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

                                   ACQUISITION

                                       BY

                             USA BIOMASS CORPORATION

                                       OF

                         AMERICAN WASTE TRANSPORT, INC.


                           AMERICAN GREEN WASTE, INC.

                                       AND

                          ASSETS HELD BY FRED ALEXANDER

                       AND LINDA ALEXANDER DOING BUSINESS

                               AS AMERICAN FIBERS



                                  March 1, 2000

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











<PAGE>


              USA BIOMASS ACQUISITION OF THE OUTSTANDING SHARES OF
            AMERICAN WASTE TRANSPORT, INC. AND AMERICAN GREEN WASTE,
             AND PURCHASE OF ASSETS HELD BY LINDA ALEXANDER AND FRED
                   ALEXANDER DOING BUSINESS AS AMERICAN FIBERS

                                  March 1, 2000
               ---------------------------------------------------



                                     PARTIES



AWT                     American Waste Transport, Inc., a California corporation

AGI                     American Green Waste, Inc., a California corporation

American Fiber          American Fiber

AWT Acquisition Corp.   AWT Acquisition Corp., a California corporation

AGI Acquisition Corp.   AGI Acquisition Corp., a California corporation

AFI Acquisition Corp.   AFI Acquisition Corp.

USA Biomass             USA Biomass Corporation, a Delaware corporation





<PAGE>


                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

Agreement and Plan of Merger and Related Documents                                       Tab No.
--------------------------------------------------                                       -------

<S>                                                                                          <C>
          Agreement  and Plan of  Merger  dated as of March 1, 2000  among  Fred
          Alexander,  Linda Alexander,  USA Biomass,  AWT Acquisition Corp., AGI
          Acquisition Corp., AWT and AGI (the "Merger Agreement") .......................     1.

          Side Letter Agreement re: delivery of shares of USA Biomass
          common stock to Fred Alexander ................................................     2.

          Agreement of Merger filed with the California
          Secretary of State on March 17, 2000 for the merger of AWT
          Acquisition Corp. into AWT and Officers' Certificates
          in support thereof ............................................................     3.

          Agreement of Merger filed with the California
          Secretary of State on March 17, 2000 for the merger of
          AGI Acquisition Corp. into AGI and Officers'
          Certificates in support thereof ...............................................     4.

          Registration Rights Agreement dated March 1, 2000
          between Fred Alexander and USA Biomass ........................................     5.

          Non-competition Agreement dated March 1, 2000
          between Fred Alexander and USA Biomass ........................................     6.

          Escrow  Agreement  dated  March 1, 2000  among Fred  Alexander,  Linda
          Alexander, USA Biomass, AWT Acquisition,  AGI Acquisition, AWT and AGl ........      7

          Stock Certificate dated March 15, 2000 representing
          1,000,000 shares of USA Biomass issued to Fred Alexander ......................     8.



Asset Purchase Agreement and Related Documents
----------------------------------------------

          Asset Purchase Agreement dated March 1, 2000 among,
          USA Biomass, AFl Acquisition Corp., and Fred
          Alexander and Linda Alexander doing business as American Fibers ...............     9.
</TABLE>


                                      -ii-


<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                          <C>
          Bill of Sale dated March 1, 2000,among USA
          Biomass, AFI Acquisition Corp., and Fred Alexander
          and Linda Alexander doing business as American Fibers .........................    10.


Employment Agreements and Employment-Related Matters
----------------------------------------------------


          Employment Agreement between Fred Alexander,
          and USA Biomass ...............................................................    11.

          Employment Offer Letter for Linda Alexander ...................................    12.

          Employment Offer Letter for Christine Alexander ...............................    13.

          Employment Offer Letter for Bob Sharp .........................................    14.

          Nonstatutory Stock Option Agreement dated March 1, 2000
          between Fred Alexander and USA Biomass ........................................    15.

          Letter   Agreement  dated  March  1,  2000  executed
          by  USA  Biomass appointing Fred Alexander as a
          director of USA Biomass .......................................................    16.



Formation Documents for AWT Acquisition, AGl Acquisition and AFl Acquisition
----------------------------------------------------------------------------


          Formation Documents for AWT Acquisition Corp.
          (Articles of Incorporation, Bylaws and Stock Certificate) .....................    17.

          Formation Documents for AOL Acquisition Corp.
          (Articles of Incorporation, Bylaws and Stock Certificate ......................    18.

          Formation Documents for AFI Acquisition Corp.
          (Articles of Incorporation, Bylaws and Stock Certificate) .....................    19.
</TABLE>


<PAGE>



                                  CONFIDENTIAL
                                  ------------





                          AGREEMENT AND PLAN OF MERGER






                            dated as of March 1, 2000

                                      among

                                 Fred Alexander,

                                Linda Alexander,

                            USA Biomass Corporation,

                             AWT Acquisition Corp.,

                             AGI Acquisition Corp.,

                       American Waste Transport, Inc., and

                           American Green Waste, Inc.




<PAGE>


                                TABLE OF CONTENTS
                                                                       Page

ARTICLE I DEFINITIONS .............................................           12
     Section 1.01 Definitions .....................................           12

ARTICLE II THE MERGERS ............................................            5
     Section 2.01  The Merger .....................................            5
     Section 2.02  Closing ........................................            7
     Section 2.03  [RESERVED] .....................................            7
     Section 2.04  [RESERVED] .....................................            7
     Section 2.05  Payments in Respect of Fractional Shares .......            7
     Section 2.06  Conversion of Certificates .....................            7

ARTICLE III REPRESENTATIONS AND WARRANTIES
                     REGARDING THE TARGETS ........................            8
     Section 3.01  Corporate Existence and Power ..................            8
     Section 3.02  Authority to Execute and Perform Under Agreement            8
     Section 3.03  Governmental Authorization; Consents ...........            8
     Section 3.04  Capitalization; Shareholders List ..............            8
     Section 3.05  Subsidiaries and Other Equity Investments ......            9
     Section 3.06  Financial Statements ...........................            9
     Section 3.07  Absence of Certain Changes .....................            9
     Section 3.08  Properties .....................................           10
     Section 3.09  No Undisclosed Liabilities .....................           10
     Section 3.10  Insurance Coverage .............................           10
     Section 3.11  Compliance with Laws; No Defaults ..............           10
     Section 3.12  Brokers' and Finders' Fees .....................           10
     Section 3.13  Other Information ..............................           10
     Section 3.14  Environmental and Health and Safety Compliance .           10

ARTICLE IV REPRESENTATIONS AND WARRANTIES
                     REGARDING USBC AND THE NEWCOS ................           11
     Section 4.01  Organization and Existence .....................           11
     Section 4.02  Capitalization of Newcos .......................           11
     Section 4.03  Brokers' and Finders' Fees .....................           11
     Section 4.04  Authority to Execute and
                     Perform Under Agreement ......................           11
     Section 4.05  Governmental Authorization; Consents ...........           12
     Section 4.06  Absence of Certain Changes .....................           12
     Section 4.07  Representations ................................           12
     Section 4.08  No Undisclosed Liabilities .....................           12


<PAGE>
                                                                            Page

     Section 4.09  Environmental and Health
     and Safety Compliance ........................................           12
     Section 4.10  SEC Documents; USBC Financial Statements .......           12

ARTICLE V INDEMNIFICATION .........................................           13
     Section 5.01  Survival of Representations and Warranties .....           13
     Section 5.02  Indemnification ................................           13

ARTICLE VI [RESERVED] .............................................           15

ARTICLE VII [RESERVED] ............................................           15

ARTICLE VIII [RESERVED] ...........................................           15

ARTICLE IX MISCELLANEOUS ..........................................           16


     Section 9.01  Notices ........................................           16
     Section 9.02  Amendments; No Waivers .........................           17
     Section 9.03  Expenses .......................................           17
     Section 9.04  Successors and Assigns .........................           17
     Section 9.05  Governing Law ..................................           17
     Section 9.06  Counterparts; Effectiveness ....................           18
     Section 9.07  Entire Agreement ...............................           18
     Section 9.08  Captions .......................................           18
     Section 9.09  Severability ...................................           18
     Section 9.10  [RESERVED] .....................................           18
     Section 9.11  Disclosure Schedules ...........................           18
     Section 9.12  Attorneys' Fees ................................           18
     Section 9.13  Arbitration ....................................           18

EXHIBIT A    FORM OF ASSET PURCHASE AGREEMENT
             BETWEEN NEWCO 3 AND SHAREHOLDER

EXHIBIT B    FORM OF EMPLOYMENT AGREEMENT
             BETWEEN USBC AND FRED ALEXANDER

EXHIBIT C    FORM OF NONCOMPETITION AGREEMENT BETWEEN FRED
             ALEXANDER AND USBC

EXHIBIT D    FORM OF AGREEMENT OF MERGER AND OFFICERS CERTIFICATES

EXHIBIT E    FORM OF ESCROW AGREEMENT




<PAGE>

                          AGREEMENT AND PLAN OF MERGER


     THIS  AGREEMENT AND PLAN OF MERGER (this  "Agreement")  is made and entered
into this 1st day of March,  2000,  among  FRED  ALEXANDER  and LINDA  ALEXANDER
(collectively,   the  "Shareholder"),   USA  BIOMASS  CORPORATION,   a  Delaware
corporation  ("USBC"),  AWT  ACQUISITION  CORP., a California  corporation and a
wholly-owned  subsidiary  of  USBC  ("Newco  I  "),  AGI  ACQUISITION  CORP.,  a
California  corporation  and a wholly  owned  subsidiary  of USBC  ("Newco  2"),
AMERICAN  WASTE  TRANSPORT,  INC., a California  corporation  ("Target  1"), and
AMERICAN GREEN WASTE, INC., a California  corporation ("Target 2"). Target 1 and
Target 2 are referred to herein individually as a "Target" and, collectively, as
the  "Targets."  Newco 1 and Newco 2 are  referred to herein  individually  as a
"Newco" and, collectively, as the "Newcos."


                                    RECITALS

     A. The Shareholder owns all of the issued and outstanding shares of capital
stock of each of the Targets.

     B. The  Shareholder  desires  to sell,  and USBC  desires to  acquire,  the
businesses  operated by the Targets  through the mergers (the  "Mergers") of the
Newcos  with  and  into  the  Targets,  with the  Targets  being  the  surviving
corporations in the mergers, pursuant to which each share of Common Stock, $.001
par value,  of the Targets (the "Common  Stock")  issued and  outstanding at the
Effective  Time  (as  defined  herein)  (collectively,  the  "Shares")  will  be
converted into the right to receive that portion of the Merger Consideration (as
defined  herein)  distributable  in respect of each such Share as more fully set
forth in this Agreement.

     C.  Concurrent with the Closing,  Shareholder and AFI Acquisition  Corp., a
California  corporation ("Newco 3"), will enter into an asset purchase agreement
(the "Asset Purchase  Agreement")  pursuant to which  Shareholder  shall sell to
Newco 3 the assets of  American  Fiber  ("Target  3"), a  business  operated  by
Shareholder.


                                    AGREEMENT

     NOW, THEREFORE,  in consideration of the mutual promises set forth herein,
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:



<PAGE>


                                    ARTICLE I

                                   DEFINITIONS

     Section 1.01 Definitions.

     (a) The following terms, as used herein, have the following meanings:

         "Affiliate means", with respect to any Person, any other Person related
     by blood or marriage to or directly or indirectly  controlling,  controlled
     by, or under common control with such specified Person.

     "Agreement" means this Agreement and Plan of Merger.

     "Asset Purchase Agreement" means the Asset Purchase Agreement among Newco
3 and Shareholder in substantially the form attached hereto as Exhibit A.

     "Balance  Sheets"  means the  balance  sheet of each of the  Targets  as of
December 31, 1999  compiled by Michael R. Duvall and Company,  Certified  Public
Accountants, copies of which previously have been provided by Targets to USBC.

     "Balance Sheet Date" means December 31, 1999.

     "CGCL" means the California General Corporation Law.

     "Closing" has the meaning set forth in Section 2.02.


     "Closing  Cash  Payment"  shall have the  meaning  set forth in Section 2.0
1(b).

     "Closing Date" means the date of the Closing.

     "Closing Payment" shall have the meaning set forth at Section 2.01(b).

     "Closing Stock Payment" has the meaning set forth in Section 2.0 1(b).

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Common Stock" has the meaning set forth in Recital B of this Agreement.

     "Effective  Time"  has  the  meaning  set  forth  in  Subsection
2.01 (a) 3.


                                      -2-
<PAGE>


     "Employee Options" means the outstanding options to purchase Common
Stock.

     "Employee Optionees" means the holders of the Employee Options.

     "Employee  Plan" means an  "employee  benefit  plan," as defined in Section
3(3)  of  ERISA,  that  (i) is  subject  to any  provision  of  ERISA,  (ii)  is
maintained,  administered,  sponsored,  or  contributed  to by any  Target,  any
Subsidiary of any Target, or (iii) covers any employee or former employee of any
Target, any Subsidiary of any Target, or any of their ERISA Affiliates.

     "Employment Agreement" means the Employment Agreement between USBC and Fred
Alexander in substantially the form attached hereto as Exhibit B.

"Environmental   Laws"   means   the   Comprehensive   Environmental   Response,
Compensation  and  Liability  Act as amended,  42  U.S.C.ss.9601  et. seq.,  the
Superfund  Amendments and  Reauthorization  Act, 42 U.S.C.ss.9601  et. seq., the
Resource  Conservation and Recovery Act, as amended,  42 U.S.C.ss.6901 et. seq.,
the Clean Air Act,  42  U.S.C.ss.7401  et.  seq.,  the Federal  Water  Pollution
Control Act, 33 U.S.C.ss.1251  seq., the  Occupational  Safety and Health Act of
1970, as amended,  5  U.S.C.ss.5108,  et. seq. and any and all other  applicable
(whether  civil,  criminal  or  administrative)   laws,  statutes,   subordinate
legislation,  treaties, regulations;  directives, decisions, by-laws, circulars,
codes, orders, notices, demands, decrees, injunctions, resolutions, judgments or
resolutions  of  any  government,   supranational,   federal,   state  or  local
government, statutory,  administrative or regulatory body, court, or agency with
regard to (a)  pollution or  protection of soil,  surface  water,  ground water,
land,  stream,  sediments,  surface or subsurface  strata,  ambient air, and any
other  environmental  medium;  (b) harm to or the  protection  of the  health of
humans,  animals or plants,  including,  without  limitation,  laws  relating to
public and workers' health and safety,  noise,  vibration or radiation;  (c) the
release  or  discharge  of any  industrial,  radioactive,  dangerous,  toxic  or
hazardous substance,  organism or waste (whether in solid,  semi-solid or liquid
form or in the form of a gas or vapor) into the  environment,  including but not
limited  to any  Hazardous  Substance  as  defined  in this  Agreement;  (d) the
generation,  manufacture,  processing,  use, treatment,  storage,  distribution,
disposal,  transport or handling of any of the foregoing  described  substances,
wastes or organisms; and (e) nuisance.

     "GAAP" means  generally  accepted  accounting  principles  set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession, as in effect on the date of this Agreement.


                                      -3-
<PAGE>

     "Lien" means, with respect to any asset, any mortgage,  lien,  restriction,
equity,  pledge,  charge,  security  interest,  conditional  sales  contract  or
encumbrance of any kind in respect of such asset.

     "Material  Adverse Change" means a material adverse change in the business,
assets,  financial  condition,  results of operations or prospects of any Target
and its Subsidiaries taken as a whole.

     "Material  Adverse Effect" means a material adverse effect on the business,
assets,  financial  condition,  results of operations or prospects of any Target
and its Subsidiaries taken as a whole. The meaning of the term "Material" as set
forth  above  shall  have no  effect  on the use of the word  "material"  in the
definition of "Material Adverse Effect".

     "Mer2er Certificates" has the meaning set forth in Section 2.0 l(a)(3).

     "Merger  Consideration"  shall have the  meaning  assigned  to such term at
2.01(b).

     "Mergers" has the meaning set forth in Recital B hereof.

     "Newco 1" means AWT Acquisition Corp., a California corporation.

     "Newco 2" means AGI Acquisition Corp., a California corporation.

     "Newco 3" means AFI Acquisition Corp., a California corporation.

     "Noncompetition  Agreement" means the Noncompetition Agreement between Fred
Alexander and USBC in the form attached hereto as Exhibit C.

     "Officers'  Certificates"  means the certificates of the officers of Newcos
and Targets related to the Mergers in the form attached hereto as Exhibit D.

     "Options" means all outstanding Employee Options and other rights issued by
the  Targets  entitling  the  holders  thereof to acquire  from the  Targets any
authorized shares of Common Stock.

     "Person" means an  individual,  a  corporation,  a  partnership,  a limited
liability  company,  an  association,  a trust or other entity or  organization,
including a government or political  subdivision or an agency or instrumentality
thereof

     "Shareholder"  means  Fred  Alexander  and Linda  Alexander,  collectively.

     "Shares" has the meaning set forth in Recital B of this Agreement.


                                      -4-
<PAGE>

     "Subsidiary"  means  any  entity  of which  securities  or other  ownership
interests  having  ordinary  voting  power to elect a  majority  of the board of
directors or other Persons  performing  similar  functions are owned directly or
indirectly by the specified Person.

     "Surviving Corporation 1" has the meaning set forth in Section 2.0I(a)(L).

     "Surviving Corporation 2" has the meaning set forth in Section 2.01(a)(2).

     "Surviving  Corporations" shall mean Surviving  Corporation 1 and Surviving
Corporation 2.

     "Target 1" means American Waste Transport,  Inc., a California corporation.

     "Target 2" means  American  Green Waste,  Inc.,  a California  corporation.

     "Target 3" means American Fibers, a business operated by Shareholder.

     "Target  Property"  shall  mean  all of the  real  property  of each of the
Targets.

     "Transaction Documents" means (i) this Agreement and all annexes, schedules
and  exhibits  hereto,  (ii)  the  Officers'  Certificates,   (iii)  the  Merger
Certificates,  (iv) the Employment Agreement, (v) the Noncompetition  Agreement,
(vi) the Registration Rights Agreement and (vii) any other documents executed in
connection therewith.

     "USBC" means USA Biomass Corporation, a Delaware corporation.

     (b) Other  capitalized terms used in this Agreement shall have the meanings
given them as set forth in this Agreement.

                                   ARTICLE II
                                  THE MERGERS

     Section 2.01 The Mergers.

     (a) Structure of the Mergers; Effective Time; Capital Stock Conversions

     (1) Subject to the terms and conditions of this Agreement and in accordance
with the CGCL, athe Effective Time: (i) Newco 1 shall be merged with


                                      -5-

<PAGE>

and into Target 1, the  separate  existence  of Newco I shall cease and Target 1
shall continue as the surviving  corporation (the "Surviving  Corporation 1") in
the  Merger;  (ii) the  Articles  of  Incorporation  of  Target  1, as in effect
immediately   prior  to  the  Effective  Time,  shall  become  the  Articles  of
Incorporation  of the Surviving  Corporation 1; (iii) the Bylaws of Target 1, as
in effect  immediately  prior to the Effective Time,  shall become the Bylaws of
Surviving  Corporation  1;  and  (iv)  the  officers  and  directors  of Newco I
immediately  prior to the Effective Time shall become the officers and directors
of Surviving  Corporation  1. From and after the Effective  Time,  the Merger of
Target 1 into Newco 1 will have all the effects set forth in Section 1103 of the
CGCL.

     (2) Subject to the terms and conditions of this Agreement and in accordance
with the CGCL, at the Effective  Time: (i) Newco 2 shall be merged with and into
Target 2, the  separate  existence  of Newco 2 shall  cease  and  Target 2 shall
continue as the surviving  corporation  (the  "Surviving  Corporation 2") in the
Merger; (ii) the Articles of Incorporation of Target 2, as in effect immediately
prior to the Effective Time,  shall become the Articles of  Incorporation of the
Surviving  Corporation 2; (iii) the Bylaws of Target 2, as in effect immediately
prior to the Effective Time, shall become the Bylaws of Surviving Corporation 2;
and  (iv)  the  officers  and  directors  of  Newco 2  immediately  prior to the
Effective Time shall become the officers and directors of Surviving  Corporation
2. From and after the Effective  Time,  the merger of Target 2 into Newco 2 will
have all the effects set forth in Section 1103 of the CGCL.

     (3) Each of the Mergers shall become effective (the "Effective  Time") upon
the  filing of an  Agreement  of Merger  in the form of  Exhibit D (the  "Merger
Certificates"),  duly executed and  acknowledged  by each Newco and each Target,
with the  Secretary of State of California  pursuant to the CGCL,  together with
any other  certificates  required by law to effect the  Merger,  to be filed and
recorded  with the  Secretary of State of the State of  California in accordance
with the provisions of Section 1103 of the CGCL.

     (4) At the Effective  Time, by virtue of the Mergers and without any action
on the part of the holder of any  shares of  capital  stock or rights in respect
thereof,  each share of the capital  stock of each Newco issued and  outstanding
immediately  prior to the  Mergers  shall  be  converted  into one  share of the
corresponding  Surviving  Corporation.  The Shares of each corresponding  Target
shall be converted into the right to receive,  subject to and in accordance with
the terms of this Agreement, the Merger Consideration.

     (b) Merger Consideration. On the Closing Date, upon surrender of all of the
certificates  representing  outstanding  Shares,  USBC shall (i) transfer to the
Shareholder  Six Hundred Fifty Thousand  Dollars  ($650,000)  (the "Closing Cash
Payment"),  which shall be paid by cashier's or certified check or wire transfer
of readily available funds, and (ii) deliver one million  (1,000,000)  shares of
common stock of USBC (the "Closing Stock Payment") to Chicago Title Company (the
"Escrow Agent") to be held in escrow by the Escrow Agent until completion of the
audit of the Targets'


                                      -6-
<PAGE>


financial  statements  for the years ended  December  31, 1998 and  December 31,
1999,  pursuant to the Escrow  Agreement in the form of Exhibit E. Upon delivery
of the Closing  Stock  Payment and the Closing Cash Payment  (collectively,  the
"Closing  Payment") to the Shareholder all rights pertaining to the Shares shall
be deemed irrevocably extinguished and converted to the rights set forth in this
Agreement.  The Closing Payment and any amounts paid to Shareholder  pursuant to
Section 2.0 1(d) shall be referred to as the "Merger Consideration."

     (c) [Reserved.]

     (d) Additional Merger  Consideration.  As additional  consideration for the
Mergers,  USBC agrees to transfer to Shareholder  seventy-five  percent (75%) of
the net recovery from the litigation matters (or potential  litigation matters),
as more fully described on Schedule 2.01(d):

     (e) Allocation of Merger  Consideration.  The Merger Consideration shall be
allocated equally between the Targets.

     Section 2.02 Closing.  The closing (the "Closing") of the Mergers and other
transactions  contemplated  hereby to be  consummated  on the Closing Date shall
take place at the offices of Paul,  Hastings,  Janofsky & Walker  LLP,  695 Town
Center Drive, Seventeenth Floor, Costa Mesa, California,

     Section 2.03 [RESERVED].

     Section 2.04 [RESERVED].

     Section 2.05 Payments in Respect of Fractional  Shares. For purposes of the
Mergers and any payment of Merger  Consideration to be made hereunder in respect
of any Share,  the  Shareholder's  aggregate  number of Shares  held or issuable
under Options at the Effective Time shall be rounded to the nearest Share.

     Section 2.06  Conversion of  Certificates.  After the Effective  Time, each
outstanding stock certificate which theretofore  represented Shares shall, until
surrendered  for exchange in accordance with Section 2.0 1(b), be deemed for all
purposes to evidence ownership of the right to receive the Merger  Consideration
distributable with respect to the Shares represented  thereby in accordance with
this Agreement.


                                      -7-
<PAGE>


                                   ARTICLE III
              REPRESENTATIONS AND WARRANTIES REGARDING THE TARGETS

     Each Target and the  Shareholder  hereby  represents  and  warrants to USBC
(except as set forth on the Schedules  attached hereto),  as of the date of this
Agreement and as of the Closing Date, as follows:

     Section 3.01  Corporate  Existence and Power.  Each Target is a corporation
duly  incorporated,  validly existing and in good standing under the laws of the
state of California.  Each Target will deliver to USBC true and complete  copies
of the  articles  of  incorporation,  minutes,  and  bylaws  of such  Target  as
currently in effect within 45 days of the Closing Date.

     Section 3.02 Authority to Execute and Perform Under Agreement.  Each Target
has all requisite  power and authority to enter into and perform this  Agreement
and the other Transaction  Documents to which it is a party and to carry out its
obligations  under this Agreement and the other Transaction  Documents,  and the
transactions  contemplated  hereby  and  thereby  have  been  duly  and  validly
authorized by all necessary  corporate  action on the part of such Target.  This
Agreement has been, and the other Transaction Documents to which each Target and
Shareholder  is a party will be as of Closing,  duly  executed and  delivered by
each such Target and  Shareholder  and constitutes or will constitute the legal,
valid and binding  obligations of each such Target and Shareholder;  enforceable
against each such Target and Shareholder in accordance with the terms thereof

     Section  3.03  Governmental   Authorization;   Consents.  To  Shareholder's
knowledge,  none of the execution,  delivery or performance of this Agreement or
any other Transaction Document, by any Target or Shareholder requires any action
by or in respect of, or filing with, any governmental body, agency,  official or
authority,  except  for the  filing of the  Merger  Certificates  and  Officers'
Certificates  with  the  Secretary  of  State  of  California  as set  forth  in
Subsection 2.01(a)(3).

     Section 3.04 Capitalization; Shareholders List.

     (a) The  authorized  capital  stock of  Target  1  consists  solely  of one
thousand  shares (1,000) of Common Stock,  of which one thousand  (1,000) shares
are issued and outstanding. All outstanding shares of Target 1 Common Stock have
been  duly  authorized  and  validly  issued  and are or will be fully  paid and
non-assessable  and  none of them  was or will be  issued  in  violation  of any
preemptive or other right.

     (b) The authorized capital stock of Target 2 consists solely of one million
(1,000,000)  shares of Common Stock,  of which two thousand  (2,000)  shares are
issued and  outstanding.  All  outstanding  shares of Target 2 Common Stock have
been


                                       -8-
<PAGE>


duly  authorized  and  validly  issued  and  are  or  will  be  fully  paid  and
non-assessable  and  none of them  was or will be  issued  in  violation  of any
preemptive or other right.

     (c) The Shareholder is the sole owner of the Shares.

     (d) Except for the shares of Common  Stock held by the  Shareholder,  there
are no outstanding (i) shares of capital stock or other voting securities of any
Target,  (ii)  securities of any Target  convertible  into or  exchangeable  for
shares of capital  stock or voting  securities of any Target or (iii) Options or
other  rights to acquire  from any  Target,  and there is no  obligation  of any
Target to issue any, capital stock, voting securities or securities  convertible
into or exchangeable  for capital stock or voting  securities of any Target (the
items in clauses  (i),  (ii) and (iii)  being  referred to  collectively  as the
"Target  Securities").  There are no  outstanding  obligations  of any Target to
issue or  deliver  or to  repurchase,  redeem or  otherwise  acquire  any Target
Securities.

     (e) The Shareholder  owns all of the outstanding  shares of Common Stock in
each Target,  free and clear of any Lien whatsoever  (except any Lien imposed by
the loan  documents  of the Targets  with Bank of America  N.T. & S.A. and which
have previously  been provided to USBC),  has and will have full power and legal
right to sell,  assign,  transfer  and deliver the same,  and will  transfer and
deliver at the Closing good and marketable title to the Shares free and clear of
any  Lien.  No  Target  nor the  Shareholder  is a  party  to any  agreement  or
understanding relating to the ownership,  voting or transfer of any Common Stock
or any other Target Securities.

     Section 3.05  Subsidiaries  and Other Equity  Investments.  No Target owns,
directly or  indirectly,  any shares of capital stock of any  corporation or any
equity  investment  in any other  Person,  and no Target has any  obligation  to
acquire any such shares or to make any such investment.

     Section 3.06  Financial  Statements.  Each Target has furnished to USBC the
balance  sheets of such Target as at  December  31,  1996,  December  31,  1997,
December 31, 1998 and December 31, 1999, and the related statements of earnings,
changes  in  shareholders'  equity  for the fiscal  years  then  ended,  and the
unaudited balance sheet and other interim financial  information of the relevant
Target  through the Closing Date (all such  financial  statements  are hereafter
collectively  referred  to  as  the  "Financial   Statements").   The  Financial
Statements fairly present the financial position of each Target, as of the dates
thereof and the results of operations  and cash flows for the periods then ended
(subject to normal recurring  year-end  adjustments in the case of any unaudited
interim financial statements).

