" means, for any period, the sum of, without
duplication, the amounts for such period of (i) Consolidated Interest Expense;  
and (ii) the aggregate amount of cash dividends and other distributions paid or 
accrued during such period in respect of Redeemable Capital Stock of the        
Company.                                                                        

    "Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes payable by the Company and the   
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.                                                           

     "Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of the Company and the Restricted           
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i) any amortization of debt discount 
attributable to such period, (ii) the net cost under Interest Rate Protection   
Obligations (including any amortization of discounts), (iii) the interest       
portion of any deferred payment obligation, (iv) all commissions, discounts and 
other fees and charges owed with respect to letters of credit and bankers'      
acceptance financing and (v) all capitalized interest and all accrued interest, 
and (b) all but the principal component of Capitalized Lease Obligations paid,  
accrued and/or scheduled to be paid or accrued by the Company and the Restricted
Subsidiaries during such period and as determined on a consolidated basis in    
accordance with GAAP.                                                           

"Consolidated Net Income" means, for any period, the consolidated net 
income (or loss) of the Company and the Restricted Subsidiaries for such period 
as determined in accordance with GAAP, adjusted, to the extent included in      
calculating such net income, by excluding, without duplication, (i) all         
extraordinary gains or losses (net of fees and expenses relating to the         
transaction giving rise thereto), (ii) income of the Company and its Restricted 
Subsidiaries derived from or in respect of Investments in Unrestricted          
Subsidiaries, except to the extent that cash dividends or distributions are     
actually received by the Company or a Restricted Subsidiary, (iii) the portion  
of net income (or loss) of the Company and the Restricted Subsidiaries allocable
to minority interests in unconsolidated Persons, except to the extent that cash 
dividends or distributions are actually received by the Company or one of the   
Restricted Subsidiaries, (iv) net income (or loss) of any Person combined with  
the Company or one                                                              

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of the Restricted Subsidiaries in a "pooling of interests" basis attributable to
any period prior to the date of combination, (v) gains or losses in respect of  
any Asset Sales by the Company or one of the Restricted Subsidiaries (net of    
fees and expenses relating to the transaction giving rise thereto), and (vi) the
net income of any Restricted Subsidiary to the extent that the declaration of   
dividends or similar distributions by that Restricted Subsidiary of that income 
is not at the time permitted, directly or indirectly, by operation of the terms 
of its charter or any agreement, instrument, judgment, decree, order, statute,  
rule or governmental regulations applicable to that Restricted Subsidiary or its
stockholders.                                                                   

     "Consolidated Net Worth" with respect to any Person means the equity of the
holders of Capital Stock of such Person and its Restricted Subsidiaries         
(excluding any Redeemable Capital Stock), as reflected in a balance sheet of    
such Person determined on a consolidated basis and in accordance with GAAP.     

"Consolidated Non-cash Charges" means, for any period, the aggregate  
depreciation, amortization and other non-cash expenses of the Company and the   
Restricted Subsidiaries reducing Consolidated Net Income for such period (other 
than any non-cash item requiring an accrual or reserve for cash disbursements in
any future period), determined on a consolidated basis in accordance with GAAP. 

   "Consulting Agreement" means the Consultant Agreement between the Company
and George McFadden dated as of January 1, 1995, as amended and in effect from  
time to time.                                                                   

"covenant defeasance" has the meaning set forth under "- Defeasance or
Covenant Defeasance of Indenture."                                              

 "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the     
Company against fluctuations in currency values.                                

  "Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.                                             

"Defeasance" has the meaning set forth under "- Defeasance or Covenant
Defeasance of Indenture."                                                       

"Designation" has the meaning set forth under "- Certain Covenants -  
Limitation on Designations of Unrestricted Subsidiaries."                       

     "Designation Amount" has the meaning set forth under "- Certain Covenants -
Limitation on Designations of Unrestricted Subsidiaries."                       

 "Domestic Subsidiary" means a Restricted Subsidiary organized under the
laws of the United States, any State or territory thereof or the District of    
Columbia.                                                                       

   "Event of Default" has the meaning set forth under "- Events of Default."

   "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.             

     "Fair Market Value" means, with respect to any asset, the price which could
be negotiated in an arm's-length free market transaction, for cash, between a   
willing seller and a willing buyer, neither of which is under pressure or       
compulsion to complete the transaction. Fair Market Value shall be determined by
the Board of Directors of the Company acting in good faith evidenced by a board 
resolution thereof delivered to the Trustee.                                    

"Four Quarter Period" has the meaning set forth in the definition of  
"Consolidated Fixed Charge Coverage Ratio."                                     

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   "GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of   
determination and which are consistently applied for all applicable periods.    

 "guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary    
course of business), direct or indirect, in any manner, of any part or all of   
such obligation and (ii) an agreement, direct or indirect, contingent or        
otherwise, the practical effect of which is to assure in any way the payment or 
performance (or payment of damages in the event of non-performance) of all or   
any part of such obligation, including, without limiting the foregoing, the     
payment of amounts drawn down by letters of credit. A guarantee shall include,  
without limitation, any agreement to maintain or preserve any other Person's    
financial condition or to cause any other Person to achieve certain levels of   
operating results.                                                              

 "Guarantor" means each Domestic Subsidiary, formed, created or acquired
before or after the Issue Date, required to become a Guarantor after the Issue  
Date pursuant to "- Certain Covenants - Limitation on Guarantees by Restricted  
Subsidiaries."                                                                  

   "incur" has the meaning set forth in "- Certain Covenants - Limitation on
Indebtedness." "Incurrence," "incurred" and "incurring" shall have the meanings 
correlative to the foregoing.                                                   

    "Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase 
price of property or services, excluding any trade payable and other accrued    
current liabilities incurred in the ordinary course of business, but including, 
without limitation, all obligations, contingent or otherwise, of such Person in 
connection with any letters of credit, bankers acceptance or other similar      
credit transaction and in connection with any agreement to purchase, redeem,    
exchange, convert or otherwise acquire for value any Capital Stock of such      
Person, or any warrants, rights or options to acquire such Capital Stock, now or
hereafter outstanding, (ii) all obligations of such Person evidenced by bonds,  
notes, debentures or other similar instruments, (iii) all indebtedness created  
or arising under any conditional sale or other title retention agreement with   
respect to property acquired by such Person (even if the rights and remedies of 
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable    
arising in the ordinary course of business, (iv) all Capitalized Lease          
Obligations of such Person, (v) all Indebtedness referred to in the preceding   
clauses of other Persons and all dividends of other Persons, the payment of     
which is secured by (or for which the holder of such Indebtedness has an        
existing right, contingent or otherwise, to be secured by) any Lien upon        
property (including, without limitation, accounts and contract rights) owned by 
such Person, even though such Person has not assumed or become liable for the   
payment of such Indebtedness (the amount of such obligation being deemed to be  
the lesser of the value of such property or asset or the amount of the          
obligation so secured), (vi) all guarantees of Indebtedness by such Person,     
(vii) except for purposes of the covenant under "Limitation on Restricted       
Payments," all Redeemable Capital Stock valued at the greater of its voluntary  
or involuntary maximum fixed repurchase price plus accrued and unpaid dividends,
(viii) all obligations under or in respect of Currency Agreements and Interest  
Rate Protection Obligations of such Person, and (ix) any amendment, supplement, 
modification, deferral, renewal, extension or refunding of any liability of the 
types referred to in clauses (i) through (viii) above. For purposes hereof, the 
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not 
have a fixed repurchase price will be calculated in accordance with the terms of
such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased
on any date on which Indebtedness will be required to be determined pursuant to 
the Indenture, and if such price is based upon, or measured by, the Fair Market 
Value of such Redeemable Capital Stock, such Fair Market Value is to be         
determined in good faith by the Board of Directors of the issuer of such        
Redeemable Capital Stock. Indebtedness (a) shall never be calculated taking into
account any cash and cash equivalents held by such Person; (b) shall not include
obligations of any Person (x) arising from the honoring by a bank or other      
financial institution of a check, draft or similar instrument inadvertently     
drawn against insufficient funds in the ordinary course of business, provided   
that such obligations are extinguished within two Business Days of their        
incurrence or (y) resulting from the endorsement of negotiable instruments for  
collection in the ordinary course of business and                               

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consistent with past business practices; and (c) which provides that an amount  
less than the principal amount thereof shall be due upon any declaration of     
acceleration thereof shall be deemed to be incurred or outstanding in an amount 
equal to the accreted value thereof at the date of determination.               

   "Independent Financial Advisor" means a nationally recognized accounting,
appraisal or investment banking firm (i) which does not, and whose directors,   
officers and employees or Affiliates do not have, a direct or indirect financial
interest in the Company and (ii) which, in the judgment of the Board of         
Directors of the Company, is otherwise independent and qualified to perform the 
task for which it is to be engaged.                                             

    "Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or          
indirectly, such Person is entitled to receive from time to time periodic       
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person  
calculated by applying a fixed or a floating rate of interest on the same       
notional amount or any other arrangement involving payments by or to such Person
based upon fluctuations in interest rates.                                      

"Investment" means, with respect to any Person, any direct or indirect
advance, loan or other extension of credit (including by means of a guarantee)  
or capital contribution to (by means of any transfer of cash or other property  
to others or any payment for property or services for the account or use of     
others or otherwise), or any purchase or acquisition by such Person of any      
Capital Stock, bonds, notes, debentures or other securities or evidences of     
Indebtedness issued by any other Person. Investments shall exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade   
practices. In addition to the foregoing, any Currency Agreement, Interest Rate  
Protection Obligation or similar agreement shall constitute an Investment.      

"Issue Date" means the original issue date of the Notes under the     
Indenture.                                                                      

"Lien" means any mortgage, charge, pledge, lien (statutory or other), 
privilege, security interest, hypothecation, cessation and transfer, lease of   
real property, assignment for security, claim, deposit arrangement, or          
preference or priority or other encumbrance upon or with respect to any property
of any kind, whether real, personal or mixed, movable or immovable, now owned or
hereafter acquired. A Person shall be deemed to own subject to a Lien any       
property which it has acquired or holds subject to the interest of a vendor or  
lessor under any conditional sale agreement, capital lease or other title       
retention agreement.                                                            

    "Material Subsidiary" means each Restricted Subsidiary of the Company that
is a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X under   
the Securities Act and the Exchange Act (as such regulation is in effect on the 
Issue Date).                                                                    

 "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash          
Equivalents (except to the extent that such obligations are financed or sold    
with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage 
commissions and other reasonable fees and expenses (including fees and expenses 
of legal counsel and investment bankers) related to such Asset Sale, (ii)       
provisions for all taxes payable as a result of such Asset Sale, (iii) amounts  
required to be paid to any Person (other than the Company or any Restricted     
Subsidiary) owning a beneficial interest in or having a Lien on the assets      
subject to the Asset Sale and (iv) appropriate amounts to be provided by the    
Company or any Restricted Subsidiary, as the case may be, as a reserve required 
in accordance with GAAP consistently applied against any liabilities associated 
with such Asset Sale and retained by the Company or any Restricted Subsidiary,  
as the case may be, after such Asset Sale, including, without limitation,       
pension and other post-employment benefit liabilities, liabilities related to   
environmental matters and liabilities under any indemnification obligations     
associated with such Asset Sale (provided that the amount of any such reserves  
shall be deemed to constitute Net Cash Proceeds at the time such reserves shall 
have been released or are not otherwise required to be retained as a reserve).  

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     "New Revolving Credit Facility" means the Credit Agreement dated as of June
16, 1997 among the Company, CoreStates Bank, N.A., as Administrative Agent (or  
any successor administrative agent), and the other financial institutions       
signatory thereto from time to time, as in effect on the Issue Date, and as such
agreement may be amended, renewed, extended, refinanced, substituted or replaced
in whole, supplemented or otherwise modified from time to time, and includes (a)
related notes, guarantees and other agreements executed in connection therewith 
and (b) any agreement (i) extending the maturity of all or any portion of the   
Indebtedness thereunder, (ii) adding guarantors thereunder and (iii) increasing 
the amount to be borrowed thereunder; provided, however, that in the case of    
clauses (ii) and (iii), any such agreement is not prohibited by the Indenture.  

   "Note Guarantee" means the guarantee by each of the Guarantors of the
Notes and the Company's obligations under the Indenture.                        

     "Other Indebtedness" has the meaning set forth under "- Certain Covenants -
Limitation on Guarantees of Restricted Subsidiaries."                           

"Other Senior Debt Pro Rata Share" means the amount of the Net Cash   
Proceeds obtained by multiplying the amount of such Net Cash Proceeds by a      
fraction, (i) the numerator of which is the lesser of the aggregate principal   
face amount or accreted value of all Indebtedness (other than (x) the Notes and 
(y) Subordinated Indebtedness) of the Company and any Guarantor outstanding at  
the time of the applicable Asset Sale with respect to which the Company or a    
Guarantor, as the case may be, is required to use Net Cash Proceeds to repay or 
make an offer to purchase and repay and (ii) the denominator of which is the sum
of (a) the aggregate principal amount of all Notes outstanding at the time of   
the applicable Asset Sale and (b) the lesser of the aggregate principal face    
amount or accreted value of all other Indebtedness (other than Subordinated     
Indebtedness) of the Company or a Guarantor outstanding at the time of the      
applicable Asset Sale with respect to which the Company or a Guarantor, as the  
case may be, is required to use the Net Cash Proceeds to repay or to offer to   
purchase and repay.                                                             

  "Outstanding Preferred Stock" means all shares of Preferred Stock of the
Company issued and outstanding as of the Issue Date.                            

 "Permitted Holders" means (i) each of (A) David R. Hamilton, (B) George
McFadden and (C) John McFadden; (ii) the spouse, ancestors, siblings,           
descendants (including children or grandchildren by adoption) of (A) any of the 
Persons described in clause (i) or (B) any spouse, ancestor, sibling or         
descendent (including children or grandchildren by adoption) of any of the      
Persons described in clause (i); (iii) in the event of the incompetence or death
of any of the Persons described in clauses (i) and (ii), such Person's estate,  
executor, administrator, committee or other personal representative, in each    
case who at any particular date shall beneficially own or have the right to     
acquire, directly or indirectly, Capital Stock of the Company; (iv) any trusts  
created for the benefit of the Persons described in clause (i), (ii) or (iii) or
any trust for the benefit of any such trust.                                    

"Permitted Indebtedness" has the meaning set forth under "- Certain   
Covenants - Limitation on Indebtedness."                                        

"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility 
and workers' compensation, performance and other similar deposits; (c) loans and
advances to employees made in the ordinary course of business not to exceed     
$250,000 in the aggregate at any one time outstanding; (d) loans and advances to
David R. Hamilton made after the Issue Date not to exceed $350,000 in the       
aggregate at any one time outstanding; (e) Interest Rate Protection Obligations 
and Currency Agreements permitted under clause (vii) or (viii) of the second    
paragraph under "- Certain Covenants - Limitation on Indebtedness;" (f)         
Investments represented by accounts receivable created or acquired in the       
ordinary course of business; (g) Investments in the form of the sale (on a      
"true-sale" non-recourse basis) of receivables transferred from the Company or  
any Restricted Subsidiary to an Accounts Receivable Subsidiary as a capital     
contribution or in exchange for Indebtedness of such Accounts Receivable        
Subsidiary or cash in the ordinary course of business; (h) Investments existing 
on the Issue Date and any renewal or replacement thereof on terms and conditions
no less favorable in any respect than that                                      

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existing on the Issue Date; (i) any Investment to the extent that the           
consideration therefor is Capital Stock (other than Redeemable Capital Stock) of
the Company; and (j) bonds, notes, debentures or other securities received in   
connection with an Asset Sale permitted under "- Certain Covenants - Disposition
of Proceeds of Asset Sales," not to exceed 15% of the total consideration in    
such Asset Sale.                                                                

