{Letterhead}
                              The Chesapeake Group
                         Investment and Merchant Banking


                  An Affiliate of Economic Analysis Group, Ltd.


                                                             January 16, 1996

   Strictly Private & Confidential

   Mr. Grant Kesler
   Chief Executive Officer
   Metalclad Corporation
   3737  Birch Street
   Newport Beach, CA 92660

   Dear Mr. Kesler,

   This letter ( the Agreement ) outlines the terms under which Chesapeake
   Group Inc. ( Chesapeake ) would be engaged to act as financial consultant
   to the Metalclad Group of Companies ( Metalclad ) in connection with
   transactions involving its Mexican Waste Operations ( Mexico ).

   1. Services

        Chesapeake shall assist Metalclad in working on its Mexican business
   and identifying and designing financial and business structures relating
   to transactions involving its Mexican Waste Operation. This engagement
   shall relate to any transaction in which Metalclad has any substantive
   Mexican relationship including those in which Metalclad is a prospective
   or actual buyer, seller, developer, investor, manager, or operator
   ( Transactions ).

   2. Advisory Fees

        Metalclad will compensate Chesapeake for the services according to
   the following schedule.

        A. Fees for services through 1995          $100,000
        B. Monthly retainer beginning 1996           $8,000

   3. Transaction Fees




                                       








        In addition to the advisory fee defined in paragraph two above,
   Metalclad will compensate Chesapeake for individual Transactions based on
   the schedule (Schedule I) to be provided on an ongoing basis and updated
   by Metalclad and Chesapeake and attached to this agreement.

   4. Termination

        Chesapeake s services hereunder may be terminated by either party at
   the end of the twenty-fourth month of this agreement without liability or
   continuing obligation to Chesapeake or Metalclad, except for any
   compensation earned or otherwise to be paid to Chesapeake pursuant to this
   Agreement and any expenses incurred by Chesapeake to the date of
   termination. The date of termination will be 30 days from the date of a
   termination notice being posted. In the event that a termination notice is
   not served, it will continue in force on a month-by-month basis
   thereafter.

   5. Survival

        Chesapeake shall have an ongoing interest based on fees earned as
   defined in paragraphs 2 and 3 for a period of 24 months following
   termination with respect to any transaction identified on Schedule I.

   6. Additional Services

        If Metalclad requests Chesapeake to perform services not contemplated
   by this Agreement or if the terms and conditions of Chesapeake s
   assignment change. Chesapeake s compensation will be determined through
   negotiations with Metalclad conducted in good faith. Such additional
   services will include work to be undertaken by Erik Buchakian, Matthew
   Root, or other Chesapeake consultants required by Metalclad.

   7. Confidentiality

        All information learned by Chesapeake pursuant to this engagement
   will be treated by its officers, employees and agents as confidential and
   such information will only be disclosed to those parties and affiliates
   who need to know it and will be used solely for the purposes of
   undertaking this engagement.

        At the request of Metalclad, Chesapeake undertakes that it will hold
   specified information for its exclusive use and that it will not release
   such information to any other party without the prior written approval of
   the relevant party.

        This confidentiality undertaking shall not apply to any part of the
   information provided hereunder which is or becomes generally available to
   the public without breach of this Agreement. Chesapeake agrees that the
   provisions of this section will survive for a period of three years and
   remain operative regardless of any termination or completion of its
   services hereunder.

   8. Indemnification



                                       








        Metalclad will indemnify Chesapeake and each of their directors,
   officers, employees and agents against any and all losses, claims,
   liabilities, relating to or arising from the arrangements hereby or
   requested pursuant hereto provided that the same shall not have arisen
   from negligence or willful default. In addition, no claims will be made
   against Chesapeake by Metalclad in respect of any loss or damage which may
   be suffered relating to or arising from the arrangements contemplated
   hereby or requested pursuant hereto provided that the same shall not have
   arisen from negligence or willful default. This paragraph shall survive
   any termination of the Agreement and arrangements contained in this
   letter. Chesapeake s liability to Metalclad under this Agreement,
   including liability for negligence, shall be limited to the amount of any
   fees received by it under the Agreement.

        Metalclad agrees to reimburse Chesapeake for all reasonable expenses
   (including reasonable fees and expenses of Counsel) which are incurred by
   it in connection with investigating, preparing or defending any such
   action or claim, whether or not in connection with pending or threatened
   litigation, in which Chesapeake is a party.

   9. Counterparts

        This Agreement may be executed in two or more counterparts, each of
   which shall be deemed an original, but all of which shall constitute one
   and the same instrument.

   If you are in agreement with the terms and conditions of this Agreement,
   please sign and return an executed copy to Chesapeake.

   Yours sincerely,

   For and on behalf of Chesapeake

   /s/Douglas S. Land
   Douglas S. Land
   Managing Director
   Chesapeake Group, Incorporated


   I hereby accept the terms set out in this letter.

   For an on behalf of Metalclad

   /s/Grant Kesler
   Grant Kesler
   Chief Executive Officer
   Metalclad Corporation









                                       








                                   Schedule I


   Transaction Fees

        1. BFI, INTERNATIONAL - In addition to the advisory fee payable to
   Chesapeake under the terms of paragraph 2, Metalclad will pay Chesapeake
   the following transaction fee relating to the negotiation of a joint
   venture with BFI, International.

           a.    Structuring Fee:        $75,000 payable on February 1, 1996;
                                         (Not subject to closing)



           Plus



           b.    Success Fee at Closing: 5% of the value of the transaction
   up to $2.5 million and 2.5% of the value thereafter with a minimum cash
   fee of $250,000 and a maximum cash fee of $500,000, payable at the closing
   of the transaction. The total amount of the Success Fee in excess of
   $500,000 shall be payable in stock based on the low bid during the two
   weeks prior to closing.



   /s/Grant S. Kesler
   Agreed on Behalf
   of Metalclad
   January 16, 1996