     Section  3.07  Absence  of  Certain  Changes.   To  the  knowledge  of  the
Shareholder, and, except as otherwise disclosed to USBC, since the Balance Sheet
Date, each Target has conducted its business in the ordinary  course  consistent
with past


                                      -9-
<PAGE>


practices. To the knowledge of the Shareholder, except as otherwise disclosed to
USBC,  since the Balance  Sheet Date,  there has not been any  Material  Adverse
Change.

     Section  3.08  Properties.  Each  Target  has all of the real and  personal
property necessary for it to conduct its business as currently conducted

     Section  3.09  No  Undisclosed   Liabilities.   To  the  knowledge  of  the
Shareholder,   and,  except  as  otherwise  disclosed  to  USBC,  there  are  no
liabilities  of any  Target of any kind  whatsoever,  and  there is no  existing
condition,  situation or set of circumstances which could reasonably be expected
to result in such a liability,  other than (a) liabilities disclosed or provided
for in the Balance Sheet, and (b) liabilities incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date.

     Section 3.10 Insurance Coverage.  The Shareholder has maintained reasonable
amounts of insurance with respect to the operations of the Targets.

     Section 3.11  Compliance  with Laws;  No Defaults.  To the knowledge of the
Shareholder,  and,  except  as  otherwise  disclosed  to USBC,  no  Target is in
violation of, or has violated,  any applicable provisions of any laws, statutes,
ordinances or regulations, except for violations that do not have as of the date
hereof and could not  reasonably  be  expected to have,  individually  or in the
aggregate, a Material Adverse Effect.

     Section 3.12 Brokers' and Finders'  Fees.  There is no  investment  banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of any Target or the  Shareholder  who might be entitled to any
fee or commission from USBC, any Target or any of their respective Affiliates in
respect of the transactions contemplated by this Agreement.

     Section 3.13 Other  Information.  To the knowledge of Shareholder,  none of
the documents or written information delivered, or representations or warranties
made, to USBC by any Target in connection with the transactions  contemplated by
this Agreement, taken as whole, contains or will contain any untrue statement of
a material  fact or omits or will omit to state a  material  fact  necessary  in
order to make the statements contained therein not misleading.

     Section  3.14  Environmental  and  Health  and  Safety  Compliance.  To the
knowledge of the  Shareholder,  and,  except as otherwise  disclosed to USBC, no
Target Property or activities of any Target on or at any time before the date of
this Agreement has been in violation of any Environmental Law.


                                      -10-
<PAGE>


                                   ARTICLE IV
                    REPRESENTATIONS AND WARRANTIES REGARDING
                               USBC AND THE NEWCOS

     USBC hereby represents and warrants to the Shareholder and the Targets,  as
of the date of this Agreement and as of the Closing Date, as follows:

     Section 4.01 Organization and Existence.

     (a) USBC is a corporation duly  incorporated,  validly existing and in good
standing  under the laws of the State of Delaware and has all  corporate  powers
and all material governmental licenses,  authorizations,  consents and approvals
required to carry on its business as now conducted.

     (b) Each Newco is a corporation duly incorporated,  validly existing and in
good standing  under the laws of the State of  California  and has all corporate
powers and all  material  governmental  licenses,  authorizations,  consents and
approvals required to carry on its business as now conducted.

     Section 4.02  Capitalization  of Newcos.  Each Newco's  authorized  capital
stock  consists  solely of 1,000,000  shares of Common  Stock,  no par value per
share ("Newco Common  Stock").  As of the date hereof,  Newco 1 had 2,000 shares
issued and  outstanding  and none were  reserved for  issuance,  and Newco 2 had
1,000,000 shares issued and outstanding and none were reserved for issuance.  As
of the date  hereof,  all of the  outstanding  shares of each of Newco's  Common
Stock are owned by USBC free and clear of any Liens.

     Section 4.03 Brokers' and Finders'  Fees.  There is no  investment  banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf  of USBC or each  Newco  who  might be  entitled  to any fee or
commission  from  the  Shareholder,  any  Target  or  any  of  their  respective
Affiliates in respect of the transactions contemplated by this Agreement.

     Section 4.04  Authority to Execute and Perform  Under  Agreement.  USBC and
each Newco has all requisite  power and authority to enter into and perform this
Agreement  and the  other  Transaction  Documents  to which it is a party and to
carry  out its  obligations  under  this  Agreement  and the  other  Transaction
Documents,  and the transactions  contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of USBC and
each Newco.  This  Agreement has been,  and the other  Transaction  Documents to
which USBC and each Newco is a party will be as of Closing,  duly  executed  and
delivered  by USBC  and each  Newco,  as  applicable,  and  constitutes  or will
constitute  the legal,  valid and  binding  obligations  of USBC and each Newco,
enforceable against USBC and each Newco in accordance with the terms thereof.


                                      -11-
<PAGE>


     Section 4.05 Governmental  Authorization;  Consents. None of the execution,
delivery or performance of this Agreement or any other Transaction  Document, by
USBC or any Newco  requires any action by or in respect of, or filing with,  any
governmental body, agency,  official or authority,  except for the filing of the
Merger  Certificates and Officers'  Certificates  with the Secretary of State of
California as set forth in Subsection 2.01 (a)(3).

     Section 4.06  Absence of Certain  Changes.  To the  knowledge of USBC since
December  31,  1999,  USBC and each  Newco has  conducted  its  business  in the
ordinary course  consistent  with past practices.  Since the Balance Sheet Date,
there has not been any Material Adverse Change.

     Section 4.07 No  Undisclosed  Liabilities.  To the knowledge of USBC,  and,
except as otherwise  disclosed to Shareholder,  there are no liabilities of USBC
of any kind whatsoever, and there is no existing condition,  situation or set of
circumstances which could reasonably be expected to result in such a liability,
other than (a) liabilities  disclosed or provided for in the USBC Balance Sheet,
and (b) liabilities  incurred in the ordinary course of business consistent with
past practice since the Balance Sheet Date.

     Section  4.08  Environmental  and  Health  and  Safety  Compliance.  To the
knowledge of USBC,  and, except as otherwise  disclosed to Shareholder,  no USBC
property  or  activities  of  USBC on or at any  time  before  the  date of this
Agreement has been in violation of any Environmental Law.

     Section 4.09 SEC Documents;  USBC Financial Statements.  USBC has furnished
or made  available to  Shareholder  and Targets true and complete  copies of all
public reports or registration  statements filed by it with the U.S.  Securities
and Exchange  Commission  (the "SEC") under the Exchange Act, all in the form so
filed (all the foregoing being collectively referred to as the "SEC Documents").
As of the date hereof, USBC has filed with the SEC all reports, proxy statements
and other  information  required to be filed by it under the Exchange Act. As of
their  respective  filing  dates,  the SEC  Documents  complied in all  material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, including where applicable,  the requirements under Item 601(10) of
Regulation  S-B to  file  certain  contracts,  and  none  of the  SEC  Documents
contained any untrue statement of a material fact or omitted to state a material
fact  required to be stated  therein or  necessary to make the  statements  made
therein,  in light of the circumstances in which they were made, not misleading,
except to the extent  corrected by a document  subsequently  field with the SEC.
The financial statements of USBC,  including the notes thereto,  included in the
SEC  Documents  (the  "USBC  Financial  Statements")  comply  as to  form in all
material respects with applicable accounting requirements and with the published
rules and  regulations  of the SEC with respect  thereto,  have been prepared in
accordance  with GAAP  consistently  applied  (except as may be indicated in the
notes  thereto or, in the case of unaudited  statements,  as permitted by Form
10-Q of the SEC) and present fairly the financial position of USBC at


                                      -12-
<PAGE>

the dates  thereof  and the  results  of its  operations  and cash flows for the
periods  then ended  (subject,  in the case of unaudited  statements,  to normal
audit adjustments).  There has been no change in USBC accounting policies except
as described in the notes to the USBC Financial Statements.

                                    ARTICLE V
                                 INDEMNIFICATION

     Section 5.01 Survival of Representations and Warranties.

     (a) The  representations  and warranties of the parties hereto contained in
this  Agreement or in any writing  delivered  pursuant  hereto or at the Closing
shall survive the Closing and the consummation of the transactions  contemplated
hereby  (and any  examination  or  investigation  by or on  behalf  of any party
hereto) until 1 year after the Closing Date.

     (b) No  Action  may  be  commenced  with  respect  to  any  representation,
warranty,  covenant or agreement in this Agreement,  or in any writing delivered
pursuant hereto,  unless written notice,  setting forth in reasonable detail the
claimed breach thereof, shall be delivered pursuant to Section 9.01 to the party
or parties against whom liability for the claimed breach is charged on or before
the  termination of the survival  period  specified in Section  5.01(a) for such
representation, warranty, covenant or agreement.

     Section 5.02 Indemnification.  Subject to the limitations set forth in this
Article V:

     (a) The  Shareholder  covenants  and agrees to defend,  indemnify  and hold
harmless USBC, each of the Surviving  Corporations  and Newco 3 from and against
any Damages arising out of or resulting from: (i) any inaccuracy in or breach of
any  representation  or warranty made by any Target or the  Shareholder  in this
Agreement or the Asset Purchase Agreement,  or in any writing delivered pursuant
to this Agreement or the Asset Purchase Agreement,  or at the Closing;  (ii) the
failure  of the  Shareholder  or any  Target to  perform  or  observe  fully any
covenant,  agreement or provision to be performed or observed by the Shareholder
or any Target pursuant to this Agreement or the Asset Purchase Agreement, or any
other written agreement entered into pursuant hereto.

     (b) USBC  covenants  and agrees to defend,  indemnify and hold harmless the
Shareholder  from and against any Damages  arising out of or resulting from: (i)
any  inaccuracy in or breach of any  representation  or warranty made by USBC in
this  Agreement or the Asset  Purchase  Agreement,  or in any writing  delivered
pursuant to this Agreement or the Asset Purchase  Agreement,  or at the Closing;
or (ii) the  failure by USBC or any Newco to perform  or observe  any  covenant,
agreement  or  condition  to be  performed  or  observed  by it pursuant to this
Agreement or the Asset Purchase Agreement.


                                      -13-
<PAGE>

     (c)  Notwithstanding  any  other  provision  of this  Agreement,  including
Section  5.02(a)  and (b),  the  obligation  of any party to this  Agreement  to
indemnify any other party to this Agreement under this Article V shall apply (i)
only to the extent that the amount of Damages  due the party  being  indemnified
exceeds,  for all claims,  losses,  expenses,  obligations and  liabilities,  an
accumulated  total of  $1,200,000  in the  aggregate,  at which time all Damages
incurred  (not  including   those  Damages  less  than   $1,200,000)   shall  be
indemnifiable.

     (d) If any party  entitled to be  indemnified  pursuant to Section 5.02 (an
"Indemnified  Party") receives notice of the assertion by any third party of any
claim or of the  commencement  by any such third  person of any Action (any such
claim or Action  being  referred  to herein as an  "Indemnifiable  Claim")  with
respect to which  another  party hereto (an  "Indemnifying  Party") is or may be
obligated  to provide  indemnification,  the  Indemnified  Party shall  promptly
notify  the   Indemnifying   Party  in  writing  (the  "Claim  Notice")  of  the
Indemnifiable Claim; provided, that the failure to provide such notice shall not
relieve or otherwise affect the obligation of the Indemnifying  Party to provide
indemnification  hereunder,  except  to the  extent  that any  Damages  directly
resulted or were caused by such failure.

     (e) The  Indemnifying  Party shall have  thirty  days after  receipt of the
Claim  Notice to  undertake,  conduct and  control,  through  counsel of its own
choosing,  and at its  expense,  the  settlement  or  defense  thereof,  and the
Indemnified  Party shall  cooperate  with the  Indemnifying  Party in connection
therewith;   provided,   that  (i)  the  Indemnifying  Party  shall  permit  the
Indemnified  Party to participate in such  settlement or defense through counsel
chosen by the  Indemnified  Party  (subject to the  consent of the  Indemnifying
Party, which consent shall not be unreasonably withheld), provided that the fees
and expenses of such counsel shall not be borne by the  Indemnifying  Party, and
(ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the
Indemnified  Party's consent.  So long as the  Indemnifying  Party is vigorously
contesting any such  Indemnifiable  Claim in good faith,  the Indemnified  Party
shall not pay or settle such claim  without the  Indemnifying  Party's  consent,
which consent shall not be unreasonably withheld.

     (f) If the Indemnifying  Party does not notify the Indemnified Party within
thirty days after  receipt of the Claim Notice that it elects to  undertake  the
defense of the  Indemnifiable  Claim described  therein,  the Indemnified  Party
shall have the right to contest, settle or compromise the Indemnifiable Claim in
the exercise of its reasonable discretion;  provided, that the Indemnified Party
shall notify the Indemnifying  Party of any compromise or settlement of any such
Indemnifiable Claim.

     (g)   Anything   contained   in  this   Section   5.02   to  the   contrary
notwithstanding, the Shareholder shall not be entitled to assume the defense for
any  Indemnifiable  Claim  (and  shall be  liable  for the  reasonable  fees and
expenses  incurred  by the  Indemnified  Party in  defending  such claim) if the
Indemnifiable Claim seeks an order,


                                      -14-
<PAGE>


injunction  or other  equitable  relief or relief for other than money  damages
against USBC which USBC determines, after conferring with its counsel, cannot be
separated  from any related  claim for money damages and which,  if  successful,
would  adversely  affect the  business,  properties  or prospects of any Target;
provided,  however,  if such equitable relief portion of the Indemnifiable Claim
can be so  separated  from  that for money  damages,  the  Shareholder  shall be
entitled to assume the defense of the portion relating to money damages.


                                   ARTICLE VI

                                   [RESERVED]




                                   ARTICLE VII

                                   [RESERVED]




                                  ARTICLE VIII


                                   [RESERVED]



                                   ARTICLE IX
                                  MISCELLANEOUS

     Section   9.01   Notices.   All  notices,   requests,   demands  and  other
communications provided for hereunder shall be in writing and shall be deemed to
have been given (i) in the case of delivery,  when  addressed to the other party
and delivered to the address set forth below, (ii) in the case of mailing, three
days after said notice has been  deposited in the United States Mails,  postage
prepaid,  by certified or return mail,  and  addressed to the other party as set
forth below, and (iii) in the case of telecopying and in all of the cases,  when
received by the other party.  The  addresses at which  notices may be sent under
this Section are the following:


     If to USBC, to:        USA Biomass Corporation
                            7314 Scout Avenue


                                      -15-
<PAGE>


                            Bell Gardens, California 90201
                            Telecopy No.: (562) 928-9932
                            Attention: Michael J. Silva


with a copy-to:             Paul, Hastings, Janofsky & Walker LLP
                            Seventeenth Floor
                            695 Town Center Drive
                            Costa Mesa, California 92626-1924
                            Telecopy No.: (714) 979-1921
                            Attention:    Douglas A. Schaaf, Esq.


If to the Shareholder to:   Fred Alexander
                            1835 "A" South Center City Parkway
                            #418
                            Escondido, CA 92025
                            Telecopy No. (760) 746-7596


with a copy to:             Law Offices of Gelber, Darling & Robertson
                            600 Anton Boulevard, Suite 1600
                            Costa Mesa, California 92626
                            Telecopy No.: (714) 979-8134
                            Attention:    Sherilyn Learned O'Dell



Any party may at any time change the address to which  notices may be sent under
this Section by the giving of notice of such to the other  parties in the manner
set forth herein.

     Section 9.02 Amendments; No Waivers.

     (a) This  Agreement may be amended by the parties  hereto.  Notwithstanding
the  foregoing,  this  Agreement  may not be amended  except by an instrument in
writing signed on behalf of each of the parties hereto.

     Section 9.03  Expenses.  USBC shall pay all costs and expenses  incurred by
USBC in  connection  with this  Agreement.  Each  Newco  shall pay all costs and
expenses  incurred by each Newco in connection with this Agreement.  Each Target
shall pay all costs and expenses incurred by each Target in connection with this
Agreement.  Notwithstanding  the  foregoing,  USBC  shall  reimburse  Target for
reasonable costs associated with the due diligence process with the exception of
professional advisors (e.g. accountants and attorneys).

     Section 9.04 Successors and Assigns. The provisions of this Agreement shall
be  binding  upon and  inure to the  benefit  of the  parties  hereto  and their
respective successors and assigns;  provided that no party may assign,  delegate
or otherwise  transfer any of its rights or  obligations  under this  Agreement
without the consent of the other parties hereto,



                                      -16-
<PAGE>


except that USBC may transfer or assign this Agreement, in whole or from time
to time in  part,  to one or more of its  Affiliates,  but no such  transfer  or
assignment will relieve USBC of its obligations hereunder.

     Section 9.05 Governing Law.

     (a) Except to the extent that the laws of the  jurisdiction of organization
of any  corporate  party  hereto,  or any other  jurisdiction,  are  mandatorily
applicable to the Merger or the mailers arising under or in connection with this
Agreement,  this  Agreement  shall  be  governed  by the  laws of the  State  of
California.  All  actions  and  proceedings  arising  out of or relating to this
Agreement shall be heard and determined in any state or federal court sitting in
the County of Orange, California.

     (b)  Each  of the  parties  hereto  irrevocably  submits  to the  exclusive
jurisdiction of the State of California,  County of Orange, and/or United States
District Court for the Southern  District of California,  for the purpose of any
action or  proceeding  arising out of or relating to this  Agreement and each of
the parties hereto  irrevocably agrees that all claims in respect to such action
or  proceeding  may be heard and  determined  exclusively  in any federal  court
sitting in the County of Orange.  Each of the parties hereto agrees that a final
judgment in any action or proceeding  shall be conclusive and may be enforced in
other  jurisdictions  by suit on the judgment or in any other manner provided by
law.

     (c) Each of the parties hereto  irrevocably  consents to the service of any
summons and  complaint  and any other  process in any other action or proceeding
relating to the Merger,  on behalf of itself or its  property,  by the  personal
delivery of copies of such  process to such party.  Nothing in this Section 9.05
shall affect the right of any party  hereto to serve legal  process in any other
manner permitted by law.

     Section 9.06 Counterparts;  Effectiveness.  This Agreement may be signed in
any number of identical  counterparts,  each of which shall be an original, with
the same  effect as if the  signatures  thereto  and  hereto  were upon the same
instrument.  This Agreement shall become  effective when each party hereto shall
have received a counterpart hereof signed by each other party hereto.

     Section 9.07 Entire  Agreement.  This  Agreement and the other  Transaction
Documents  constitute the entire  agreement  between the parties with respect to
the subject mailer hereof and supersede all prior agreements, understandings and
negotiations,  both  written  and oral,  among the parties  with  respect to the
subject  matter  of this  Agreement  and the  other  Transaction  Documents.  No
representation,  inducement, promise,  understanding,  condition or warranty not
set forth in this Agreement or in any other  Transaction  Document has been made
or  relied  upon by any  party  hereto.  Neither  this  Agreement  nor any other
Transaction Document, nor any provision hereof or thereof is


                                      -17-
<PAGE>


intended to confer upon any Person  other than the parties  hereto any rights or
remedies hereunder or thereunder.

     Section 9.08 Captions.  The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation hereof

     Section 9.09 Severability. If a provision of this Agreement is deemed to be
contrary to law,  that  provision  will be deemed  separable  from the remaining
provisions of this Agreement, and will not affect the validity,  interpretation,
or effect of the other  provisions  of either this  Agreement  or any  agreement
executed  pursuant  to  it  or  the  application  of  that  provision  to  other
circumstances not contrary to law.

     Section 9.10 [RESERVED]

     Section 9.11  Disclosure  Schedules.  The  Disclosure  Schedules are hereby
incorporated  into this  Agreement  to the same extent as though fully set forth
herein.

     Section 9.12  Attorneys'  Fees.  If any action or  proceeding is brought to
enforce or interpret this Agreement or to recover Damages for the breach hereof,
the prevailing  party will be entitled to recover its  reasonable  costs of suit
and reasonable attorneys' fees.

     Section 9.13 Arbitration. Any and all disputes or controversies arising out
of this Agreement shall be resolved by arbitration in Orange County,  California
pursuant  to  the  rules  of the  American  Arbitration  Association;  provided,
however,  (i) the parties  shall be entitled to pursue  discovery in  accordance
with  California  Code of Civil  Procedure ss. 1283.05 and (ii) the  arbitration
hearing shall  commence no later than 120 calendar days after the  arbitrator(s)
is appointed.  Unless specified otherwise herein, arbitration under this Section
9.13  shall  be the  exclusive  means  of  resolving  any  and all  disputes  or
controversies  arising out of this  Agreement.  All parties shall bear their own
costs and attorneys' fees in any  arbitration or proceeding  arising out of this
Agreement,  except that the Arbitrators' fees or costs shall be borne equally by
the parties to such arbitration or proceeding.


            [The remainder of this page is intentionally left blank.]



                                      -18-
<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have executed or have caused this
Agreement to be duly executed by their respective  authorized officers as of the
day and year first above written.

                                                         USA BIOMASS CORPORATION


  /S/ FRED ALEXANDER
-------------------------------------    By:
Fred Alexander                              ----------------------------------
                                         Print name:
                                                    --------------------------
                                         Title:
                                               -------------------------------
  /S/ LINDA ALEXANDER
-------------------------------------
Linda Alexander
                                         AWT ACQUISITION CORP.



AMERICAN WASTE                           By:
TRANSPORT, INC.                             ----------------------------------
                                         Print name:
                                                    --------------------------
                                         Title:
                                               -------------------------------
By:     /S/ FRED ALEXANDER
    ---------------------------------
Print name:    FRED ALEXANDER            AGI ACQUISITION CORP.
           --------------------------
Title:  President
      -------------------------------

                                         By:
AMERICAN GREEN WASTE, INC.                  ----------------------------------
                                         Print name:
                                                    --------------------------
                                         Title:
By:     /S/ FRED ALEXANDER
    ---------------------------------
Print name:    FRED ALEXANDER
           --------------------------
Title:  President
      -------------------------------




                                      -19-
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be duly executed by their respective  authorized officers as of the
day and year first above written.

                                                         USA BIOMASS CORPORATION



-------------------------------------    By:      /s/ MICHAEL J. SILVA
Fred Alexander                              ----------------------------------
                                         Print name: Michael J. Silva
                                                    --------------------------
                                         Title:  Chief Development Officer
                                               -------------------------------

-------------------------------------
Linda Alexander                          AWT ACQUISITION CORP.



AMERICAN WASTE                           By:      /s/ MICHAEL J. SILVA
TRANSPORT, INC.                             ----------------------------------
                                         Print name: Michael J. Silva
                                                    --------------------------
                                         Title:  Chief Development Officer
                                               -------------------------------
By:
   ----------------------------------
Print name:                               AGI ACQUISITION CORP.
           --------------------------
Title:
      -------------------------------     By:      /s/ MICHAEL J. SILVA
                                             ---------------------------------
                                          Print name: Michael J. Silva
                                                     -------------------------
AMERICAN GREEN WASTE, INC.                Title:  Chief Development Officer
                                                ------------------------------

By:
   ----------------------------------
Print name:
           --------------------------
Title:
      -------------------------------



                                      -19-


<PAGE>




                                Schedule 2.01(d)

                         Additional Merger Consideration


<PAGE>




EXHIBIT A


<PAGE>




EXHIBIT A



<PAGE>






                                    EXHIBIT A

                    FORM OF ASSET PURCHASE AGREEMENT BETWEEN
                             NEWCO 3 AND SHAREHOLDER


<PAGE>



                       [FORM OF ASSET PURCHASE AGREEMENT]

     THIS ASSET PURCHASE AGREEMENT  ("Agreement") is made and entered into as of
the ____ day of March,  2000 by and among AFI  Acquisition  Corp.,  a California
corporation ("Buyer") and Fred Alexander and Linda Alexander, each an individual
(collectively, "Sellers") doing business as American Fiber.


                                    RECITALS

     A. Sellers own and operate a waste business (the "Business") and are active
in the Business.

     B. The Sellers desire to sell to Buyer certain assets used in the Business,
and Buyer desires to acquire such assets,  all on the terms and  conditions  set
forth herein.

     NOW,  THEREFORE,  in consideration of the mutual covenants contained herein
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby  acknowledged,  the parties  hereto,  intending to be legally  bound,
agree as follows:

          1. Purchase and Sale of Assets.

               1.1 Assets to be Acquired. Subject to the terms and conditions of
          this  Agreement,  Sellers hereby sell,  convey,  transfer,  assign and
          deliver to the Buyer and Buyer hereby purchases,  acquires and accepts
          from  Sellers,  all of Sellers'  right,  title and  interest in and to
          (collectively, the "Assets"):

                    (a)   All   supplies,   materials,   inventory,   equipment,
               machinery,  furniture,  fixtures,  spare parts and other personal
               property  and assets  listed on Schedule  1.1(a)  (the  "Tangible
               Assets");

                    (b) All trade names,  product names,  service marks, rights,
               licenses,  likenesses,  and logos of Sellers  used in  connection
               with the Business and all  likenesses and  presentations  thereof
               including,  but not limited to,  those items listed on Schedule
               1.1(b), and all goodwill  associated  therewith (the "Proprietary
               Rights");

                    (c) All know-how,  proprietary information,  customer lists,
               customer  records,   customer  files  and  all  associated  data,
               supplier lists, sales techniques,  processes, formulas, patterns,
               compilations, programs, devices, methods, techniques, inventions,
               drawings,  designs and  technical  data,  and other  confidential
               information   used  in   connection   with  the   Business   (the
               "Proprietary Information");


<PAGE>

                    (d) All files, papers, literature,  sales and purchase order
               records,  books of account,  and books and records related to the
               Business or the Assets;

                    (e) All telephone numbers,  customer files. names, addresses
               and  accounts   receivable   information   (including  aging  and
               delinquency) related to all customers used in connection with the
               Business;

                    (f)  All  rights  under  or  pursuant  to  all   warranties,
               representations  or  guaranties  made by  suppliers  or others in
               connection  with any  products or services  furnished to Sellers;
               and

                    (g) The goodwill associated with items (a) - (f) above.

               1.2 [Reserved].

          2. Assumed Liabilities.  Buyer shall assume all liabilities associated
     with the operation of the Business prior to the Closing Date.

          3. Sales  Taxes and Fees.  Buyer shall be  responsible  for all sales,
     use,  transfer  and similar  taxes and fees arising out of the purchase and
     sale of the Assets.

          4.  Closing.  The  purchase  and sale of the Assets shall occur at the
     offices of Paul,  Hastings,  Janofsky & Walker LLP, 695 Town Center  Drive,
     Seventeenth  Floor,  Costa Mesa,  California,  at 10:00 a.m.  local time on
     March 10, 2000, or at such other time (the "Closing Date") and place as the
     parties shall mutually agree, by delivery of the following (the "Closing"):

               4.1 Sellers Deliveries. Sellers shall deliver to Buyer:

                    (a) A Bill of Sale in  substantially  the form of  Exhibit A
               duly executed by Sellers; and

                    (b)  Such  other  instruments  and  documents  as (i) may be
               necessary  to  effect  the  transfer  of the  Assets  to Buyer as
               contemplated  by this  Agreement  and  (ii) may be  necessary  or
               desirable  in the  reasonable  opinion of the Buyer's  counsel in
               connection with the transactions contemplated hereby.

               4.2 Buyer Deliveries. Buyer shall pay to Sellers at the Closing a
          check of One Hundred Thousand Dollars ($100,000) as the purchase price
          for the Assets ("Purchase Price").