  "Permitted Liens" means (a) Liens on property of (or Capital Stock of) a
Person existing at the time such Person (i) is merged into or consolidated with 
the Company or any Restricted Subsidiary or (ii) becomes a Restricted           
Subsidiary; provided, however, that such Liens were in existence prior to the   
contemplation of such merger, consolidation or acquisition and do not attach to 
any property or assets of the Company or any Restricted Subsidiary other than   
the property or assets subject to the Liens prior to such merger, consolidation 
or acquisition; (b) Liens imposed by law such as landlords', carriers',         
warehousemen's and mechanics' Liens and other similar Liens arising in the      
ordinary course of business which secure payment of obligations not more than 60
days past due or which are being contested in good faith and by appropriate     
proceedings; (c) Liens existing on the Issue Date; (d) Liens securing only the  
Notes; (e) Liens in favor of the Company or any Restricted Subsidiary; (f) Liens
for taxes, assessments or governmental charges or claims that are not yet       
delinquent for more than 90 days or that are being contested in good faith by   
appropriate proceedings promptly instituted and diligently concluded; provided, 
however, that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation  
of rights of way, restrictions and other similar easements, licenses,           
restrictions on the use of properties, or imperfections of title that in the    
aggregate are not material in amount and do not in any case materially detract  
from the properties subject thereto or interfere with the ordinary conduct of   
the business of the Company and the Restricted Subsidiaries; (h) Liens resulting
from the deposit of cash or notes in connection with contracts, tenders or      
expropriation proceedings, or to secure workers' compensation, surety or appeal 
bonds, costs of litigation when required by law, public and statutory           
obligations, obligations under franchise arrangements entered into in the       
ordinary course of business and other obligations of a similar nature arising in
the ordinary course of business; (i) Liens on property of the Company securing  
the New Revolving Credit Facility; (j) Liens securing Indebtedness consisting of
Capitalized Lease Obligations, Purchase Money Indebtedness (other than          
Indebtedness incurred in connection with an Asset Acquisition), mortgage        
financings, industrial revenue bonds or other monetary obligations, in each case
incurred solely for the purpose of financing all or any part of the purchase    
price or cost of construction or installation of assets used in the business of 
the Company or the Restricted Subsidiaries, or repairs, additions or            
improvements to such assets; provided, however, that (I) such Liens secure      
Indebtedness in an amount not in excess of the original purchase price or the   
original cost of any such assets or repair, addition or improvement thereto     
(plus an amount equal to the reasonable fees and expenses in connection with the
incurrence of such Indebtedness), (II) such Liens do not extend to any other    
assets of the Company or the Restricted Subsidiaries (and, in the case of       
repairs, additions or improvements to any such assets, such Lien extends only to
the assets (and improvements thereto or thereon) repaired, added to or          
improved), (III) the incurrence of such Indebtedness is permitted by "-         
Limitation on Indebtedness" above and (IV) such Liens attach prior to 90 days   
after such purchase, construction, installation, repair, addition or            
improvement; (k) Liens to secure any Refinancings (or successive Refinancings), 
in whole or in part, of any Indebtedness secured by Liens referred to in the    
clauses above so long as such Lien does not extend to any other property (other 
than improvements thereto); (l) Liens securing letters of credit entered into in
the ordinary course of business and consistent with past business practice; (m) 
Liens on and pledges of the Capital Stock of any Unrestricted Subsidiary        
securing any Indebtedness of such Unrestricted Subsidiary; (n) leases or        
subleases granted to others that do not materially interfere with the ordinary  
course of business of the Company and the Restricted Subsidiaries, taken as a   
whole; (o) any interest or title of a lessor in the property subject to any     
lease or located on the real property subject to any lease; (p) Liens arising   
from the rendering of a final judgment or order against the Company or any      
Restricted Subsidiary that does not give rise to an Event of Default; and (q)   
Liens on property existing at the time such property is acquired by the Company 
or any Restricted Subsidiary so long as such acquisition (including the         
assumption of any Indebtedness in connection therewith) does not violate any of 
the terms of the                                                                

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Indenture and such Liens were in existence prior to the contemplation of such   
acquisition and do not attach to any other property of the Company or such      
Restricted Subsidiary.                                                          

"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,            
unincorporated organization or government or any agency or political subdivision
thereof.                                                                        

   "Preferred Stock" means, with respect to any Person, Capital Stock of any
class or classes (however designated) of such Person which is preferred as to   
the payment of dividends or distributions, or as to the distribution of assets  
upon any voluntary or involuntary liquidation or dissolution of such Person,    
over Capital Stock of any other class of such Person.                           

"Public Equity Offering" has the meaning set forth under "- Optional  
Redemption - Optional Redemption upon Public Equity Offering."                  

"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary incurred for the purpose of financing all or any part of  
the purchase price or the cost of construction or improvement of any property,  
provided that the aggregate principal amount of such Indebtedness does not      
exceed the lesser of the Fair Market Value of such property or such purchase    
price or cost.                                                                  

  "Redeemable Capital Stock" means any class or series of Capital Stock to
the extent that, either by its terms, by the terms of any security into which it
is convertible or exchangeable, or by contract or otherwise, is or upon the     
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the New Notes or is redeemable at the option of 
the holder thereof at any time prior to such Stated Maturity, or is convertible 
into or exchangeable for debt securities at any time prior to such Stated       
Maturity.                                                                       

"Reference Period" has the meaning set forth under the definition of  
"Consolidated Fixed Charge Coverage Ratio."                                     

"Refinance" means, with respect to any Indebtedness, any refinancing, 
redemption, retirement, renewal, replacement, extension or refunding of such    
Indebtedness.                                                                   

     "Restricted Payment" has the meaning set forth under "- Certain Covenants -
Limitation on Restricted Payments."                                             

    "Restricted Subsidiary" means any Subsidiary of the Company (other than an
Accounts Receivable Subsidiary) that has not been designated by the Board of    
Directors of the Company, by a board resolution delivered to the Trustee, as an 
Unrestricted Subsidiary pursuant to and in compliance with the covenant         
described under "- Certain Covenants - Limitation on Designations of            
Unrestricted Subsidiaries." Any such designation may be revoked by a board      
resolution of the Board of Directors of the Company delivered to the Trustee,   
subject to the provisions of such covenant.                                     

"Revocation" has the meaning set forth under "- Certain Covenants -   
Limitation on Designations of Unrestricted Subsidiaries."                       

     "Securities Act" mean the Securities Act of 1933, as amended, and the rules
and regulations promulgated by the Commission thereunder.                       

  "Service Agreement" means the Service Agreement dated as of December 11,
1995 by and between Chemical Leaman Tank Lines, Inc. and Acumen Consulting      
Group, Inc., as amended and in effect from time to time.                        

     "Stated Maturity" means, with respect to any New Note or any installment of
interest thereon, the dates specified in such New Note as the fixed date on     
which the principal of such New Note or such installment of interest is due and 
payable, and when used with respect to any other Indebtedness, means the date   
specified in the instrument governing such Indebtedness as the fixed date on    
which the principal of such Indebtedness or any installment of interest is due  
and payable.                                                                    

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"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding shares of Voting Capital Stock having at least a majority 
of the votes entitled to be cast in the election of directors shall at the time 
be owned, directly or indirectly, by such Person, or (b) any other Person of    
which at least a majority of the shares of Voting Capital Stock are at the time,
directly or indirectly, owned by such first named Person.                       

"Subordinated Indebtedness" means, with respect to the Company,       
Indebtedness of the Company which is expressly subordinated in right of payment 
to the Notes or, with respect to any Guarantor, Indebtedness of such Guarantor  
which is expressly subordinated in right of payment to the Note Guarantee of    
such Guarantor.                                                                 

"Surviving Person" means, with respect to any Person involved in any  
consolidation or merger, or any sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of its properties and assets as an
entirety, the Person formed by or surviving such merger or consolidation or the 
Person to which such sale, assignment, conveyance, transfer or lease is made.   

"Transaction Date" has the meaning set forth under the definition of  
"Consolidated Fixed Charge Coverage Ratio".                                     

 "Unrestricted Subsidiary" means each Accounts Receivable Subsidiary and
each other Subsidiary of the Company (other than a Guarantor) designated as such
pursuant to and in compliance with the covenant described under "- Certain      
Covenants - Limitation on Designations of Unrestricted Subsidiaries." Any such  
designation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such covenant.                            

"Unutilized Net Available Proceeds" has the meaning set forth under "-
Certain Covenants - Disposition of Proceeds of Asset Sales."                    

"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary          
circumstances to elect at least a majority of the Board of Directors, managers  
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of 
the happening of any contingency).                                              

 "Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary of
which 100% of the outstanding Capital Stock is owned by the Company and/or      
another Wholly-Owned Restricted Subsidiary. For purposes of this definition, any
directors' qualifying shares shall be disregarded in determining the ownership  
of a Restricted Subsidiary.                                                     

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BOOK-ENTRY; DELIVERY AND FORM 

  Except as set forth below, the New Notes will initially be issued in the
form of one registered New Note in global form (the "Global New Note"). The     
Global New Note will be deposited on the date of the closing of the Exchange    
Offer with, or on behalf of, The Depository Trust Company (the "Depositary") and
registered in the name of Cede & Co., as nominee of the Depositary. Interests in
the Global New Note will be available for purchase only by "qualified           
institutional buyers," as defined in Rule 144A under the Securities Act         
("QIBs").                                                                       

     New Notes that are (i) originally issued to or transferred to institutional
"accredited investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the 
Securities Act, who are not QIBs or to any other persons who are not QIBs or    
(ii) issued as described below under "Certificated Securities," will be issued  
in registered form without coupons (the "Certificated Securities"). Upon the    
transfer to a QIB of Certificated Securities, such Certificated Securities may, 
unless the Global New Note has previously been exchanged for Certificated       
Securities, be exchanged for an interest in the Global New Note representing the
principal amount of New Notes being transferred.                                

 The Depositary has advised the Company that it is (i) a limited-purpose
trust company organized under the laws of the State of New York, (ii) a member  
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"        
registered pursuant to Section 17A of the Exchange Act. The Depositary was      
created to hold securities for its participating organizations (collectively,   
the "Participants") and to facilitate the clearance and settlement of           
transactions in such securities between Participants through electronic         
book-entry changes in accounts of its Participants. The Depositary's            
Participants include securities brokers and dealers (including the Initial      
Purchasers), banks and trust companies, clearing corporations and certain other 
organizations. Access to the Depositary's system is also available to other     
entities such as banks, brokers, dealers and trust companies (collectively, the 
"Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. QIBs may elect to hold New   
Notes acquired by them through the Depositary. QIBs who are not Participants may
beneficially own securities held by or on behalf of the Depositary only through 
Participants or Indirect Participants. Persons that are not QIBs may not hold   
New Notes through the Depositary.                                               

The Company expects that pursuant to procedures established by the    
Depositary (i) upon deposit of the Global New Note, the Depositary will credit  
the accounts of Participants designated by the Exchange Agent with an interest  
in the Global New Note and (ii) ownership of the New Notes will be shown, on,   
and the transfer of ownership thereof will be effected only through, records    
maintained by the Depositary (with respect to the interests of Participants),   
the Participants and the Indirect Participants. The laws of some states require 
that certain persons take physical delivery in definitive form of securities    
that they own and that security interests in negotiable instruments can only be 
perfected by delivery of certificates representing the instruments.             
Consequently, the ability to transfer New Notes or to pledge the New Notes as   
collateral will be limited to such extent. The New Notes will be subject to     
certain other restrictions on transferability.                                  

So long as the Depositary or its nominee is the registered owner of a 
Global New Note, the Depositary or such nominee, as the case may be, will be    
considered the sole owner or holder of the New Notes represented by the Global  
New Note for all purposes under the Indenture. Except as provided below, owners 
of beneficial interests in a Global New Note will not be entitled to have New   
Notes represented by such Global New Note registered in their names, will not   
receive or be entitled to receive physical delivery of Certificated Securities, 
and will not be considered the owners or holders thereof under the Indenture for
any purpose, including with respect to the giving of any directions,            
instructions or approvals to the Trustee thereunder. As a result, the ability of
a person having a beneficial interest in New Notes represented by a Global New  
Note to pledge such interest to persons or entities that do not participate in  
the Depositary's system, or to otherwise take actions with respect to such      
interest, may be affected by the lack of a physical certificate evidencing such 
interest.                                                                       

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 Accordingly, each QIB owning a beneficial interest in a Global New Note
must rely on the procedures of the Depositary and, if such QIB is not a         
Participant or an Indirect Participant, on the procedures of the Participant    
through which such QIB owns its interest, to exercise any rights of a holder    
under the Indenture or such Global New Note. The Company understands that under 
existing industry practice, in the event the Company requests any action of     
holders of New Notes or a QIB that is an owner of a beneficial interest in a    
Global New Note desires to take any action that the Depositary, as the holder of
such Global New Note, is entitled to take, the Depositary would authorize the   
Participants to take such action and the Participants would authorize QIBs      
owning through such Participants to take such action or would otherwise act upon
the instructions of such QIBs. Neither the Company nor the Trustee will have any
responsibility or liability for any aspect of the records relating to or        
payments made on account of New Notes by the Depositary, or for maintaining,    
supervising or reviewing any records of the Depositary relating to such New     
Notes.                                                                          

     Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by a Global New Note registered in the name of the    
Depositary or its nominee on the applicable record date will be payable by the  
Trustee to or at the direction of the Depositary or its nominee in its capacity 
as the registered holder of the Global New Note representing such New Notes     
under the Indenture. Under the terms of the Indenture, the Company and the      
Trustee may treat the persons in whose names the New Notes, including the Global
New Note, are registered as the owners thereof for the purposes of receiving    
such payments and for any and all other purposes whatsoever. Consequently,      
neither the Company nor the Trustee has or will have any responsibility or      
liability for the payment of such amounts to beneficial owners of New Notes     
(including principal, premium, if any, and interest), or to immediately credit  
the accounts of the relevant Participants with such payment, in amounts         
proportionate to their respective holdings in principal amount of beneficial    
interest in the Global New Note as shown on the records of the Depositary.      
Payments by the Participants and the Indirect Participants to the beneficial    
owners of New Notes will be governed by standing instructions and customary     
practice and will be the responsibility of the Participants or the Indirect     
Participants.                                                                   

CERTIFICATED SECURITIES                                                         

If the Depositary is at any time unwilling or unable to continue as a 
depository and a successor depositary is not appointed by the Company within 90 
days then, upon surrender by the Depositary of its Global New Note, Certificated
Securities will be issued to each person that the Depositary identifies as the  
beneficial owner of the New Notes represented by the Global New Note. In        
addition, subject to certain conditions, any person having a beneficial interest
in a Global New Note may, upon request to the Trustee, exchange such beneficial 
interest for Certificated Securities. Upon any such issuance, the Trustee is    
required to register such Certificated Securities in the name of such person or 
persons (or the nominee of any thereof), and cause the same to be delivered     
thereto.                                                                        

  Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the        
beneficial owners of the related New Notes and each such person may conclusively
rely on, and shall be protected in relying on instructions from the Depositary  
for all purposes (including with respect to the registration and delivery, and  
the respective principal amounts, of the New Notes to be issued).               

    The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable. The    
Company will have no responsibility for the performance by DTC or its           
Participants of their respective obligations as described hereunder or under the
rules and procedures governing their respective operations.                     

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CERTAIN U.S. INCOME TAX CONSIDERATIONS

The following is a summary of the material U.S. federal income tax    
consequences associated with the acquisition, ownership and disposition of the  
New Notes. The summary is based upon current laws, regulations, rulings and     
judicial decisions, all of which are subject to change. The discussion below    
does not address all aspects of U.S. federal income taxation that may be        
relevant to particular holders in the context of their specific investment      
circumstances or certain types of holders subject to special treatment under    
such laws (for example, financial institutions, tax-exempt organizations and    
insurance companies).                                                           

   For purposes of the discussion, a "U.S. holder" is an individual who is a
citizen or resident of the U.S., a corporation, partnership or other entity     
created under the laws of the U.S. or any political subdivision thereof, an     
estate that is subject to U.S. federal income taxation without regard to the    
source of income, or a trust, with respect to which a court within the U.S. is  
able to exercise primary supervision over its administration and one or more    
U.S. fiduciaries have the authority to control all its substantial decisions. A 
"Non-U.S. holder" is any holder who is not a U.S. holder.                       

   ELIGIBLE HOLDERS OF THE OLD NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, OWNING AND    
DISPOSING OF THE NEW NOTES AS WELL AS THE APPLICATION OF STATE, LOCAL AND       
FOREIGN INCOME AND OTHER TAX LAWS.                                              

U.S. HOLDERS                                                                    

   Interest payable on the Old Notes and the New Notes will be includible in
the income of a U.S. holder in accordance with such U.S. holder's regular method
of accounting. Although the New Notes provide that in certain circumstances a   
holder may receive additional amounts as Additional Interest or as premium upon 
redemption, the Company has determined that the likelihood that such payments   
will be made is remote. As a result, the existence of provisions in the         
Indenture requiring such payments under certain circumstances will not give rise
to original issue discount. These payments would be recognized as income when   
received, regardless of the method of accounting of the U.S. holder. If a New   
Note is redeemed, sold or otherwise disposed of, a U.S. holder generally will   
recognize gain or loss equal to the difference between the amount realized on   
the sale or other disposition of such New Note (to the extent such amount does  
not represent accrued but unpaid interest) and such U.S. holder's tax basis in  
the New Note. Such gain or loss will be capital gain or loss, assuming that the 
U.S. holder has held the New Note as a capital asset, and will be long-term if  
the U.S. holder has held the New Note for more than one year at the time of     
disposition.                                                                    

NON-U.S. HOLDERS                                                                

     An investment in the New Notes by a Non-U.S. holder generally will not give
rise to any U.S. federal income tax consequences if the interest received or any
gain recognized on the sale, redemption or other disposition of the New Notes by
such holder is not treated as effectively connected with the conduct by such    
holder of a trade or business in the United States, and in the case of gains    
derived by an individual, such individual is not present in the United States   
for 183 days or more and certain other requirements (including applicable       
reporting requirements) are met. Under current Treasury regulations, in order to
avoid backup withholding of 31% on payments of interest (i) a Non-U.S. holder of
the New Notes generally must certify to the issuer or its agent, under penalties
of perjury, that it is not a United States person and complete and provide the  
payor with a U.S. Treasury Form W-8 (or a suitable substitute form), which      
includes its name and address, or (ii) a securities clearing organization, bank 
or other financial organization that holds customers' securities in the ordinary
course of business (a "financial institution") and holds the New Note, must     
certify under penalties of perjury that such a Form W-8 (or suitable substitute 
form) has been received from the beneficial owner of the New Notes by it or by a
financial institution between it and the beneficial owner, and must furnish the 
payor with a copy thereof.                                                      

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   On April 22, 1996, the Internal Revenue Service proposed regulations (the
"Proposed Regulations") which, if enacted in their current form, could affect   
the procedures to be followed by a Non-U.S. holder in establishing such holder's
status as a Non-U.S. holder for purposes of the backup withholding rules        
discussed above. The Proposed Regulations, if adopted in their current form,    
generally would be effective for payments made after December 31, 1997. Eligible
holders should consult their tax advisors concerning the potential adoption of  
the Proposed Regulations and the potential effect of such regulations on an     
investment in the New Notes.                                                    

EXCHANGE OFFER                                                                  

     The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not constitute a significant modification of the terms of the Old Notes and,    
therefore, such exchange will not constitute an exchange for United States      
federal income tax purposes. Accordingly, such exchange will have no United     
States federal income tax consequences to U.S. holders of Old Notes and the     
holding period of the New Notes will include the holding period of the Old Notes
and the basis of the New Notes will be the same as the basis of the Old Notes   
immediately before the exchange.                                                

BOND PREMIUM ON THE NEW NOTES                                                   

 If a U.S. holder of a New Note purchased the Old Notes for an amount in
excess of the amount payable at the maturity date (or a call date, if           
appropriate) of the Old Notes, the U.S. holder may deduct such excess as        
amortizable bond premium over the aggregate terms of the Old Notes and the New  
Notes (taking into account earlier call dates, as appropriate), under a         
yield-to-maturity formula. The deduction is available only if an election is    
made by the purchaser or is in effect. This election is revocable only with the 
consent of the Service. The election applies to all obligations owned or        
subsequently acquired by the U.S. holder. The U.S. holder's adjusted tax basis  
in the Old Notes and the New Notes will be reduced to the extent of the         
deduction of amortizable bond premium. Except as may otherwise be provided in   
future regulations, under the Code the amortizable bond premium is treated as an
offset to interest income on the Old Notes and the New Notes rather than as a   
separate deduction item.                                                        

MARKET DISCOUNT ON THE NEW NOTES                                                

   Tax consequences of a disposition of the New Notes may be affected by the
market discount provision of the Code. These rules generally provide that if a  
U.S. holder acquired the Old Notes (other than in an original issue) at a market
discount which equals or exceeds 1/4 of 1% of the stated redemption price of the
Old Notes at maturity multiplied by the number of remaining complete years to   
maturity and thereafter recognizes gain upon a disposition (or makes a gift) of 
the New Notes, the lesser of (i) such gain (or appreciation, in the case of a   
gift) or (ii) the portion of the market discount which accrued while the Old or 
New Notes were held by such U.S. holder will be treated as ordinary income at   
the time of the disposition (or gift). For these purposes, market discount means
the excess (if any) of the stated redemption price at maturity over the basis of
such Old or New Notes immediately after their acquisition by the U.S. holder. A 
U.S. holder of the New Notes may elect to include any market discount (whether  
accrued under the Old Notes or the New Notes) in income currently rather than   
upon disposition of the New Notes. This election once made applies to all market
discount obligations acquired on or after the first taxable year to which the   
election applies, and may not be revoked without the consent of the Service.    

A U.S. holder of any New Note who acquired the Old Note at a market   
discount generally will be required to defer the deduction of a portion of the  
interest on any indebtedness incurred or maintained to purchase or carry such   
Old or New Note until the market discount is recognized upon a subsequent       
disposition of such New Note. Such a deferral is not required, however, if the  
holder elects to include accrued market discount in income currently.           

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BACKUP WITHHOLDING AND INFORMATION REPORTING                                    

     A 31% "backup" withholding tax and information reporting requirements apply
to certain payments of interest and original issue discount on an obligation,   
and to proceeds of the sale of an obligation before maturity, to certain        
non-corporate holders. The Company, and/or any paying and/or collection agent,  
including a broker, as the case may be, will be required to withhold from any   
payment that is subject to backup withholding a tax equal to 31% of such payment
unless the holder furnishes its taxpayer identification number (i.e., social    
security number in the case of an individual) in the manner prescribed in       
applicable Treasury regulations, certifies that such number is correct,         
certifies (with respect to payments of interest) as to no loss of exemption from
backup withholding and meets certain other conditions. Backup withholding,      
however, in any event, generally does not apply to payments to certain "exempt  
recipients" such as corporations.                                               

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PLAN OF DISTRIBUTION

Each broker-dealer that holds Old Notes that were acquired for its own
account as a result of market making or other trading activities (other than Old
Notes acquired directly from the Company), may exchange Old Notes for New Notes 
in the Exchange Offer. However, any such broker-dealer may be deemed to be an   
"underwriter" within the meaning of such term under the Securities Act and must,
therefore, acknowledge that it will deliver a prospectus in connection with any 
resale of New Notes received in the Exchange Offer. This prospectus delivery    
requirement may be satisfied by the delivery by such broker-dealer of this      
Prospectus, as it may be amended or supplemented from time to time. The Company 
has agreed that, for a period of 180 days after the effective date of this      
Prospectus, it will make this Prospectus, as amended or supplemented, available 
to any broker-dealer who receives New Notes in the Exchange Offer for use in    
connection with any such sale. The Company will not receive any proceeds from   
any sales of New Notes by broker-dealers. New Notes received by broker-dealers  
for their own accounts pursuant to the Exchange Offer may be sold from time to  
time in one or more transactions in the over-the-counter market, in negotiated  
transactions, through the writing of options on the New Notes or a combination  
of such methods of resale, at market prices at the time of resale, at prices    
related to such prevailing market prices or negotiated prices. Any such resale  
of New Notes by broker-dealers may be made directly to a purchaser or to or     
through brokers or dealers who may receive compensation in the form of          
commissions or concessions from any such broker-dealer and/or the purchasers of 
any such New Notes. Any broker-dealer that resells New Notes that were received 
by it for its own account pursuant to the Exchange Offer and any broker or      
dealer that participates in a distribution of such New Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any 
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act. 
The Company has agreed to pay all expenses incident to the Exchange Offer other 
than commissions or concessions of any brokers or dealers and will indemnify    
Eligible Holders (including any broker-dealer) against certain liabilities,     
including liabilities under the Securities Act.                                 

   By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby agrees to notify the Company prior  
to using the Prospectus in connection with the sale or transfer of New Notes,   
and acknowledges and agrees that, upon receipt of notice from the Company of the
happening of any event which makes any statement in the Prospectus untrue in any
material respect or which requires the making of any changes in the Prospectus  
in order to make the statements herein not misleading (which notice the Company 
agrees to deliver promptly to such broker-dealer), such broker-dealer will      
suspend use of the Prospectus until the Company has amended or supplemented the 
Prospectus to correct such misstatement or omission and has furnished copies of 
the amended or supplemented prospectus to such broker-dealer.                   

LEGAL MATTERS 

   The validity of the New Notes offered hereby is being passed upon for the
Company by Pepper, Hamilton & Scheetz LLP.                                      

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES                      

Report of Independent Public Accountants....................  F-2 

Consolidated Balance Sheets as of December 31, 1995 and           
  1996, and June 29, 1997...................................  F-3 

Consolidated Statements of Operations for the Years Ended         
  December 31, 1994, 1995 and 1996, and for the unaudited         
  Six Months Ended June 30, 1996 and the audited Six Months       
  Ended June 29, 1997.......................................  F-5 

Consolidated Statements of Stockholders' Equity for the           
  Years Ended December 31, 1994, 1995 and 1996, and for the       
  Six Months Ended June 29, 1997............................  F-6 

Consolidated Statements of Cash Flows for the Years Ended         
  December 31, 1994, 1995 and 1996, and the unaudited Six         
  Months Ended June 30, 1996 and audited Six Months Ended         
  June 29, 1997.............................................  F-7 

Notes to Consolidated Financial Statements..................  F-8 

Schedule II -- Valuation and Qualifying Accounts............  F-26

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Chemical Leaman Corporation:                                                 

We have audited the accompanying consolidated balance sheets of Chemical Leaman 
Corporation (a Pennsylvania corporation) and subsidiaries as of December 31,    
1995 and 1996 and June 29, 1997, and the related consolidated statements of     
operations, stockholders' equity and cash flows for each of the three years in  
the period ended December 31, 1996 and for the six month period ended June 29,  
1997. These financial statements and the schedule referred to below are the     
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements and schedule based on our audits.         

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit 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 financial position of Chemical Leaman Corporation and
subsidiaries as of December 31, 1995 and 1996 and June 29, 1997, and the results
of their operations and their cash flows for each of the three years in the     
period ended December 31, 1996 and for the six month period ended June 29, 1997,
in conformity with generally accepted accounting principles.                    

Our audit was made for the purpose of forming an opinion on the basic financial 
statements taken as a whole. The schedule listed in the index to financial      
statements is presented for purposes of complying with the Securities and       
Exchange Commissions rules and is not part of the basic financial statements.   
This schedule has been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, fairly states in all     
material respects the financial data required to be set forth therein in        
relation to the basic financial statements taken as a whole.                    

                       ARTHUR ANDERSEN LLP

Philadelphia, Pennsylvania                                                      
July 25, 1997                                                               

(except with respect to                                                         
the matters discussed in Note 12                                                
and Note 15, as to which                                                        
the date is September 17, 1997)                                                 

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS) 

                                                        [Enlarge/Download Table]

                                                          DECEMBER 31,               
                                                     ----------------------  JUNE 29,
                      ASSETS                           1995          1996      1997  
                      ------                         --------      --------  --------
                                                                                     
CURRENT ASSETS:                                                                      
  Cash and cash equivalents (includes restricted                                     
     cash of $1,934 at December 31, 1995, $3,541 at                                  
     December 31, 1996, and $0 at June 29, 1997)...  $  8,523      $  5,788  $ 14,723
  Accounts receivable, net of allowance of $323 at                                   
     December 31, 1995, $570 at December 31, 1996,                                   
     and $664 at June 29, 1997.....................    28,850        36,859    15,406
  Operating supplies...............................     1,175         1,548       929
  Prepaid expenses and other.......................     5,814         7,982     9,692
                                                     --------      --------  --------
        Total current assets.......................    44,362        52,177    40,750
                                                     --------      --------  --------

PROPERTY AND EQUIPMENT:                                                              
  Land.............................................     5,037         5,131     5,131
  Buildings and improvements.......................    25,410        26,728    27,577
  Revenue equipment................................   124,076       147,767   150,028
  Other equipment..................................    31,569        49,087    54,909
                                                     --------      --------  --------
        Total property and equipment, at cost......   186,092       228,713   237,645
ACCUMULATED DEPRECIATION...........................   109,321       119,924   127,008
                                                     --------      --------  --------

PROPERTY AND EQUIPMENT, net........................    76,771       108,789   110,637
                                                     --------      --------  --------

NOTES RECEIVABLE...................................     2,500         3,500     3,500

RECOVERABLE ENVIRONMENTAL COSTS....................     8,147        13,680    14,101

OTHER ASSETS.......................................     4,625         4,398     8,540
                                                     --------      --------  --------
                                                     $136,405      $182,544  $177,528
                                                     --------      --------  --------
                                                     --------      --------  --------

The accompanying notes are an integral part of these statements.

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS 
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS) 

                                                        [Enlarge/Download Table]

                                                          DECEMBER 31,               
                                                     ----------------------  JUNE 29,
       LIABILITIES AND STOCKHOLDERS' EQUITY            1995          1996      1997  
       ------------------------------------          --------      --------  --------
                                                                                     
CURRENT LIABILITIES:                                                                 
  Accounts and drafts payable......................  $ 13,973      $ 18,028  $ 21,865
  Accrued salaries and wages.......................     4,490         4,336     4,321
  Other accrued liabilities........................     1,973         3,828     1,630
  Estimated self-insurance liabilities.............     5,778         4,238     3,471
  Current maturities of long-term debt.............     2,612         4,364       638
  Current maturities of equipment obligations......     4,804         4,957        --
                                                     --------      --------  --------
        Total current liabilities..................    33,630        39,751    31,925
                                                     --------      --------  --------
LONG-TERM EQUIPMENT OBLIGATIONS....................    24,232        53,484        --
                                                     --------      --------  --------
LONG-TERM DEBT.....................................    36,173        46,219   101,564
                                                     --------      --------  --------
ESTIMATED SELF-INSURANCE LIABILITIES...............    15,337        16,783    17,732
                                                     --------      --------  --------
OTHER NONCURRENT LIABILITIES.......................     4,654         5,266     7,836
                                                     --------      --------  --------
REDEEMABLE PREFERRED STOCK.........................     2,600         5,318     5,318
                                                     --------      --------  --------

STOCKHOLDERS' EQUITY:                                                                
  Common stock -- 3,000,000 shares authorized;                                       
     issued -- 605,400, 550,895, and 550,895 shares                                  
     at December 31, 1995 and 1996, and June 29,                                     
     1997, respectively; par value $2.50...........     2,810         2,677     2,677
  Additional paid-in capital.......................     2,117           533       533
  Retained earnings................................    33,709        32,992    30,857
                                                     --------      --------  --------
                                                       38,636        36,202    34,067
  Less --                                                                            
     Treasury stock, 2,593 shares, at cost.........    16,881        16,881    16,881
     Stock subscriptions receivable................     1,976         3,598     3,598
     Minimum pension liability, net of tax.........        --            --       435
                                                     --------      --------  --------
        Total stockholders' equity.................    19,779        15,723    13,153
                                                     --------      --------  --------
                                                     $136,405      $182,544  $177,528
                                                     --------      --------  --------
                                                     --------      --------  --------

The accompanying notes are an integral part of these statements.

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS 
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                                                                           FOR THE SIX       
                                                           FOR THE YEAR ENDED              MONTHS ENDED      
                                                              DECEMBER 31,            ---------------------- 
                                                     ------------------------------    JUNE 30,     JUNE 29, 
                                                       1994       1995       1996        1996         1997   
                                                     --------   --------   --------   -----------   -------- 
                                                                                      (UNAUDITED)            
                                                                                                             
OPERATING REVENUES.................................  $241,443   $245,706   $281,075    $127,612     $156,545 
                                                     --------   --------   --------    --------     -------- 
OPERATING EXPENSES:                                                                                          
  Salaries, wages and benefits.....................    71,499     63,546     67,737      32,531       34,947 
  Purchased transportation and rents...............    85,470     98,903    122,635      54,542       69,131 
  Operations and maintenance.......................    52,768     50,240     52,924      22,696       32,158 
  Depreciation and amortization....................    11,783     13,731     16,255       7,173        9,336 
  Taxes and licenses...............................     2,829      2,755      2,613       1,175        1,457 
  Insurance and claims.............................     4,870      3,483      4,766       2,015        4,402 
  Communication and utilities......................     5,417      6,056      7,213       3,594        3,320 
  (Gain) loss on disposition of revenue equipment,                                                           
    net............................................        (6)       573        290         141           45 
                                                     --------   --------   --------    --------     -------- 
    Total operating expenses.......................   234,630    239,287    274,433     123,867      154,796 
                                                     --------   --------   --------    --------     -------- 
OPERATING INCOME...................................     6,813      6,419      6,642       3,745        1,749 
INTEREST EXPENSE, net..............................     4,946      5,978      7,553       3,092        4,515 
OTHER (INCOME) EXPENSE, net........................        92       (110)      (795)        (11)         165 
                                                     --------   --------   --------    --------     -------- 
  Income (loss) before income tax provision........     1,775        551       (116)        664       (2,931)
INCOME TAX PROVISION (BENEFIT).....................       710        220         46         333       (1,223)
                                                     --------   --------   --------    --------     -------- 
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............  $  1,065   $    331   $   (162)   $    331     $ (1,708)
                                                     --------   --------   --------    --------     -------- 
EXTRAORDINARY LOSS on early extinguishment of debt,                                                          
  less applicable income taxes of $133.............        --         --         --          --     ($   199)
                                                     --------   --------   --------    --------     -------- 
NET INCOME (LOSS)..................................  $  1,065   $    331   $   (162)   $    331     $ (1,907)
                                                     --------   --------   --------    --------     -------- 
                                                     --------   --------   --------    --------     -------- 

The accompanying notes are an integral part of these statements.