          5.  Representations  and  Warranties of Sellers.  Sellers  jointly and
     severally represent and warrant to Buyer that:


                                      -2-
<PAGE>

               5.1 Authority.  The execution,  delivery and  performance of this
          Agreement  by Sellers  has been duly  authorized  and  approved by all
          necessary  actions by each of them and neither the  execution  nor the
          delivery of this Agreement,  nor the  consummation of the transactions
          contemplated  hereby,  will  conflict with or result in a breach of or
          constitute a default  under (a) any law or  administrative  regulation
          applicable  to Sellers or (b) any note,  agreement,  judgment,  order,
          award,  decree or other  instrument or restriction  ("Instrument")  to
          which Sellers are bound,  or give any party with rights under any such
          Instrument  the right to terminate or change the rights or obligations
          of Sellers  under  such  Instrument.  No  authorization,  approval  or
          consent of, or notice to or filing with, any governmental authority or
          any third party is or will be required for the execution,  delivery or
          performance  of this  Agreement by Sellers and Sellers have full power
          and  authority  to perform all acts  required to be done by them under
          this Agreement.  This Agreement constitutes,  and the other agreements
          and  instruments  to be  executed  in  connection  herewith  when duly
          executed  and  delivered  will  constitute,  legal,  valid and binding
          obligations  of  Sellers  and  will  be  enforceable  against  them in
          accordance with their respective terms.

               5.2 Title to Assets;  Condition of the Assets.  Sellers have good
          and  marketable  ownership and title to all of the Assets and own that
          Assets free and clear of any and all liens, security interests,  prior
          assignments and encumbrances of any and every kind whatsoever.  At the
          Closing,  Sellers will  transfer  ownership and title of the Assets to
          Buyer free and clear of any and all liens,  security interests,  prior
          assignments  and  encumbrances of any and every kind  whatsoever.

               5.3 Reserved.

               5.4 Reserved.

               5.5  Compliance  with Law. To the  knowledge of the Sellers,  and
          except as previously  disclosed to Buyer,  none of the Business or the
          Assets is in  violation  of, or  alleged  to be in  violation  of, any
          applicable  regulation,   ordinance,   statute,  order,  law  or  rule
          promulgated by any governmental authority.

               5.6  Litigation.  To the knowledge of the Sellers,  and except as
          previously  disclosed to Buyer,  there is no action,  lawsuit,  claim,
          proceeding or investigation  pending,  or threatened,  against,  by or
          affecting Sellers or the Assets.

               5.7 Consents and  Assignments.  To the  knowledge of the Sellers,
          and except as previously disclosed to Buyer, all agreements, consents,
          approvals,   licenses   and   assignments   necessary   for   Sellers'
          consummation of the  transactions  contemplated by this Agreement,  if
          any, have been obtained.

               5.8 No Brokers,  etc. Neither the Sellers nor any party acting on
          their  behalf  has  paid  or has  become  obligated  to pay any fee or
          commission to any broker,  finder or intermediary for or on account of
          the transactions contemplated by this Agreement.


                                      -3-
<PAGE>



          6.  Representations  and  Warranties of Buyer.  Buyer  represents  and
     warrants to the Sellers that:

               6.1  Organization.  Buyer  is duly  incorporated  and  organized,
          validly  existing and in good standing  under the laws of the State of
          California. Buyer has full corporate power and authority to own, lease
          and operate its  properties  and  conduct  its  business as  currently
          conducted.

               6.2 Authority.  The execution,  delivery and  performance of this
          Agreement  by Buyer  has been  duly  authorized  and  approved  by all
          necessary  actions  and  neither  the  execution  or  delivery of this
          Agreement,  nor  the  consummation  of the  transactions  contemplated
          hereby,  will  conflict  and  result  in a breach of or  constitute  a
          default  under (a) Buyer's  organizational  documents,  (b) any law or
          administrative  regulation  applicable to Buyer, or (c) any Instrument
          to which Buyer is bound,  or give any party with rights under any such
          Instrument  the right to terminate or change the right or  obligations
          of Buyer under such Instrument. No authorization,  approval or consent
          of or notice to or filing  with,  any  governmental  authority  or any
          third  party is or will be  required  for the  execution,  delivery or
          performance  of this  Agreement  by Buyer and Buyer has full power and
          authority to perform all acts  required to be done by Buyer under this
          Agreement.   This  Agreement   constitutes,   and  any  agreements  or
          instruments to be delivered in connection  herewith when duly executed
          and delivered will constitute, legal, valid and binding obligations of
          Buyer and will be enforceable  against Buyer in accordance  with their
          respective terms.

               6.3 No Brokers,  etc. Neither Buyer nor any party acting on their
          behalf has paid or has become  obligated to pay any fee or  commission
          to  any  broker,  finder  or  intermediary  for or on  account  of the
          transactions contemplated by this Agreement.

          7. Additional Covenants.

               7.1 General Assistance. To facilitate the orderly transfer of the
          Assets and to enable  Buyer to obtain  the  benefits  of the  goodwill
          associated  therewith,  the Sellers  shall  cooperate  with and assist
          Buyer and use reasonable efforts in obtaining all necessary  approvals
          and consents for the transactions  contemplated  hereby, and otherwise
          use  reasonable  efforts to transfer to Buyer all of the right,  title
          and  interest  in the  Assets  and the  exclusive  rights  to use such
          Assets. Furthermore,  the Sellers agree to assist in the transition of
          all  customers of the Sellers to Buyer  including the  preparation  of
          letters,   joint  announcements  and  press  releases,   and  personal
          communications  with such  customers  and the  participation  of joint
          personal appearances, to the extent reasonable requested by Buyer.

               7.2 Confidentiality.  Sellers shall hold in confidence, and shall
          use reasonable  efforts to ensure that their respective  employees and
          representatives  hold in confidence,  all information supplied to them
          concerning  Buyer,  the terms and provisions of this Agreement and the
          fact  that  negotiations  regarding  purchase  and sale of the  Assets
          between Buyer and the Sellers have occurred.


                                      -4-
<PAGE>


               7.3 Access to Information.  After the Closing,  the Sellers shall
          have access at reasonable times, upon reasonable notice and subject to
          reasonable  requirements  related  to  confidentiality,  to the books,
          records and documents transferred to Buyer under this Agreement to the
          extent reasonably  requested by the Sellers for their accounting,  tax
          and legal purposes.

          8.  Indemnification.   The  indemnification  provisions  contained  in
     Section 5 of the Agreement and Plan of Merger dated as of March 1, 2000, by
     and among Sellers, USA Biomass  Corporation,  a Delaware  corporation,  AWT
     Acquisition  Corp.,  a California  corporation,  AGI  Acquisition  Corp., a
     California  corporation,  American  Waste  Transport,  Inc.,  a  California
     corporation,  and  American  Green Waste,  Inc., a California  corporation,
     shall govern any  indemnification  obligations arising from a breach of any
     representations or warranty contained in this Agreement.

          9. General Provisions.

          9.1 Notices.  Any notice  required or permitted to be given  hereunder
     shall  be in  writing  and  shall  be  (a)(i)  personally  delivered,  (ii)
     delivered by certified mail, return receipt requested,  postage prepaid, or
     (iii)  transmitted  by telex,  telecopier  or facsimile  transmission  with
     subsequent  confirmation  to the parties by mail (postage  prepaid) and (b)
     delivered to the intended recipient as follows:

     If to Sellers:     Fred Alexander
                        1835 "A" South Center City Parkway, #418
                        Escondido, California 92025
                        Facsimile: (760) 746-7596

     If to Buyer:       USA Biomass Corporation
                        Attn: Michael J. Silva
                        7314 Scout Avenue
                        Bell Gardens, California
                        Facsimile No.: (562) 928-9932

     or, as to any party,  at such other  address as shall be designated by such
     party in a notice  to each  other  party.  Except  as  otherwise  specified
     herein, all notices and other  communications  shall be deemed to have been
     duly given on (i) the date when delivered if delivered personally, (ii) the
     date when  received  if  delivered  by  certified  mail,  (iii) the date of
     transmission with confirmed answer back if transmitted by telex or (iv) the
     date when properly transmitted by telecopier or facsimile,  whichever shall
     first occur.

          9.2  Entire  Agreement;   Amendment.  This  Agreement,  the  documents
     referred to herein,  and the exhibits and schedules  hereto,  which by this
     reference are incorporated herein, contain the entire agreement between the
     parties hereto relating to the transactions  contemplated  herein,  and all
     prior or contemporaneous  agreements,  understandings,  representations and
     statements, oral or written, are hereby superseded. No amendment,



                                      -5-
<PAGE>


     modification,  waiver, discharge or change of this Agreement shall be valid
     unless the same is in writing and signed by all of the parties hereto.

          9.3 Governing Law.

          (a) This  Agreement  shall  be  governed  by the laws of the  State of
     California.  All actions and proceedings arising out of or relating to this
     Agreement  shall be heard  and  determined  in any state or  federal  court
     sitting in the County of Orange, California.

          (b) Each of the parties  hereto  irrevocably  submits to the exclusive
     jurisdiction  of the State of  California,  County of  Orange,  and/or  the
     United States District Court for the Southern  District of California,  for
     the purpose of any action or proceeding  arising out of or relating to this
     Agreement and each of the parties hereto irrevocably agrees that all claims
     in  respect  to such  action or  proceeding  may be heard  and  determined
     exclusively  in any federal court sitting in the County of Orange.  Each of
     the parties hereto agrees that a final judgment in any action or proceeding
     shall be conclusive and may be enforced in other  jurisdictions  by suit on
     the judgment or in any other manner provided by law.

          9.4 Successors and Assigns.  This Agreement  shall be binding upon and
     shall  inure to the  benefit of the  parties  hereto  and their  respective
     successors and assigns.

          9.5 Further  Assurances.  Without further  consideration,  each of the
     parties  hereto  agrees to  execute,  acknowledge  and  deliver  such other
     documents and take such further actions as may be necessary or advisable to
     carry out the purposes of this Agreement.

          9.6 Attorneys'  Fees. In the event of any dispute  between the parties
     hereto in connection  with this  Agreement,  the prevailing  party shall be
     entitled to recover  from the losing  party all of its costs and  expenses,
     including, without limitation, court costs and reasonable attorneys' fees.

          9.7  Counterparts.  This  Agreement  may be  executed  in one or  more
     counterparts and each such counterpart shall be deemed an original, but all
     of which taken together shall constitute one and the same agreement.

          9.8  Survival  of  Covenants,   Representations  and  Warranties.  All
     covenants,  representations  and  warranties set forth in this Agreement or
     any schedule,  exhibit or other document  delivered  pursuant  hereto shall
     survive (i) the Closing and (ii) any  investigation  by the party receiving
     the benefit of any such covenants, representations and warranties.

          10.  Representation  by Legal Counsel.  Seller  acknowledges that they
     have been  represented  by legal counsel in connection  with this Agreement
     and have consulted with such legal counsel.

                               [SIGNATURES FOLLOW]




                                      -6-
<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

                                 "BUYER"

                                 AFI Acquisition Corp., a California corporation



                                 By:____________________________________________
                                            Michael J. Silva, President



                                 "SELLERS"

                                 _______________________________________________
                                 Fred Alexander, an individual


                                 _______________________________________________
                                 Linda Alexander. an individual


                                      -7-
<PAGE>


                                    Exhibit A

                                  Bill of Sale


<PAGE>


                                  BILL OF SALE



     FOR VALUE RECEIVED, Fred Alexander and Linda Alexander,  each an individual
(collectively, "Sellers") doing business as American Fiber, hereby sell, assign,
transfer  and  convey  to  AFI  Acquisition  Corp.,  a  California   corporation
("Buyer"),  all of Sellers'  rights,  title and interest in and to the Assets as
defined in Section 1.1 of that  certain  Asset  Purchase  Agreement  dated as of
March ____ 2000 (the "Purchase Agreement") between Sellers and Buyer.

     This Bill of Sale is  delivered  pursuant  to, and shall be governed by and
construed in accordance with the terms of the Purchase Agreement. Nothing herein
is  intended  to  modify,   limit  or  otherwise  affect  the   representations,
warranties,  covenants and agreements  contained in the Purchase Agreement,  and
such representations,  warranties, covenants and agreements shall remain in full
force and effect in accordance with the terms of the Purchase Agreement.

     IN WITNESS  WHEREOF,  Sellers have  executed  this Bill of Sale dated as of
March ___, 2000.



                                 "SELLERS"

                                 _______________________________________________
                                 Fred Alexander, an individual


                                 _______________________________________________
                                 Linda Alexander. an individual


Acknowledged by Buyer:

AFI Acquisition Corp., a California corporation


By:  ________________________________
        Michael J. Silva, President



<PAGE>


                                 Schedule 1.1(a)

                                 Tangible Assets


     See attachment hereto.



<PAGE>




                                 Schedule 1.1(b)

                               Proprietary Rights


     None.


<PAGE>




                                    EXHIBIT B

                      FORM OF EMPLOYMENT AGREEMENT BETWEEN
                             USBC AND FRED ALEXANDER




<PAGE>




                         [FORM OF EMPLOYMENT AGREEMENT]



     THIS EMPLOYMENT  AGREEMENT  (this  "Agreement") is effective as of March 1,
2000,  by  and  between  USA  Biomass   Corporation,   a  Delaware   corporation
("Company"), and Fred Alexander, an individual ("Employee").


                                    RECITALS

     A. Company is engaged in the business of solid  waste,  transportation  and
disposal,  and operating a Greenwaste business (the "Business") and has need for
personnel with experience in said Business.

     B.  Employee is  experienced  in the Business and in the  operation of such
Business.

     C. In  connection  with  the  transactions  contemplated  by  that  certain
Agreement and Plan of Merger dated as of March 1, 2000 (the "Merger  Agreement")
by and among Employee,  Company, AWT Acquisition Corp., a California corporation
and a wholly-owned  subsidiary of Company,  AGI Acquisition  Corp., a California
corporation and a wholly owned subsidiary of Company,  American Waste Transport,
Inc., a  California  corporation  ("AWT"),  and  American  Green Waste,  Inc., a
California  corporation  ("AGI"),  pursuant to which Company acquired all of the
outstanding  shares of the  capital  stock of AWT and AGI,  Company  desires  to
employ Employee upon the terms and conditions hereinafter set forth.

     D.  Employee  is  willing  to enter  into this  Agreement  with  respect to
Employee's employment and services upon the terms and conditions hereinafter set
forth.

                                    AGREEMENT

     In  consideration  of  the  foregoing  recitals  and  the  premises  herein
contained, the parties agree as follows:

                                     I. TERM

     SECTION 1.01  Employment.  Subject to the  provisions of Section IV hereof,
Company hereby employs  Employee and Employee  hereby  accepts  employment  with
Company for a period of five years  beginning on the date hereof and terminating
at the close of business on March 1,2005 (the "Employment Term").

                                   II. DUTIES

     SECTION  2.01 General  Duties.  Employee  shall serve as Vice  President of
Company  during the  Employment  Term.  Employee,  during the  Employment  Term,
subject to the  policies  and  directives  of Fred  Behrens  and/or the Board of
Directors of Company,  shall be responsible  for the green waste  operations and
business development.


<PAGE>

     SECTION  2.02  Devotion of Time to  Company's  Business.  Unless  otherwise
agreed to in advance  and in writing by  Company,  during the  Employment  Term,
Employee  shall  devote  his  best  efforts,   and  all  of  his  business  time
exclusively,  to his employment with Company,  and to perform such duties as are
specified in Section 2.01 and such other duties  consistent with Section 2.01 as
shall be reasonably  requested by Fred Behrens  and/or the Board of Directors of
Company.  Employee shall not, during  Employee's  employment,  unless  otherwise
agreed to in advance and in writing by Company, seek or accept other employment,
become  self-employed  in any other capacity,  or engage in any activities which
are detrimental to the business of Company.

                         III. COMPENSATION AND BENEFITS

     SECTION  3.01 Base Salary.  As  compensation  for his  services  hereunder,
during the  Employment  Term,  Employee  shall  receive an annual base salary of
$120,000  payable in cash at the times and in the  installments  consistent with
Company's payroll practices. Employee's salary shall be subject to annual review
by the Company's  Board of Directors or its  Compensation  Committee,  but in no
event shall Employee's salary be reduced below $120,000.

     SECTION  3.02  Vacation.  During the  Employment  Term,  Employee  shall be
entitled to four (4) weeks paid vacation each year.

     SECTION  3.03  Expenses.  During the  Employment  Term,  Employee  shall be
entitled to receive  reimbursement for all reasonable  out-of-pocket  travel and
other expense incurred by Employee in performing  Employee's services hereunder,
provided that:

          (a) Each such  expenditure  is of a nature  qualifying  it as a proper
     business expenditure of Company and is approved by Company; and

          (b) Employee  furnishes to Company adequate  documentary  evidence for
     the  substantiation  of such expenditures and Employee  otherwise  complies
     with Company policies with respect to expense reimbursement.

          (c) Employee will  continue to have  possession of and continue to use
     for business  expenses,  the same company credit cards currently being used
     by Employee in his  operations  of AWT and AGI.  The Company  shall pay all
     expense  relating to  Employee's  use of these credit cards as long as such
     expenses are reasonably related to the operation of the Company's business.

     SECTION 3.04 Car Allowance.  During the  Employment  Term, the Company will
pay for all  monthly  payments,  insurance  payments,  service  and  maintenance
charges  and fuel  expenses  relating  to  Employee's  vehicle  which is used by
Employee to conduct Company business, consistent with Company policy.

     SECTION 3.05 Medical  Insurance and Other  Benefits.  During the Employment
Term.  Employee will be eligible to participate in any such medical,  dental and
disability  insurance plans,  life insurance  plans,  retirement plans and other
employee  welfare and benefit  plans or programs  generally  made  available  to
Company's senior-level  executives or its employees generally, as such plans and
programs may be in effect from time to


                                      -2-
<PAGE>


time. In addition,  the Company will maintain life insurance for Employee in the
amount  of One  Million  Five  Hundred  Thousand  Dollars  for  the  Beneficiary
designated by Employee.  This  insurance  will be in addition to any  additional
"Key Man" insurance the Company may decide to obtain.

     SECTION 3.06 Stock Option. Concurrent with the execution of this Agreement,
Company shall grant Employee a  non-qualified  stock option to purchase  250,000
shares of Common  Stock at an  exercise  price of $3.50 per share  pursuant to a
separate  stock  option  agreement.  Employee's  rights to  exercise  such stock
options are governed by such stock option agreement

     SECTION 3.07 Incentive  Program.  Employee will also be entitled to receive
additional  compensation  pursuant to an incentive program to be approved by the
Company's  Board  of  Directors  or its  Compensation  Committee.  The  proposed
incentive  program will be that the Company will conduct a good faith review for
each contract for new business in which Employee  participates  in generating to
make the determination as to whether additional  compensation  should be awarded
to  Employee  as  part of this  incentive  program.  The  parties  will  use the
following four factors in determining the additional consideration:

          1. Total Annual Dollar Generation

             -How Badly Needed
             -Target Market Reached
             -Overall Sales Impact

          2. Return on Investment

             -Profitability
             -Use of Existing Equipment
             -Other Benefits

          3.  New Business Utilization

              -Creates Backhauls
              -Fits Into Existing Business
              -Developed Routes

          4.  Market Share

              -Keep Competition Out
              -Strengthen Position in Area
              -Investment in Customer

A value will be assessed  for each factor.  The highest  value to be assigned to
each factor is five (5). The total value for all factors will be  multiplied  by
 .10.  This number  will be the  percentage  of the total  annual  revenue  which
Employee  will be entitled to receive as part of this  incentive  program.  (For
example,  if for a new contract  with total annual  revenue of  $1,400,000 it is
determined  that each of the four  factors  has a value of 5, the  total  annual
incentive annually given to Employee would be $28,000).



                                      -3-
<PAGE>

Compensation  under this  incentive  program  is  determined  by the  reasonable
judgment of the Company acting in good faith.

                                 IV. TERMINATION

     SECTION 4.01 Termination Other than for Cause, Death or Disability. Company
may terminate Employee's  employment under this Agreement,  at any time, for any
reason,  other than or on account of Employee's death or disability  pursuant to
Sections 4.04 and 4.05 of this Agreement,  without cause, upon written notice to
Employee.  If this  Agreement is terminated by Company  pursuant to this Section
4.01,  Company shall have no further  obligation or liability to Employee  under
this  Agreement,  except that Employee shall be entitled to receive only (i) the
portion of Employee's  salary as set forth in Section 3.01 which has been earned
up to the  Date of  Termination  (as  defined  in  Section  4.07  hereof),  (ii)
compensation  for any accrued and unused vacation up to the Date of Termination,
as determined in accordance with Company's then existing vacation policy,  (iii)
reimbursement,  pursuant  to Section  3.03,  for  reasonable  business  expenses
incurred up to the Date of Termination,  (iv) all additional compensation earned
by Employee based on his  performance up to the Date of Termination  pursuant to
any  incentive  program  approved by the  Company's  Board of  Directors  or its
Compensation Committee (collectively, the "Minimum Payments"), and (v) severance
pay in an amount equal to Employee's  base salary (as set forth in Section 3.01)
that would have been payable to Employee over the balance of the Employment Term
had this Agreement not been terminated early (the "Severance  Period"),  payable
by Company  during  the  Severance  Period at the times and in the  installments
consistent with Company's payroll practices (the "Severance Payments"). Employee
may terminate his Employment under this Agreement,  at any time, for any reason,
without  cause,  upon  written  notice  to  Company.  Upon such  termination  by
Employee,  Company  shall have no further  obligation  or  liability to Employee
under this Agreement, except that Employee shall be entitled to receive only the
Minimum Payments.

     SECTION  4.02  Termination  for Cause.  Company  may  terminate  Employee's
employment under this Agreement for "cause", due to any of the following acts or
omissions:

          (a)  Employee's  failure to perform his duties in a manner  reasonably
     consistent with the terms of this Agreement and the criteria established by
     Fred Behrens and/or Board of Directors of Company; provided,  however, that
     termination  pursuant to this paragraph (a) shall be preceded by sixty (60)
     days prior written notice  providing a reasonable  opportunity for Employee
     to correct his conduct, if the conduct in question can be corrected;

          (b) Conduct on the part of Employee  which  constitutes an intentional
     breach of any statutory or common law duty of loyalty to Company;

          (c) Any illegal act of Employee which materially and adversely affects
     the business of Company or any of its affiliates;

          (d)  Intentional  wrongful  engagement by Employee in any  competitive
     activity prohibited by the Noncompetition  Agreement of even date herewith,
     entered into



                                      -4-
<PAGE>


     between Employee and Company, or employment in another business in a manner
     not permitted by Section 2.02; or

          (e) Reserved.

          (f)  Employee's  conviction  of any felony or for any crime or offense
     causing harm to the Company or any of its  affiliates or involving  acts of
     theft, fraud,  misappropriation of funds, embezzlement,  moral turpitude or
     similar conduct;

          (g) Employee's  willful or intentional  misuse or diversion of Company
     funds,  misappropriation of funds,  embezzlement,  or fraudulent or willful
     misrepresentations  or  omissions on any written  reports  submitted to the
     Company.

     If this  Agreement  is  terminated  by Company  for cause  pursuant to this
Section 4.02,  Company shall have no further obligation or liability to Employee
under this Agreement, except that Employee shall be entitled to receive only the
Minimum Payments.

     SECTION 4.03  Resignation  for Good  Reason.  Employee may resign for "good
reason" and thereby  terminate his employment  under this Agreement (but not his
other obligations  hereunder) if, without  Employee's  express consent,  Company
substantially  reduces  Employee's  duties  and  responsibilities  such  that it
results in a material  adverse  reduction in Employee's  position,  authority or
responsibilities,  and  Company  fails to cure  such  reduction  in  duties  and
responsibilities  within sixty (60) days after  written  notice  specifying  the
particular  acts objected to and the specific cure requested is given to Company
by  Employee.  If this  Agreement  is  terminated  by  Employee  for good reason
pursuant to this  Section  4.03,  Company  shall have no further  obligation  or
liability  to  Employee  under this  Agreement,  except that  Employee  shall be
entitled to receive only the Minimum Payments and the Severance Payments.

     SECTION  4.04   Termination  for  Death.   This  Agreement  and  Employee's
employment  hereunder shall terminate  automatically  upon Employee's  death. If
this  Agreement  is  terminated  because of  Employee's  death  pursuant to this
Section 4.04,  Company shall have no further obligation or liability to Employee
under this Agreement, except that Employee shall be entitled to receive only (i)
the Minimum Payments and (ii) any Severance Payments.

     SECTION 4.05  Termination  for  Disability.  If Employee  becomes  disabled
during Employee's employment hereunder, this Agreement and Employee's employment
hereunder shall terminate on the date of determination by the Board of Directors
of Company  of such  disability.  As used  herein,  "disability"  shall mean any
condition that qualifies as a disability  under Company's  long-term  disability
plan as in  effect  on the  date of  determination  or  which  renders  Employee
incapable of performing  substantially all of Employee's managerial and Employee
services  hereunder for ninety (90) days or more in the aggregate during any one
(1) year  period,  and which at any time after such ninety  (90) days  Company's
Board of Directors  shall determine  continues to render  Employee  incapable of
performing  Employee's  managerial  and  Employee  services  hereunder.  If this
Agreement  is  terminated  because of  Employee's  disability  pursuant  to this
Section 4.05.  Company shall have no further obligation or liability to Employee
under this



                                      -5-
<PAGE>


Agreement,  except  that  Employee  shall be  entitled  to receive  only (i) the
Minimum Payments, and (ii) the Severance Payments.

     SECTION  4.06  Notice  of   Termination.   Any  termination  of  Employee's
employment by Company or by Employee (other than termination pursuant to Section
4.04 above) shall be  communicated  by a written  Notice of  Termination  to the
other party hereto.  For purposes of this  Agreement,  a "Notice of Termination"
means a notice which (i)  indicates the specific  termination  provision in this
Agreement relied upon, (ii) sets forth the  circumstances  which provide a basis
for termination of Employee's employment under the provisions so indicated,  and
(iii) if the termination  date is other than the date of receipt of such notice,
specifies the termination  date of this Agreement  (which date shall not be more
than ninety (90) days after the giving of such notice).

     SECTION 4.07 Date of Termination. "Date of Termination" shall mean the date
of death, the date of the determination of a disability,  the date of receipt of
the Notice of Termination or the date specified therein, as the case may be.

     SECTION 4.08 [Reserved]

     SECTION 4.09 No Additional  Payments.  Except as otherwise provided in this
Agreement,  upon termination of Employee's employment hereunder,  Employee shall
not be entitled to any  severance  payments or severance  benefits from Company.
Should Employee accept severance  benefits from the Company,  Employee shall not
be  entitled  to any  payments  by Company on account of any claim for  wrongful
termination,  including  but not limited to claims under any  federal,  state or
local human and civil rights or labor laws, other than the payments and benefits
provided  in  Section IV hereof,  except  for any  benefits  which may be due to
Employee in the normal  course  under any  employee  benefit  plan or program of
Company which provides for benefits after termination of employment.  Employee's
right to receive  payments or benefits under this Agreement upon  termination of
employment  will cease if Employee  breaches  any  provision of Section V below.
Receipt and acceptance of amounts paid to Employee followed by placement of such
amounts in a segregated account, with prompt notice to the Company that Employee
is not  accepting  the payment  for  purposes of this  Section  4.09,  shall not
constitute acceptance of payment for purposes of this Section 4.09.

                            V. RESTRICTIVE COVENANTS

     SECTION 5.01  Confidential and Proprietary  Information.  As an employee of
Company,  Employee  shall have access to certain  Confidential  and  Proprietary
Information (as defined below) concerning Company and its Affiliates (as defined
below).  Employee  agrees  that he will  not,  either  directly  or  indirectly,
disclose  to  any  person  or  use  any  of  the  Confidential  and  Proprietary
Information  in any way during the  Employment  Term  (except as required in the
course of the  performance  of his duties to Company) or after the expiration of
the Employment Term.

     For purposes of this Agreement,  "Confidential and Proprietary Information"
means any of the following  information relating to the business of Company that
is not generally known to competitors,  suppliers and customers of Company:  (i)
any business or technical  information,  design,  process,  procedure,  formula,
improvement, or any portion



                                      -6-
<PAGE>

or phase thereof,  that is owned by or has, at the time of  determination,  been
used by Company; (ii) any information related to the development of products and
production processes;  (iii) any information  concerning proposed new processes;
(iv) any information  concerning customer lists and other customer  information,
vendor lists and information, price data, cost data, profit plans, capital plans
and  proposed  or  existing  marketing  techniques  or plans;  and (v) any other
information  which would  constitute a "Trade  Secret"  under the Uniform  Trade
Secrets Act as in force and effect in the State of California.