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                            ADDITIONAL                          STOCK       MINIMUM           
                                    COMMON   PAID-IN    RETAINED  TREASURY   SUBSCRIPTION   PENSION           
                                    STOCK    CAPITAL    EARNINGS   STOCK      RECEIVABLE   LIABILITY   TOTAL  
                                    ------  ----------  --------  --------   ------------  ---------  ------- 
                                                                                                              
BALANCE, JANUARY 1, 1994........... $2,940    $3,720    $32,665   $(14,888)    $(1,520)       $ --    $22,917 
  Net income.......................                       1,065                                         1,065 
  Reverse stock split..............   (47)      (512)                                                    (559)
  Retirement of common stock.......   (73)      (917)                                                    (990)
  Purchase of common stock.........                                (1,993)                             (1,993)
  Preferred stock dividends........                        (195)                                         (195)
                                    ------    ------    -------   --------     -------        ----    ------- 

BALANCE, DECEMBER 31, 1994......... $2,820    $2,291    $33,535   $(16,881)    $(1,520)       $ --    $20,245 
  Net income.......................                         331                                           331 
  Retirement of common stock.......   (48)      (592)                                                    (640)
  Issuance of common stock.........    38        418                              (456)                    -- 
  Preferred stock dividends........                        (157)                                         (157)
                                    ------    ------    -------   --------     -------        ----    ------- 

BALANCE, DECEMBER 31, 1995......... $2,810    $2,117    $33,709   $(16,881)    $(1,976)       $ --    $19,779 
  Net loss.........................                        (162)                                         (162)
  Retirement of common stock.......   (56)      (740)                                                    (796)
  Issuance of common stock.........   150      1,647                            (1,622)                   175 
  Issuance of preferred stock......  (227)    (2,491)                                                  (2,718)
  Preferred stock dividends........                        (355)                                         (355)
  Amortization of pension                                                                                     
    intangible asset...............                        (200)                                         (200)
                                    ------    ------    -------   --------     -------        ----    ------- 

BALANCE, DECEMBER 31, 1996......... $2,677    $  533    $32,992   $(16,881)    $(3,598)       $ --    $15,723 
  Net loss.........................                      (1,907)                                       (1,907)
  Preferred stock dividends........                        (178)                                         (178)
  Adjustment required to recognize                                                                            
    minimum pension liability......                                                           (435)      (435)
  Amortization of pension                                                                                     
    intangible asset...............                         (50)                                          (50)
                                    ------    ------    -------   --------     -------        ----    ------- 

BALANCE, JUNE 29, 1997............. $2,677    $  533    $30,857   $(16,881)    $(3,598)       (435)   $13,153 
                                    ------    ------    -------   --------     -------        ----    ------- 
                                    ------    ------    -------   --------     -------        ----    ------- 

The accompanying notes are an integral part of these statements.

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                                                  FOR THE YEAR ENDED              FOR THE SIX       
                                                                     DECEMBER 31,                MONTHS ENDED       
                                                             ----------------------------    JUNE 30,     JUNE 29,  
                                                              1994      1995       1996        1996         1997    
                                                             -------   -------   --------   -----------   --------- 
                                                                                            (UNAUDITED)             
                                                                                                                    
OPERATING ACTIVITIES:                                                                                               
  Net income (loss)......................................... $ 1,065   $   331   $   (162)   $     331    $  (1,907)
  Adjustments to reconcile net income (loss) to net cash                                                            
    provided by (used in) operating activities--                                                                    
      Depreciation and amortization.........................  11,783    13,731     16,255        7,173        9,336 
      Provision for doubtful accounts.......................     320       338        318          198          225 
      Provision (benefit) for deferred income taxes.........     524    (1,777)       813          333       (1,223)
      (Gain) loss on disposition of property and                                                                    
        equipment...........................................      (6)      573        290          141           45 
      Extraordinary loss related to early extinguishment of                                                         
        debt................................................      --        --         --           --          199 
      Changes in assets and liabilities.....................   2,881     4,248    (12,837)      (8,155)     (10,194)
                                                             -------   -------   --------    ---------    --------- 
        Net cash provided by (used in) operating                                                                    
          activities........................................  16,567    17,444      4,677           21       (3,519)
                                                             -------   -------   --------    ---------    --------- 
INVESTING ACTIVITIES:                                                                                               
  Acquisition of business...................................      --        --    (15,517)     (15,517)          -- 
  Additions to property and equipment....................... (20,747)  (13,270)   (20,020)      (9,863)     (11,006)
  Proceeds from sales of property and equipment.............   1,992     2,780      1,264        1,399          751 
                                                             -------   -------   --------    ---------    --------- 
        Net cash used in investing activities............... (18,755)  (10,490)   (34,273)     (23,981)     (10,255)
                                                             -------   -------   --------    ---------    --------- 
FINANCING ACTIVITIES:                                                                                               
  Payments on equipment obligations.........................  (9,248)  (20,893)   (11,149)      (4,633)     (62,439)
  Proceeds from issuance of equipment obligations...........  17,710    15,986     40,554       27,548        3,998 
  Increase (decrease) in bank overdrafts....................     643    (1,529)       923          524        2,882 
  Proceeds from issuance of long-term debt..................     100        --     10,000        2,550      100,000 
  Payments on long-term debt................................  (1,348)   (2,211)   (12,491)      (1,399)     (21,355)
  Payments on early extinguishment of debt..................      --        --         --           --         (199)
  Issuance (purchase) of common stock.......................  (1,993)       --        175           --           -- 
  Retirement of common stock................................  (1,549)     (640)      (796)        (796)          -- 
  Preferred stock dividends.................................    (195)     (157)      (355)        (162)        (178)
                                                             -------   -------   --------    ---------    --------- 
        Net cash provided by (used in) financing                                                                    
          activities........................................   4,120    (9,444)    26,861       23,632       22,709 
                                                             -------   -------   --------    ---------    --------- 
        Net increase (decrease) in cash and cash                                                                    
          equivalents.......................................   1,932    (2,490)    (2,735)        (328)       8,935 
CASH AND CASH EQUIVALENTS:                                                                                          
  Beginning of year.........................................   9,081    11,013      8,523        8,523        5,788 
                                                             -------   -------   --------    ---------    --------- 
  End of year............................................... $11,013   $ 8,523   $  5,788    $   8,195    $  14,723 
                                                             -------   -------   --------    ---------    --------- 
                                                             -------   -------   --------    ---------    --------- 
CHANGES IN ASSETS AND LIABILITIES:                                                                                  
  (Increase) decrease in accounts receivable................ $(3,795)  $ 1,912   $ (8,327)   $  (5,692)   $  (6,772)
  Decrease (increase) in prepaid expenses, operating                                                                
    supplies and                                                                                                    
    other assets............................................     376    (2,560)    (3,515)      (1,461)      (5,283)
  (Increase) decrease in recoverable environmental costs....  (2,818)    9,853     (5,533)      (7,739)        (421)
  Decrease in insurance deposit.............................   4,217        --         --           --           -- 
  (Decrease) increase in accounts payable...................     (73)      270      3,132        3,694          955 
  Increase (decrease) in accrued salaries and wages.........   2,516    (2,721)      (154)          74          (15)
  (Decrease) increase in accrued other......................     (35)    1,644      1,042        1,731         (975)
  Increase (decrease) in estimated self-insurance                                                                   
    liabilities.............................................   1,543    (2,302)       (94)       1,157          182 
  Increase (decrease) in other noncurrent liabilities.......     950    (1,848)       612           81        2,135 
                                                             -------   -------   --------    ---------    --------- 
                                                             $ 2,881   $ 4,248   $(12,837)   $  (8,155)   $ (10,194)
                                                             -------   -------   --------    ---------    --------- 
                                                             -------   -------   --------    ---------    --------- 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                  
    Cash paid during the period for--                                                                               
      Interest.............................................. $ 4,905   $ 6,038   $  7,442    $   2,640    $   4,212 
      Income taxes..........................................     401     2,601        326           43           45 
    Noncash investing and financing activities--                                                                    
      Issuance of capital lease obligations.................   8,623     5,716      6,889       13,196          974 
      Assets acquired with capital lease obligations........  (8,623)   (5,716)    (6,889)     (13,196)        (974)
      Fleet capital lease obligations assumed...............      --        --      7,400           --           -- 
      Fleet assets acquired subject to capital lease                                                                
        obligation..........................................      --        --     (7,400)          --           -- 
      Issuance of common stock for a note...................      --       456      1,622           --           -- 
      Stock subscription note receivable....................      --      (456)    (1,622)          --           -- 
      Amortization of pension intangible asset..............      --        --        200          100           50 
      Retained earnings adjustment..........................      --        --       (200)        (100)         (50)
      Adjustment required to recognize minimum pension                                                              
        liability...........................................      --        --         --           --          435 
      Stockholders' equity adjustment for minimum pension                                                           
        liability...........................................      --        --         --           --         (435)
      Off balance sheet treatment of asset backed                                                                   
        certificate.........................................      --        --         --           --      (28,000)
      Off balance sheet treatment of accounts receivable....      --        --         --           --       28,000 

The accompanying notes are an integral part of these statements.

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

1. BUSINESS:                                                                    

Chemical Leaman Corporation (a Pennsylvania corporation) and its      
subsidiaries (the "Company") offer a full range of specialized transportation   
services, including short and long-haul transportation, intermodal services,    
materials handling and third-party logistics, principally to the chemical       
industry. In addition, the Company provides tank cleaning and driver-related    
services to its own fleet as well as to independent owner-operators and         
third-party carriers.                                                           

The Company derived approximately 95%, 94%, 84%, 93% and 74% of its   
revenues from its wholly owned trucking subsidiary, Chemical Leaman Tank Lines, 
Inc. ("CLTL"), for the years ended December 31, 1994, 1995 and 1996, and the    
unaudited six month period ended June 30, 1996 and the audited six month period 
ended June 29, 1997, respectively. CLTL operates 70 terminals throughout the    
United States and the Canadian Provinces of Quebec and Ontario. CLTL has 22 of  
its terminals located in the Northeast region of the country. CLTL generated    
10%, 15% and 16% of its revenues from a single customer in the years ended      
December 31, 1994, 1995 and 1996, respectively, and 16% and 19% for the         
unaudited six month period ended June 30, 1996 and the audited six month period 
ended June 29, 1997, respectively. CLTL's top ten customers accounted for       
approximately 44%, 45% and 47% of CLTL revenues in the years ended December 31, 
1994, 1995 and 1996, respectively, and 46% and 50% for the unaudited six month  
period ended June 30, 1996 and the audited six month period ended June 29, 1997,
respectively. The Company derives the majority of its remaining revenue from its
wholly owned trucking subsidiary, Fleet Transport Company, Inc. ("Fleet") (see  
Note 14), and from tank cleaning services through its wholly owned subsidiary,  
Quala Systems, Inc. ("QSI").                                                    

The business of the Company is subject to limited seasonality, with   
revenues generally declining slightly during winter months (namely the first and
fourth fiscal quarters) and over holidays. Highway transportation can be        
adversely affected depending upon the severity of the weather in various        
sections of the country during the winter months. The Company's operating       
expenses also have been somewhat higher in the winter months, due primarily to  
decreased fuel efficiency and increased maintenance costs of revenue equipment  
in colder months.                                                               

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:                                  

Principles of Consolidation                                                 

   The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions    
have been eliminated.                                                           

Unaudited Consolidated Financial Information                                

In the opinion of management, the unaudited consolidated financial    
information for the six month period ended June 30, 1996, reflects all          
adjustments (consisting only of normal recurring adjustments) necessary to      
present fairly such information in accordance with generally accepted accounting
principles and are prepared in a manner consistent with the audited consolidated
financial statements.                                                           

Use of Estimates                                                            

The preparation of financial statements in accordance with generally  
accepted accounting principles requires management to make estimates and        
assumptions that affect the reported amounts of assets and liabilities and      
disclosure of contingent assets and liabilities at the date of the financial    
statements and the reported amounts of revenues and expenses during the         
reporting period. The most significant estimates with regard to these financial 
statements are in the areas of estimated self-insurance liabilities and         
environmental recoveries and liabilities. Actual results could differ from these
estimates.                                                                      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)                   

Accounts Receivable                                                         

     At December 31, 1995 and 1996, and June 29, 1997 substantially all accounts
receivable were due from customers within the chemical processing industry. The 
Company does not require any security arrangements with respect to these        
receivables (see Note 6).                                                       

Operating Supplies                                                          

     Operating supplies, representing repair parts, fuel and unmounted tires for
revenue equipment, are valued at the lower of first-in, first-out ("FIFO") cost 
or market value. The Company records initial and replacement tire purchases as  
prepaid expenses and amortizes the amounts over the estimated useful life of 27 
months. Recapped tires are also recorded as prepaid expenses, but are amortized 
over 16 months.                                                                 

Prepaid Expenses and Other                                                  

  Prepaid expenses, which consist principally of tires and hoses placed in
service, are valued at cost and are amortized over their estimated useful lives,
which range from 16 to 27 months.                                               

Property and Equipment                                                      

Property and equipment are stated at cost. Depreciation, including    
amortization of capitalized leases, is computed using the straight-line method  
over the estimated useful lives of the assets, net of estimated salvage values, 
or the lease periods, whichever is shorter. Estimated useful lives are as       
follows: buildings and improvements, 5 to 30 years; revenue equipment, 2 to 7   
years; other equipment, 2 to 10 years. Maintenance and repairs are charged to   
operations as incurred. Major repairs and improvements which extend the useful  
life of the related assets are capitalized and depreciated over their estimated 
useful lives. When assets are retired or otherwise disposed of, the cost and    
related accumulated depreciation are removed from the accounts and any resulting
gain or loss is included in operating results.                                  

Included in other equipment is $7,871,000 at December 31, 1996, and   
$10,991,000 at June 29, 1997 of capitalized costs related to the development and
implementation of a new management information system. The Company expects to   
incur additional costs related to this project during 1997 which will also be   
capitalized. These costs will be amortized over a period of seven years, which  
is expected to begin in January 1998.                                           

Recoverable Environmental Costs                                             

  Recoverable environmental costs consist principally of recoverable costs
under various insurance policies related to environmental matters at the        
Bridgeport Site (see Note 12).                                                  

Revenue Recognition                                                         

  The Company recognizes revenue when shipments are delivered or when tank
cleaning services are provided. Amounts payable to leased operators for         
purchased transportation and to Company drivers for wages are accrued when the  
related revenue is recognized.                                                  

Income Taxes                                                                

   The Company accounts for income taxes under the liability method, whereby
deferred tax assets and liabilities are recognized for the tax effects of       
temporary differences between the financial reporting and tax bases of assets   
and liabilities using enacted tax rates.                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)                   

Environmental Expenditures                                                  

   Environmental expenditures that relate to an existing condition caused by
past operations and that do not contribute to current or future revenue         
generation are expensed. Liabilities are recorded when environmental assessments
and/or cleanups are probable, and the costs can be reasonably estimated (see    
Note 12).                                                                       

Estimated Self-Insurance Liabilities                                        

  The Company is currently self-insured up to the following per-occurrence
retention levels:                                                               

                                                                [Download Table]
                                                                        
o Public liability and property damage, cargo losses, and               
  sudden and accidental environmental losses................  $1,000,000
o Workers' compensation.....................................  $  500,000
o Medical benefits for salaried employees...................  $  100,000
o Collision and other environmental losses..................    No Limit

    The Company is responsible up to an aggregate of $9,000,000 and $5,500,000
per year for public liability at December 31, 1996 and June 29, 1997,           
respectively, and $4,000,000 per year for workers' compensation liability.      

 The Company has excess coverage beyond the deductible levels for public
liability, property damage and sudden and accidental environmental losses. The  
Company's insurable limit was $100,000,000 at December 31, 1996 and June 29,    
1997 with a $2,000,000 deductible at December 31, 1996 and $1,000,000 deductible
at June 29, 1997.                                                               

    The liability for self-insurance is accrued based on claims incurred, with
the liability for unsettled claims and claims incurred but not yet reported     
being estimated based on management's evaluation of the nature and severity of  
individual claims and the Company's past claims experience.                     

Statement of Cash Flows                                                     

The Company considers all highly liquid investments purchased with a  
maturity of three months or less to be cash equivalents.                        