     For purposes of this Agreement, "Affiliate" means any corporation, company,
partnership,  joint  venture,  firm  and/or  other  entity  which  controls,  is
controlled  by or is under common  control with the person with respect to which
the term "Affiliate" is used. For purposes of this Agreement,  "Person" means an
individual,  corporation,  partnership,  limited  liability  company,  trust  or
unincorporated  organization,  or  a  government  or  any  agency  or  political
subdivision  thereof  "Control"  means  (a) in the case of  corporate  entities,
direct or indirect  ownership  of at least fifty  percent  (50%) of the stock or
participating shares entitled to vote for the election of directors;  and (b) in
the  case of  non-corporate  entities  (such  as  limited  liability  companies,
partnerships or limited  partnerships),  either (x) direct or indirect ownership
of at least  fifty  percent  (50%) of the equity  interest,  or (y) the power to
direct the management and policies of the noncorporate entity.

     SECTION 5.02  Inventions  and  Improvements.  Employee  agrees that he will
assign to Company, without further consideration, the exclusive rights and title
to all inventions,  discoveries,  ideas,  improvements,  and other  intellectual
property made or acquired by Employee during the Employment Term,  whether alone
or jointly with others. Employee further agrees to execute any and all documents
that are  required  in order to  transfer  or  assign  such  property  rights to
Company.

     SECTION 5.03 [Reserved]

                                VI. MISCELLANEOUS

     SECTION 6.01 Notices.  Any notices to be given hereunder by either party to
the other  shall be in writing and may be  effected  by  personal  delivery,  by
courier,  or by mail  (registered  or  certified),  postage  prepaid with return
receipt  requested,  or by  facsimile  confirmed by mail,  or by overnight  mail
courier service.  Notices shall be addressed to the parties at the addresses set
forth below:

To Employee:        Fred  Alexander
                    1835 "A" South Center City Parkway, #418
                    Escondido, California 92025
                    Facsimile: (760) 746-7596



                                      -7-
<PAGE>

To Company:
                     USA Biomass Corporation
                     Attention:    Michael J. Silva
                     7314 Scout Avenue
                     Bell Gardens, California 90201
                     Facsimile: (562) 928-9932

     Mailed  notices shall be deemed  communicated  as of four (4) calendar days
after  mailing.  Notices  delivered  personally or by courier or facsimile or by
overnight mail courier service shall be deemed delivered when actually received.
Any party may change its address for notices by a notice in accordance with this
section.

     Section 6.02 Entire Agreement.  This Agreement supersedes any and all other
agreements,  either oral or in writing,  between the parties hereto with respect
to the  employment  of Employee by Company and contains all of the covenants and
agreements  between the parties  with respect to such  employment  in any manner
whatsoever;  provided,  however,  that  the  foregoing  shall  not  apply to the
provisions of the Merger Agreement,  the  Non-Competition  Agreement executed in
connection  herewith,  and any other ancillary  documents executed in connection
with  the  transactions  arising  therefrom   (collectively,   the  "Transaction
Documents").  Each party to this Agreement acknowledges that no representations,
inducements,  promises or agreements, orally or otherwise, have been made by any
party, which are not embodied herein or in the Transaction  Documents,  and that
no other prior  agreement,  statement or promise not contained in this Agreement
or in the Transaction  Documents  shall be valid and binding.  A modification of
this  Agreement  by  means of a  statement  or  promise  not  contained  in this
Agreement shall not be valid or binding. Any modification of this Agreement will
be effective only if it is in writing signed by the party to be charged.

     Section 6.03 Partial Invalidity. If any provision of this Agreement, or any
word,  phrase,  clause,  sentence or other portion thereof  (including,  without
limitation, the geographic and temporal restrictions and provisions contained in
this  Agreement),  is held by a court of competent  jurisdiction  to be invalid,
void or unenforceable for any reason,  such provision or portion thereof will be
modified  or deleted in such a manner as to make this  Agreement,  as  modified,
legal and enforceable to the fullest extent permitted under applicable laws.

     Section 6.04 Law Governing  Agreement.  To the extent not inconsistent with
the  arbitration  provisions  herein,  this  Agreement  shall be governed by and
construed in  accordance  with the law of the State of  California.  The parties
hereto  consent  to submit to the  exclusive  jurisdiction  of the courts of the
State of California,  County of Orange,  and/or the United States District Court
for the Central  District of  California  (Southern  Division)  for any actions,
suits,  controversies  or  proceedings  arising  our  of  or  relating  to  this
Agreement.

     Section 6.05 Arbitration. Any and all disputes or controversies arising out
of this Agreement shall be resolved by arbitration in Orange County,  California
pursuant  to  the  rules  of the  American  Arbitration  Association;  provided,
however,  (i) the parties  shall be entitled to pursue  discovery in  accordance
with  California  Code of Civil  Procedure  ss.1283.05 and (ii) the  arbitration
hearing shall  commence no later than 120 calendar days after the  arbitrator(s)
is appointed.  Unless specified otherwise herein, arbitration under this Section
6.05 shall be the exclusive means of resolving any and all disputes or



                                      -8-
<PAGE>

controversies  arising out of this  Agreement.  All parties shall bear their own
costs and attorneys' fees in any  arbitration or proceeding  arising out of this
Agreement,  except that the Arbitrators' fees or costs shall be borne equally by
the parties to such arbitration or proceeding.

     Section 6.06 Representation by Counsel.  Employee  acknowledges that he has
been  represented  by legal  counsel in connection  with this  Agreement and has
consulted with such legal counsel.

     Section 6.07 Successors and Assigns.  The rights and obligations of Company
and  Employee  under this  Agreement  shall inure to the benefit of and shall be
binding upon the successors and assigns of Company.  The rights and  obligations
of Employee under this Agreement may not be assigned by Employee.

     Section 6.08 Counterparts.  This Agreement may be executed in counterparts,
all of which taken together will constitute one instrument.

     Section 6.09 Waiver.  Either  party's  failure to enforce any  provision or
provisions  of this  Agreement  shall not in any way be construed as a waiver of
any such  provision  or  provisions,  nor  prevent  that party  thereafter  from
enforcing each and every other provision of this  Agreement.  The rights granted
both parties  herein are  cumulative and shall not constitute a waiver of either
party's  right to assert  all other  legal  remedies  available  to it under the
circumstances.

     SECTION  6.10  Binding  Effect.   Except  as  otherwise  provided  in  this
Agreement,  this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors,  heirs, and assigns. Company and
Employee  shall not assign,  convey,  or otherwise  transfer,  voluntarily or by
operation of law, to any person or entity, this Agreement or any interest herein
without the prior written consent of Company.  Any attempt to do so without such
consent shall be null and void.


                            (Signature page follows)



                                      -9-
<PAGE>

                                   EXHIBIT C


<PAGE>


     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.


                                          "Company"

                                          USA BIOMASS CORPORATION



                                          By:___________________________________
                                          Name:_________________________________
                                          Title:________________________________


                                          "Employee"



                                          ______________________________________
                                          FRED ALEXANDER



                                      -10-
<PAGE>




                                   EXHIBIT C


<PAGE>


                                    EXHIBIT C

                    FORM OF NONCOMPETITION AGREEMENT BETWEEN
                             FRED ALEXANDER AND USBC



<PAGE>





                       [FORM OF NON-COMPETITION AGREEMENT]


     THIS NON-COMPETITION  AGREEMENT (this "Agreement") is effective as of March
1, 2000, by and between USA Biomass  Corporation,  a Delaware  corporation ("USA
Biomass"), and Fred Alexander, an individual ("Alexander").

                                    RECITALS:

     A. USA Biomass has entered into an Agreement  and Plan of Merger  effective
as of March 1, 2000 (the "Merger  Agreement")  with  Alexander,  AWT Acquisition
Corp., a California  corporation  and a wholly-owned  subsidiary of USA Biomass,
AGI Acquisition Corp., a California corporation and a wholly owned subsidiary of
USA Biomass,  American Waste Transport,  Inc., a California corporation ("AWT"),
and American Green Waste, Inc., a California  corporation  (`AGI"),  pursuant to
which USA  Biomass  will  acquire all of the  outstanding  shares of the capital
stock of AWT and AGI.

     B. AFI  Acquisition  Corp.,  a California  corporation  and a  wholly-owned
subsidiary of USA Biomass ("AFI"),  has entered into an Asset Purchase Agreement
of even date herewith (the "Asset Agreement") with Alexander,  pursuant to which
AFI will  acquire  substantially  all of the assets of the  business  previously
conducted under the name of American Fibers (the "Fibers Business").  The Fibers
Business,  AGI and AWT are  sometimes  collectively  referred  to  herein as the
"Acquired  Companies." The Merger Agreement and the Asset Agreement are referred
to herein collectively as the "Purchase Agreements.

     C. Alexander is the sole owner of the Acquired Companies.

     D.  As  a  condition  to  USA  Biomass'   obligations  under  the  Purchase
Agreements, Alexander has agreed to enter into this Agreement.

     NOW,  THEREFORE,  in  consideration of the consummation of the transactions
contemplated  in the Purchase  Agreements  and the mutual  agreements  contained
herein, the parties hereto, intending to be legally bound, agree as follows:

     1. Covenant Not-to-Compete.

          (a) General Covenant. During the Restricted Period (as defined below),
     Alexander  agrees that he shall not,  within the United States,  including,
     without  limitation,  with respect to the State of California,  each of the
     counties  listed  on  Exhibit  "A" to  this  Agreement  (collectively,  the
     "Territory"), engage or participate in the ownership, management, operation
     or control of, or be connected as an officer, employee,  partner, director,
     agent, security holder, creditor, or consultant for any other person or



<PAGE>


     entity,  in the conduct or operation of, any business  engaged in the trash
     transportation,  disposal  or  conversion  business,  or any other  related
     businesses or services,  which would be similar to or competitive  with (i)
     the businesses  presently conducted by USA Biomass or any of its Affiliates
     (as defined below), (ii) the businesses presently conducted by the Acquired
     Companies or any of their  Affiliates or (iii) the businesses  conducted by
     USA Biomass or any of its Affiliates on the date of Alexander's termination
     of  employment  under the  Employment  Agreement of even date herewith (the
     "Employment Agreement") between USA Biomass and Shareholder  (collectively,
     the  "Business").  For  purposes of this  Agreement,  the term  "Restricted
     Period" shall mean the period  during which USA Biomass is actually  paying
     Alexander full compensation under the Employment Agreement.  If USA Biomass
     is not  obligated  to  pay  Alexander  compensation  under  the  Employment
     Agreement, USA Biomass may, at its election, continue to pay Alexander full
     compensation  thereunder  and keep the  Restricted  Period  in force  for a
     period up to five (5) year from the date hereof,  provided,  however,  that
     the  Restricted  Period shall  continue for five years from the date hereof
     even  if  full  compensation  is  not  paid  to  Alexander  if  Alexander's
     termination  of  employment  under the  Employment  Agreement  involves the
     conviction for a crime  constituting a felony and  substantially  involving
     the  Company.  No claim  of  breach  or  setoff  shall  act to  extend  the
     Restricted Period pursuant to the provisions of this paragraph.

          (b) Conduct of Business.  Shareholder acknowledges and agrees that USA
     Biomass together with the Acquired Companies (collectively,  the "Company")
     is  purchasing  all of the  outstanding  capital  stock of AWT and AGI, and
     substantially all of the assets of AFI,  including the goodwill  associated
     therewith, for the purpose of engaging in the Business and benefitting from
     the  Acquired  Companies'  goodwill  and  reputation.  For purposes of this
     Agreement,  "Affiliate" means any corporation,  company, partnership, joint
     venture,  firm and/or other entity which  controls,  is controlled by or is
     under  common  control  with the  person  with  respect  to which  the term
     "Affiliate"  is used.  For purposes of this  Agreement,  "person"  means an
     individual,  corporation,  partnership, limited liability company, trust or
     unincorporated  organization,  or a  government  or any agency or political
     subdivision thereof

          (c) Interpretation. The covenants contained in this Section 1 shall be
     construed to be a series of separate  covenants,  one for each geographical
     location specified.  Except for geographical  coverage,  each such separate
     covenant  shall be deemed  identical to the terms  contained  herein.  If a
     court of competent  jurisdiction deems any term,  provision or geographical
     location of any  covenant  or  provision  contained  this  Agreement  to be
     invalid,  illegal or unenforceable for any reason,  the court may reduce or
     eliminate  such term,  provision  or  geographical  location  to conform to
     applicable  law so as to be valid and  enforceable,  or, if it cannot be so
     reduced or  eliminated  without  materially  altering the  intention of the
     parties, the invalidity or unenforceability of such term or provision shall
     in no way affect (to the maximum extent permissible by law) the validity or
     enforcebility of any other term, provision or

                                      -2-

<PAGE>


     geographical location of this Agreement,  or the validity or enforceability
     of the remaining separate covenants.

          (d) Limitation. Nothing in this Section 1 shall prevent Alexander from
     holding or acquiring  common stock in any company which is publicly  traded
     on any  nationally  recognized  stock  exchange or on the  National  Market
     System of The Nasdaq Stock  Market,  provided  that such  holdings are less
     than  five  percent  (5%)  of  the   outstanding   capital  stock  of  such
     publicly-traded company.

     2. Agreement Not to Solicit.  To ensure the protection of the trade secrets
of the Company and to  preserve  the  goodwill of the Company for the benefit of
the Company,  Alexander  agrees to not, and will cause each of his Affiliates to
not, at any time during his  employment  with the Company and for six (6) months
after the termination of his employment with the Company:

               (i) Attempt in any manner to persuade any customer of the Company
          to cease to do business or to reduce the amount of business which such
          customer has customarily done or contemplates  doing with the Company;
          or

               (ii)  Solicit  for  employment  or employ  any  person  who is an
          employee of the Company.

     3. Consideration;  Reasonable Scope. Alexander acknowledges and agrees that
the transactions  contemplated by the Purchase Agreements constitute good, valid
and binding consideration for Alexander's obligations and covenants contained in
this Agreement.

     4. Miscellaneous.

          (a) Notices.  Any notices to be given hereunder by either party to the
     other shall be in writing and may be  effected  by  personal  delivery,  by
     courier, or by mail (registered or certified),  postage prepaid with return
     receipt requested,  or by facsimile confirmed by mail, or by overnight mail
     courier service. Notices shall be addressed to the parties at the addresses
     set forth below:

     To Alexander:            Fred Alexander
                              1835 "A" South Center City Parkway, #418
                              Escondido, California 92025
                              Facsimile: (760) 746-7596

     To the Company:          USA Biomass Corporation
                              Attention: Michael J. Silva
                              7314 Scout Avenue

                                      -3-

<PAGE>


                                     Bell Gardens, California 90201
                                     Facsimile:    (562) 928-9932

          Mailed  notices shall be deemed  communicated  as of four (4) calendar
     days after mailing. Notices delivered personally or by courier or facsimile
     or overnight mail courier  service shall be deemed  delivered when actually
     received.  Any party may  change  its  address  for  notices by a notice in
     accordance with this section.

          (b) Entire  Agreement.  This  Agreement  supersedes  any and all other
     agreements,  either  oral or in writing,  between  the parties  hereto with
     respect  to the  matters  set forth  herein;  provided,  however,  that the
     foregoing shall not apply to the provisions of the Purchase  Agreements and
     the Employment  Agreement  executed in connection  herewith,  and any other
     ancillary  documents  executed in connection with the transactions  arising
     therefrom (collectively,  the "Transaction Documents").  Each party to this
     Agreement  acknowledges that no representations,  inducements,  promises or
     agreements, orally or otherwise, have been made by any party, which are not
     embodied  herein or in the Transaction  Documents,  and that no other prior
     agreement,  statement or promise not contained in this  Agreement or in the
     Transaction  Documents  shall be valid and binding.  A modification of this
     Agreement  by  means  of a  statement  or  promise  not  contained  in this
     Agreement shall not be valid or binding. Any modification of this Agreement
     will be  effective  only if it is in  writing  signed  by the  party  to be
     charged.

          (c) Law Governing  Agreement.  This Agreement shall be governed by and
     construed in accordance with the law of the State of California.

          (d) Venue. The parties hereto irrevocably and unconditionally  consent
     to  submit  to the  exclusive  jurisdiction  of the  courts of the State of
     California,  County of Orange,  and/or the United States District Court for
     the Central  District of  California  (Southern  Division) for any actions,
     suits,  controversies  or  proceedings  arising  out of or relating to this
     Agreement and the transactions  contemplated  hereby (and the parties agree
     not to commence any action, suit or proceeding relating thereto,  except in
     such  courts),  and further  agree that  service of any  process,  summons,
     notice or document by U.S.  registered mail to the respective  addresses of
     the parties set forth herein, shall be effective service of process for any
     action, suit or proceeding brought against the parties in any such court.

          (e) Successors and Assigns.  The rights and obligations of USA Biomass
     and Alexander  under this Agreement shall inure to the benefit of and shall
     be binding upon the successors  and assigns of USA Biomass.  The rights and
     obligations  of  Alexander  under this  Agreement  may not be  assigned  by
     Alexander.

          (f) Counterparts.  This Agreement may be executed in counterparts, all
     of which taken together will constitute one instrument.

                                      -4-

<PAGE>


          (g)  Waiver.  Either  party's  failure to  enforce  any  provision  or
     provisions of this Agreement  shall not in any way be construed as a waiver
     of any such provision or provisions, nor prevent that party thereafter from
     enforcing  each and every other  provision  of this  Agreement.  The rights
     granted  both  parties  herein are  cumulative  and shall not  constitute a
     waiver of either party's right to assert all other legal remedies available
     to it under the circumstances.

          (h)  Attorneys'  Fees and Costs.  If any action in law or in equity is
     necessary  to  enforce  or  interpret  the  terms  of this  Agreement,  the
     prevailing party shall be entitled to reasonable attorneys' fees, costs and
     necessary  disbursements in addition to any other relief to which he may be
     entitled.

          (i) Binding  Effect.  Except as otherwise  provided in this Agreement,
     this  Agreement  shall be  binding  upon and  inure to the  benefit  of the
     parties hereto and their respective  successors,  heirs,  and assigns.  USA
     Biomass and  Alexander  shall not assign,  convey,  or otherwise  transfer,
     voluntarily or by operation of law, to any person or entity, this Agreement
     or any interest  herein  without the prior written  consent of USA Biomass.
     Any attempt to do so without such consent shall be null and void.

          (j) Not an Employment  Agreement.  This Agreement is not an employment
     contract and nothing in this Agreement  confers on Alexander any right with
     respect to the  continuation  of any employment  such persons may have with
     USA Biomass.

          (k) Arbitration.  Any and all disputes or controversies arising out of
     this  Agreement   shall  be  resolved  by  arbitration  in  Orange  County,
     California pursuant to the rules of the American  Arbitration  Association;
     provided, however, (i) the parties shall be entitled to pursue discovery in
     accordance with California Code of Civil Procedure ss. 1283.05 and (ii) the
     arbitration  hearing  shall  commence no later than 120 calendar days after
     the  arbitrator(s)  is  appointed.   Unless  specified   otherwise  herein,
     arbitration  under this section shall be the  exclusive  means of resolving
     any and all

     IN WITNESS  WHEREOF,  the parties hereto have executed this  Noncompetition
Agreement as of the date first above written.

                                      -5-

<PAGE>

                           "USA Biomass"

                           USA BIOMASS CORPORATION, a Delaware corporation

                           By:
                              --------------------------------------
                           Name:
                                ------------------------------------
                           Title:
                                 -----------------------------------

                           "Shareholder"

                           FRED ALEXANDER

                           -----------------------------------------
                           Fred Alexander, an individual



                                      -6-

<PAGE>

                                   EXHIBIT "A"

                               California Counties
                               -------------------

Alameda                       Marin                         San Mateo
Alpine                        Mariposa                      Santa Barbara
Amador                        Mendocino                     Santa Clara
Butte                         Merced                        Santa Cruz
Calaveras                     Modoc                         Shasta
Colusa                        Mono                          Sierra
Contra Costa                  Monterey                      Siskiyou
Del Norte                     Napa                          Solano
El Dorado                     Nevada                        Sonoma
Fresno                        Orange                        Stanislaus
Glenn                         Placer                        Sutter
Humboldt                      Plumas                        Tehama
Imperial                      Riverside                     Trinity
Inyo                          Sacramento                    Tulare
Kern                          San Benito                    Tuolumne
Kings                         San Bernardino                Ventura
Lake                          San Diego                     Yolo
Lassen                        San Francisco                 Yuba
Los Angeles                   San Joaquin
Madera                        San Luis Obisqo



<PAGE>


                          [FORM OF AGREEMENT OF MERGER]



     This  Agreement  of  Merger  (this  "Agreement")  is  entered  into  as  of
_______,2000.  between AGI Acquisition Corp., a California corporation ("Merging
Corporation") which is a wholly owned subsidiary of USA Biomass  Corporation,  a
Delaware  corporation.  and  which  has an office  at 7314  Scout  Avenue,  Bell
Gardens,  California  90201,  and  American  Green  Waste,  Inc.,  a  California
corporation (the "Surviving Corporation";  the Merging Corporation and Surviving
Corporation   sometimes   hereinafter  are  referred  to  as  the   "Constituent
Corporations").

     The Merger.  Subject to the terms and conditions  hereof,  at the Effective
Time (as defined below):  (i) Merging  Corporation shall be merged with and into
Surviving  Corporation  (the  "Merger")  and the  separate  existence of Merging
Corporation  shall  cease  and  Surviving  Corporation  shall  continue  as  the
surviving  corporation  in the Merger;  (ii) the  Articles of  Incorporation  of
Surviving Corporation as in effect immediately prior to the Effective Time shall
remain the Articles of Incorporation of Surviving Corporation;  (iii) the Bylaws
of Surviving  Corporation as in effect  immediately  prior to the Effective Time
shall  remain the Bylaws of  Surviving  Corporation;  and (iv) the  officers and
directors of Merging  Corporation  immediately prior to the Effective Time shall
become the officers and directors of Surviving  Corporation.  From and after the
Effective Time, the Merger will have all the effects  provided by the California
General Corporation Law ("CGCL").

     Effect of the Merger on  Capital  Stock and  Merger  Consideration.  At the
Effective  Time,  by virtue of the Merger and  without any action on the part of
the holder of any shares of capital stock of the Constituent Corporations,  each
share of the  capital  stock of  Surviving  Corporation  issued and  outstanding
immediately  prior to the Effective  Time,  shall be converted into the right to
receive 250 shares of the common stock of USA Biomass  Corporation  and $162.50,
and  each  share  of  the  capital  stock  of  Merging  Corporation  issued  and
outstanding immediately prior to the Effective Time, shall be converted into one
share of the capital stock of Surviving Corporation.

     Effective  Time of the Merger.  The Merger shall become  effective upon the
filing  of the  Officers'  Certificates  and a copy of this  Agreement  with the
Secretary of State of California (the "Effective Time").

     Other  Agreements.  The  parties  to  this  Agreement  are  parties  to the
Agreement and Plan of Merger of even date herewith,  entered into between, among
others, the parties hereto, which agreement is intended to be construed together
with this Agreement in order to effectuate their purposes.


                         [SIGNATURES ON FOLLOWING PAGE]


<PAGE>


                     [SIGNATURE PAGE TO AGREEMENT OF MERGER]


     IN WITNESS WHEREOF, the parties have executed this Agreement as of the ____
day of _________, 2000.

                                        "Surviving Corporation"

                                        AMERICAN GREEN WASTE, INC., a
                                        California corporation


                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------



                                        "Merging Corporation"

                                        AGI ACQUISITION CORP., a California
                                        corporation

                                        By:
                                           -------------------------------------
                                           Michael J. Silva, President

                                        By:
                                           -------------------------------------
                                           Michael J. Silva, Secretary



                                      -2-

<PAGE>


                       [FORM OF CERTIFICATE OF OFFICERS]

     The undersigned, Michael J. Silva, certifies that:

     1.   He is the  President  an  Secretary  of  AGI  Acquisition  Corp.  (the
          "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached  hereto,  under which the Company  will be merged with and
          into American Green Waste, Inc., a California Company.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Director of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders   in  accordance  with  Section  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  2,000,   all  of  which  constitute  one  class.  The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares with the Company.

     5.   No vote of Shareholders of USA Biomass,  Inc., a Delaware  corporation
          and the parent corporation of the company, was required.

     I further  declare  under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of my own knowledge.

                                             -----------------------------------
                                             Michael J. Silva
                                             President and Secretary



<PAGE>


                       [FORM OF CERTIFICATE OF OFFICERS]

     The undersigned, Fred Alexander and Linda Alexander, certifies that:

     1.   We are the President an  Secretary,  respectively,  of American  Green
          Waste, Inc. (the "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached hereto, under which the Merging Corporation will be merged
          with  and  into  the  Company  and  the  Company  shall  be  surviving
          corporation in the merger.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Director of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders   in  accordance  with  Section  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  2,000,   all  of  which  constitute  one  class.  The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares with the Company.

     I further  declare  under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of my own knowledge.

                                             -----------------------------------
                                             Fred Alexander
                                             President

                                             -----------------------------------
                                             Linda Alexander
                                             Secretary



<PAGE>




                                    EXHIBIT E

                            FORM OF ESCROW AGREEMENT














<PAGE>


                           [FORM OF ESCROW AGREEMENT]


     This Escrow  Agreement  (the  "Agreement")  is made and entered  into as of
March  1,  2000  by and  among  USA  Biomass,  a  California  corporation  ("USA
Biomass"),  Chicago Title Company (the "Escrow  Holder"),  Linda Alexander,  and
Fred Alexander  (collectively  the  "Shareholder"),  the selling  shareholder of
American Waste Transport,  Inc., a California  corporation ("AWT"), and American
Green Waste,  Inc., a California  corporation  ("AGI" and together with AWT, the
"Target Companies").

                                    RECITALS

     Pursuant to that certain  Agreement and Plan of Merger dated as of March 1,
2000 (the "Merger  Agreement"),  by and among the Shareholder,  USA Biomass, AWT
Acquisition Corp., a California corporation and a wholly-owned subsidiary of USA
Biomass,  AGI  Acquisition  Corp., a California  corporation  and a wholly owned
subsidiary of USA Biomass,  AWT and AGI, USA Biomass shall issue to  Shareholder
One Million  (1,000,000)  shares of the common stock of USA Biomass (the "Common
Stock");

     Pursuant  to Section  2.01(b) of the Merger  Agreement,  the  parties  have
agreed that the One Million  (1,000,000) shares of Common Stock shall be held in
escrow  pursuant  to the  terms  of this  Agreement  until  the  completion  and
certification  of  the  financial  audit  of  the  Target  Companies'  financial
statements  for the years ended  December 31,  1998,  and December 31, 1999 (the
"Audit").

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and other  good and
valuable  consideration,  the receipt and adequacy of which is  acknowledged  by
each party, it is agreed as follows:


1.   ESCROW DEPOSIT

     1.1 Simultaneously  with the execution and delivery of this Agreement,  the
Shareholder  is  delivering  to  the  Escrow  Holder  a  stock  certificate,  or
certificates (or documentation representing such), registered in the name of the
Shareholder  representing  his beneficial  ownership of One Million  (1,000,000)
shares of Common Stock.  The Escrow Holder hereby  acknowledges  receipt of such
certificates.



<PAGE>


     1.2 As used  herein,  the term  "Escrow  Deposit"  means (a) the  aggregate
shares being  delivered to the Escrow  Holder as described in Section 1.1 hereof
and (b) all distributions  received by the Escrow Holder pursuant to Section 1.3
hereof.

     1.3 The  Shareholder  hereby  authorizes  delivery  directly  to the Escrow
Holder (and agrees that he will  deliver to the Escrow  Holder if he shall first
receive  the  same)  to be held as part of the  Escrow  Deposit  hereunder,  all
non-cash  dividends  in  the  form  of  stock  or  other  securities  and  other
distributions on or with respect to the Common Stock held in the Escrow Deposit.
All cash  dividends  made on  account  of the  Common  Stock  held in the Escrow
Deposit shall be paid to the Shareholder.

2.   DELIVERY OF ESCROW DEPOSIT BY THE ESCROW HOLDER

     The Escrow  Holder  shall hold the  Escrow  Deposit in escrow  until it has
received written notice from the Company that the Audits have been completed and
authorizing the Escrow Holder to release the Escrow Deposit. Upon receiving such
written  notice,  the Escrow Holder shall deliver to the  Shareholder,  free and
clear of any  interest of USA Biomass  therein,  all of the Escrow  Deposit then
held by the Escrow Holder.