Fair Value of Financial Instruments                                         

   The carrying amounts reported in the accompanying statements of financial
position for cash, accounts receivable, and accounts payable approximate fair   
value because of the immediate or short-term maturities of these financial      
instruments.                                                                    

The fair value of the Company's debt is estimated based on the quoted 
market prices for the same or similar issues or on the current rates offered to 
the Company for debt of the same remaining maturities. The book value of the    
Company's debt approximates fair market value.                                  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)                   

Reclassifications                                                           

 Certain prior period amounts have been reclassified to conform with the
June 29, 1997 presentation.                                                     

Changes in Accounting Policies                                              

   On January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for  
Long-Lived Assets to Be Disposed Of" ("SFAS No. 121"). This statement requires  
recognition of impairment losses for long-lived assets whenever events or       
changes in circumstances result in the carrying amount of the assets exceeding  
the sum of expected future cash flows associated with such assets. The          
measurement of the impairment losses to be recognized is to be based on the     
difference between the fair values and the carrying amounts of the assets. SFAS 
No. 121 also requires that long-lived assets held for sale be reported at the   
lower of carrying amount or fair value less cost to sell. The effect of the     
adoption of this policy was not material.                                       

Statement of Financial Accounting Standards No. 123, "Accounting for  
Stock-Based Compensation ("SFAS No. 123") was effective for 1996. This statement
provides for a fair value based method of accounting for grants of equity       
instruments to employees or suppliers in return for goods or services. With     
respect to stock-based compensation to employees, SFAS No. 123 permits entities 
to continue to apply the provisions prescribed by APB Opinion No. 25; however,  
certain pro forma disclosures must be presented as if the fair value based      
method had been applied in measuring compensation cost. There were no           
transactions requiring disclosure in 1995 or 1996 or for the six months ended   
June 29, 1997.                                                                  

    In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing 
of Financial Assets and Extinguishment of Liabilities" ("SFAS No. 125"). This   
statement provides accounting and reporting standards for transfers and         
servicing of financial assets and extinguishments of liabilities. Those         
standards are based on consistent application of a financial-components approach
that focuses on control. Under that approach, after a transfer of financial     
assets, an entity recognizes the financial and servicing assets it controls and 
the liabilities it has incurred, derecognizes financial assets when control has 
been surrendered, and derecognizes liabilities when extinguished. SFAS No. 125  
provides consistent standards for distinguishing transfers of financial assets  
that are sales from transfers that are secured borrowings. SFAS No. 125 is      
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996, and is to be applied             
prospectively. The Company adopted this statement during the first quarter of   
1997 and accounts for its $28,000,000 asset backed certificates as a sale for   
financial reporting purposes (see Note 6). Accordingly, the asset backed        
certificates of $28,000,000 and the associated accounts receivable of           
$28,000,000 are not reflected on the consolidated balance sheet as of June 29,  
1997.                                                                           

 In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 96-1, "Environmental Remediation             
Liabilities". This SOP provides that environmental remediation liabilities      
should be accrued when the criteria of Financial Accounting Standards Board     
(FASB) Statement of Financial Accounting Standards No. 5, "Accounting for       
Contingencies", are met, and that the accrual should include incremental direct 
costs of the remediation effort and the costs of compensation and benefits for  
those employees who are expected to devote a significant amount of time directly
to the remediation effort, to the extent of the time expected to be spent       
directly on the remediation effort. The provisions of this SOP are effective for
fiscal years beginning after December 15, 1996. The Company adopted this SOP on 
January 1, 1997. The effect of the adoption was not material.                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

3. INCOME TAXES:                                                                

Income tax provision comprises the following:                         

                                                                [Download Table]

                                                         FOR THE SIX   FOR THE SIX 
                                  FOR THE YEAR ENDED     MONTHS ENDED  MONTHS ENDED
                                     DECEMBER 31,          JUNE 30,      JUNE 29,  
                                 ---------------------   ------------  ------------
                                 1994    1995    1996        1996          1997    
                                 ----   ------   -----   ------------  ------------
                                    (IN THOUSANDS)       (UNAUDITED)               
                                                                                   
U.S. federal:                                                                      
  Current....................... $ 27   $1,894   $(776)     $(388)       $    --   
  Deferred......................  446   (1,692)    918        643           (929)  
Foreign.........................   11       --      --         --             --   
State:                                                                             
  Current.......................  148      103       9          5              5   
  Deferred......................   78      (85)   (105)        73           (299)  
                                 ----   ------   -----      -----        -------   
                                 $710   $  220   $  46      $ 333        $(1,223)  
                                 ----   ------   -----      -----        -------   
                                 ----   ------   -----      -----        -------   

A reconciliation of the statutory to actual income tax provision is as
follows:                                                                        

                                                                [Download Table]

                                                        FOR THE SIX   FOR THE SIX 
                                   FOR THE YEAR ENDED   MONTHS ENDED  MONTHS ENDED
                                      DECEMBER 31,        JUNE 30,      JUNE 29,  
                                   ------------------   ------------  ------------
                                   1994   1995   1996       1996          1997    
                                   ----   ----   ----   ------------  ------------
                                     (IN THOUSANDS)     (UNAUDITED)               
                                                                                  
Statutory tax (benefit)            $603   $187   $(39)     $ 226        $  (997)  
  provision.......................                                                
Increase (decrease) resulting                                                     
  from:                                                                           
  State income taxes, net of                                                      
     federal tax benefit..........  151    104    142         71             63   
  Benefit of net operating loss                                                   
     carryforwards................  (91)   (99)  (311)      (156)           (75)  
  Provision (benefit) of foreign                                                  
     tax credit carryforwards..... (102)  (102)    51         51             51   
  Other, net......................  149    130    203        141           (265)  
                                   ----   ----   ----      -----        -------   
Actual tax provision (benefit).... $710   $220   $ 46      $ 333        $(1,223)  
                                   ----   ----   ----      -----        -------   
                                   ----   ----   ----      -----        -------   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

3. INCOME TAXES: -- (CONTINUED)                                                 

   Gross deferred tax assets at December 31, 1995 and 1996 and June 29, 1997
consist of the following:                                                       

                                                                [Download Table]

                                                     DECEMBER 31,              
                                                   -----------------   JUNE 29,
                                                    1995      1996       1997  
                                                   -------   -------   --------
                                                    (IN THOUSANDS)             
                                                                               
Gross deferred tax assets:                                                     
  Self insurance liabilities.....................  $ 7,932   $ 7,413   $ 7,190 
  Pensions.......................................    1,228     1,205       665 
  Accruals.......................................      901       851       778 
  AMT and other credit carryforwards.............    2,413     1,921     1,932 
  NOL carryovers.................................       --     1,487     3,017 
  Other..........................................      888     2,220     1,938 
                                                   -------   -------   ------- 
                                                   $13,362   $15,097   $15,520 
                                                   -------   -------   ------- 
                                                   -------   -------   ------- 

   Gross deferred tax liabilities at December 31, 1995 and 1996 and June 29,
1997 consist of the following:                                                  

                                                                [Download Table]

                                                     DECEMBER 31,              
                                                   -----------------   JUNE 29,
                                                    1995      1996       1997  
                                                   -------   -------   --------
                                                    (IN THOUSANDS)             
                                                                               
Gross deferred tax liabilities:                                                
  Depreciation...................................  $ 7,624   $ 7,782   $ 8,488 
  Recoverable environmental costs................    3,600     5,145     5,505 
  Other..........................................    1,688     2,821       799 
                                                   -------   -------   ------- 
                                                   $12,912   $15,748   $14,792 
                                                   -------   -------   ------- 
                                                   -------   -------   ------- 

   The Company has an alternative minimum tax ("AMT") credit carryforward of
approximately $1,860,000 at December 31, 1996 and $1,911,000 at June 29, 1997   
that can be used to offset future regular taxes in excess of AMT. The Company   
has approximately $433,000 at December 31, 1996 and $4,636,000 at June 29, 1997 
AMT net operating loss ("NOL") carryforwards for financial reporting purposes   
which will be used in future years to offset AMT income. The Company has a net  
operating loss ("NOL") carry forward of $8,874,000 for tax purposes at June 29, 
1997 which begins to expire in 2011.                                            

4. EMPLOYEE BENEFIT PLANS:                                                      

The Company maintains two noncontributory benefit plans that cover full-time    
salaried employees and certain other employees under a collective bargaining    
agreement. Retirement benefits for employees covered by the salaried plan are   
based on years of service and compensation levels. The monthly benefit for      
employees under the collective bargaining agreement plan is based on years of   
service multiplied by a monthly benefit factor. Assets of the plans are invested
primarily in equity securities and fixed income investments. Pension costs are  
funded in accordance with the provisions of the applicable law. Pension expense 
for these plans was $561,000, $696,000 and $297,000 for the years ended December
31, 1994, 1995 and 1996, respectively, and $257,000 and $168,000 for the        
unaudited six month period ended June 30, 1996 and the audited six month period 
ended June 29, 1997, respectively.                                              

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

4. EMPLOYEE BENEFIT PLANS: -- (CONTINUED)                                       

     The Company also provides supplemental retirement benefits to its employees
through defined contribution 401(k) plans. Participation in these plans is      
elective. Assets of these plans are invested primarily in mutual funds.         

  The components of net periodic pension cost for the years ended December
31, 1994, 1995 and 1996 and the six month period ended June 29, 1997 are as     
follows:                                                                        

                                                                [Download Table]

                                                                         JUNE 29,
                                               1994     1995     1996      1997  
                                              ------   ------   ------   --------
                                                        (IN THOUSANDS)           
                                                                                 
Service cost................................. $  863   $  814   $1,045    $  536 
Interest cost................................  2,201    2,305    2,377     1,254 
Actual return on plan assets.................     37   (5,486)  (3,037)   (1,608)
Net amortization and deferral................ (2,540)   3,063      (88)      (14)
                                              ------   ------   ------    ------ 
                                              $  561   $  696   $  297    $  168 
                                              ------   ------   ------    ------ 
                                              ------   ------   ------    ------ 

    The actuarial assumptions used in accounting for the plans are as follows:

                                                                [Download Table]

                                                  DECEMBER 31                
                                              --------------------   JUNE 29,
                                                 1995        1996      1997  
                                              -----------   ------   --------
                                                                             
Discount rates..............................  8.25%-8.75%   7.75%     7.75%  
Rate of assumed compensation increase.......      5%          5%       5%    
Expected long-term rates of return on                                        
  assets....................................    9%-9.5%     9%-11%   9%-11%  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

4. EMPLOYEE BENEFIT PLANS: -- (CONTINUED)                                       

   The following table sets forth the funded status of the two plans and the
amount recognized in the Company's consolidated balance sheets at December 31,  
1995 and 1996 and June 29, 1997:                                                

                                                        [Enlarge/Download Table]

                                   1995                           1996                       JUNE 29, 1997        
                       -----------------------------  -----------------------------  -----------------------------
                       ASSETS EXCEED    ACCUMULATED   ASSETS EXCEED    ACCUMULATED   ASSETS EXCEED    ACCUMULATED 
                        ACCUMULATED      BENEFITS      ACCUMULATED      BENEFITS      ACCUMULATED      BENEFITS   
                         BENEFITS      EXCEED ASSETS    BENEFITS      EXCEED ASSETS    BENEFITS      EXCEED ASSETS
                       -------------   -------------  -------------   -------------  -------------   -------------
                                                             (IN THOUSANDS)                                       
                                                                                                                  
Actuarial present                                                                                                 
  value of benefit                                                                                                
  obligations:                                                                                                    
  Vested.............     $18,513         $7,951         $19,686         $ 8,700       $ 20,772         $ 9,341   
  Nonvested..........         294            292             343             338            296             320   
                          -------         ------         -------         -------       --------         -------   
Accumulated benefit                                                                                               
  obligations........     $18,807         $8,243         $20,029         $ 9,038         21,068           9,661   
                          -------         ------         -------         -------       --------         -------   
                          -------         ------         -------         -------       --------         -------   
Projected benefit                                                                                                 
  obligations........     $21,424         $8,243         $22,738         $ 9,038         23,849           9,661   
Plan assets at market                                                                                             
  value..............      22,472          7,407          22,471           7,407         23,571           7,368   
                          -------         ------         -------         -------       --------         -------   
Projected benefit                                                                                                 
  obligation less                                                                                                 
  than (in excess of)                                                                                             
  plan assets........       1,048           (836)           (267)         (1,631)          (278)         (2,293)  
Unrecognized                                                                                                      
  actuarial gain.....      (4,587)          (102)         (3,272)            692         (3,287)          1,477   
Unrecognized prior                                                                                                
  service cost.......       1,721            315           1,721             315          1,541             228   
Unrecognized                                                                                                      
  transition                                                                                                      
  amount.............        (894)            61            (894)             61           (596)             35   
Adjustment required                                                                                               
  to recognize                                                                                                    
  minimum                                                                                                         
  liability..........          --           (274)             --          (1,068)            --          (1,739)  
                          -------         ------         -------         -------       --------         -------   
Accrued pension                                                                                                   
  liability, included                                                                                             
  in other noncurrent                                                                                             
  liabilities........     $(2,712)        $ (836)        $(2,712)        $(1,631)      ($ 2,620)        ($2,292)  
                          -------         ------         -------         -------       --------         -------   
                          -------         ------         -------         -------       --------         -------   

   The Company charged to operations payments to multiemployer pension plans
required by collective bargaining agreements of $2,471,000, $1,992,000 and      
$1,870,000 for the years ended December 31, 1994, 1995 and 1996 and $949,000 and
$923,000 for the unaudited six month period ended June 30, 1996 and the audited 
six month period ended June 29, 1997. These defined benefit plans cover         
substantially all of the Company's union employees not covered under the        
Company's plan. The actuarial present value of accumulated plan benefits and net
assets available for benefits to employees under these multiemployer plans is   
not readily available (see Note 10).                                            

     SFAS No. 87, "Employers' Accounting for Pensions", requires the recognition
of an additional minimum liability for each defined benefit plan for which the  
excess of the accumulated benefit obligation over plan assets exceeds the       
pension liability recorded. A portion of this amount has been offset by the     
recording of an intangible asset. Because the asset recognized may not exceed   
the amount of unrecognized prior service cost and transition obligation on an   
individual plan basis, the balance, net of tax benefits, is reported as a       
reduction of stockholders' equity at June 29, 1997.                             

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

5. SENIOR NOTE OFFERING:                                                        

   On June 16, 1997 the Company completed the sale of $100 million of Senior
Notes (the "Notes"). The Notes bear interest at a rate per annum of 10 3/8% and 
are due 2005. The Notes are redeemable at the option of the Company, in whole or
in part, at any time on or after June 15, 2001, at redemption prices as defined 
in the Purchase Agreement. In addition on or prior to June 15, 2000, the Company
may redeem up to 25% of the Notes at a redemption price of 110 3/8% with the net
proceeds of a Public Equity Offering, provided that not less than $75 million in
aggregate principal amount of the Notes is immediately outstanding after giving 
effect to such redemption. If there is a change of control in the ownership of  
the Company, each Note holder will have the right to require the Company to     
purchase all or a portion of such holder's Notes at a purchase price equal to   
101% of the principal amount thereof. The Notes rank pari passu in right of     
payment with all existing and future unsecured and unsubordinated indebtedness  
of the Company and senior in right of payment to all existing and future        
subordinated indebtedness of the Company. In connection with the Notes, the     
Company is subject to certain covenants that among other things, limit (1) the  
incurrence of additional indebtedness by the Company, (2) the payment of        
dividends on and redemption of capital stock of the Company, (3) certain        
investments by the Company, (4) certain sales of assets, and (5) consolidations 
and mergers of the Company. The Company used the proceeds from the Notes to     
repay substantially all of the Company's outstanding indebtedness and for       
working capital and general corporate purposes. The Notes are classified as     
long-term debt on the consolidated balance sheet as of June 29, 1997 (See Note  
6).                                                                             

     The Company also entered into the Registration Rights Agreement dated as of
the Closing Date (the "Registration Rights Agreement"), among the Company and   
the Initial Purchasers, pursuant to which the Company granted certain           
registration rights for the benefit of the holders of the Notes. Under the      
Registration Rights Agreement, the Company agreed for the benefit of the holders
of the Notes that it would, at its own cost (i) within 60 days after the Closing
Date file a registration statement (the "Registration Statement") with the      
Commission with respect to a registered offer to exchange the Notes for New     
Notes, which will have terms substantially identical to the Notes and (ii) use  
its best efforts to cause such Registration Statement to be declared effective  
under the Securities Act within 120 days after the Closing Date. If for any     
reason the Exchange Offer is not consummated within 150 days after the Closing  
Date, the Company is obligated under the Registration Rights Agreement to file a
shelf registration statement with the Commission covering resales of the Notes. 
If the Company defaults with respect to its obligations under the Registration  
Rights Agreement, the Company will be obligated to pay Additional Interest of   
0.25% per annum for the first 90-day period (or portion thereof) and an         
additional 0.25% per annum for each subsequent 90-day period (up to a maximum   
aggregate increase of 1.00% per annum) until all Registration Defaults have been
cured, whereupon the accrual of Additional Interest will cease and the interest 
rate on the Notes will revert to the original rate.                             

6. EQUIPMENT OBLIGATIONS AND LONG-TERM DEBT:                                    

     Long-term debt as of December 31, 1995 and 1996, and June 29, 1997 consists
of the following:                                                               

                                                        [Enlarge/Download Table]

                                                           DECEMBER 31,      JUNE 29, 
                                                         -----------------   -------- 
                                                          1995      1996       1997   
                                                         -------   -------   -------- 
                                                                (IN THOUSANDS)        
                                                                                      
Senior Notes............................................ $    --   $    --   $100,000 
Asset-backed certificate................................  23,000    28,000            
                                                                                  --- 
Capital lease obligations...............................  14,863    21,729      2,202 
Mortgage notes..........................................     922       854         -- 
Less -- Amounts due in one year or less.................  (2,612)   (4,364)      (638)
                                                         -------   -------   -------- 
                                                         $36,173   $46,219   $101,564 
                                                         -------   -------   -------- 
                                                         -------   -------   -------- 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

6. EQUIPMENT OBLIGATIONS AND LONG-TERM DEBT: -- (CONTINUED)                     

 In May 1993, the Company, through one of its wholly owned subsidiaries,
sold a $23,000,000 Asset Backed Certificate (the "Certificate") to an insurance 
company (the "Investor") pursuant to the terms of the related Receivables       
Contribution and Purchase Agreement and the Pooling and Servicing Agreement (the
"Agreements"). The Agreements were amended and restated as of December 16, 1994,
and as of December 30, 1996, to allow for increases to the Certificate amount   
now totaling $28,000,000. The Certificate is secured by the Company's           
receivables, as defined in the Agreements, and may be repurchased at any time   
for a purchase price equal to the unpaid principal and interest due. The        
Certificate bears interest at a per-annum rate equal to the London Interbank    
Offered Rate ("LIBOR") plus .80%. The Certificate is scheduled to mature in     
December 1999. In accordance with the terms of the Agreements, the Company held 
$1,934,000 and $3,541,400 in a restricted cash account at December 31, 1995 and 
1996, respectively, and $0 at June 29, 1997. On March 30, 1997, the Agreements  
were amended and restated and the provision permitting the Company to repurchase
the Certificate at any time was eliminated. As a result, the transaction is     
accounted for as a sale for financial reporting purposes. Accordingly, the      
Certificate of $28,000,000 and the associated accounts receivable of $28,000,000
are not reflected on the consolidated balance sheet as of June 29, 1997.        