3.   SETTLEMENT OF DISPUTES

     3.1 To the extent not  subject to any  arbitration  provision  herein,  the
parties  hereby  irrevocably  and  unconditionally  consent  to  submit  to  the
exclusive  jurisdiction  of the  courts  of the State of  California,  County of
Orange,  and/or the United  States  District  Court for the Central  District of
California  (Southern  Division)  for  any  actions,  suits,   controversies  or
proceedings  arising out of or relating to this  Agreement and the  transactions
contemplated  hereby (and the parties agree not to commence any action,  suit or
proceeding  relating  thereto  except in such  courts),  and further  agree that
service of any process,  summons,  notice or document by U.S. registered mail to
the respective  addresses set forth herein shall be effective service of process
for any  action,  suit or  proceeding  brought  against  the parties in any such
court. The parties hereby irrevocably and unconditionally waive any objection to
the laying of venue of any action, suit, controversies or proceeding arising out
of this Agreement or the transactions  contemplated hereby, in the courts of the
State of  California,  County of Orange and/or the United States  District Court
for the Central District of California (Southern  Division),  and hereby further
irrevocably  and  unconditionally  waive  and agree not to plead or claim in any
such court that any such action,  suit or  proceeding  brought in any such court
has been brought in an inconvenient or improper forum.

     3.2 Any and all  disputes or  controversies  arising out of this  Agreement
shall be resolved by arbitration in Orange  County,  California  pursuant to the
rules of the

                                      -2-

<PAGE>


American Arbitration  Association;  provided,  however, (i) the parties shall be
entitled  to  pursue  discovery  in  accordance  with  California  Code of Civil
Procedure  Section  1283.05 and (ii) the  arbitration  hearing shall commence no
later  than 120  calendar  days after the  arbitrator(s)  is  appointed.  Unless
specified  otherwise  herein,  arbitration  under this  Section 3.2 shall be the
exclusive means of resolving any and all disputes or  controversies  arising out
of this Agreement. All parties shall bear their own costs and attorneys' fees in
any  arbitration or proceeding  arising out of this  Agreement,  except that the
Arbitrators'  fees or costs  shall  be  borne  equally  by the  parties  to such
arbitration or proceeding.

     3.3 It is the intent of the  parties to this  Agreement  that all  disputes
under this Agreement shall be resolved,  to the extent  possible,  in connection
with a single arbitration or judicial proceeding,

4.   CONCERNING THE ESCROW HOLDER

     4.1 USA  Biomass  and the  Shareholder  shall  each pay the  Escrow  Holder
one-half  of  its  fees  for  its  services   hereunder   and  one-half  of  all
out-of-pocket  costs and expenses of the escrow,  including postage,  telephone,
courier charges,  share  certificate  transfer fees, wire transfer fees, and all
similar expenses relating to all aspects of the escrow.

     4.2 The  Escrow  Holder  may  resign  and be  discharged  from  its  duties
hereunder at any time by giving  notice of such  resignation  to USA Biomass and
the  Shareholder  specifying  a date (not less than 30 days  after the giving of
such  notice)  when such  resignation  shall take  effect.  Promptly  after such
notice,  a successor  escrow agent shall be appointed by mutual agreement of USA
Biomass and the  Shareholder,  such successor  escrow agent to become the Escrow
Holder  hereunder upon the  resignation  date  specified in such notice.  If USA
Biomass and the  Shareholder  are unable to agree upon a successor  escrow agent
within 30 days after such notice,  the Escrow  Holder may, at the expense of USA
Biomass and the Shareholder,  petition a court of competent jurisdiction for the
appointment of a successor.  The Escrow Holder shall continue to serve until its
successor accepts the escrow and receives the Escrow Deposit or until the Escrow
Deposit is deposited with a court.  USA Biomass and the Shareholder may agree at
any time to replace the Escrow  Holder with a new escrow agent by giving  notice
thereof to the Escrow Holder then acting.

     4.3 The  Escrow  Holder  undertakes  to  perform  only  such  duties as are
specifically set forth herein. The Escrow Holder shall have no responsibility to
read, understand or comply with the Merger Agreement.  The Escrow Holder, acting
or refraining from acting in good faith,  shall not be liable for any mistake of
fact or error of judgment by it or for any acts or  omissions by it of any kind,
unless caused by willful

                                      -3-

<PAGE>


misconduct  or gross  negligence,  and shall be entitled  to rely,  and shall be
protected  in doing so, upon (a) any written  notice,  instrument,  or signature
believed by it to be genuine and to have been signed or presented by the proper
party or parties duly  authorized to do so, and (b) the advice of counsel (which
may be of the Escrow  Holder's own  choosing).  The Escrow  Holder shall have no
responsibility  for the contents of any writing  submitted  to it hereunder  and
shall be entitled in good faith to rely without any liability  upon the contents
thereof.

     4.4 USA Biomass and the Shareholder and their respective  heirs,  assignees
and  representatives  hereby  agree to  indemnify  and hold  harmless the Escrow
Holder from any and all  claims,  demands,  debts,  duties,  obligations,  acts,
costs, expenses,  sums of money, suits, dues, actions and/or causes of action of
any kind or nature  whatsoever which shall for any reason  whatsoever be made by
any person, entity or organization,  as a result of or in any way connected with
the Escrow Holder's  performance under the terms of this Agreement to the extent
that they do not result from the willful  misconduct of the Escrow Holder.  This
right of  indemnification  shall survive the termination of this Agreement,  and
the  resignation  or removal of the Escrow  Holder.  The costs and  expenses  of
enforcing this right of indemnification  shall also be split between USA Biomass
and the Shareholder.

     4.5 If the Escrow  Holder is named in any  lawsuit or  arbitration  for any
reason in connection with this Agreement or the Escrow Deposit,  then the Escrow
Holder  is  hereby  authorized  to  deposit  with  the  clerk  of the  court  or
arbitration  tribunal  in which such  proceeding  is  pending  any or all of the
Escrow Deposit held by the Escrow Holder pursuant  hereto,  or to interplead all
interested  parties in any court of competent  jurisdiction  and to deposit with
the clerk of such court or arbitration tribunal any or all of the Escrow Deposit
that is the subject of such proceeding.  Upon its depositing such Escrow Deposit
as aforesaid,  the Escrow Holder shall be fully  released and  discharged of any
duties or liabilities  with respect to such Escrow Deposit so deposited  [except
to the extent such liabilities  arose from the willful  misconduct of the Escrow
Holder].

5.   MISCELLANEOUS

     5.1 This  Agreement  will be binding upon,  inure to the benefit of, and be
enforceable by the respective heirs, beneficiaries, representatives, successors,
and assigns of the parties hereto.

     5.2 This Agreement  contains the entire  understanding  of the parties with
respect to its subject  matter and may be amended  only by a written  instrument
duly executed by all the parties hereto.

                                      -4-

<PAGE>


     5.3 All  notices,  claims,  requests,  demands,  and  other  communications
hereunder ("notices") shall be in writing and shall be deemed to have been given
if  personally  delivered  or if sent by  telecopy  or  facsimile  or  mailed by
overnight,  commercial  air courier  service or by first  class,  registered  or
certified mail, postage prepaid, and properly addressed as follows:

          If to USA Biomass:

               USA Biomass Corporation
               Attn:  Michael J. Silva
               7314 Scout Avenue
               Bell Gardens, California 90201
               Fax: (562) 928-9932

          If to the Shareholder:

               Fred Alexander
               1835 "A" South Center City Parkway, #418
               Escondido, California 92025
               Fax:   (760) 746-7596

          If to Escrow Holder:

               Chicago Title Company
               Attention:   Escrow Division
               16969 Von Karman Avenue, Suite 200
               Irvine, California 92606
               Fax:  (949) 752-8043

     Any party may change its address for purposes of this Section by giving the
other parties  written  notice of the new address in the manner set forth above.
Notice will conclusively be deemed to have been given when personally delivered,
or if given  by mail,  on the  second  day  after  being  sent by an  overnight,
commercial  air  courier  service or on the fifth day after  being sent by first
class,  registered  or  certified  mail,  or if given by telecopy  or  facsimile
machine, when confirmation of transmission is indicated by the sender's telecopy
or facsimile machine.

     5.4 This  Agreement  shall be governed  by, and  construed  and enforced in
accordance  with,  the laws of the  State of  California  without  regard to its
conflict of laws principles.

                                      -5-

<PAGE>


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

     5.6 This  Agreement  shall remain in full force and effect until the Escrow
Holder has delivered all the Escrow Deposit in its possession in accordance with
the terms hereof.

     5.7 Article headings  contained herein are for reference  purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

     5.8 Shareholder  acknowledges that he has been represented by legal counsel
in connection with this Agreement and has consulted with such legal counsel.


                            [Signature page follows]


                                      -6-

<PAGE>

     IN WITNESS WHEREOF,  this Agreement has been duly executed and delivered by
the duly  authorized  officers of USA Biomass and the Escrow Holder,  and by the
Shareholder, as of the date above written.



                                        "USA BIOMASS"

                                             USA Biomass Corporation


                                             By:
                                                --------------------------------
                                                Name:
                                                     ---------------------------
                                                Title:
                                                      --------------------------


                                        "SHAREHOLDER"


                                             By:
                                                --------------------------------
                                                Fred Alexander


                                             By:
                                                --------------------------------
                                                Linda Alexander


                                        "ESCROW HOLDER"

                                             CHICAGO TITLE COMPANY


                                             By:
                                                --------------------------------
                                                Name:
                                                     ---------------------------
                                                Title:
                                                      --------------------------


                                       -7-

<PAGE>

                            USA BIOMASS CORPORATION
                               7314 Scout Avenue
                         Bell Gardens, California 90201

                                 March 1, 2000

Mr. Fred Alexander
1835 "A" South Center City Parkway, #418
Escondido, California 92025

     Re: Delivery of Shares

Dear Fred:

     This letter will confirm our understanding  concerning the 1,000,000 shares
of USA Biomass Corporation  ("USBC") to be delivered to you (and then to Chicago
Title  Corporation (the "Escrow  Agent"))  pursuant to the Agreement and Plan of
Merger  dated as of March 1,  2000,  among you,  USA  Biomass  Corporation,  AWT
Acquisition  Corp., AGI Acquisition Corp.,  American Waste Transport,  Inc., and
American  Green  Waste,  Inc.  We agree  that USBC  will  pursue  the  necessary
procedures  with the transfer agent to cause the Shares to be (i) issued in your
name and (ii) delivered to the Escrow Agent, as soon as is reasonably possible.


                                                  Sincerely,

                                                  /s/ Fred Beherns
                                                  ------------------------------
                                                  Fred Beherns
                                                  President



<PAGE>

                              STATE OF CALIFORNIA

                               [GRAPHIC OMITTED]

                               SECRETARY OF STATE


     I,  BILL  JONES,  Secretary  of State of the  State of  California,  hereby
certify:

     That the attached  transcript of [ILLEGIBLE] page(s) has been compared with
the record on file in this office,  of which it purports to be a copy,  and that
it is full, true and correct.


[SEAL]              IN WITNESS WHEREOF, I execute this certificate and affix the
                    Great Seal of the State of California this day of

                    ------------------------------
                    /s/ Bill Jones
                    Secretary of State



<PAGE>



                                                           ENDORSED FILED
                                                          In the office of
                                                       the Secretary of State
                                                    of the State of California
                                                            MAR 17 2000
                                                  BILL JONES, Secretary of State


                              AGREEMENT OF MERGER

     This Agreement of Merger (this  "Agreement") is entered into as of March 1,
2000,  between  AWT  Acquisition  Corp.,  a  California   corporation  ("Merging
Corporation") which is a wholly owned subsidiary of USA Biomass  Corporation,  a
Delaware  corporation,  and  which  has an office  at 7314  Scout  Avenue,  Bell
Gardens,  California  90201,  and American Waste  Transport,  Inc., a California
corporation (the "Surviving Corporation";  the Merging Corporation and Surviving
Corporation   sometimes   hereinafter  are  referred  to  as  the   "Constituent
Corporations").

     The Merger.  Subject to the terms and conditions  hereof,  at the Effective
Time (as defined below):  (i) Merging  Corporation shall be merged with and into
Surviving  Corporation  (the  "Merger")  and the  separate  existence of Merging
Corporation  shall  cease  and  Surviving  Corporation  shall  continue  as  the
surviving  corporation  in the Merger;  (ii) the  Articles of  Incorporation  of
Surviving Corporation as in effect immediately prior to the Effective Time shall
remain the Articles of Incorporation of Surviving Corporation;  (iii) the Bylaws
of Surviving  Corporation as in effect  immediately  prior to the Effective Time
shall  remain the Bylaws of  Surviving  Corporation;  and (iv) the  officers and
directors of Merging  Corporation  immediately prior to the Effective Time shall
become the officers and directors of Surviving  Corporation.  From and after the
Effective Time, the Merger will have all the effects  provided by the California
General Corporation Law ("CGCL").

     Effect of the Merger on  Capital  Stock and  Merger  Consideration.  At the
Effective  Time,  by virtue of the Merger and  without any action on the part of
the holder of any shares of capital stock of the Constituent Corporations,  each
share of the  capital  stock of  Surviving  Corporation  issued and  outstanding
immediately  prior to the Effective  Time,  shall be converted into the right to
receive 500 shares of the common stock of USA Biomass Corporation and $325, and,
each share of the capital stock of Merging  Corporation  issued and  outstanding
immediately  prior to the Effective  Time,  shall be converted into one share of
the capital stock of Surviving Corporation.

     Effective  Time of the Merger.  The Merger shall become  effective upon the
filing  of the  Officers'  Certificates  and a copy of this  Agreement  with the
Secretary of State of California (the "Effective Time").

     Other  Agreements.  The  parties  to  this  Agreement  are  parties  to the
Agreement and Plan of Merger of even date herewith,  entered into between, among
others, the parties hereto, which agreement is intended to be construed together
with this Agreement in order to effectuate their purposes.


                         [SIGNATURES ON FOLLOWING PAGE]



<PAGE>


                     [SIGNATURE PAGE TO AGREEMENT OF MERGER]


     IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement as of the
First day of March, 2000.


                                        "Surviving Corporation"

                                        AMERICAN WASTE TRANSPORT, INC.,
                                        a California corporation


                                        By:     /s/ FRED ALEXANDER
                                           -------------------------------------
                                           Name:    Fred Alexander
                                                --------------------------------
                                           Title:   [ILLEGIBLE]
                                                 -------------------------------

                                        By:     /s/ LINDA ALEXANDER
                                           -------------------------------------
                                           Name:    Linda Alexander
                                                --------------------------------
                                           Title:   Secre/Treasurer
                                                 -------------------------------


                                        "Merging Corporation"

                                        AWT ACQUISITION CORP., a California
                                        corporation

                                        By:     /s/ MICHAEL J. SILVA
                                           -------------------------------------
                                           Michael J. Silva, President


                                        By:     /s/ MICHAEL J. SILVA
                                           -------------------------------------
                                           Michael J. Silva, Secretary

                                      -2-



<PAGE>


                           CERTIFICATE OF OFFICERS OF
                         AMERICAN WASTE TRANSPORT, INC.



     The undersigned, Fred Alexander and Linda Alexander, certify that:

     1.   They are the President and Secretary,  respectively, of American Waste
          Transport, Inc. (the "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached  hereto,  under which AWT Acquisition  Corporation will be
          merged  with  and  into  the  Company  and the  Company  shall  be the
          surviving corporation in the merger.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Directors of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders  in  accordance  with  Sections  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  1,000  all  of  which   constitute  one  class.   The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares of the Company.

     We further  declare under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of our own knowledge.



                                    /s/ FRED ALEXANDER
                                    --------------------------------------------
                                    Fred Alexander
                                    President


                                    /s/ LINDA ALEXANDER
                                    --------------------------------------------
                                    Linda Alexander
                                    Secretary



<PAGE>

                           CERTIFICATE OF OFFICERS OF
                              AWT ACQUISITION CORP.


     The undersigned, Michael J. Silva, certifies that:

     1.   He is the  President,  Secretary  and Chief  Financial  Officer of AWT
          Acquisition Corporation (the "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached  hereto,  under which the Company  will be merged with and
          into American Waste Transport, Inc.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Directors of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders  in  accordance  with  Sections  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  1,000  all  of  which   constitute  one  class.   The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares  of the  Company.

     5.   No vote of the parent was required.

     I further  declare  under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of my own knowledge.


                                                /s/ Michael J. Silva
                                                --------------------------------
                                                Michael J. Silva
                                                President and Secretary and
                                                  Chief Financial Officer

<PAGE>

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

                              STATE OF CALIFORNIA
                                     [SEAL]

                               SECRETARY OF STATE

     I,  BILL  JONES,  Secretary  of State of the  State of  California,  hereby
certify:

     That the attached transcript of 5 page(s) has been compared with the record
on file in this office,  of which it purports to be a copy, and that it is full,
true and correct.

[SEAL]              IN WITNESS WHEREOF I execute this  certificate and affix the
                    Great Seal of the State of California this day of


                    -----------------------------------
                    /S/ BILL JONES
                    Secretary of State

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

<PAGE>


                                                          ENDORSED - FILED
                                         in the office of the Secretary at State
                                                      of the State of California

                                                             MAR 17 2000

                                                  BILL JONES, Secretary of State


                               AGREEMENT OF MERGER

     This Agreement of Merger (this  "Agreement") is entered into as of March 1,
2000,  between  AGI  Acquisition  Corp.,  a  California   corporation  ("Merging
Corporation") which is a wholly owned subsidiary of USA Biomass  Corporation,  a
Delaware  corporation,  and  which  has an office  at 7314  Scout  Avenue,  Bell
Gardens,  California  90201,  and  American  Green  Waste,  Inc.,  a  California
corporation (the "Surviving Corporation";  the Merging Corporation and Surviving
Corporation   sometimes   hereinafter  are  referred  to  as  the   "Constituent
Corporations").

     The Merger.  Subject to the terms and conditions  hereof,  at the Effective
Time (as defined below):  (i) Merging  Corporation shall be merged with and into
Surviving  Corporation  (the  "Merger")  and the  separate  existence of Merging
Corporation  shall  cease  and  Surviving  Corporation  shall  continue  as  the
surviving  corporation  in the Merger;  (ii) the  Articles of  Incorporation  of
Surviving Corporation as in effect immediately prior to the Effective Time shall
remain the Articles of Incorporation of Surviving Corporation;  (iii) the Bylaws
of Surviving  Corporation as in effect  immediately  prior to the Effective Time
shall  remain the Bylaws of  Surviving  Corporation;  and (iv) the  officers and
directors of Merging  Corporation  immediately prior to the Effective Time shall
become the officers and directors of Surviving  Corporation.  From and after the
Effective Time, the Merger will have all the effects  provided by the California
General Corporation Law ("CGCL").

     Effect of the Merger on  Capital  Stock and  Merger  Consideration.  At the
Effective  Time,  by virtue of the Merger and  without any action on the part of
the holder of any shares of capital stock of the Constituent Corporations,  each
share of the  capital  stock of  Surviving  Corporation  issued and  outstanding
immediately  prior to the Effective  Time,  shall be converted into the right to
receive 250 shares of the common stock of USA Biomass  Corporation  and $162.50,
and  each  share  of  the  capital  stock  of  Merging  Corporation  issued  and
outstanding immediately prior to the Effective Time, shall be converted into one
share of the capital stock of Surviving Corporation.

     Effective  Time of the Merger.  The Merger shall become  effective upon the
filing  of the  Officers'  Certificates  and a copy of this  Agreement  with the
Secretary of State of California (the "Effective Time").

     Other  Agreements.  The  parties  to  this  Agreement  are  parties  to the
Agreement and Plan of Merger of even date herewith,  entered into between, among
others, the parties hereto, which agreement is intended to be construed together
with this Agreement in order to effectuate their purposes.


                         [SIGNATURES ON FOLLOWING PAGE]

<PAGE>

                     [SIGNATURE PAGE TO AGREEMENT OF MERGER]


     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the 1st
day of March, 2000.


                             "Surviving Corporation"

                             AMERICAN GREEN WASTE, INC., a
                             California corporation



                             By: /s/ FRED ALEXANDER
                                 ---------------------------
                                 Name:  Fred Alexander
                                 Title: Pres

                             By: /s/ LINDA ALEXANDER
                                ----------------------------
                                 Name:  Linda Alexander
                                 Title: Secretary/Treasurer

                             "Merging Corporation"

                             AGI ACQUISITION CORP., a California
                             corporation


                             By:
                                 ---------------------------
                                 Michael J. Silva, President

                             By:
                                 ---------------------------
                                 Michael J. Silva, Secretary


                                      -2-
<PAGE>


                     [SIGNATURE PAGE TO AGREEMENT OF MERGER]


     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the 1st
day of March, 2000.


                             "Surviving Corporation"

                             AMERICAN GREEN WASTE, INC., a
                             California corporation



                             By:
                                 -----------------------------------------------
                                 Name:
                                       -----------------------------------------
                                 Title:
                                       -----------------------------------------

                             By:
                                 -----------------------------------------------
                                 Name:
                                       -----------------------------------------
                                 Title:
                                       -----------------------------------------

                             "Merging Corporation"

                             AGI ACQUISITION CORP., a California
                             corporation


                             By: /s/ MICHAEL J. SILVA
                                 -----------------------------------------------
                                 Michael J. Silva, President

                             By: /s/ MICHAEL J. SILVA
                                 -----------------------------------------------
                                 Michael J. Silva, Secretary


                                      -2-

<PAGE>

                           CERTIFICATE OF OFFICERS OF
                              AGI ACQUISITION CORP.

     The undersigned, Michael J. Silva, certifies that:

     1.   He is the  President  an  Secretary  of  AGI  Acquisition  Corp.  (the
          "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached  hereto,  under which the Company  will be merged with and
          into American Green Waste, Inc., a California corporation.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Directors of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders  in  accordance  with  Sections  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  2,000,   all  of  which  constitute  one  class.  The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares of the Company.

     5.   No vote of Shareholders of USA Biomass,  Inc., a Delaware  corporation
          and the parent corporation of the Company, was required.

     I further  declare  under penalty of PERJURY under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of my own knowledge.


                                        /s/ MICHAEL J. SILVA
                                        ----------------------------------------
                                        Michael J. Silva
                                        President and Secretary

<PAGE>


                           CERTIFICATE OF OFFICERS OF
                           AMERICAN GREEN WASTE, INC.


     The undersigned, Fred Alexander and Linda Alexander, certify that:

     1.   We are the President and  Secretary,  respectively,  of American Green
          Waste, Inc. (The "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached hereto, under which the Merging Corporation will be merged
          with and into  the  Company  and the  Company  shall be the  surviving
          corporation in the merger.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Directors of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders  in  accordance  with  Sections  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  2,000,   all  of  which  constitute  one  class.  The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares of the Company.

     We further  declare under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of our own knowledge.


                                        /s/ FRED ALEXANDER
                                        ----------------------------------------
                                        Fred Alexander
                                        President


                                        /s/ LINDA ALEXANDER
                                        ----------------------------------------
                                        Linda Alexander
                                        Secretary

                                                                          [SEAL]

<PAGE>

                               AGREEMENT OF MERGER


     This Agreement of Merger (this  "Agreement") is entered into as of March 1,
2000,  between  AGI  Acquisition  Corp.,  a  California   corporation  ("Merging
Corporation") which is a wholly owned subsidiary of USA Biomass  Corporation,  a
Delaware  corporation,  and  which  has an office  at 7314  Scout  Avenue,  Bell
Gardens,  California  90201,  and  American  Green  Waste,  Inc.,  a  California
corporation (the "Surviving Corporation";  the Merging Corporation and Surviving
Corporation   sometimes   hereinafter  are  referred  to  as  the   "Constituent
Corporations").

     The Merger.  Subject to the terms and conditions  hereof,  at the Effective
Time (as defined below):  (i) Merging  Corporation shall be merged with and into
Surviving  Corporation  (the  "Merger")  and the  separate  existence of Merging
Corporation  shall  cease  and  Surviving  Corporation  shall  continue  as  the
surviving  corporation  in the Merger;  (ii) the  Articles of  Incorporation  of
Surviving Corporation as in effect immediately prior to the Effective Time shall
remain the Articles of Incorporation of Surviving Corporation;  (iii) the Bylaws
of Surviving  Corporation as in effect  immediately  prior to the Effective Time
shall  remain the Bylaws of  Surviving  Corporation;  and (iv) the  officers and
directors of Merging  Corporation  immediately prior to the Effective Time shall
become the officers and directors of Surviving  Corporation.  From and after the
Effective Time, the Merger will have all the effects  provided by the California
General Corporation Law ("CGCL").

     Effect of the Merger on  Capital  Stock and  Merger  Consideration.  At the
Effective  Time,  by virtue of the Merger and  without any action on the part of
the holder of any shares of capital stock of the Constituent Corporations,  each
share of the  capital  stock of  Surviving  Corporation  issued and  outstanding
immediately  prior to the Effective  Time,  shall be converted into the right to
receive 250 shares of the common stock of USA Biomass  Corporation  and $162.50,
and  each  share  of  the  capital  stock  of  Merging  Corporation  issued  and
outstanding immediately prior to the Effective Time, shall be converted into one
share of the capital stock of Surviving Corporation.

     Effective  Time of the Merger.  The Merger shall become  effective upon the
filing  of the  Officers'  Certificates  and a copy of this  Agreement  with the
Secretary of State of California (the "Effective Time").

     Other  Agreements.  The  parties  to  this  Agreement  are  parties  to the
Agreement and Plan of Merger of even date herewith,  entered into between, among
others, the parties hereto, which agreement is intended to be construed together
with this Agreement in order to effectuate their purposes.


                         [SIGNATURES ON FOLLOWING PAGE]




<PAGE>

                     [SIGNATURE PAGE TO AGREEMENT OF MERGER]


     IN WITNESS WHEREOF,  the parties have executed this Agreement as of the 1st
day of March, 2000.

                             "Surviving Corporation"

                             AMERICAN GREEN WASTE, INC., a
                             California corporation



                             By:
                                 -----------------------------------------------
                                 Name:
                                       -----------------------------------------
                                 Title:
                                       -----------------------------------------

                             By:
                                 -----------------------------------------------
                                 Name:
                                       -----------------------------------------
                                 Title:
                                       -----------------------------------------

                             "Merging Corporation"

                             AGI ACQUISITION CORP., a California
                             corporation


                             By: /s/ MICHAEL J. SILVA
                                 -----------------------------------------------
                                 Michael J. Silva, President

                             By: /s/ MICHAEL J. SILVA
                                 -----------------------------------------------
                                 Michael J. Silva, Secretary
<PAGE>



                           CERTIFICATE OF OFFICERS OF
                              AGI ACQUISITION CORP.


     The undersigned, Michael J. Silva, certifies that:

     1.   He is the  President  an  Secretary  of  AGI  Acquisition  Corp.  (the
          "Company").

     2.   The Company has entered into the Agreement of Merger,  a copy of which
          is attached  hereto,  under which the Company  will be merged with and
          into American Green Waste, Inc., a California corporation.

     3.   The  Agreement  of  Merger  has been  duly  approved  by the  Board of
          Directors of the Company.

     4.   The Agreement of Merger has been duly approved by the required vote of
          shareholders  in  accordance  with  Sections  1201  and  1103  of  the
          Corporations  Code.  The total  number of  outstanding  shares of this
          corporation  is  2,000,   all  of  which  constitute  one  class.  The
          shareholder  approval  was by the  holders of 100% of the  outstanding
          shares of the Company.

     5.   No vote of Shareholders of USA Biomass,  Inc., a Delaware  corporation
          and the parent corporation of the Company, was required.

     I further  declare  under penalty of perjury under the laws of the State of
California  that the matters set forth in this  certificate are true and correct
of my own knowledge.

                            By: /s/ MICHAEL J. SILVA
                                 -----------------------------------------------
                                 Michael J. Silva
                                 President and Secretary

<PAGE>


                          REGISTRATION RIGHTS AGREEMENT


     THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of
March 1, 2000 by and among USA BIOMASS CORPORATION,  a Delaware corporation (the
"Company") and FRED ALEXANDER (the "Shareholder").


                                    RECITALS

     A. Pursuant to that certain  Agreement and Plan of Merger dated as of March
1, 2000 (the "Merger Agreement"), by and among the Shareholder, the Company, AWT
Acquisition Corp., a California corporation and a wholly-owned subsidiary of the
Company,  AGI  Acquisition  Corp., a California  corporation  and a wholly owned
subsidiary  of  the  Company,  American  Waste  Transport,  Inc.,  a  California
corporation,  and American  Green Waste,  Inc.,  a California  corporation,  the
Company issued to Shareholder shares of common stock of the Company (the "Common
Stock").

     B. As an  inducement  to purchase  the shares of Common  Stock being issued
pursuant to the terms of the Merger  Agreement,  the Company desires to grant to
the Shareholder the rights set forth herein.

     NOW, THEREFORE,  in consideration of the mutual promises,  representations,
warranties,  covenants and conditions  set forth in the Merger  Agreement and in
this Agreement, the Company and the Shareholder agree as follows:


                                    ARTICLE I

                               CERTAIN DEFINITIONS

     1.1 Certain  Definitions.  As used in this  Agreement,  the following terms
shall have the following respective meanings:

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Holder" means  Shareholder  and any transferee of Registrable  Shares
     who,  pursuant to Section 3.2 beLow,  is  entitled to  registration  rights
     hereunder.

          "Registrable  Shares"  means  100,000  of the  shares of Common  Stock
     issued to  Shareholder  in the Merger and any shares of Common Stock issued
     upon any


<PAGE>

     stock split, stock dividend, recapitalization or similar event with respect
     to such shares;  provided,  however, that Registrable Shares shall cease to
     be Registrable Shares after they have been sold, transferred or assigned in
     a transaction  which does not meet the  requirements  for the assignment of
     registration rights as set forth in Section 3.2 hereof.

          "Registration"  means the registration of the Registrable Shares under
     the Securities Act, pursuant to this Agreement.

          "Rule 144" means Rule 144 under the  Securities  Act, as such rule may
     be amended from time to time, or any similar rule or  regulation  hereafter
     adopted by the SEC.

          "SEC" means the U.S. Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended.

                                   ARTICLE II

                               REGISTRATION RIGHTS

     2.1 Registration.

     (a) Registration. Should the Holder within six (6) months after the date of
this Agreement provide written notice to the Company requesting registration for
sale of all of the  Registrable  Shares,  the  Company  shall  use  commercially
reasonable  efforts to,  within 120 days of receiving  such notice,  prepare and
file with the SEC, a  registration  statement  under the Securities Act covering
the Registrable Shares (the  "Registration").  The Registration shall be on Form
S-3 or another  appropriate  form permitting  registration  of such  Registrable
Shares for resale by the Holder from time to time.

     (b)  Effectiveness.  The  Company  shall  use its  commercially  reasonable
efforts to cause the  Registration to become  effective under the Securities Act
as soon as practicable following the date of filing of the Registration. Subject
to the  requirements  of the  Securities  Act,  including,  without  limitation,
requirements   relating  to  updating  through   post-effective   amendments  or
otherwise,  the  Company  shall use its best  efforts  to keep the  Registration
continuously  effective until the later of (i) one year after the effective date
of the  Registration or (ii) such time as all of the  Registrable  Shares may be
sold pursuant to Rule 144 under the Act by the Holder.

                                      -2-

<PAGE>

     (c)  Deferral by Company.  Notwithstanding  anything in this Section 2.1 to
the contrary,  the Company shall not be obligated to prepare,  file and cause to
become  effective  pursuant to this Section 2.1 a Registration  Statement if the
Company  furnishes to Holder a  certificate  signed by an officer of the Company
stating that it will be detrimental to the Company or its  shareholders  for the
Company  to  comply  with  the  requested  registration,  and it is,  therefore,
advisable to defer the filing of the Registration  Statement  relating  thereto.
Any such  deferral  shall be for a period  of not more than one  hundred  twenty
(120) days after the Company's  receipt of the written request for  registration
pursuant to this Section 2.1.

     (d) Suspension Period. Following the effectiveness of the Registration, the
Company may, at any time,  suspend the effectiveness of such Registration for up
to 60 days, as  appropriate  (a  "Suspension  Period"),  by giving notice to the
Holder, if the Company shall have determined that the Company may be required to
disclose any material corporate development which disclosure may have a material
adverse effect on the Company.  Notwithstanding the foregoing,  no more than two
Suspension  Periods  (i.e.,  120 days) may occur in  immediate  succession.  The
period of any such suspension of the  Registration  shall be added to the period
of time the Company  agrees to keep the  Registration  effective  as provided in
Section 2.1(b). The Company shall use its best efforts to limit the duration and
number of any Suspension  Periods.  The Holder agrees that,  upon receipt of any
notice from the Company of a Suspension  Period, he shall forthwith  discontinue
disposition of shares covered by the Registration until he is advised in writing
by the Company that he may continue such disposition.

     (e)  Furnish  Information.  It  shall  be  a  condition  precedent  to  the
obligation  of the Company to take any action  pursuant to this  Agreement  with
respect to Registrable Shares that Holder famish to the Company such information
regarding Holder, the Registrable Shares held by Holder, and the intended method
of distribution  of such shares required to effect the  registration of Holder's
Registrable  Securities.  Holder agrees to comply with all  prospectus  delivery
requirements and other applicable securities laws in connection with any sale by
Holder of any shares pursuant to the requested Registration.

     2.2  Allocation  of  Expenses.  Whenever  the  Company is  required  by the
provisions  of this  Article II to effect the  registration  of the  Registrable
Shares,  the Company shall pay all Registration  Expenses in connection with any
such  registration.  "Registration  Expenses" means all expenses incurred by the
Company in complying with this Article II, including,  without  limitation,  all
registration  and filing fees,  printing  expenses,  expenses of complying  with
state  securities or blue sky laws, fees and  disbursements  of separate counsel
for the Company and  accountants'  fees and expenses  incident to or required by
any such Registration. All fees and disbursements of separate


                                      -3-
<PAGE>

counsel for the Holder and all other  expenses of the Holder  (including  travel
expenses)  shall  be  borne  by the  Holder.  The  underwriting  commissions  or
discounts shall be borne by Holder.

     2.3  Indemnification.  In connection  with any  registration of Registrable
Shares pursuant to this Article II:

          (a) The Company  agrees to indemnify and hold harmless the Holder with
     respect to his  Registrable  Shares,  from and  against any and all losses,
     claims,  damages or liabilities,  joint or several, to which the Holder may
     become  subject  under the  Securities  Act or  otherwise,  insofar as such
     losses,  claims, damages or liabilities (or proceedings in respect thereof)
     arise out of or are based  upon any  untrue  statement  or  alleged  untrue
     statement of a material fact  contained in a registration  statement  filed
     pursuant hereto,  or in any  post-effective  amendment  thereto,  or in any
     preliminary prospects or prospectus thereunder, or in any supplement to any
     such prospectus (a "Filed Document"), or arise out of or are based upon the
     omission or alleged omission to state in any Filed Document a material fact
     required to be stated therein or necessary to make the  statements  therein
     not  misleading,  and agrees to  reimburse  the Holder for any legal or any
     other expenses  reasonably  incurred by it in connection with investigating
     or  defending  any such  loss,  claim,  damage,  liability  or  proceeding;
     provided,  however,  that the Company  shall not be liable to the Holder to
     the extent that (i) any such loss, claim, damage or liability arises out of
     or is  based  upon an  untrue  statement  or  omission  or  alleged  untrue
     statement or omission  made in any Filed  Document in reliance  upon and in
     conformity with information furnished to the Company by or on behalf of the
     Holder with respect to the Registrable  Shares,  and (ii) such statement or
     omission was contained in a preliminary prospectus and corrected in a final
     or amended or  supplemented  prospectus  and the Holder failed to deliver a
     copy of such  final or  amended or  supplemented  prospectus  to the person
     suing on the basis of such  statement or omission  within the time required
     by the Securities Act.

          (b) The Holder agrees to indemnify and hold harmless the Company, each
     of its  directors,  each  officer  and  each  other  person  who  may  have
     liability,  from  and  against  any  and all  losses,  claims,  damages  or
     liabilities,  joint or  several,  to which the  Company  or any of them may
     become  subject  under the  Securities  Act or  otherwise,  insofar as such
     losses,  claims, damages or liabilities (or proceedings in respect thereof)
     arise out of or are based  upon any  untrue  statement  or  alleged  untrue
     statement of a material fact contained in a Filed Document, or arise out of
     or are based upon the  omission  or alleged  omission to state in any Filed
     Document a material fact required to be stated therein or necessary to make
     the statements therein not misleading, in each case to the extent that such
     statement  or omission  was made in reliance  upon and in  conformity  with
     information furnished in writing to the Company by or on behalf of


                                      -4-

<PAGE>


     the Holder  and agrees to  reimburse  each such  indemnified  party for any
     legal or any other expenses  reasonably  incurred by it in connection  with
     the investigation or defending any such loss, claim,  damage,  liability or
     proceeding;  provided, however, that (a) the Holder shall have no liability
     for any untrue  statements  or  omissions  as to which he shall have timely
     notified  the  Company in writing  and the  Company  shall have  thereafter
     failed to correct in the final prospectus or a supplement to the prospects,
     and (b) the liability of the Holder under these indemnification  provisions
     shall be limited to an amount  equal to the  public  offering  price of the
     shares sold by the Holder,  unless such liability arises out of or is based
     on willful misconduct by the Holder.

          (c)  Promptly  after  receipt by an  indemnified  party under  Section
     2.3(a)  or  2.3(b)  of  notice  of the  commencement  of any  action,  such
     indemnified  party  shall,  if a claim  in  respect  thereof  is to be made
     against the  indemnifying  party under either such  subsection,  notify the
     indemnifying party in writing of the commencement thereof; but the omission
     so to notify the  indemnifying  party shall not  relieve  the  indemnifying
     party from any liability which it may have to any indemnified  party except
     to the extent the indemnifying  party has been actually  prejudiced by such
     omission.  In case any such action shall be brought against the indemnified
     party  and it shall  notify  the  indemnifying  party  of the  commencement
     thereof,  the indemnifying party shall be entitled to participate  therein,
     and, to the extent that it shall wish,  jointly with any other indemnifying
     party,  similarly  notified,  to assume the defense  thereof,  with counsel
     reasonably  satisfactory to such indemnified  party.  After notice from the
     indemnifying  party to such indemnified  party of its election so to assume
     the defense  thereof,  the  indemnifying  party shall not be liable to such
     indemnified  party under this  Section 2.3 for any legal or other  expenses
     subsequently  incurred by such  indemnified  party in  connection  with the
     defense thereof other than reasonable costs of investigation.

          (d) If, for any reason,  the  indemnification  provided for in Section
     2.3 is not  available to the  indemnified  parties,  then the  indemnifying
     party shall  contribute  to the amount  paid or payable by the  indemnified
     party  as a  result  of such  loss,  claim,  damage  or  liability  in such
     proportion  as is  appropriate  to reflect not only the  relative  benefits
     received by the indemnified party and the indemnifying  party, but also the
     relative fault of the indemnified party and the indemnifying party, as well
     as any other relevant equitable considerations.


                                      -5-

<PAGE>

                                   ARTICLE III

                               GENERAL PROVISIONS

     3.1  Termination.  This Agreement  shall terminate in its entirety one year
from the date hereof.  Notwithstanding the foregoing,  the provisions of Section
2.3 shall survive the termination of this Agreement.

     3.2 Assignment of  Registration  Rights.  The right to cause the Company to
register Registrable Shares pursuant to Article II may be assigned to a trust or
other entity  established  for estate  planning  purposes for the benefit of the
Holder or his family,  provided that the Company is given written notice of such
assignment prior to such assignment.

     3.3 Further  Assurances.  Each of the parties hereto shall, during the term
hereof, take all actions necessary to effectuate the purposes and intent hereof.

     3.4 No Third Party Beneficiaries. Except as otherwise specifically provided
herein,  the parties  hereto  together with any persons or entities  entitled to
indemnification  hereunder  shall have the sole right to enforce the performance
of the provisions of this  Agreement,  and no other person shall be entitled to,
or shall have any claim,  right,  title or interest to or in any such matters by
virtue of this Agreement.

     3.5 Amendments;  Waiver.  No amendment of or modification to this Agreement
shall be  effective  unless it shall be in writing and signed by the Company and
the Holder.  No waiver of any  provision  of this  Agreement  shall be effective
unless contained in a writing referred specifically to such provision and signed
by the party against whom the waiver is alleged.

     3.6 Notices. All notices or other communication required or permitted to be
given  hereunder  shall be in writing and shall be  delivered by hand or sent by
telex,  cable,  facsimile or telecopy,  or sent postage prepaid, by first class,
registered or certified mail, or sent by reputable  overnight  courier  service,
and shall be deemed  given  when so  delivered  by hand,  upon  confirmation  of
transmission if sent by telex, cable,  facsimile or telecopy, or if mailed, five
(5) days after being sent by first class,  registered  or certified  mail, or if
sent by reputable overnight courier service, on the second day after being sent,
as  follows,  or to such other  address as may be  hereafter  designated  by the
respective parties hereto in accordance with these notice provisions:


                                      -6-

<PAGE>

          (i)  If to the Company:

               USA Biomass Corporation
               Attn: Michael J. Silva
               7314 Scout Avenue
               Bell Gardens, California 90201
               Facsimile: (562) 928-9932

          (ii) If to the Holder:

               1835 "A" South Center City Pkwy, #418
               Escondido, CA 92025

     3.7  Interpretation.  The  headings  contained  in this  Agreement  are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.


     3.8   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  all of which shall be considered one and the same agreement,  and
shall become  effective when one or more such  counterparts  have been signed by
each of the parties and delivered to the other parties.

     3.9 Entire  Agreement.  This  Agreement  contains the entire  agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and  understandings  relating to such subject
matter.

     3.10 Severability. If any provision of this Agreement or the application of
any such provision to any person or circumstance shall be held invalid,  illegal
or  unenforceable  in any  respect by a court of  competent  jurisdiction,  such
invalidity,  illegality or unenforceability shall not affect any other provision
hereof

     3.11 Governing  Law. This Agreement  shall be governed by, and construed in
accordance  with,  the laws of the  State of  California  without  regard to its
conflicts of law principles.

     3.12 Venue.  As part of the  consideration  for the Company's  grant of the
registration  rights  provided for herein,  the parties hereby  irrevocably  and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of  California,  County of Orange,  and/or the United States  District
Court  for the  Central  District  of  California  (Southern  Division)  for any
actions, suits,  controversies or proceedings arising out of or relating to this
agreement and the transactions contemplated



                                      -7-
<PAGE>


hereby (and the parties  agree not to commence  any action,  suit or  proceeding
relating  thereto except in such courts),  and further agree that service of any
process,  summons,  notice or document by U.S. registered mail to the respective
addresses set forth above shall be effective  service of process for any action,
suit or proceeding  brought  against the parties in any such court.  The parties
hereby  irrevocably  and  unconditionally  waive any  objection to the laying of
venue of any  action,  suit,  controversies  or  proceeding  arising out of this
agreement or the transactions contemplated hereby, in the courts of the State of
California,  County of Orange  and/or the United States  District  Court for the
Central  District  of  California  (Southern   Division),   and  hereby  further
irrevocably  and  unconditionally  waive  and agree not to plead or claim in any
such court that any such action,  suit or  proceeding  brought in any such court
has been brought in an inconvenient or improper forum.





                            (Signature Page Follows)











                                      -8-
<PAGE>

                [SIGNATURE PAGE-- REGISTRATION RIGHTS AGREEMENT]


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed as of the date first above written.



"COMPANY"                                     USA BIOMASS CORPORATION, a
                                              Delaware corporation


                                              By:     FRED H. BEHREN
                                                 -------------------------------
                                              Name:   Fred H. Behren
                                                 -------------------------------
                                              Title:  Chairman
                                                 -------------------------------



"HOLDER"

                                              ----------------------------------
                                              Fred Alexander








                                      -9-




<PAGE>

                [SIGNATURE PAGE -- REGISTRATION RIGHTS AGREEMENT]


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed as of the date first above written.


"COMPANY"                                     USA BIOMASS CORPORATION, a
                                              Delaware corporation


                                              By:
                                                 -------------------------------
                                              Name:
                                                 -------------------------------
                                              Title:
                                                 -------------------------------



"HOLDER"
                                              FRED ALEXANDER
                                              ----------------------------------
                                              Fred Alexander



                                      -9-
<PAGE>


                            NON-COMPETITION AGREEMENT


     THIS NON-COMPETITION  AGREEMENT (this "Agreement") is effective as of March
1, 2000, by and between USA Biomass  Corporation,  a Delaware  corporation ("USA
Biomass"), and Fred Alexander, an individual ("Alexander").

                                    RECITALS:

     A. USA Biomass has entered into an Agreement  and Plan of Merger  effective
as of March 1, 2000 (the "Merger  Agreement")  with  Alexander,  AWT Acquisition
Corp., a California  corporation  and a wholly-owned  subsidiary of USA Biomass,
AGI Acquisition Corp., a California corporation and a wholly owned subsidiary of
USA Biomass,  American Waste Transport,  Inc., a California corporation ("AWT"},
and American Green Waste, Inc., a California  corporation  (`AGI"),  pursuant to
which USA  Biomass  will  acquire all of the  outstanding  shares of the capital
stock of AWT and AGI.

     B. AFI  Acquisition  Corp.,  a California  corporation  and a  wholly-owned
subsidiary of USA Biomass ("AFI"),  has entered into an Asset Purchase Agreement
of even date herewith (the "Asset Agreement") with Alexander,  pursuant to which
AFI will  acquire  substantially  all of the assets of the  business  previously
conducted under the name of American Fibers (the "Fibers Business").  The Fibers
Business,  AGI and AWT are  sometimes  collectively  referred  to  herein as the
"Acquired  Companies." The Merger Agreement and the Asset Agreement are referred
to herein collectively as the "Purchase Agreements."

     C. Alexander is the sole owner of the Acquired Companies.

     D.  As  a  condition  to  USA  Biomass'   obligations  under  the  Purchase
Agreements, Alexander has agreed to enter into this Agreement.

     NOW,  THEREFORE,  in  consideration of the consummation of the transactions
contemplated  in the Purchase  Agreements  and the mutual  agreements  contained
herein, the parties hereto, intending to be legally bound, agree as follows:

     1. Covenant Not-to-Compete.

          (a) General Covenant. During the Restricted Period (as defined below),
     Alexander  agrees that he shall not,  within the United States,  including,
     without  limitation,  with respect to the State of California,  each of the
     counties  listed  on  Exhibit  "A" to  this  Agreement  (collectively,  the
     "Territory"), engage or participate in the ownership, management, operation
     or control of, or be connected as an officer, employee,  partner, director,
     agent, security holder, creditor, or consultant for any other person or



<PAGE>


     entity,  in the conduct or operation of, any business  engaged in the trash
     transportation,  disposal  or  conversion  business,  or any other  related
     businesses or services,  which would be similar to or competitive  with (i)
     the businesses  presently conducted by USA Biomass or any of its Affiliates
     (as defined below), (ii) the businesses presently conducted by the Acquired
     Companies or any of their  Affiliates or (iii) the businesses  conducted by
     USA Biomass or any of its Affiliates on the date of Alexander's termination
     of  employment  under the  Employment  Agreement of even date herewith (the
     "Employment Agreement") between USA Biomass and Shareholder  (collectively,
     the  "Business").  For  purposes of this  Agreement,  the term  "Restricted
     Period" shall mean the period  during which USA Biomass is actually  paying
     Alexander full compensation under the Employment Agreement.  If USA Biomass
     is not  obligated  to  pay  Alexander  compensation  under  the  Employment
     Agreement, USA Biomass may, at its election, continue to pay Alexander full
     compensation  thereunder  and keep the  Restricted  Period  in force  for a
     period up to five (5) year from the date hereof provided, however, that the
     Restricted  Period shall  continue for five years from the date hereof even
     if full compensation is not paid to Alexander if Alexander's termination of
     employment  under the  Employment  Agreement  involves the conviction for a
     crime  constituting a felony and  substantially  involving the Company.  No
     claim of breach  or  setoff  shall  act to  extend  the  Restricted  Period
     pursuant to the provisions of this paragraph.

          (b) Conduct of Business.  Shareholder acknowledges and agrees that USA
     Biomass together with the Acquired Companies (collectively,  the "Company")
     is  purchasing  all of the  outstanding  capital  stock of AWT and AGI, and
     substantially all of the assets of AFI,  including the goodwill  associated
     therewith, for the purpose of engaging in the Business and benefitting from
     the  Acquired  Companies'  goodwill  and  reputation.  For purposes of this
     Agreement,  "Affiliate" means any corporation,  company, partnership, joint
     venture,  firm and/or other entity which  controls,  is controlled by or is
     under  common  control  with the  person  with  respect  to which  the term
     "Affiliate"  is used.  For purposes of this  Agreement,  "person"  means an
     individual,  corporation,  partnership, limited liability company, trust or
     unincorporated  organization,  or a  government  or any agency or political
     subdivision thereof.

          (c) Interpretation. The covenants contained in this Section 1 shall be
     construed to be a series of separate  covenants,  one for each geographical
     location specified.  Except for geographical  coverage,  each such separate
     covenant  shall be deemed  identical to the terms  contained  herein.  If a
     court of competent  jurisdiction deems any term,  provision or geographical
     location of any  covenant  or  provision  contained  this  Agreement  to be
     invalid,  illegal or unenforceable for any reason,  the court may reduce or
     eliminate  such term,  provision  or  geographical  location  to conform to
     applicable  law so as to be valid and  enforceable,  or, if it cannot be so
     reduced or  eliminated  without  materially  altering the  intention of the
     parties, the invalidity or unenforceability of such term or provision shall
     in no way affect (to the maximum extent permissible by law) the validity or
     enforceability of any other term, provision or

                                      -2-

<PAGE>


     geographical location of this Agreement,  or the validity or enforceability
     of the remaining separate covenants.

          (d) Limitation. Nothing in this Section 1 shall prevent Alexander from
     holding or acquiring  common stock in any company which is publicly  traded
     on any  nationally  recognized  stock  exchange or on the  National  Market
     System of The Nasdaq Stock  Market,  provided  that such  holdings are less
     than  five  percent  (5%)  of  the   outstanding   capital  stock  of  such
     publicly-traded company.

     2. Agreement Not to Solicit.  To ensure the protection of the trade secrets
of the Company and to  preserve  the  goodwill of the Company for the benefit of
the Company,  Alexander  agrees to not and will cause each of his  Affiliates to
not, at any time during his  employment  with the Company and for six (6) months
after the termination of his employment with the Company:

          (i) Attempt in any manner to persuade  any  customer of the Company to
     cease to do  business  or to reduce  the  amount  of  business  which  such
     customer has customarily done or contemplates doing with the Company; or

          (ii) Solicit for employment or employ any person who is an employee of
     the Company.

     3. Consideration;  Reasonable Scope. Alexander acknowledges and agrees that
the transactions  contemplated by the Purchase Agreements constitute good, valid
and binding consideration for Alexander's obligations and covenants contained in
this Agreement.

     4. Miscellaneous.

          (a) Notices.  Any notices to be given hereunder by either party to the
     other shall be in writing and may be  effected  by  personal  delivery,  by
     courier, or by mail (registered or certified),  postage prepaid with return
     receipt requested,  or by facsimile confirmed by mail, or by overnight mail
     courier service. Notices shall be addressed to the parties at the addresses
     set forth below:

To Alexander:                       Fred Alexander
                                    1835 "A" South Center City Parkway, #418
                                    Escondido, California 92025
                                    Facsimile: (760) 746-7596

To the Company:                     USA Biomass Corporation
                                    Attention: Michael J. Silva
                                    7314 Scout Avenue

                                      -3-

<PAGE>


                                    Bell Gardens, California 90201
                                    Facsimile:   (562) 928-9932

     Mailed  notices shall be deemed  communicated  as of four (4) calendar days
after  mailing.  Notices  delivered  personally  or by courier or  facsimile  or
overnight mail courier service shall be deemed delivered when actually received.
Any party may change its address for notices by a notice in accordance with this
section.

          (b) Entire  Agreement.  This  Agreement  supersedes  any and all other
     agreements,  either  oral or in writing,  between  the parties  hereto with
     respect  to the  matters  set forth  herein;  provided,  however,  that the
     foregoing shall not apply to the provisions of the Purchase  Agreements and
     the Employment  Agreement  executed in connection  herewith,  and any other
     ancillary  documents  executed in connection with the transactions  arising
     therefrom (collectively,  the "Transaction Documents").  Each party to this
     Agreement  acknowledges that no representations,  inducements,  promises or
     agreements, orally or otherwise, have been made by any party, which are not
     embodied  herein or in the Transaction  Documents,  and that no other prior
     agreement,  statement or promise not contained in this  Agreement or in the
     Transaction  Documents  shall be valid and binding.  A modification of this
     Agreement  by  means  of a  statement  or  promise  not  contained  in this
     Agreement shall not be valid or binding. Any modification of this Agreement
     will be  effective  only if it is in  writing  signed  by the  party  to be
     charged.

          (c) Law Governing  Agreement.  This Agreement shall be governed by and
     construed in accordance with the law of the State of California.

          (d) Venue. The parties hereto irrevocably and unconditionally  consent
     to  submit  to the  exclusive  jurisdiction  of the  courts of the State of
     California,  County of Orange,  and/or the United States District Court for
     the Central  District of  California  (Southern  Division) for any actions,
     suits,  controversies  or  proceedings  arising  out of or relating to this
     Agreement and the transactions  contemplated  hereby (and the parties agree
     not to commence any action, suit or proceeding relating thereto,  except in
     such  courts),  and further  agree that  service of any  process,  summons,
     notice or document by U.S.  registered mail to the respective  addresses of
     the parties set forth herein, shall be effective service of process for any
     action, suit or proceeding brought against the parties in any such court.

          (e) Successors and Assigns.  The rights and obligations of USA Biomass
     and Alexander  under this Agreement shall inure to the benefit of and shall
     be binding upon the successors  and assigns of USA Biomass.  The rights and
     obligations  of  Alexander  under this  Agreement  may not be  assigned  by
     Alexander.

          (f) Counterparts.  This Agreement may be executed in counterparts, all
     of which taken together will constitute one instrument.

                                      -4-

<PAGE>


          (g)  Waiver.  Either  party's  failure to  enforce  any  provision  or
     provisions of this Agreement  shall not in any way be construed as a waiver
     of any such provision or provisions, nor prevent that party thereafter from
     enforcing  each and every other  provision  of this  Agreement.  The rights
     granted  both  parties  herein are  cumulative  and shall not  constitute a
     waiver of either party's right to assert all other legal remedies available
     to it under the circumstances.

          (h)  Attorneys'  Fees and Costs.  If any action in law or in equity is
     necessary  to  enforce  or  interpret  the  terms  of this  Agreement,  the
     prevailing party shall be entitled to reasonable attorneys' fees, costs and
     necessary  disbursements in addition to any other relief to which he may be
     entitled.

          (i) Binding  Effect.  Except as otherwise  provided in this Agreement,
     this  Agreement  shall be  binding  upon and  inure to the  benefit  of the
     parties hereto and their respective  successors,  heirs,  and assigns.  USA
     Biomass and  Alexander  shall not assign,  convey,  or otherwise  transfer,
     voluntarily or by operation of law, to any person or entity, this Agreement
     or any interest  herein  without the prior written  consent of USA Biomass.
     Any attempt to do so without such consent shall be null and void.

          (j) Not an Employment  Agreement.  This Agreement is not an employment
     contract and nothing in this Agreement  confers on Alexander any right with
     respect to the  continuation  of any employment  such persons may have with
     USA Biomass.

          (k) Arbitration.  Any and all disputes or controversies arising out of
     this  Agreement   shall  be  resolved  by  arbitration  in  Orange  County,
     California pursuant to the rules of the American  Arbitration  Association;
     provided, however, (i) the parties shall be entitled to pursue discovery in
     accordance with California Code of Civil Procedure ss. 1283.05 and (ii) the
     arbitration  hearing  shall  commence no later than 120 calendar days after
     the  arbitrator(s)  is  appointed.   Unless  specified   otherwise  herein,
     arbitration  under this section shall be the  exclusive  means of resolving
     any and all disputes or  controversies  arising out of this Agreement.  All
     parties shall bear their own costs and attorneys'  fees in any  arbitration
     or proceeding  arising out of this Agreement,  except that the Arbitrators'
     fees or costs shall be borne equally by the parties to such  arbitration or
     proceeding.