  The capital lease obligations are payable in monthly installments to the
year 2001 at interest rates ranging from 6.2% to 12.0%.                         

   Equipment obligations as of December 31, 1995 and 1996, and June 29, 1997
consist of the following:                                                       

                                                                [Download Table]

                                                     DECEMBER 31,      JUNE 29,
                                                   -----------------   --------
                                                    1995      1996       1997  
                                                   -------   -------   --------
                                                    (IN THOUSANDS)             
                                                                               
$20,000,000 Revolving Credit Agreement...........  $    --   $    --   $    -- 
$12,500,000 Revolving Credit Agreement...........    3,479     6,829        -- 
$26,000,000 Revolving Credit Agreement...........   11,355    24,855        -- 
$10,000,000 Revolving Credit Agreement...........       --     8,325        -- 
Other equipment obligations at interest rates                                  
  ranging from 7.5% to 12.7%, payable in                                       
  installments through 2003......................   14,202    18,432        -- 
Less -- Amounts due in one year..................   (4,804)   (4,957)       -- 
                                                   -------   -------   ------- 
                                                   $24,232   $53,484   $    -- 
                                                   -------   -------   ------- 
                                                   -------   -------   ------- 

In May 1993, the Company entered into a $10,000,000 Revolving Credit  
Agreement with a bank. The agreement was amended in July 1995 and again in July 
1996, and the revolving credit line was increased to $12,500,000. This amended  
agreement includes a maximum of $8,500,000 in open letters of credit, $3,900,000
of which was utilized at December 31, 1996 and June 29, 1997, respectively. The 
Company pays letter of credit fees of 2% of the outstanding balance of issued   
letters of credit, and a commitment fee of .5% on the unused credit line.       
Borrowings under this agreement bear interest, based upon the election of the   
Company, at the Base Rate, as defined, plus .75% per annum or the Adjusted      
LIBOR, as defined, plus 3%. Borrowings are secured by liens against specified   
revenue equipment. The Company has agreed to various loan covenants, including  
the maintenance of certain financial conditions and ratios, limitations on      
mergers, asset sales and purchases, and intercompany advances among other       
restrictions. The Company was in compliance with all these covenants as of      
December 31, 1996. This agreement was terminated and all outstanding amounts    
were repaid in June of 1997 with the proceeds of the Note Offering (See Note 5).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

6. EQUIPMENT OBLIGATIONS AND LONG-TERM DEBT: -- (CONTINUED)                     

   The $26,000,000 Revolving Credit Agreement is with an asset-based lender.
Borrowings under this agreement bear interest at rates indexed from .75% to 1.5%
above a bank's prime rate, with a floor of 7.5%. This agreement includes a      
maximum of $3,750,000 in open letters of credit, of which none were drawn at    
December 31, 1996 and June 29, 1997. Borrowings are secured by liens against    
certain revenue equipment and are limited to 85% of the depreciated value of    
that equipment, as defined. The Company has agreed to various loan covenants,   
including the maintenance of certain financial conditions and ratios,           
limitations of additional debt or liens, restriction of dividends and           
limitations on mergers, asset sales and purchases, and intercompany advances,   
among other restrictions. The Company was in compliance with all these covenants
as of December 31, 1996 and June 29, 1997. The agreement is subject to renewal  
on June 30, 1998, or alternatively it will convert to a 48-month term loan with 
payments beginning August 1, 1998. The Company also pays letter of credit fees  
at an annual rate of 2% of the outstanding balance of the issued letters of     
credit, and fees on the unused credit line at an annual rate of .5%. This       
agreement was terminated and all outstanding amounts were repaid in June of 1997
with the proceeds of the Note Offering (See Note 5).                            

   The $10,000,000 Revolving Credit Agreement is with an asset-based lender.
Borrowings under this agreement bear interest rates indexed from .75% to 1.5%   
above a bank's prime rate, with a floor of 6.5%. Borrowings are secured by liens
against certain revenue equipment and are limited to 85% of the depreciated     
value of that equipment, as defined. The Company has agreed to various loan     
covenants, including the maintenance of certain financial conditions and ratios,
restriction of dividends and limitations on mergers, asset sales and purchases, 
and intercompany advances, among other restrictions. The Company was in         
compliance with all these covenants as of December 31, 1996 and June 29, 1997.  
The agreement is subject to renewal on June 30, 1998, or alternatively it will  
convert to a 48-month term loan with payments beginning August 1, 1998. The     
Company also pays fees on the unused credit line at an annual rate of .5%. This 
agreement was terminated and all outstanding amounts were repaid in June of 1997
with the proceeds of the Note Offering (See Note 5).                            

   In connection with the Offering of the Notes, Chemical Leaman Corporation
entered into a revolving credit facility with CoreStates Bank, N.A. (the "New   
Revolving Credit Facility"). The New Revolving Credit Facility provides for up  
to $20 million of revolving loans and $8.5 million letters of credit. Borrowings
under the New Revolving Credit Facility may be used for working capital and the 
purchase of revenue equipment. Amounts outstanding under the New Revolving      
Credit Facility will bear interest at a variable rate at the Company's election 
of (i) the Base Rate (as defined therein) plus 1/2% or (ii) LIBOR (as defined   
therein) plus 1.80%. The Company will be required to pay a letter of credit fee 
of 1.80% per annum of letters of credit outstanding and a commitment fee of     
3/8% per annum of the unused portion of the facility. The New Revolving Credit  
Facility will mature in June 2000, subject to a maximum of two annual extensions
at the option of the Company upon the approval of CoreStates. The New Revolving 
Credit Facility was undrawn at June 29, 1997 except for $3.9 million of stand-by
letters of credit which were rolled over from an existing facility.             

The New Revolving Credit Facility is secured by $25 million of revenue
equipment held by Chemical Leaman Corporation and availability under the        
facility is limited to 80% of the value of such equipment.                      

    The New Revolving Credit Facility contains financial covenants including a
minimum net worth test and a minimum fixed charge coverage ratio. In addition,  
the New Revolving Credit Facility contains covenants that restrict certain      
mergers, acquisitions and sales of assets, the incurrence of indebtedness, the  
payment of dividends, the repurchase of stock, the making of loans to           
shareholders and the granting of liens.                                         

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

6. EQUIPMENT OBLIGATIONS AND LONG-TERM DEBT: -- (CONTINUED)                     

The Company does not utilize interest rate swaps or other derivative  
financing arrangements to limit its interest rate risk.                         

 Annual maturities of debt following June 30, 1998, excluding letters of
credit, are as follows:                                                         

                                                                [Download Table]

                                                         LONG-TERM    EQUIPMENT 
                                                           DEBT      OBLIGATIONS
                                                         ---------   -----------
                                                             (IN THOUSANDS)     
                                                                                
1998.................................................... $    415      $    --  
1999....................................................      489           --  
2000....................................................      459           --  
2001....................................................      201           --  
2002....................................................       --           --  
Subsequent..............................................  100,000           --  
                                                         --------      -------  
                                                         $101,564      $    --  
                                                         --------      -------  
                                                         --------      -------  

7. STOCKHOLDERS' EQUITY:                                                        

   In April 1996, the Company completed a reverse merger transaction whereby
stockholders who owned less than 50 common shares had their shares converted    
into a right to receive $6,000 per share in cash; 111 shares were converted as a
result of this transaction.                                                     

   In October 1996, the Company issued a stock dividend effected in the form
of a 199-to-1 stock split to its stockholders whereby each stockholder received 
199 shares of common stock for each common share held. The 1995 financial       
statements have been adjusted to reflect the stock dividend.                    

 In 1996, officers of the Company were granted and immediately exercised
rights for the purchase of 299 shares of common stock at $6,000 per share, and  
as consideration executed promissory notes in favor of the Company with a       
maturity date of December 31, 2006, with interest payable annually at the rate  
of 7.25%. These notes receivable have been classified as a stock subscription   
receivable in stockholders' equity.                                             

  In 1995, an officer of the Company was granted and immediately exercised
rights for the purchase of 76 shares of common stock at $6,000 per share, and as
consideration executed a promissory note in favor of the Company with a maturity
date of December 31, 2004, and interest payable annually at the rate of 6.83%.  
This note receivable has been classified as a stock subscription receivable in  
stockholders' equity.                                                           

    In 1996, the Company canceled certain options that were granted to Company
officers and paid $315,000 as consideration to the employees to cancel the      
options.                                                                        

     In 1988, an officer of the Company exercised rights for the purchase of 250
shares of common stock at $6,080 per share, and as consideration executed a     
promissory note in favor of the Company with a term of 10 years and interest    
payable annually at the rate of 9.39%. This note receivable has been classified 
as a stock subscription receivable in stockholders' equity.                     

8. MANDATORILY REDEEMABLE PREFERRED STOCK:                                      

    In August 1992, the Company issued Series A Preferred stock (the "Series A
Preferred") which has a $20,000 stated value per share and a 6% cumulative      
dividend payable quarterly, subject to certain legal and contractual            
limitations. The Series A Preferred can be redeemed at a premium by the Company 
during the first seven years after issuance, after which time the Company may   
redeem the                                                                      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

8. MANDATORILY REDEEMABLE PREFERRED STOCK: -- (CONTINUED)                       

Series A Preferred at par value plus accumulated unpaid dividends. After ten    
years, the Series A Preferred holders have the right to require redemption at   
par value plus accumulated unpaid dividends. The Company may not amend certain  
of the terms of the Series A Preferred without the prior written consent of the 
holders of at least 90% of the then-outstanding shares of Series A Preferred.   
The Company may not issue any class or series of capital stock that is senior in
priority to the Series A Preferred while any of the shares thereof are issued   
and outstanding. The Series A Preferred, as a class, has the right to elect one 
member of the Board of Directors, but has no other voting rights. The Series A  
Preferred has no conversion features.                                           

 In May 1996, the Company converted 151 shares of common stock held by a
stockholder into 151 Series B convertible preferred shares (the "Series B       
Preferred"). The Series B Preferred has a $6,000 stated value per share and a 6%
cumulative dividend payable quarterly, subject to certain legal and contractual 
limitations. After ten years, the Series B Preferred holders have the right to  
require redemption at par value plus accumulated unpaid dividends. The Series B 
Preferred is convertible into an equal number of fully paid and nonassessable   
shares of common stock at the option of the Series B Preferred Stockholders. The
Company may not issue any class or series of capital stock that is senior in    
priority to the Series B Preferred, except for the shares of Series A Preferred,
while any of the shares thereof are issued and outstanding.                     

In May 1996, the Company converted 302 shares of common stock held by 
stockholders into 302 Series C convertible preferred shares (the "Series C      
Preferred"). The Series C Preferred has a $6,000 stated value per share and an  
8% cumulative dividend payable quarterly, subject to certain legal and          
contractual limitations. After ten years, the Series C Preferred holders have   
the right to require redemption at par value plus accumulated unpaid dividends. 
The Series C Preferred has no conversion features. The Company may not issue any
class or series of capital stock that is senior in priority to the Series C     
Preferred, except for the shares of Series A Preferred, while any of the shares 
thereof are issued and outstanding. The Company's shares of Series C Preferred  
rank, as to dividends and liquidation, equally with each other, equally with    
shares of the Series B Preferred, senior and prior to the Company's common      
stock, and senior to, or on a parity with, classes or series of capital stock   
(other than the Company's common stock and Series A Preferred) hereafter issued 
by the Company.                                                                 

9. LEASES:                                                                      

                                                                [Download Table]

                                                      DECEMBER 31,             
                                                   -----------------   JUNE 29,
                                                    1995      1996       1997  
                                                   -------   -------   --------
                                                    (IN THOUSANDS)             
                                                                               
Building, revenue equipment and other equipment                                
  financed under capital leases..................  $20,757   $30,627   $ 4,904 
Less -- Accumulated depreciation.................    7,234    10,409     3,313 
                                                   -------   -------   ------- 
                                                   $13,523   $20,218   $ 1,591 
                                                   -------   -------   ------- 
                                                   -------   -------   ------- 

    The Company leases certain terminal facilities and revenue equipment under
noncancellable operating leases with terms ranging through the year 2001. Annual
rent expense was $824,000 and $1,369,000 for the years ended December 31, 1995  
and 1996, respectively, and $512,000 and $860,000 for the unaudited six month   
period ended June 30, 1996 and the audited six month period ended June 29, 1997,
respectively.                                                                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

9. LEASES: -- (CONTINUED)                                                       

  The following is a schedule of future minimum lease payments for capital
and operating leases as of June 29, 1997:                                       

                                                                [Download Table]

                                                            CAPITAL   OPERATING
                                                            LEASES     LEASES  
                                                            -------   ---------
                                                              (IN THOUSANDS)   
                                                                               
1997 (6 months)...........................................  $   464    $ 1,598 
1998......................................................      829      3,555 
1999......................................................      730      2,699 
2000......................................................      517      1,381 
2001......................................................      169        650 
Subsequent................................................       16      2,036 
                                                            -------    ------- 
Total minimum lease payments..............................    2,725    $11,919 
                                                                       ------- 
                                                                       ------- 
Less -- Amount representing interest......................      523            
                                                            -------            
Present value of minimum lease payments...................  $ 2,202            
                                                            -------            
                                                            -------            

10. COMMITMENTS AND CONTINGENT LIABILITIES:                                     

Commitments to purchase revenue equipment amounted to approximately   
$5,504,000 and $2,555,000 at December 31, 1996 and June 29, 1997, respectively. 

In connection with a dispute between the Company and a multiemployer  
pension plan covering certain of the Company's union employees, the plan's      
trustees have threatened to terminate the Company's participation in the pension
plan with respect to some of its employees. If such termination were to occur,  
the plan's trustees have indicated that the Company would be required to pay a  
partial withdrawal liability in the amount of approximately $3.8 million over a 
period of two years commencing in 1999. The Company is currently negotiating    
with the trustees concerning a possible settlement of the dispute, which would  
permit all of the Company's covered operations to continue to participate in the
pension plan in exchange for either increased future contributions or increased 
covered employment. The Company believes that the ultimate resolution of this   
matter will not have a material adverse effect on the Company's financial       
condition or results of operation. (See Note 15.)                               

   The Company is a party to a lawsuit filed in 1987 against the Company and
approximately 25 other defendants in the Superior Court of New Jersey, Passaic  
County (A.L.U. Textile Combining Corp. et al. v. Texaco Chemical Co., et al.,   
No. L-23905-87). The approximately 175 plaintiffs seek damages claimed to exceed
$100 million resulting from a fire set to a building by trespassing arsonists.  
The plaintiffs allege that the Company was negligent by delivering a shipment of
naphthalene to an outdoor facility where it could be ignited by trespassers. The
Company has denied any liability and has asserted cross-claims against the other
defendants. Discovery in the lawsuit has not yet been concluded. The Company had
applicable insurance coverage at the time of the incident of $53 million,       
subject to a deductible of $250,000 per incident. The plaintiffs have made a    
settlement offer in an amount falling within the coverage limit, which the      
Company has not accepted, and settlement negotiations are continuing. A portion 
of the insurance coverage is carried by insurers which are currently insolvent, 
which could result in the Company being required to pay amounts in excess of the
deductible limit to settle or otherwise resolve the lawsuit. If a settlement    
cannot be successfully concluded, the Company intends to defend against the     
lawsuit.                                                                        

The Company is involved in other litigation in the normal course of   
business. After consultation with legal counsel, management is of the opinion   
that various claims and litigation currently pending will not materially affect 
the Company's financial position or results of operations (see Note 12).        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

11. RELATED-PARTY TRANSACTIONS:                                                 

   The Company paid consulting fees of $720,000, $730,000 and $1,251,000 for
the years ended December 31, 1994, 1995 and 1996, respectively, and $861,000 and
$460,000 for the unaudited six month period ended June 30, 1996 and the audited 
six month period ended June 29, 1997, respectively, to a director of the        
Company. The Company also paid consulting fees totaling $149,000, $162,000 and  
$162,000 for the years ended December 31, 1994, 1995 and 1996, respectively, and
$72,000 and $81,000 for the unaudited six month period ended June 30, 1996 and  
the audited six month period ended June 29, 1997, respectively, to certain      
preferred stockholders.                                                         

  On December 11, 1995, the Company and a consulting firm ("the Consulting
Firm") entered into a Service Agreement under which the Consulting Firm agreed  
to assist in the development and implementation of the Company's new information
technology system on a fee for service basis. The president, controlling        
stockholder and a director of the Consulting Firm is a director of the Company. 
In addition, on July 1, 1996, the Company and this director entered into a      
Consulting Agreement for this director to assist the Company with the management
of its new information technology system. The Consulting Agreement provides for 
this director to receive a consulting fee of $20,834 per month and the potential
to receive a bonus of up to 100% of the base consulting fee, payable at the end 
of 1996 and 1997. The Consulting Agreement has a termination date of December   
31, 1997. The Company paid $670,000 and $2,525,000 for the years ended December 
31, 1995 and 1996, respectively, and $1,273,000 and $1,375,000 for the unaudited
six month period ended June 30, 1996 and audited six month period ended June 29,
1997 to this director.                                                          

 During 1995, the Company extended a $2,500,000 loan to its Chairman and
Chief Executive Officer. The loan is evidenced by a promissory note and bears   
interest at 8.25% per annum. Interest under this loan is payable annually, and  
the principal is due upon maturity at December 31, 2004. During 1996, the       
Company extended an additional $1,000,000 loan to this officer. This loan is    
also scheduled to mature December 31, 2004, and bears interest at a rate of     
6.50% per annum. The loan amounts are included in notes receivable on the       
consolidated balance sheets.                                                    

12. ENVIRONMENTAL MATTERS:                                                      

    For a number of years the Company has been involved in two sites that have
been designated as Superfund sites by the United States Environmental Protection
Agency ("EPA") located in Bridgeport, New Jersey and West Caln Township,        
Pennsylvania.                                                                   

  Bridgeport, New Jersey.  During 1991, the Company entered into a Consent
Decree with the EPA filed in the U.S. District Court for the District of New    
Jersey, U.S. v. Chemical Leaman Tank Lines, Inc., Civil Action No. 91-2637 (JFG)
(D.N.J.), with respect to its site located in Bridgeport, New Jersey, requiring 
the Company to remediate groundwater contamination. The Consent Decree allowed  
the Company to undertake Remedial Design and Remedial Action ("RD/RA") related  
to the groundwater operable unit of the cleanup. Costs associated with          
performing the RD/RA were $1.2 million in 1996. No decision has been made as to 
the extent of soil remediation to be required, if any.                          