     IN WITNESS  WHEREOF,  the parties hereto have executed this  Noncompetition
Agreement as of the date first above written.

                                       -5-

<PAGE>

                                        "USA Biomass"


                                        USA BIOMASS CORPORATION, a Delaware
                                        corporation


                                        By: /s/ Fred H. BEHRENS
                                           -------------------------------------
                                           Name: Fred H. BEHRENS
                                                --------------------------------
                                           Title: Chairman
                                                 -------------------------------


                                        "Shareholder"

                                        FRED ALEXANDER


                                        ----------------------------------------
                                        Fred Alexander, an individual




                                      -6-

<PAGE>


                                        "USA Biomass"



                                        USA BIOMASS CORPORATION, a Delaware
                                        corporation


                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------


                                        "Shareholder"

                                        FRED ALEXANDER


                                        ----------------------------------------
                                        Fred Alexander, an individual

                                      -6-

<PAGE>


                                   EXHIBIT "A"


                              California Counties
                              -------------------

Alameda                       Marin                         San Mateo
Alpine                        Mariposa                      Santa Barbara
Amador                        Mendocino                     Santa Clara
Butte                         Merced                        Santa Cruz
Calaveras                     Modoc                         Shasta
Colusa                        Mono                          Sierra
Contra Costa                  Monterey                      Siskiyou
Del Norte                     Napa                          Solano
El Dorado                     Nevada                        Sonoma
Fresno                        Orange                        Stanislaus
Glenn                         Placer                        Sutter
Humboldt                      Plumas                        Tehama
Imperial                      Riverside                     Trinity
Inyo                          Sacramento                    Tulare
Kern                          San Benito                    Tuolumne
Kings                         San Bernardino                Ventura
Lake                          San Diego                     Yolo
Lassen                        San Francisco                 Yuba
Los Angeles                   San Joaquin
Madera                        San Luis Obispo




<PAGE>


                                ESCROW AGREEMENT


     This Escrow  Agreement  (the  "Agreement")  is made and entered  into as of
March  1,  2000  by and  among  USA  Biomass,  a  California  corporation  ("USA
Biomass"),  Chicago Title Company (the "Escrow  Holder"),  Linda Alexander,  and
Fred Alexander  (collectively  the  "Shareholder"),  the selling  shareholder of
American Waste Transport,  Inc., a California  corporation ("AWT"), and American
Green Waste, Inc., a California  corporation  ("AGI", and together with AWT, the
"Target Companies").

                                    RECITALS

     Pursuant to that certain  Agreement and Plan of Merger dated as of March 1,
2000 (the "Merger  Agreement"),  by and among the Shareholder,  USA Biomass, AWT
Acquisition Corp., a California corporation and a wholly-owned subsidiary of USA
Biomass,  AGI  Acquisition  Corp., a California  corporation  and a wholly owned
subsidiary of USA Biomass,  AWT and AGI, USA Biomass shall issue to  Shareholder
One Million  (1,000,000)  shares of the common stock of USA Biomass (the "Common
Stock");

     Pursuant to Section  2.0 1(b) of the Merger  Agreement,  the  parties  have
agreed that the One Million  (1,000,000) shares of Common Stock shall be held in
escrow  pursuant  to the  terms  of this  Agreement  until  the  completion  and
certification  of  the  financial  audit  of  the  Target  Companies'  financial
statements  for the years ended  December 31,  1998,  and December 31, 1999 (the
"Audit").

     NOW,  THEREFORE,  in  consideration  of the  foregoing  and other  good and
valuable  consideration,  the receipt and adequacy of which is  acknowledged  by
each party, it is agreed as follows:


1.   ESCROW DEPOSIT

     1.1 Simultaneously  with the execution and delivery of this Agreement,  the
Shareholder  is  delivering  to  the  Escrow  Holder  a  stock  certificate,  or
certificates (or documentation representing such), registered in the name of the
Shareholder  representing  his beneficial  ownership of One Million  (1,000,000)
shares of Common Stock.  The Escrow Holder hereby  acknowledges  receipt of such
certificates.

     1.2 As used  herein,  the term  "Escrow  Deposit"  means (a) the  aggregate
shares being  delivered to the Escrow  Holder as described in Section 1.1 hereof
and (b) all distributions  received by the Escrow Holder pursuant to Section 1.3
hereof



<PAGE>


     1.3 The  Shareholder  hereby  authorizes  delivery  directly  to the Escrow
Holder (and agrees that he will  deliver to the Escrow  Holder if he shall first
receive  the  same)  to be held as part of the  Escrow  Deposit  hereunder,  all
non-cash  dividends  in  the  form  of  stock  or  other  securities  and  other
distributions on or with respect to the Common Stock held in the Escrow Deposit.
All cash  dividends  made on  account  of the  Common  Stock  held in the Escrow
Deposit shall be paid to the Shareholder.

2.   DELIVERY OF ESCROW DEPOSIT BY THE ESCROW HOLDER

     The Escrow  Holder  shall hold the  Escrow  Deposit in escrow  until it has
received written notice from the Company that the Audits have been completed and
authorizing the Escrow Holder to release the Escrow Deposit. Upon receiving such
written  notice,  the Escrow Holder shall deliver to the  Shareholder,  free and
clear of any  interest of USA Biomass  therein,  all of the Escrow  Deposit then
held by the Escrow Holder.

3.   SETTLEMENT OF DISPUTES

     3.1 To the extent not  subject to any  arbitration  provision  herein,  the
parties  hereby  irrevocably  and  unconditionally  consent  to  submit  to  the
exclusive  jurisdiction  of the  courts  of the State of  California,  County of
Orange,  and/or the United  States  District  Court for the Central  District of
California  (Southern  Division)  for  any  actions,  suits,   controversies  or
proceedings  arising out of or relating to this  Agreement and the  transactions
contemplated  hereby (and the parties agree not to commence any action,  suit or
proceeding  relating  thereto  except in such  courts),  and further  agree that
service of any process,  summons,  notice or document by U.S. registered mail to
the respective  addresses set forth herein shall be effective service of process
for any  action,  suit or  proceeding  brought  against  the parties in any such
court. The parties hereby irrevocably and unconditionally waive any objection to
the laying of venue of any action, suit, controversies or proceeding arising out
of this Agreement or the transactions  contemplated hereby, in the courts of the
State of  California,  County of Orange and/or the United States  District Court
for the Central District of California (Southern  Division),  and hereby further
irrevocably  and  unconditionally  waive  and agree not to plead or claim in any
such court that any such action,  suit or  proceeding  brought in any such court
has been brought in an inconvenient or improper forum.

     3.2 Any and all  disputes or  controversies  arising out of this  Agreement
shall be resolved by arbitration in Orange  County,  California  pursuant to the
rules  of the  American  Arbitration  Association;  provided,  however,  (i) the
parties shall be entitled to pursue discovery in accordance with California Code
of Civil  Procedure  Section  1283.05  and (ii) the  arbitration  hearing  shall
commence no later than 120 calendar days after the  arbitrator(s)  is appointed.
Unless specified  otherwise herein,  arbitration under this Section 3.2 shall be
the exclusive means of resolving any and all disputes or  controversies  arising
out of this  Agreement.  All parties  shall bear their own costs and  attorneys'
fees in

                                      -2-

<PAGE>


any  arbitration or proceeding  arising out of this  Agreement,  except that the
Arbitrators'  fees or costs  shall  be  borne  equally  by the  parties  to such
arbitration or proceeding.

     3.3 lt is the intent of the  parties to this  Agreement  that all  disputes
under this Agreement shall be resolved,  to the extent  possible,  in connection
with a single arbitration or judicial proceeding.

4.   CONCERNING THE ESCROW HOLDER

     4.1 USA  Biomass  and the  Shareholder  shall  each pay the  Escrow  Holder
one-half  of  its  fees  for  its  services   hereunder   and  one-half  of  all
out-of-pocket  costs and expenses of the escrow,  including postage,  telephone,
courier charges,  share  certificate  transfer fees, wire transfer fees, and all
similar expenses relating to all aspects of the escrow.

     4.2 The  Escrow  Holder  may  resign  and be  discharged  from  its  duties
hereunder at any time by giving  notice of such  resignation  to USA Biomass and
the  Shareholder  specifying  a date (not less than 30 days  after the giving of
such  notice)  when such  resignation  shall take  effect.  Promptly  after such
notice,  a successor  escrow agent shall be appointed by mutual agreement of USA
Biomass and the  Shareholder,  such successor  escrow agent to become the Escrow
Holder  hereunder upon the  resignation  date  specified in such notice.  If USA
Biomass and the  Shareholder  are unable to agree upon a successor  escrow agent
within 30 days after such notice,  the Escrow  Holder may, at the expense of USA
Biomass and the Shareholder,  petition a court of competent jurisdiction for the
appointment of a successor.  The Escrow Holder shall continue to serve until its
successor accepts the escrow and receives the Escrow Deposit or until the Escrow
Deposit is deposited with a court.  USA Biomass and the Shareholder may agree at
any time to replace the Escrow  Holder with a new escrow agent by giving  notice
thereof to the Escrow Holder then acting.

     4.3 The  Escrow  Holder  undertakes  to  perform  only  such  duties as are
specifically set forth herein. The Escrow Holder shall have no responsibility to
read, understand or comply with the Merger Agreement.  The Escrow Holder, acting
or refraining from acting in good faith,  shall not be liable for any mistake of
fact or error of judgment by it or for any acts or  omissions by it of any kind,
unless caused by willful  misconduct or gross negligence,  and shall be entitled
to rely,  and shall be  protected  in doing  so,  upon (a) any  written  notice,
instrument, or signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly  authorized  to do so, and (b) the
advice of counsel (which may be of the Escrow Holder's own choosing). The Escrow
Holder shall have no responsibility for the contents of any wilting submitted to
it hereunder  and shall be entitled in good faith to rely without any  liability
upon the contents thereof.

                                      -3-

<PAGE>


     4.4 USA Biomass and the Shareholder and their respective  heirs,  assignees
and  representatives  hereby  agree to  indemnify  and hold  harmless the Escrow
Holder from any and all  claims,  demands,  debts,  duties,  obligations,  acts,
costs, expenses,  sums of money, suits, dues~ actions and/or causes of action of
any kind or nature  whatsoever which shall for any reason  whatsoever be made by
any person, entity or organization,  as a result of or in any way connected with
the Escrow Holder's  performance under the terms of this Agreement to the extent
that they do not result from the willful  misconduct of the Escrow Holder.  This
right of  indemnification  shall survive the termination of this Agreement,  and
the  resignation  or removal of the Escrow  Holder.  The costs and  expenses  of
enforcing this right of indemnification  shall also be split between USA Biomass
and the Shareholder.

     4.5 If the Escrow  Holder is named in any  lawsuit or  arbitration  for any
reason in connection with this Agreement or the Escrow Deposit,  then the Escrow
Holder  is  hereby  authorized  to  deposit  with  the  clerk  of the  court  or
arbitration  tribunal  in which such  proceeding  is  pending  any or all of the
Escrow Deposit held by the Escrow Holder pursuant  hereto,  or to interplead all
interested  parties in any court of competent  jurisdiction  and to deposit with
the clerk of such court or arbitration tribunal any or all of the Escrow Deposit
that is the subject of such proceeding.  Upon its depositing such Escrow Deposit
as aforesaid,  the Escrow Holder shall be fully  released and  discharged of any
duties or liabilities  with respect to such Escrow Deposit so deposited  [except
to the extent such liabilities  arose from the willful  misconduct of the Escrow
Holder].

5.   MISCELLANEOUS

     5.1 This  Agreement  will be binding upon,  inure to the benefit of, and be
enforceable by the respective heirs, beneficiaries, representatives, successors,
and assigns of the parties hereto.

     5.2 This Agreement  contains the entire  understanding  of the parties with
respect to its subject  matter and may be amended  only by a written  instrument
duly executed by all the parties hereto.

     5.3 All  notices,  claims,  requests,  demands,  and  other  communications
hereunder ("notices") shall be in writing and shall be deemed to have been given
if  personally  delivered  or if sent by  telecopy  or  facsimile  or  mailed by
overnight,  commercial  air courier  service or by first  class,  registered  or
certified mail, postage prepaid, and properly addressed as follows:

                                      -4-

<PAGE>


          If to USA Biomass:

               USA Biomass Corporation
               Attn: Michael J. Silva
               7314 Scout Avenue
               Bell Gardens, California 90201
               Fax: (562) 928-9932

          If to the Shareholder:

               Fred Alexander
               1835 "A" South Center City Parkway, #418
               Escondido, California 92025
               Fax: (760) 746-7596

          If to Escrow Holder:

               Chicago Title Company
               Attention: Escrow Division
               16969 Von Karman Avenue, Suite 200
               Irvine, California 92606
               Fax: (949) 752-8043

     Any party may change its address for purposes of this Section by giving the
other parties  written  notice of the new address in the manner set forth above.
Notice will conclusively be deemed to have been given when personally delivered,
or if given  by mail,  on the  second  day  after  being  sent by an  overnight,
commercial  air  courier  service or on the fifth day after  being sent by first
class,  registered  or  certified  mail,  or if given by telecopy  or  facsimile
machine, when confirmation of transmission is indicated by the sender's telecopy
or facsimile machine.

     5.4 This  Agreement  shall be governed  by, and  construed  and enforced in
accordance  with,  the laws of the  State of  California  without  regard to its
conflict of laws principles.

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

     5.6 This  Agreement  shall remain in full force and effect until the Escrow
Holder has delivered all the Escrow Deposit in its possession in accordance with
the terms hereof

                                      -5-

<PAGE>


     5.7 Article headings  contained herein are for reference  purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

     5.8 Shareholder  acknowledges that he has been represented by legal counsel
in connection with this Agreement and has consulted with such legal counsel.


                            (Signature page follows)


                                      -6-

<PAGE>


     IN WITNESS WHEREOF,  this Agreement has been duly executed and delivered by
the duly  authorized  officers of USA Biomass and the Escrow Holder,  and by the
Shareholder, as of the date first above written.


                                        "USA BIOMASS"

                                             USA Biomass Corporation

                                             By: /s/ Fred BEHRENS
                                                 -------------------------------
                                                 Name: Fred BEHRENS
                                                       -------------------------
                                                 Title: Chairman
                                                        ------------------------


                                        "SHAREHOLDER"


                                             By:
                                                 -------------------------------
                                                 Fred Alexander


                                             By:
                                                 -------------------------------
                                                 Linda Alexander


                                        "ESCROW HOLDER"

                                             CHICAGO TITLE COMPANY


                                             By:
                                                 -------------------------------
                                                 Name:
                                                       -------------------------
                                                 Title:
                                                        ------------------------



                                       -7-


<PAGE>

     [SEAL]                   USA BIOMASS CORPORATION              [SHARES]


INCORPORATED UNDER THE LAWS     USA0002166    08952            SEE REVERSE FOR
 OF THE STATE OF DELAWARE                                    CERTAIN DEFINITIONS
                                                              CUSIP 90333F 10 5
This Certifies that    SEE LEGEND ENDORSED ON REVERSE SIDE    ***1000000*******
                                                              ****1000000******
                       *** RESTRICTED SECURITIES ***          *****1000000*****
                       FRED ALEXANDER                         ******1000000****
                       PMB 418-1835 A S CENTRE CITY PARKWAY   *******1000000***
0000011213             ESCONDIDO CA 92025                     ********1000000**


is the record
  holder of            **ONE MILLION**

    FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.002 PAR VALUE, OF
                            USA Biomass Corporation

 transferable on the books of the Corporation by the holder hereof in person or
 by duly authorized attorney upon surrender of this certificate properly
 endorsed. This certificate is not valid until countersigned by the Transfer
 Agent and registered by the Registrar.

 WITNESS the facsimile seal of the Corporation and the facsimile signatures of
 its duly authorized officers.

Dated:
MARCH 15, 2000
08952000726 IXR

/s/ [ILLEGIBLE]                      [SEAL]            /s/ FRED BEHRENS

SECRETARY                                              CHAIRMAN



<PAGE>


                            ASSET PURCHASE AGREEMENT


     THIS ASSET PURCHASE AGREEMENT  ("Agreement") is made and entered into as of
the 1st day of March,  2000 by and among AFI  Acquisition  Corp.,  a  California
corporation ("Buyer") and Fred Alexander and Linda Alexander, each an individual
(collectively, "Sellers") doing business as American Fiber.

                                    RECITALS

     A. Sellers own and operate a waste business (the "Business") and are active
in the Business.

     B. The Sellers desire to sell to Buyer certain assets used in the Business,
and Buyer desires to acquire such assets,  all on the terms and  conditions  set
forth herein.

     NOW,  THEREFORE,  in consideration of the mutual covenants contained herein
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby  acknowledged,  the parties  hereto,  intending to be legally  bound,
agree as follows:

     1.   Purchase and Sale of Assets.

          1.1 Assets to be Acquired. Subject to the terms and conditions of this
     Agreement, Sellers hereby sell, convey, transfer, assign and deliver to the
     Buyer and Buyer hereby purchases, acquires and accepts from Sellers, all of
     Sellers' right, title and interest in and to (collectively, the "Assets"):

               (a) All supplies,  materials,  inventory,  equipment,  machinery,
          furniture,  fixtures,  spare  parts and other  personal  property  and
          assets listed on Schedule 1.1(a) (the "Tangible Assets");

               (b) All  trade  names,  product  names,  service  marks,  rights,
          licenses, likenesses, and logos of Sellers used in connection with the
          Business and all likenesses and presentations  thereof including,  but
          not  limited  to,  those items  listed on  Schedule  1.1(b),  and all
          goodwill associated therewith (the "Proprietary Rights");

               (c)  All  know-how,  proprietary  information,   customer  lists,
          customer  records,  customer files and all associated  data,  supplier
          lists, sales techniques,  processes, formulas, patterns, compilations,
          programs, devices, methods, techniques,  inventions, drawings, designs
          and  technical  data,  and  other  confidential  information  used  in
          connection with the Business (the "Proprietary Information");



<PAGE>


               (d) All  files,  papers,  literature,  sales and  purchase  order
          records,  books of  account,  and books  and  records  related  to the
          Business or the Assets;

               (e) All telephone numbers,  customer files, names,  addresses and
          accounts  receivable  information  (including  aging and  delinquency)
          related to all customers used in connection with the Business;

               (f)  All   rights   under   or   pursuant   to  all   warranties,
          representations   or  guaranties   made  by  suppliers  or  others  in
          connection with any products or services furnished to Sellers; and

               (g) The goodwill associated with items (a) - (f) above.

          1.2  [Reserved.]

     2. Assumed Liabilities.  Buyer shall assume all liabilities associated with
the operation of the Business prior to the Closing Date.

     3. Sales Taxes and Fees.  Buyer shall be  responsible  for all sales,  use,
transfer and similar  taxes and fees arising out of the purchase and sale of the
Assets.

     4. Closing.  The purchase and sale of the Assets shall occur at the offices
of Paul,  Hastings,  Janofsky & Walker LLP, 695 Town Center  Drive,  Seventeenth
Floor, Costa Mesa, California, at 10:00 a.m. local time on March 10, 2000, or at
such other time (the  "Closing  Date") and place as the parties  shall  mutually
agree, by delivery of the following (the "Closing"):

          4.1  Sellers Deliveries. Sellers shall deliver to Buyer:

               (a) A Bill of Sale in  substantially  the form of  Exhibit A duly
          executed by Sellers; and

               (b) Such other  instruments and documents as (i) may be necessary
          to effect the transfer of the Assets to Buyer as  contemplated by this
          Agreement  and (ii) may be necessary  or  desirable in the  reasonable
          opinion of the Buyer's  counsel in  connection  with the  transactions
          contemplated hereby.

          4.2 Buyer  Deliveries.  Buyer  shall pay to Sellers  at the  Closing a
          check of One Hundred Thousand Dollars ($100,000) as the purchase price
          for the Assets ("Purchase Price").

     5. Representations and Warranties of Sellers. Sellers jointly and severally
represent and warrant to Buyer that:

                                      -2-

<PAGE>


          5.1  Authority.  The  execution,  delivery  and  performance  of  this
     Agreement by Sellers has been duly authorized and approved by all necessary
     actions by each of them and neither the  execution nor the delivery of this
     Agreement,  nor the consummation of the transactions  contemplated  hereby,
     will  conflict  with or result in a breach of or constitute a default under
     (a) any law or administrative  regulation  applicable to Sellers or (b) any
     note,  agreement,  judgment,  order,  award,  decree or other instrument or
     restriction  ("Instrument")  to which Sellers are bound,  or give any party
     with rights under any such  Instrument the right to terminate or change the
     rights or obligations of Sellers under such Instrument.  No  authorization,
     approval  or  consent  of, or notice to or filing  with,  any  governmental
     authority  or any third  party is or will be  required  for the  execution,
     delivery or  performance of this Agreement by Sellers and Sellers have full
     power and  authority to perform all acts  required to be done by them under
     this Agreement.  This Agreement  constitutes,  and the other agreements and
     instruments  to be executed in  connection  herewith when duly executed and
     delivered will constitute,  legal, valid and binding obligations of Sellers
     and will be enforceable  against them in accordance  with their  respective
     terms.

          5.2 Title to Assets;  Condition  of the Assets.  Sellers have good and
     marketable ownership and title to all of the Assets and own the Assets free
     and clear of any and all liens,  security interests,  prior assignments and
     encumbrances of any and every kind whatsoever. At the Closing, Sellers will
     transfer  ownership  and title of the Assets to Buyer free and clear of any
     and all liens,  security  interests,  prior assignments and encumbrances of
     any and every kind whatsoever.

          5.3 Reserved.

          5.4 Reserved.


          5.5 Compliance  with Law. To the knowledge of the Sellers,  and except
     as previously  disclosed to Buyer, none of the Business or the Assets is in
     violation of, or alleged to be in violation of, any applicable  regulation,
     ordinance,  statute,  order,  law or rule  promulgated by any  governmental
     authority.

          5.6  Litigation.  To the  knowledge  of the  Sellers,  and  except  as
     previously  disclosed  to  Buyer,  there  is  no  action,  lawsuit,  claim,
     proceeding  or  investigation  pending,  or  threatened,   against,  by  or
     affecting Sellers or the Assets.

          5.7 Consents and  Assignments.  To the  knowledge of the Sellers,  and
     except  as  previously  disclosed  to  Buyer,  all  agreements,   consents,
     approvals,  licenses and assignments necessary for Sellers' consummation of
     the  transactions  contemplated  by  this  Agreement,  if  any,  have  been
     obtained.

          5.8 No Brokers etc N either the Sellers nor any party  acting on their
     behalf has paid or has become obligated to pay any fee or commission to any
     broker,  finder  or  intermediary  for or on  account  of the  transactions
     contemplated by this Agreement.

                                      -3-

<PAGE>


     6.  Representations  and Warranties of Buyer. Buyer represents and warrants
to the Sellers that:

          6.1 Organization.  Buyer is duly  incorporated and organized,  validly
     existing and in good  standing  under the laws of the State of  California.
     Buyer has full corporate  power and authority to own, lease and operate its
     properties and conduct its business as currently conducted.

          6.2  Authority.  The  execution,  delivery  and  performance  of  this
     Agreement by Buyer has been duly  authorized  and approved by all necessary
     actions and neither the  execution or delivery of this  Agreement,  nor the
     consummation of the  transactions  contemplated  hereby,  will conflict and
     result  in  a  breach  of  or   constitute  a  default  under  (a)  Buyer's
     organizational   documents,  (b)  any  law  or  administrative   regulation
     applicable to Buyer, or (c) any Instrument to which Buyer is bound, or give
     any party with rights under any such  Instrument  the right to terminate or
     change  the  right  or  obligations  of Buyer  under  such  Instrument.  No
     authorization,  approval  or  consent of or notice to or filing  with,  any
     governmental  authority  or any third party is or will be required  for the
     execution, delivery or performance of this Agreement by Buyer and Buyer has
     full power and  authority to perform all acts  required to be done by Buyer
     under this  Agreement.  This Agreement  constitutes,  and any agreements or
     instruments  to be delivered in connection  herewith when duly executed and
     delivered will constitute,  legal,  valid and binding  obligations of Buyer
     and will be enforceable  against Buyer in accordance with their  respective
     terms.

          6.3 No  Brokers,  etc.  Neither  Buyer nor any  party  acting on their
     behalf has paid or has become obligated to pay any fee or commission to any
     broker,  finder  or  intermediary  for or on  account  of the  transactions
     contemplated by this Agreement.

     7. Additional Covenants.

          7.1 General  Assistance.  To  facilitate  the orderly  transfer of the
     Assets  and to  enable  Buyer  to  obtain  the  benefits  of  the  goodwill
     associated therewith, the Sellers shall cooperate with and assist Buyer and
     use  reasonable  efforts in obtaining all necessary  approvals and consents
     for the  transactions  contemplated  hereby,  and otherwise use  reasonable
     efforts to  transfer to Buyer all of the right,  title and  interest in the
     Assets  and the  exclusive  rights  to use such  Assets.  Furthermore,  the
     Sellers  agree to assist in the  transition of all customers of the Sellers
     to Buyer  including the  preparation of letters,  joint  announcements  and
     press  releases,  and personal  communications  with such customers and the
     participation  of joint  personal  appearances,  to the  extent  reasonable
     requested by Buyer.

          7.2 Confidentiality.  Sellers shall hold in confidence,  and shall use
     reasonable   efforts  to  ensure  that  their   respective   employees  and
     representatives  hold  in  confidence,  all  information  supplied  to them
     concerning  Buyer,  the terms and provisions of this Agreement and the fact
     that negotiations  regarding  purchase and sale of the Assets between Buyer
     and the Sellers have occurred.

                                       -4-

<PAGE>


          7.3 Access to Information.  After the Closing,  the Sellers shall have
     access  at  reasonable   times,  upon  reasonable  notice  and  subject  to
     reasonable  requirements related to confidentiality,  to the books, records
     and  documents  transferred  to Buyer  under this  Agreement  to the extent
     reasonably  requested  by the Sellers for their  accounting,  tax and legal
     purposes.

     8. Indemnification.  The indemnification  provisions contained in Section 5
of the  Agreement  and Plan of Merger  dated as of March 1,  2000,  by and among
Sellers, USA Biomass Corporation, a Delaware corporation, AWT Acquisition Corp.,
a California  corporation,  AGI  Acquisition  Corp.,  a California  corporation,
American Waste  Transport,  Inc., a California  corporation,  and American Green
Waste.  Inc.,  a  California  corporation,   shall  govern  any  indemnification
obligations  arising from a breach of any  representations or warranty contained
in this Agreement.

     9. General Provisions.

          9.1 Notices.  Any notice  required or permitted to be given  hereunder
     shall  be in  writing  and  shall  be  (a)(i)  personally  delivered,  (ii)
     delivered by certified mail, return receipt requested,  postage prepaid, or
     (iii)  transmitted  by telex,  telecopier  or facsimile  transmission  with
     subsequent  confirmation  to the parties by mail (postage  prepaid) and (b)
     delivered to the intended recipient as follows:

If to Sellers:                 Fred Alexander
                               1835 "A" South Center City Parkway, #418
                               Escondido, California 92025
                               Facsimile: (760) 746-7596

If to Buyer:                   USA Biomass Corporation
                               Attn: Michael J. Silva
                               7314 Scout Avenue
                               Bell Gardens, California
                               Facsimile No.: (562) 928-9932

     or, as to any party,  at such other  address as shall be designated by such
     party in a notice  to each  other  party.  Except  as  otherwise  specified
     herein, all notices and other  communications  shall be deemed to have been
     duly given on (i) the date when delivered if delivered personally, (ii) the
     date when  received  if  delivered  by  certified  mail,  (iii) the date of
     transmission with confirmed answer back if transmitted by telex or (iv) the
     date when properly transmitted by telecopier or facsimile,  whichever shall
     first occur.

          9.2  Entire  Agreement;   Amendment.  This  Agreement,  the  documents
     referred to herein,  and the exhibits and schedules  hereto,  which by this
     reference are incorporated herein, contain the entire agreement between the
     parties hereto relating to the transactions  contemplated  herein,  and all
     prior or contemporaneous  agreements,  understandings,  representations and
     statements, oral or written, are hereby superseded. No amendment,

                                       -5-

<PAGE>


modification,  waiver,  discharge  or  change of this  Agreement  shall be valid
unless the same is in writing and signed by all of the parties hereto.