 In August 1994, the EPA issued a Record of Decision ("ROD") selecting a
remedy for the wetlands operable unit at the Bridgeport site. The Company has   
submitted comments to the EPA that vigorously dispute the merits of the EPA's   
remedy. In the last quarter of 1996, the EPA issued demands to the Company for  
reimbursement of approximately $2.5 million in alleged EPA past response costs  
at the site for the groundwater and wetlands operable units, and the Company    
expects that additional demands may be issued in the future. The government has 
not made a claim against the Company for natural resource damages. The Company  
and the EPA are negotiating a settlement of the EPA's response cost claims. If  
the EPA accepts the Company's latest offer, the Company will be                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

12. ENVIRONMENTAL MATTERS: -- (CONTINUED)                                       

permitted to reimburse the EPA's cost at the site over a three year period at a 
total cost of $3.3 million, plus interest.                                      

The Company is in litigation with its insurers to recover its costs in
connection with the environmental cleanup at the Bridgeport site. On April 7,   
1993, the U.S. District Court for the District of New Jersey entered a judgment 
requiring the insurers to reimburse the Company for substantially all past and  
future environmental cleanup costs at the Bridgeport site. The insurers appealed
the judgment to the U.S. Court of Appeals for the Third Circuit, but before the 
appeal was decided the Company and its primary insurer settled all of the       
Company's claims, including claims asserted or to be asserted at other sites,   
for $11.5 million. This insurer dismissed its appeal, but the excess carriers   
did not. On June 20, 1996, the U.S. Court of Appeals affirmed the judgment      
against the excess insurance carriers, except for the allocation of liability   
among applicable policies, and remanded the case for an allocation of damage    
liability among the insurers and applicable policies on a several basis. The    
allocation proceeding and the Company's petition for recovery of its legal costs
are presently pending before the U.S. District Court.                           

   It is the belief of environmental counsel to the Company, and management,
that receipt of insurance proceeds sufficient to recover substantially all of   
the costs of remediating the Bridgeport site, including attorney fees and       
expenses, is likely to occur. On September 15, 1997, the District Court issued  
an order allocating damage liability among the applicable policies. The Company 
capitalized $1,647,000 and $4,243,000 during 1995 and 1996, respectively, and   
$421,000 during the six month period ended June 29, 1997, of current costs      
related to the Bridgeport site based upon their probable future recovery. The   
deferred costs of $9,437,000, $13,680,000 and $14,101,000 are classified as     
recoverable costs in the consolidated balance sheets at December 31, 1995 and   
1996, and June 29, 1997, respectively.                                          

 West Caln Township, Pennsylvania.  The EPA has alleged that the Company
disposed of hazardous materials at the William Dick Lagoons Superfund Site      
located in West Caln Township, Pennsylvania. In 1991, the EPA issued ROD I,     
requiring the installation of a public water supply for some residents near the 
site. In November 1991, the EPA issued special notice letters to the Company and
another potentially responsible party ("PRP") soliciting implementation of ROD  
I. In March 1992, the EPA issued a unilateral order to the Company and the other
party directing them to implement ROD I. The Company declined to comply based on
its belief that it had sufficient cause not to comply.                          

In April 1993, the EPA issued ROD II, selecting a remedy for the soil 
remediation phase of this cleanup program. The EPA and the Company agreed that  
the Company would be afforded the opportunity to implement its preferred remedy 
for the soil remediation phase and to settle its differences with the EPA       
regarding the public water supply issue. Pursuant to a Consent Decree lodged    
with the U.S. District Court for the Eastern District of Pennsylvania on October
10, 1995, U.S. v. Chemical Leaman Tank Lines, Inc., Civil Action No. 95-CV-4264 
(RJB) (E.D.P.A.), the Company paid the EPA $713,674 in June 1996, $713,674 in   
October 1996, and approximately $300,000 in November 1995, and established a    
$300,000 irrevocable standby letter of credit. These payments settled EPA's     
claim relating to past response costs and failure to install a public water     
supply in accordance with ROD I. The Consent Decree requires the Company to make
an additional payment to EPA of $700,000 in October 1997, perform an interim    
groundwater remedy at the site, and finance the soil remedy at an estimated cost
of approximately $4.1 million. The Consent Decree does not cover the final      
groundwater remedy or other site remedies, or claims, if any, for natural       
resource damages.                                                               

 Other Sites.  On August 5, 1992, the Company entered into a CD with the
City and State of New York settling its liability for alleged contamination of  
five municipal landfills located in New York                                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

12. ENVIRONMENTAL MATTERS: -- (CONTINUED)                                       

City. The CD, which was entered by the United States District Court for the     
Southern District of New York on August 7, 1992, obligated the Company to pay to
the State of New York $133,227 by September 16, 1992. This payment was made as  
required. The CD also obligated the Company to pay the City of New York         
$1,419,183 on June 30, 1995. The Company and the City of New York agreed in     
principle to a deferral of the June 30, 1995 payment in exchange for an increase
in the total amount due from the Company. In accordance with that agreement, the
Company paid the City of New York $500,000 in June 1995. Three additional       
payments of $250,000 were made on March 31, 1996, June 30, 1996, and March 30,  
1997. A final payment of $379,576 was made on June 30, 1997.                    

In addition, the Company has also been named as a defendant and a     
potentially responsible party at a number of former waste disposal sites. In    
these matters the Company's involvement is relatively limited and generally     
arises out of shipment of wastes by or for the Company in the ordinary course of
business over many years to contaminated sites owned and operated by third      
parties.                                                                        

   Although the extent and timing of the litigation, settlement and possible
cleanup costs at the foregoing sites, other than certain phases of the          
Bridgeport and West Caln Township sites, are not reasonably estimable at this   
time, it is anticipated that the Company will expend substantial amounts with   
respect to such sites.                                                          

   The Company has recorded total charges (credits) to income of $2,700,000,
$2,388,000 and $2,280,000 for the years ended December 31, 1994, 1995 and 1996, 
respectively, and $(1,392,000) and $760,000 for the unaudited six month period  
ended June 30, 1996 and the audited six month period ended June 29, 1997,       
respectively, with regard to the foregoing environmental cleanup and related    
charges. At December 31, 1995 and 1996, and June 29, 1997, the reserve for      
environmental liabilities was approximately, $15,309,000, $13,115,000 and       
$12,400,000, respectively, and this reserve is included in estimated            
self-insurance liabilities in the consolidated balance sheets.                  

13. INVESTMENT:                                                                 

The Company has a zero coupon bond of $2,236,000, which is required as
security under the Company's insurance program. The bond is scheduled to mature 
February 15, 2016. The bond is classified as held-to-maturity, and has a value  
of $737,000 which consists of the initial purchase price and accretion of income
and is included in other assets on the consolidated balance sheets.             

14. ACQUISITION:                                                                

  In June 1996, the Company and BMI Transportation, Inc. ("BMI") signed an
asset purchase agreement in which the Company purchased certain assets          
(equipment and receivables) and assumed certain liabilities, as defined, of     
Fleet Transport Company, Inc. ("Fleet"), a division of BMI. The consideration   
for the assets purchased was $15,500,000 and the assumption of capital lease    
obligations of approximately $7,400,000. Additionally, the Company assumed      
certain operating leases related to revenue equipment. The Company retained     
$1,500,000 of the purchase price to be utilized to perform any necessary or     
appropriate environmental cleanup on the facilities purchased from BMI. This    
amount is reflected as a liability in the consolidated balance sheet. To the    
extent the Company does not utilize the $1,500,000 on or prior to the second    
anniversary of the closing date, the Company is required to pay one half of the 
unused portion to BMI with interest thereon at an annual rate of 8%. The balance
of the unused portion is required to be paid to BMI on the third anniversary of 
the closing date with interest thereon at an annual rate of 8%. The acquisition 
was accounted for under the purchase method of accounting. Based on the         
allocation of the purchase price, no goodwill resulted from this acquisition.   
Under the terms of the asset purchase agreement, there is an additional         
contingent payment of up to a                                                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS) -- (CONTINUED)

14. ACQUISITION: -- (CONTINUED)                                                 

maximum of $7,000,000 that the Company is required to make if revenues and      
earnings of Fleet exceed certain levels, as defined, for the 12-month period    
ended June 29, 1997. Based on the revenues and earnings of Fleet for the        
12-month period ended June 29, 1997, the Company does not anticipate making the 
contingent payment. Operating results for Fleet are included in the Company's   
consolidated statement of operations beginning June 29, 1996. The accompanying  
statement of operations for the year ended December 31, 1996 and the audited six
month period ended June 29, 1997, includes $461,000 and $711,000, respectively, 
of net loss attributable to the Fleet acquisition.                              

15. SUBSEQUENT EVENT:                                                           

   The Company has entered into an agreement to settle a dispute between the
Company and a multiemployer pension plan covering certain of the Company's union
employees. Under the agreement, the Company has agreed to provide a minimum     
level of future contributions to the plan for a four-year period ending         
September 1, 2001. At that time, the plan trustees may renew their claim that   
they have the right to terminate the Company's participation in the plan with   
respect to some or all of its employees, and the Company retains any and all    
defenses it has with respect to such claim. If the Company's participation were 
to have terminated during 1997 with respect to a group of employees, the Company
would have been assessed a partial withdrawal liability of approximately $3.8   
million payable over a period of two years commencing in 1999. The Company      
anticipates that any withdrawal liability that might be due on account of a     
partial withdrawal in or after 2001 will be substantially reduced from that     
level.                                                                          

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CHEMICAL LEAMAN CORPORATION AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS) 

                                                        [Enlarge/Download Table]

                                              BALANCE AT                               BALANCE AT  
                                          BEGINNING OF PERIOD  ADDITIONS  DEDUCTIONS  END OF PERIOD
                                          -------------------  ---------  ----------  -------------
                                                                                                   
FOR SIX MONTH PERIOD ENDED JUNE 29, 1997                                                           

Accounts receivable allowance for                                                                  
  doubtful accounts.....................          $570            $225       $(131)        $664    

FOR YEAR ENDED DECEMBER 31, 1996                                                                   

Accounts receivable allowance for                                                                  
  doubtful accounts.....................           323             318         (71)         570    

FOR YEAR ENDED DECEMBER 31, 1995                                                                   

Accounts receivable allowance for                                                                  
  doubtful accounts.....................           212             338        (227)         323    

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================================================================================

   ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR  
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF  
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE     
AGENT AS FOLLOWS.                                                               

BY MAIL:
FIRST UNION NATIONAL BANK 
1525 WEST W. T. HARRIS BLVD. 3C3
CHARLOTTE, NORTH CAROLINA 28288 
ATTENTION: MICHAEL KLOTZ

FACSIMILE TRANSMISSION: 
(704) 590-7628

BY HAND/OVERNIGHT EXPRESS:
FIRST UNION NATIONAL BANK 
1525 WEST W. T. HARRIS BLVD. 3C3
CHARLOTTE, NORTH CAROLINA 28288 
ATTENTION: MICHAEL KLOTZ

FACSIMILE TRANSMISSION: 
(704) 590-7628

TO CONFIRM RECEIPT: 
(704) 590-7408

    (ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSIMILE SHOULD BE SENT PROMPTLY
BY HAND, OVERNIGHT COURIER OR REGISTERED OR CERTIFIED MAIL)                     

     NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT  
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR        
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE        
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION 
OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR   
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF 
THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS  
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE      
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY         
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS    
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.                           

================================================================================

================================================================================
OFFER TO EXCHANGE ALL OUTSTANDING 
10 3/8% SENIOR NOTES DUE 2005 
($100,000,000 PRINCIPAL AMOUNT) 
FOR 10 3/8% SENIOR NOTES DUE 2005 

CHEMICAL LEAMAN CORPORATION 

------------------
PROSPECTUS
------------------

              , 1997

================================================================================

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS                              

    Chemical Leaman Corporation (the "Company") is a Pennsylvania corporation.
Sections 513 and 518 of the Pennsylvania Corporations and Unincorporated        
Associations statute (the "Associations Code"), Sections 1741-1750 of the       
Pennsylvania Business Corporation Law of 1988 (the "BCL") and the Company's     
By-Laws provide for indemnification of the Company's directors and officers. As 
permitted under Section 518 of the Associations Code and 1741-1750 of the BCL,  
the Company's By-Laws provide that the Company shall indemnify directors and    
officers against all expenses incurred in connection with actions, suits        
(whether civil, criminal, administrative or investigative, including derivative 
actions) threatened or pending against or completed with respect to, such       
officer or director (including expenses incurred or to be incurred by virtue of 
being called as a witness) by reason of the fact that he or she is or was a     
officer or director of the Company, or by reason of the fact that such officer  
or director serves or served as an employee or agent of any entity at the       
Company's request, unless the act or failure to act on the part of the officer  
or director giving rise to the claim for indemnification is determined by a     
court to have constituted willful misconduct or recklessness. In addition, the  
Company's By-Laws, consistent of Section 1713 of the BCL, state that the        
responsibility or liability of the Company's directors will not be limited if   
such liability arises out of a breach or failure by such officer or director to 
perform his or her duties under the BCL and such breach or failure to perform   
said duties constituted self-dealing or wilful misconduct or recklessness.      
Moreover, under the BCL and the Company's By-Laws, the personal liability of the
Company's officers and directors shall not be limited if the responsibility or  
liability arises under or any criminal statute or the liability concerns the    
payment of tax pursuant to federal, state or local law. Section 1745 of the BCL 
and the Company's By-Laws permit the Company to pay expenses incurred in        
connection with any such action, suit or proceeding in advance of the final     
disposition of such action, suit or proceeding upon the Company receipt of an   
undertaking by or on behalf of the representative to repay the amount so        
advanced if said person is ultimately determined not to be entitled to          
indemnification under the BCL or the By-Laws. The By-Laws provide that the      
Company's officers and directors shall have the right to employ his or her own  
legal counsel in such action, but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense thereof shall be 
at the expense of such person unless: (i) the employment of legal counsel by    
such person shall have been authorized by the Company; (ii) such person shall   
have reasonably concluded that there may be a conflict of interest between the  
Company and such person in the conduct of the defense of such proceeding; or    
(iii) the Company shall in fact have employed legal counsel to assume the       
defense of such action. The Company shall not be entitled to assume the defense 
of any proceeding brought by or on behalf of the Company or as to which such    
person shall have reasonably concluded that there may be a conflict of interest 
if indemnification under the By-Laws or advancement of expenses are not paid or 
made by the Company, or on its behalf, within 90 days after a written claim for 
indemnification or a request for an advancement of expenses has been received by
the Company; and such person may, at any time thereafter, bring suit against the
Company to recover the unpaid amount of the claim or the advancement of         
expenses. The By-Laws, in accordance with Section 518 of the Associations Code  
and Section 1750 of the BCL, further provide that indemnification and           
advancement of expenses shall, unless otherwise provided when authorized,       
continue as to a person who has ceased to be a director, officer, employee or   
agent; and, pursuant to Section 1747 of the BCL, the By-Laws also provide that  
the Company shall have the power to purchase and maintain insurance on behalf of
any person who is a director, officer, employee or agent of the Company, or who 
is serving at the request of the Company against any liability asserted against 
him or her and incurred in any such capacity, or arising out of his or her      
status as such, whether or not the Company would have the power to indemnify him
or her against such liability under the BCL.                                    

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   Under the Company's By-laws, it is the policy of the Company to indemnify
officers and directors to the fullest extent permitted by law, and Section 1743 
of the BCL mandates indemnification against expenses, including attorney's fees,
actually and reasonably incurred by an officer, director or representative when 
such individuals are ultimately successful on the merits or otherwise in defense
of any third-party action or proceedings, or of any derivative or corporate     
actions, or in defense of any claim, issue or matter therein.                   

   The foregoing discussion is qualified in its entirety by reference to the
Associations Code, the BCL and the By-Laws of the Company.                      

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                             

(a) Exhibits.                                                         

                                                                [Download Table]

EXHIBIT NO.                            EXHIBIT                           
-----------                            -------                           
                                                                         
 *1.1        Purchase Agreement, dated as of June 10, 1997, by and among 
             Chemical Leaman Corporation and Merrill Lynch, Pierce,      
             Fenner & Smith Incorporated and Schroder Wertheim & Co.     
             Incorporated.                                               

 *2.1        Asset Purchase Agreement, dated June 28, 1996, among Fleet  
             Transport Company, Inc., Fleet Transport Va., Inc., Bulk    
             Storage, Inc., BMI Transportation, Inc., Fleet Acquisition  
             Corporation and Chemical Leaman Corporation.                

 *2.2        Plan of Merger between CLC Merger Corp. and Chemical Leaman 
             Corporation, effective March 25, 1996.                      

 *3.1        Articles of Incorporation of Chemical Leaman Corporation as 
             amended.                                                    

 *3.2        By-Laws of Chemical Leaman Corporation.                     

 *4.1        Indenture, dated as of June 16, 1997, between Chemical      
             Leaman Corporation and First Union National Bank, as        
             trustee, relating to the 10 3/8% Senior Notes due 2005 of   
             Chemical Leaman Company.                                    

 *4.2        Form of New Note (contained in Exhibit 4.1 as Exhibit A-2). 

  5.1        Opinion of Pepper, Hamilton & Scheetz LLP regarding legality
             of the securities being registered.                         

 *10.1       Registration Rights Agreement, dated as of June 16, 1997, by
             and among Chemical Leaman Corporation and Merrill Lynch,    
             Pierce, Fenner & Smith & Co. Incorporated and Schroder      
             Wertheim & Co. Incorporated.                                

 *10.2       Revolving Credit Agreement, dated as of June 16, 1997,      
             between Chemical Leaman Corporation and CoreStates Bank,    
             N.A.                                                        

 *10.3       Purchase Agreement, dated September 10, 1996, between       
             Chemical Leaman Corporation and David M. Boucher.           

 *10.4       Promissory Note, dated September 10, 1996, for $262,500 by  
             David M. Boucher to Chemical Leaman Corporation.            

 *10.5       Pledge Agreement, dated September 10, 1996, by and between  
             Chemical Leaman Corporation and David M. Boucher.           

 *10.6       Letter Agreement for cancellation of stock options, dated   
             September 10, 1996, by and between Chemical Leaman          
             Corporation and Eugene C. Parkerson.                        

 *10.7       Purchase Agreement, dated September 10, 1996, between       
             Chemical Leaman Corporation and Eugene C. Parkerson.        

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                                                                [Download Table]

EXHIBIT NO.                            EXHIBIT                          
-----------                            -------                          
                                                                        
 *10.8       Promissory Note, dated September 10, 1996, for $244,844 by 
             Eugene C. Parkerson to Chemical Leaman Corporation.        

 *10.9       Pledge Agreement, dated September 10, 1996, by and between 
             Chemical Leaman Corporation and Eugene C. Parkerson.       

 *10.10      Amendment to Stock Purchase and Pledge Agreement, dated    
             September 10, 1996, by and between Chemical Leaman         
             Corporation and Philip J. Ringo.                           

 *10.11      Promissory Note, dated September 10, 1996, for $67,500 by  
             Philip J. Ringo to Chemical Leaman Corporation.            

 *10.12      Stock Purchase and Pledge Agreement, dated August 9, 1995, 
             between Chemical Leaman Corporation and Philip J. Ringo.   

 *10.13      Promissory Note, dated August 9, 1995, for $456,000 by     
             Philip J. Ringo to Chemical Leaman Corporation.            

 *10.14      Letter Agreement for cancellation of stock options, dated  
             September 10, 1996, by and between Chemical Leaman         
             Corporation and Reuben M. Rosenthal.                       

 *10.15      Purchase Agreement, dated September 10, 1996, between      
             Chemical Leaman Corporation and Reuben M. Rosenthal.       

 *10.16      Promissory Note, dated September 10, 1996, for $188,088 by 
             Reuben M. Rosenthal to Chemical Leaman Corporation.        

 *10.17      Pledge Agreement, dated September 10, 1996 by and between  
             Chemical Leaman Corporation and Reuben M. Rosenthal.       

 *10.18      Purchase Agreement, dated September 10, 1996, between      
             Chemical Leaman Corporation and Fernando C. Colon-Osorio.  

 *10.19      Promissory Note, dated September 10, 1996, for $209,250 by 
             Fernando C. Colon-Osorio to Chemical Leaman Corporation.   

 *10.20      Pledge Agreement, dated September 10, 1996, by and between 
             Chemical Leaman Corporation and Fernando C. Colon-Osorio.  

 *10.21      Promissory Note, dated November 10, 1988, for $1,520,000 by
             David R. Hamilton to Chemical Leaman Corporation.          

 *10.22      Promissory Note, dated January 25, 1995, for $2,500,000 by 
             David R. Hamilton to Chemical Leaman Corporation.          

 *10.23      Promissory Note, dated January 2, 1996, for $1,000,000 by  
             David R. Hamilton to Chemical Leaman Corporation.          

 *10.24      Consultant Agreement, dated January 1, 1995, by and between
             Chemical Leaman Corporation and George McFadden.           

 *10.25      Service Agreement, dated December 11, 1995, by and between 
             Chemical Leaman Tank Lines, Inc. and Acumen Consulting     
             Group, Inc.                                                

 *10.26      Consulting Agreement, dated July 1, 1996, by and between   
             Chemical Leaman Corporation and Fernando C. Colon-Osorio.  

 *10.27      Consulting Agreement, dated July 1, 1996, by and between   
             Samuel F. Niness, Jr. and Chemical Leaman Tank Lines, Inc. 

 *10.28      Agreement and Release, dated June 10, 1994, by and between 
             Charles Fernald and Chemical Leaman Corporation.           

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EXHIBIT NO.                            EXHIBIT                           
-----------                            -------                           
                                                                         

 *10.29      Letter Agreement for employment, dated June 1, 1995, by and 
             among Chemical Leaman Corporation, Chemical Leaman Tank     
             Lines, Inc., David R. Hamilton, George McFadden and Philip  
             J. Ringo.                                                   

 *10.30      Amendment to Letter Agreement, dated October 31, 1995, by   
             and among Chemical Leaman Corporation, Chemical Leaman Tank 
             Lines, Inc. and Philip J. Ringo.                            

 *10.31      Exchange Agreement, dated May 22, 1996, by and between      
             Chemical Leaman Corporation and Karen Lloyd.                

 *10.32      Uniform Bulk Motor Carrier Contract, dated October 1, 1991, 
             by and between Chemical Leaman Tank Lines, Inc. and The Dow 
             Chemical Company.                                           

 *10.33      Lease Agreement, dated November 14, 1979, by and between    
             Pickering Place and Chemical Leaman Corporation.            

 *10.34      Revolving Credit Agreement, dated June 28, 1996, by and     
             among Fleet Acquisition Corporation and Associates          
             Commercial Corporation; First Amendment thereto dated as of 
             December 31, 1996; and Second Amendment thereto dated as of 
             March 30, 1997.                                             

 *10.35      Amended and Restated Revolving Credit Agreement, dated as of
             January 1, 1994, by and among Chemical Leaman Tank Lines,   
             Inc. ("CLTL") and Associates Commercial Corporation; First  
             Amendment thereto dated as of June 6, 1994; Second Amendment
             thereto dated as of June 30, 1994; Third Amendment thereto  
             dated as of December 31, 1994; Fourth Amendment thereto     
             dated as of June 30, 1995; Fifth Amendment thereto dated as 
             of December 31, 1995; Sixth Amendment thereto dated as of   
             April 11, 1996; Seventh Amendment thereto dated as of June  
             30, 1996; Eighth Amendment thereto dated as of December 31, 
             1996; and Ninth Amendment thereto dated as of March 30,     
             1997.                                                       

 *10.36      Credit Agreement, dated July 31, 1995, by and between CLTL  
             and CoreStates Bank, N.A.; Amendment No. 1 thereto dated May
             31, 1996; Amendment No. 2 thereto dated July 31, 1996;      
             Amendment No. 3 thereto dated November 22, 1996; and        
             Amendment No. 4 thereto dated January 13, 1997.             

 *10.37      Receivables Contribution and Purchase Agreement, dated as of
             May 14, 1993, by and among CLTL, Quala Systems, Inc.,       
             Chemical Leaman Corporation, and Pickering Way Funding      
             Corp.; First Amendment thereto dated as of December 16,     
             1994; Second Amendment thereto dated as of December 30,     
             1996; and Third Amendment thereto dated as of March 30,     
             1997.                                                       

 *10.38      Pickering Way Funding Trust Pooling and Servicing Agreement,
             dated as of May 14, 1993, by and among Pickering Way Funding
             Corp., Chemical Leaman Corporation, and Fidelity Bank; First
             Amendment thereto dated as of December 16, 1994; Second     
             Amendment thereto dated as of June 23, 1995; Second         
             Amendment thereto dated as of December 30, 1996, by and     
             among Pickering Way Funding Corp., Chemical Leaman          
             Corporation, and First Union National Bank (as successor    
             interest to Fidelity Bank); Third Amendment thereto dated as
             of March 30, 1997; and Fourth Amendment thereto dated as of 
             June 11, 1997.                                              

 *10.39      Certificate Purchase Agreement, dated December 30, 1996, by 
             and among Pickering, First Union National Bank and          
             Transamerica Life Insurance and Annuity Company.            

                                                                              

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EXHIBIT NO.                            EXHIBIT                         
-----------                            -------                         
                                                                       

*10.40       Service Marketing Services Agreement, dated May 19, 1995, 
             between Union Pacific Railroad Company and CLTL.          

 10.41       Standard Independent Service Agreement.                   

*12.1        Statement regarding computation of ratio of earnings to   
             fixed charges for Chemical Leaman Corporation.            

*21.1        Subsidiaries of Chemical Leaman Corporation.              

 23.1        Consent of Arthur Andersen LLP, independent public        
             accountants.                                              

 23.2        Consent of Pepper, Hamilton & Scheetz LLP (included in    
             Exhibit 5.1).                                             

*24(a)       Certified Board Resolution re Power of Attorney of Certain
             Directors.                                                

*24(b)       Power of Attorney of Certain Directors (included on page  
             II-8 of the Registration Statement).                      

*25.1        Statement of Eligibility under the Trust Indenture Act of 
             1939 of First Union National Bank on Form T-1.            

*27.1        Financial Data Schedule.                                  

*99.1        Form of Letter of Transmittal for the 10 3/8% Senior Notes
             due 2005.                                                 

*99.2        Form of Notice of Guaranteed Delivery.                    

------------------                                                              

* Previously filed.                                                             

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(b) Financial Statement Schedules                                     

  Certain schedules have been omitted because they are not applicable, not
required, or the required information is included in the Financial Statements or
the notes thereto.                                                              

ITEM 22. UNDERTAKINGS.                                                          

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the  
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant   
has been advised that in the opinion of the Securities and Exchange Commission  
such indemnification is against public policy as expressed in the Act and is,   
therefore, unenforceable. In the event that a claim for indemnification against 
such liabilities (other than the payment by the Registrant of expenses incurred 
or paid by a director, officer or controlling person of the Registrant in the   
successful defense of any action, suit or proceeding) is asserted by such       
director, officer or controlling person in connection with the securities being 
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate     
jurisdiction the question whether such indemnification by it is against public  
policy as expressed in the Securities Act and will be governed by the final     
adjudication of such issue.                                                     

The undersigned registrant hereby undertakes: (1) to file, during any 
period in which offers or sales are being made, a post-effective amendment to   
this registration statement: (i) to include any prospectus required by Section  
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any   
facts or events arising after the effective date of the registration statement  
(or the most recent post-effective amendment thereof) which, individually or in 
the aggregate, represent a fundamental change in the information set forth in   
the registration statement. Notwithstanding the foregoing, any increase or      
decrease in volume of securities offered (if the total dollar value of          
securities offered would not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum offering range may be         
reflected in the form of prospectus filed with the Commission pursuant to Rule  
424(b) if, in the aggregate, the changes in volume and price represent no more  
than 20 percent change in the maximum aggregate offering price set forth in the 
"Calculation of Registration Fee" table in the effective registration statement;
and (iii) to include any material information with respect to the plan of       
distribution not previously disclosed in the registration statement or any      
material change to such information in the registration statement; (2) that, for
the purpose of determining any liability under the Securities Act of 1933, each 
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities 
at that time shall be deemed to be the initial bona fide offering thereof; and  
(3) to remove from registration by means of a post-effective amendment any of   
the securities being registered which remain unsold at the termination of the   
offering.                                                                       

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SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Chemical Leaman Corporation, has duly caused Amendment No. 1 to this            
Registration Statement to be signed on its behalf by the undersigned, thereunto 
duly authorized in the City of Exton, Commonwealth of Pennsylvania, on the 18th 
day of September, 1997.                                                         

                            By: /s/ DAVID M. BOUCHER
                                            --------------------------------
                            David M. Boucher
                                  Senior Vice President,
                                        Chief Financial Officer, and
                     Secretary

     Pursuant to the requirements of the Securities Act of 1933, Amendment No. 1
to this Registration Statement has been signed on September 18, 1997 by the     
following persons in the capacities indicated:                                  

                                                                [Download Table]

           SIGNATURES                                            TITLE        
           ----------                                            -----        
                                                                              
By             *                                                              
     -----------------------------                   Chairman of the Board,   
     David R. Hamilton                               Chief Executive Officer  
                                                     and President            

By:            *                                                              
     -----------------------------                   Executive Vice President,
     Eugene C. Parkerson                             Administration; Director 

By:            *                                                              
     -----------------------------                   Director                 
     Philip J. Ringo                                                          

By:            *                                                              
     -----------------------------                   Director                 
     Reuben M. Rosenthal                                                      

By:            *                                                              
     -----------------------------                   Director                 
     Fernando C. Colon-Osorio                                                 

By:            *                                                              
     -----------------------------                   Director                 
     G. Michael Cronk                                                         

By:            *                                                              
     -----------------------------                   Director                 
     Charles E. Fernald, Jr.                                                  

By:            *                                                              
     -----------------------------                   Director                 
     Samuel C. Hamilton, Jr.                                                  

By:            *                                                              
     -----------------------------                   Director                 
     John H. McFadden                                                         

By:            *                                                              
     -----------------------------                   Director                 
     George McFadden                                                          

By:            *                                                              
     -----------------------------                   Director                 
     Samuel F. Niness, Jr.                                                    

*By: /s/ DAVID M. BOUCHER                                                     
     -----------------------------                                            
      David M. Boucher                                                        
      Attorney-in-fact                                                        

II-7

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-4/A’ Filing		Date		First		Last			Other Filings
		2/15/16		120
		12/31/06		115
		6/15/05		3		65
		12/31/04		61		118
		8/1/02		35		70
		9/1/01		121
		6/15/01		3		112
		12/31/00		67
		6/15/00		3		112
		6/30/99		62
		8/1/98		114
		6/30/98		114		115
		6/18/98		62
		6/17/98		62
		12/31/97		18		118			10-K405
		12/15/97		16		65
		11/13/97		28
		10/14/97		27		28			424B1
Filed on:		9/18/97		1		130
		9/17/97		98
		9/16/97		12		27
		9/15/97		55		119
		8/15/97		27		28
		7/25/97		98
		6/30/97		120
		6/29/97		2		122
		6/16/97		3		125
		6/15/97		16
		6/11/97		127
		6/10/97		2		125
		3/30/97		24		127
		1/13/97		127
		1/1/97		107
		12/31/96		8		127
		12/30/96		113		127
		12/15/96		107
		11/22/96		127
		9/10/96		125		126
		7/31/96		127
		7/1/96		61		126
		6/30/96		18		127
		6/29/96		121
		6/28/96		19		127
		6/20/96		55		119
		5/31/96		127
		5/22/96		127
		4/22/96		94
		4/11/96		127
		3/31/96		120
		3/25/96		125
		1/2/96		61		126
		1/1/96		107
		12/31/95		18		127
		12/11/95		61		126
		10/31/95		127
		10/10/95		55		119
		8/9/95		126
		7/31/95		127
		7/14/95		59
		6/30/95		120		127
		6/23/95		127
		6/18/95		62
		6/17/95		62
		6/1/95		127
		5/19/95		128
		1/25/95		61		126
		1/1/95		53		126
		12/31/94		18		127
		12/16/94		113		127
		6/30/94		127
		6/18/94		62
		6/10/94		62		126
		6/6/94		127
		1/1/94		102		127
		12/31/93		18		36
		7/2/93		33
		5/14/93		33		127
		4/7/93		55		119
		12/31/92		9		46
		9/16/92		120
		8/7/92		120
		8/5/92		119
		7/1/92		62
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