          9.3 Governing Law.

               (a) This Agreement  shall be governed by the laws of the State of
          California.  All actions and proceedings arising out of or relating to
          this  Agreement  shall be heard and determined in any state or federal
          court sitting in the County of Orange, California.

               (b)  Each  of  the  parties  hereto  irrevocably  submits  to the
          exclusive  jurisdiction of the State of California,  County of Orange,
          and/or the United States  District Court for the Southern  District of
          California, for the purpose of any action or proceeding arising out of
          or  relating  to  this  Agreement  and  each  of  the  parties  hereto
          irrevocably  agrees  that all  claims  in  respect  to such  action or
          proceeding  may be heard and  determined  exclusively  in any  federal
          court  sitting  in the County of Orange.  Each of the  parties  hereto
          agrees  that a final  judgment  in any action or  proceeding  shall be
          conclusive and may be enforced in other  jurisdictions  by suit on the
          judgment or in any other manner provided by law.

          9.4 Successors and Assigns.  This Agreement  shall be binding upon and
     shall  inure to the  benefit of the  parties  hereto  and their  respective
     successors and assigns.

          9.5 Further  Assurances.  Without further  consideration,  each of the
     parties  hereto  agrees to  execute,  acknowledge  and  deliver  such other
     documents and take such further actions as may be necessary or advisable to
     carry out the purposes of this Agreement.

          9.6 Attorneys'  Fees. In the event of any dispute  between the parties
     hereto in connection  with this  Agreement,  the prevailing  party shall be
     entitled to recover  from the losing  party all of its costs and  expenses,
     including, without limitation, court costs and reasonable attorneys' fees.

          9.7  Counterparts.  This  Agreement  may be  executed  in one or  more
     counterparts and each such counterpart shall be deemed an original, but all
     of which taken together shall constitute one and the same agreement.

          9.8  Survival  of  Covenants.   Representations  and  Warranties.  All
     covenants,  representations  and  warranties set forth in this Agreement or
     any schedule,  exhibit or other document  delivered  pursuant  hereto shall
     survive (i) the Closing and (ii) any  investigation  by the party receiving
     the benefit of any such covenants, representations and warranties.

     10.  Representation  by Legal Counsel.  Seller  acknowledges that they have
been  represented  by legal counsel in connection  with this  Agreement and have
consulted with such legal counsel.

                              [SIGNATURES FOLLOW]


                                       -6-

<PAGE>


     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

                                        "BUYER"

                                        AFI Acquisition Corp., a California
                                        corporation


                                        By: /s/ Michael J. Silva
                                            ------------------------------------
                                            Michael J. Silva, President



                                        "SELLERS"

                                        /s/ Fred Alexander
                                        ----------------------------------------
                                        Fred Alexander, an individual

                                        /s/ Linda Alexander
                                        ----------------------------------------
                                        Linda Alexander, an individual



                                      -7-

<PAGE>

                                   Exhibit A
                                   ---------

                                  Bill of Sale








<PAGE>


                                  BILL OF SALE
                                  ------------

     FOR VALUE RECEIVED, Fred Alexander and Linda Alexander,  each an individual
(collectively, "Sellers") doing business as American Fiber, hereby sell, assign.
transfer  and  convey  to  AFI  Acquisition  Corp.,  a  California   corporation
("Buyer"),  all of Sellers'  rights,  title and interest in and to the Assets as
defined in Section 1.1 of that  certain  Asset  Purchase  Agreement  dated as of
March ___. 2000 (the "Purchase Agreement") between Sellers and Buyer.

     This Bill of Sale is  delivered  pursuant  to, and shall be governed by and
construed in accordance with the terms of the Purchase Agreement. Nothing herein
is  intended  to  modify,   limit  or  otherwise  affect  the   representations,
warranties,  covenants and agreements  contained in the Purchase Agreement,  and
such representations,  warranties, covenants and agreements shall remain in full
force and effect in accordance with the terms of the Purchase Agreement.

     IN WITNESS  WHEREOF,  Sellers have  executed  this Bill of Sale dated as of
March ___,2000.


                                        "SELLERS"


                                        ----------------------------------------
                                        Fred Alexander, an individual


                                        ----------------------------------------
                                        Linda Alexander, an individual


Acknowledged by Buyer:

AFI Acquisition Corp., a California corporation


By:
    ---------------------------------
    Michael J. Silva, President




<PAGE>



                                 Schedule 1.1(a)

                                 Tangible Assets


     See attachment hereto.














<PAGE>


                                 Schedule 1.1(a)
                                 ---------------

                                 Tangible Assets


1.   Blue Shaving Mill

2.   Green Shaving Mill

3.   (2) Chop Saws

4.   Cyclone Filter and Blower

5.   Chain Drag Conveyor

6.   Blue Horizontal Shaver/Hogg

7.   1973 22' Chevy Flatbed

8.   Office Equipment

End of Schedule



<PAGE>


                                Schedule 1 .1(b)

                               Proprietary Rights


     None.





<PAGE>


                                  BILL OF SALE
                                  ------------


     FOR VALUE RECEIVED, Fred Alexander and Linda Alexander,  each an individual
(collectively, "Sellers") doing business as American Fiber, hereby sell, assign,
transfer  and  convey  to  AFI  Acquisition  Corp.,  a  California   corporation
("Buyer"),  all of Sellers'  rights,  title and interest in and to the Assets as
defined in Section 1.1 of that  certain  Asset  Purchase  Agreement  dated as of
March 1, 2000 (the "Purchase Agreement") between Sellers and Buyer.

     This Bill of Sale is  delivered  pursuant  to, and shall be governed by and
construed in accordance with the terms of the Purchase Agreement. Nothing herein
is  intended  to  modify,   limit  or  otherwise  affect  the   representations,
warranties,  covenants and agreements  contained in the Purchase Agreement,  and
such representations,  warranties, covenants and agreements shall remain in full
forc5 and effect in accordance with the terms of the Purchase Agreement.

     IN WITNESS  WHEREOF,  Sellers have  executed  this Bill of Sale dated as of
March 1, 2000.


                                        "SELLERS"


                                        /s/ Fred Alexander
                                        ----------------------------------------
                                        Fred Alexander, an individual


                                        /s/ Linda Alexander
                                        ----------------------------------------
                                        Linda Alexander, an individual


Acknowledged by Buyer:

AFI Acquisition Corp., a California corporation


By: /s/ Michael J. Silva
    ----------------------------------
    Michael J. Silva, President




<PAGE>


                              EMPLOYMENT AGREEMENT


     THIS  EMPLOYMENT  AGREEMENT  (this  "Agreement")  is  effective as of March
1,2000,  by  and  between  USA  Biomass  Corporation,   a  Delaware  corporation
("Company"), and Fred Alexander, an individual ("Employee").


                                    RECITALS

     A. Company is engaged in the business of solid  waste,  transportation  and
disposal,  and operating a Greenwaste business (the "Business") and has need for
personnel with experience in said Business.

     B.  Employee is  experienced  in the Business and in the  operation of such
Business.

     C. In  connection  with  the  transactions  contemplated  by  that  certain
Agreement and Plan of Merger dated as of March 1, 2000 (the "Merger  Agreement")
by and among Employee,  Company, AWT Acquisition Corp., a California corporation
and a wholly-owned  subsidiary of Company,  AGI Acquisition  Corp., a California
corporation and a wholly owned subsidiary of Company,  American Waste Transport,
Inc., a  California  corporation  ("AWT"),  and  American  Green Waste,  Inc., a
California  corporation  ("AGI"),  pursuant to which Company acquired all of the
outstanding  shares of the  capital  stock of AWT and AGI,  Company  desires  to
employ Employee upon the terms and conditions hereinafter set forth.

     D.  Employee  is  willing  to enter  into this  Agreement  with  respect to
Employee's employment and services upon the terms and conditions hereinafter set
forth.


                                    AGREEMENT

     In  consideration  of  the  foregoing  recitals  and  the  premises  herein
contained, the parties agree as follows:

                                     I. TERM

     SECTION 1.01  Employment.  Subject to the  provisions of Section IV hereof,
Company hereby employs  Employee and Employee  hereby  accepts  employment  with
Company for a period of five years  beginning on the date hereof and terminating
at the close of business on March 1, 2005 (the "Employment Term").

                                   II. DUTIES

     SECTION  2.01 General  Duties.  Employee  shall serve as Vice  President of
Company  during the  Employment  Term.  Employee,  during the  Employment  Term,
subject to the  policies  and  directives  of Fred  Behrens  and/or the Board of
Directors of Company,  shall be responsible  for the green waste  operations and
business development.


<PAGE>


     SECTION  2.02  Devotion of Time to  Company's  Business.  Unless  otherwise
agreed to in advance  and in writing by  Company,  during the  Employment  Term,
Employee  shall  devote  his  best  efforts,   and  all  of  his  business  time
exclusively,  to his employment with Company,  and to perform such duties as are
specified in Section 2.01 and such other duties  consistent with Section 2.01 as
shall be reasonably  requested by Fred Behrens  and/or the Board of Directors of
Company.  Employee shall not, during  Employee's  employment,  unless  otherwise
agreed to in advance and in writing by Company, seek or accept other employment,
become self employed in any other  capacity,  or engage in any activities  which
are detrimental to the business of Company.


                         III. COMPENSATION AND BENEFITS

     SECTION  3.01 Base Salary.  As  compensation  for his  services  hereunder,
during the  Employment  Term,  Employee  shall  receive an annual base salary of
$120,000  payable in cash at the times and in the  installments  consistent with
Company's payroll practices. Employee's salary shall be subject to annual review
by the Company's  Board of Directors or its  Compensation  Committee,  but in no
event shall Employee's salary be reduced below $120,000.

     SECTION  3.02  Vacation.  During the  Employment  Term,  Employee  shall be
entitled to four (4) weeks paid vacation each year.

     SECTION  3.03  Expenses.  During the  Employment  Term,  Employee  shall be
entitled to receive  reimbursement for all reasonable  out-of-pocket  travel and
other expense incurred by Employee in performing  Employee's services hereunder,
provided that:

          (a) Each such  expenditure  is of a nature  qualifying  it as a proper
     business expenditure of Company and is approved by Company; and

          (b) Employee  furnishes to Company adequate  documentary  evidence for
     the  substantiation  of such expenditures and Employee  otherwise  complies
     with Company policies with respect to expense reimbursement.

          (c) Employee will  continue to have  possession of and continue to use
     for business  expenses,  the same company credit cards currently being used
     by Employee in his  operations  of AWT and AGI.  The Company  shall pay all
     expense  relating to  Employee's  use of these credit cards as long as such
     expenses are reasonably related to the operation of the Company's business.

     SECTION 3.04 Car Allowance.  During the  Employment  Term, the Company will
pay for all  monthly  payments,  insurance  payments,  service  and  maintenance
charges  and fuel  expenses  relating  to  Employee's  vehicle  which is used by
Employee to conduct Company business, consistent with Company policy.

     SECTION 3.05 Medical  Insurance and Other  Benefits.  During the Employment
Term,  Employee will be eligible to participate in any such medical,  dental and
disability  insurance plans,  life insurance  plans,  retirement plans and other
employee  welfare and benefit  plans or programs  generally  made  available  to
Company's senior-level  executives or its employees generally, as such plans and
programs may be in effect from time to


                                      -2-
<PAGE>

time. In addition,  the Company will maintain life insurance for Employee in the
amount  of One  Million  Five  Hundred  Thousand  Dollars  for  the  Beneficiary
designated by Employee.  This  insurance  will be in addition to any  additional
"Key Man" insurance the Company may decide to obtain.

     SECTION 3.06 Stock Option. Concurrent with the execution of this Agreement,
Company shall grant Employee a  non-qualified  stock option to purchase  250,000
shares of Common  Stock at an  exercise  price of $3.50 per share  pursuant to a
separate  stock  option  agreement.  Employee's  rights to  exercise  such stock
options are governed by such stock option agreement

     SECTION 3.07 Incentive  Program.  Employee will also be entitled to receive
additional  compensation  pursuant to an incentive program to be approved by the
Company's  Board  of  Directors  or its  Compensation  Committee.  The  proposed
incentive  program will be that the Company will conduct a good faith review for
each contract for new business in which Employee  participates  in generating to
make the determination as to whether additional  compensation  should be awarded
to  Employee  as  part of this  incentive  program.  The  parties  will  use the
following four factors in determining the additional consideration:

                1.  Total Annual Dollar Generation

                         -How Badly Needed
                         -Target Market Reached
                         -Overall Sales Impact

                2.  Return on Investment

                         -Profitability
                         -Use of Existing Equipment
                         -Other Benefits

                3.  New Business Utilization

                         -Creates Backhauls
                         -Fits Into Existing Business
                         -Developed Routes

                4.  Market Share

                         -Keep Competition Out
                         -Strengthen Position in Area
                         -Investment in Customer

     A value will be assessed for each factor.  The highest value to be assigned
to each factor is five (5). The total value for all factors  will be  multiplied
by .10.  This number will be the  percentage  of the total annual  revenue which
Employee  will be entitled to receive as part of this  incentive  program.  (For
example,  if for a new contract  with total annual  revenue of  $1,400,000 it is
determined  that each of the four  factors  has a value of 5, the  total  annual
incentive annually given to Employee would be $28,000).



                                      -3-
<PAGE>


Compensation  under this  incentive  program  is  determined  by the  reasonable
judgment of the Company acting in good faith.


                                 IV. TERMINATION

     SECTION 4.01 Termination Other than for Cause, Death or Disability. Company
may terminate Employee's  employment under this Agreement,  at any time, for any
reason,  other than or on account of Employee's death or disability  pursuant to
Sections 4.04 and 4.05 of this Agreement,  without cause, upon written notice to
Employee.  If this  Agreement is terminated by Company  pursuant to this Section
4.01,  Company shall have no further  obligation or liability to Employee under
this  Agreement,  except that Employee shall be entitled to receive only (i) the
portion of Employee's  salary as set forth in Section 3.01 which has been earned
up to the  Date of  Termination  (as  defined  in  Section  4.07  hereof),  (ii)
compensation  for any accrued and unused vacation up to the Date of Termination,
as determined in accordance with Company's then existing vacation policy,  (iii)
reimbursement,  pursuant to Section  3.03,  for  reasonable  business  expenses
incurred up to the Date of Termination,  (iv) all additional compensation earned
by Employee based on his  performance up to the Date of Termination  pursuant to
any  incentive  program  approved by the  Company's  Board of  Directors  or its
Compensation Committee (collectively, the "Minimum Payments"), and (v) severance
pay in an amount equal to Employee's  base salary (as set forth in Section 3.01)
that would have been payable to Employee over the balance of the Employment Term
had this Agreement not been terminated early (the "Severance  Period"),  payable
by Company  during  the  Severance  Period at the times and in the  installments
consistent with Company's payroll practices (the "Severance Payments"). Employee
may terminate his Employment under this Agreement,  at any time, for any reason,
without  cause,  upon  written  notice  to  Company.  Upon such  termination  by
Employee,  Company  shall have no further  obligation  or  liability to Employee
under this Agreement, except that Employee shall be entitled to receive only the
Minimum Payments.

     SECTION  4.02  Termination  for Cause.  Company  may  terminate  Employee's
employment under this Agreement for "cause", due to any of the following acts or
omissions:

          (a)  Employee's  failure to perform his duties in a manner  reasonably
     consistent with the terms of this Agreement and the criteria established by
     Fred Behrens and/or Board of Directors of Company; provided,  however, that
     termination  pursuant to this paragraph (a) shall be preceded by sixty (60)
     days prior written notice  providing a reasonable  opportunity for Employee
     to correct his conduct, if the conduct in question can be corrected;

          (b) Conduct on the part of Employee  which  constitutes an intentional
     breach of any statutory or common law duty of loyalty to Company;

          (c) Any illegal act of Employee which materially and adversely affects
     the business of Company or any of its affiliates;

          (d)  Intentional  wrongful  engagement by Employee in any  competitive
     activity prohibited by the Noncompetition  Agreement of even date herewith,
     entered into



                                      -4-
<PAGE>

     between Employee and Company, or employment in another business in a manner
     not permitted by Section 2.02; or

          (e) Reserved.

          (f)  Employee's  conviction  of any felony or for any crime or offense
     causing harm to the Company or any of its  affiliates or involving  acts of
     theft, fraud,  misappropriation of funds, embezzlement,  moral turpitude or
     similar conduct;


          (g) Employee's  willful or intentional  misuse or diversion of Company
     funds,  misapproprition  of funds,  embezzlement,  or fraudulent or willful
     misrepresentations  or  omissions on any written  reports  submitted to the
     Company.


     If this  Agreement  is  terminated  by Company  for cause  pursuant to this
Section 4.02,  Company shall have no further obligation or liability to Employee
under this Agreement, except that Employee shall be entitled to receive only the
Minimum Payments.

     SECTION 4.03  Resi2nation  for Good  Reason.  Employee may resign for "good
reason" and thereby  terminate his employment  under this Agreement (but not his
other obligations  hereunder) if, without  Employee's  express consent,  Company
substantially  reduces  Employee's  duties  and  responsibilities  such  that it
results in a material  adverse  reduction in Employee's  position,  authority or
responsibilities,  and  Company  falls to cure  such  reduction  in  duties  and
responsibilities  within sixty (60) days after  written  notice  specifying  the
particular  acts objected to and the specific cure requested is given to Company
by  Employee.  If this  Agreement  is  terminated  by  Employee  for good reason
pursuant to this  Section  4.03,  Company  shall have no further  obligation  or
liability  to  Employee  under this  Agreement,  except that  Employee  shall be
entitled to receive only the Minimum Payments and the Severance Payments.

     SECTION  4.04   Termination  for  Death.   This  Agreement  and  Employee's
employment  hereunder shall terminate  automatically  upon Employee's  death. If
this  Agreement  is  terminated  because of  Employee's  death  pursuant to this
Section 4.04,  Company shall have no further obligation or liability to Employee
under this Agreement, except that Employee shall be entitled to receive only (i)
the Minimum Payments and (ii) any Severance Payments.

     SECTION 4.05  Termination  for  Disability.  If Employee  becomes  disabled
during Employee's employment hereunder, this Agreement and Employee's employment
hereunder shall terminate on the date of determination by the Board of Directors
of Company  of such  disability.  As used  herein,  "disability"  shall mean any
condition that qualifies as a disability  under Company's  long-term  disability
plan as in  effect  on the  date of  determination  or  which  renders  Employee
incapable of performing  substantially all of Employee's managerial and Employee
services  hereunder for ninety (90) days or more in the aggregate during any one
(1) year  period,  and which at any time after such ninety  (90) days  Company's
Board of Directors  shall determine  continues to render  Employee  incapable of
performing  Employee's  managerial  and  Employee  services  hereunder.  If this
Agreement  is  terminated  because of  Employee's  disability  pursuant  to this
Section 4.05,  Company shall have no further obligation or liability to Employee
under this


                                      -5-
<PAGE>


Agreement,  except  that  Employee  shall be  entitled  to receive  only (i) the
Minimum Payments, and (ii) the Severance Payments.

     SECTION  4.06  Notice  of   Termination.   Any  termination  of  Employee's
employment by Company or by Employee (other than termination pursuant to Section
4.04 above) shall be  communicated  by a written  Notice of  Termination  to the
other party hereto.  For purposes of this  Agreement,  a "Notice of Termination"
means a notice which (i)  indicates the specific  termination  provision in this
Agreement relied upon, (ii) sets forth the  circumstances  which provide a basis
for termination of Employee's employment under the provisions so indicated,  and
(iii) if the termination  date is other than the date of receipt of such notice,
specifies the termination  date of this Agreement  (which date shall not be more
than ninety (90) days after the giving of such notice).

     SECTION 4.07 Date of Termination. "Date of Termination" shall mean the date
of death, the date of the determination of a disability,  the date of receipt of
the Notice of Termination or the date specified therein, as the case may be.

     SECTION 4.08 [Reserved]

     SECTION 4.09 No Additional  Payments.  Except as otherwise provided in this
Agreement,  upon termination of Employee's employment hereunder,  Employee shall
not be entitled to any  severance  payments or severance  benefits from Company.
Should Employee accept severance  benefits from the Company,  Employee shall not
be  entitled  to any  payments  by Company on account of any claim for  wrongful
termination,  including  but not limited to claims under any  federal,  state or
local human and civil rights or labor laws, other than the payments and benefits
provided  in  Section IV hereof,  except  for any  benefits  which may be due to
Employee in the normal  course  under any  employee  benefit  plan or program of
Company which provides for benefits after termination of employment.  Employee's
right to receive  payments or benefits under this Agreement upon  termination of
employment  will cease if Employee  breaches  any  provision of Section V below.
Receipt and acceptance of amounts paid to Employee followed by placement of such
amounts in a segregated account, with prompt notice to the Company that Employee
is not  accepting  the payment  for  purposes of this  Section  4.09,  shall not
constitute acceptance of payment for purposes of this Section 4.09.


                            V. RESTRICTIVE COVENANTS

     SECTION 5.01  Confidential and Proprietary  Information.  As an employee of
Company,  Employee  shall have access to certain  Confidential  and  Proprietary
Information (as defined below) concerning Company and its Affiliates (as defined
below).  Employee  agrees  that he will  not,  either  directly  or  indirectly,
disclose  to  any  person  or  use  any  of  the  Confidential  and  Proprietary
Information  in any way during the  Employment  Term  (except as required in the
course of the  performance  of his duties to Company) or after the expiration of
the Employment Term.

     For purposes of this Agreement,  "Confidential and Proprietary Information"
means any of the following  information relating to the business of Company that
is not generally known to competitors,  suppliers and customers of Company:  (i)
any business or technical  information,  design,  process,  procedure,  formula,
improvement, or any portion


                                      -6-
<PAGE>


or phase thereof,  that is owned by or has, at the time of  determination,  been
used by Company; (ii) any information related to the development of products and
production processes;  (iii) any information  concerning proposed new processes;
(iv) any information  concerning customer lists and other customer  information,
vendor lists and information, price data, cost data, profit plans, capital plans
and  proposed  or  existing  marketing  techniques  or plans;  and (v) any other
information  which would  constitute a "Trade  Secret"  under the Uniform  Trade
Secrets Act as in force and effect in the State of California.

     For purposes of this Agreement, "Affiliate" means any corporation, company,
partnership,  joint  venture,  firm  and/or  other  entity  which  controls,  is
controlled  by or is under common  control with the person with respect to which
the term "Affiliate" is used. For purposes of this Agreement,  "Person" means an
individual,  corporation,  partnership,  limited  liability  company,  trust  or
unincorporated  organization,  or  a  government  or  any  agency  or  political
subdivision,  thereof.  "Control"  means (a) in the case of corporate  entities,
direct or indirect  ownership  of at least fifty  percent  (50%) of the stock or
participating shares entitled to vote for the election of directors;  and (b) in
the  case of  non-corporate  entities  (such  as  limited  liability  companies,
partnerships or limited  partnerships),  either (x) direct or indirect ownership
of at least  fifty  percent  (50%) of the equity  interest,  or (y) the power to
direct the management and policies of the noncorporate entity.

     SECTION 5.02  Inventions  and  Improvements.  Employee  agrees that he will
assign to Company, without further consideration, the exclusive rights and title
to all inventions,  discoveries,  ideas,  improvements,  and other  intellectual
property made or acquired by Employee during the Employment Term,  whether alone
or jointly with others. Employee further agrees to execute any and all documents
that are  required  in order to  transfer  or  assign  such  property  rights to
Company.

     SECTION 5.03 [Reserved]


                                VI. MISCELLANEOUS

     SECTION 6.01 Notices.  Any notices to be given hereunder by either party to
the other  shall be in writing and may be  effected  by  personal  delivery,  by
courier,  or by mail  (registered  or  certified),  postage  prepaid with return
receipt  requested,  or by  facsimile  confirmed by mail,  or by overnight  mail
courier service.  Notices shall be addressed to the parties at the addresses set
forth below:


To Employee:           Fred Alexander
                       1835 "A" South Center City Parkway, #418
                       Escondido, California 92025
                       Facsimile: (760) 746-7596


                                      -7-
<PAGE>


To Company:            USA Biomass Corporation
                       Attention: Michael J. Silva
                       7314 Scout Avenue
                       Bell Gardens, California 90201
                       Facsimile: (562) 928-9932

     Mailed  notices shall be deemed  communicated  as of four (4) calendar days
after  mailing.  Notices  delivered  personally or by courier or facsimile or by
overnight mail courier service shall be deemed delivered when actually received.
Any party may change its address for notices by a notice in accordance with this
section.

     Section 6.02 Entire Agreement.  This Agreement supersedes any and all other
agreements,  either oral or in writing,  between the parties hereto with respect
to the  employment  of Employee by Company and contains all of the covenants and
agreements  between the parties  with respect to such  employment  in any manner
whatsoever;  provided,  however,  that  the  foregoing  shall  not  apply to the
provisions of the Merger Agreement,  the  Non-Competition  Agreement executed in
connection  herewith,  and any other ancillary  documents executed in connection
with  the  transactions  arising  therefrom   (collectively,   the  "Transaction
Documents").  Each party to this Agreement acknowledges that no representations,
inducements,  promises or agreements, orally or otherwise, have been made by any
party' which are not embodied herein or in the Transaction  Documents,  and that
no other prior  agreement,  statement or promise not contained in this Agreement
or in the Transaction  Documents  shall be valid and binding.  A modification of
this  Agreement  by  means of a  statement  or  promise  not  contained  in this
Agreement shall not be valid or binding. Any modification of this Agreement will
be effective only if it is in writing signed by the party to be charged.

          Section 6.03 Partial  Invalidity.  If any provision of this Agreement,
or any word,  phrase,  clause,  sentence or other  portion  thereof  (including,
without  limitation,  the  geographic and temporal  restrictions  and provisions
contained in this Agreement), is held by a court of competent jurisdiction to be
invalid, void or unenforceable for any reason, such provision or portion thereof
will be  modified  or  deleted  in such a manner as to make this  Agreement,  as
modified, legal and enforceable to the fullest extent permitted under applicable
laws.

     Section 6.04 Law Governing  Agreement.  To the extent not inconsistent with
the  arbitration  provisions  herein,  this  Agreement  shall be governed by and
construed in  accordance  with the law of the State of  California.  The parties
hereto  consent  to submit to the  exclusive  jurisdiction  of the courts of the
State of California,  County of Orange,  and/or the United States District Court
for the Central  District of  California  (Southern  Division)  for any actions,
suits,  controversies  or  proceedings  arising  our  of  or  relating  to  this
Agreement.

     Section 6.05 Arbitration. Any and all disputes or controversies arising out
of this Agreement shall be resolved by arbitration in Orange County,  California
pursuant  to  the  rules  of the  American  Arbitration  Association;  provided,
however,  (i) the parties  shall be entitled to pursue  discovery in  accordance
with  California  Code of Civil  Procedure ss. 1283.05 and (ii) the  arbitration
hearing shall  commence no later than 120 calendar days after the  arbitrator(s)
is appointed.  Unless specified otherwise herein, arbitration under this Section
6.05 shall be the exclusive means of resolving any and all disputes or


                                      -8-
<PAGE>

controversies  arising out of this  Agreement.  All parties shall bear their own
costs and attorneys' fees in any  arbitration or proceeding  arising out of this
Agreement,  except that the Arbitrators' fees or costs shall be borne equally by
the parties to such arbitration or proceeding.

     Section 6.06 Representation by Counsel.  Employee  acknowledges that he has
been  represented  by legal  counsel in connection  with this  Agreement and has
consulted with such legal counsel.

     Section 6.07 Successors and Assigns.  The rights and obligations of Company
and  Employee  under this  Agreement  shall inure to the benefit of and shall be
binding upon the successors and assigns of Company.  The rights and  obligations
of Employee under this Agreement may not be assigned by Employee.

     Section 6.08  Counterp5ts.  This Agreement may be executed in counterparts,
all of which taken together will constitute one instrument.

     Section 6.09 Waiver.  Either  party's  failure to enforce any  provision or
provisions  of this  Agreement  shall not in any way be construed as a waiver of
any such  provision  or  provisions,  nor  prevent  that party  thereafter  from
enforcing each and every other provision of this  Agreement.  The rights granted
both parties  herein are  cumulative and shall not constitute a waiver of either
party's  right to assert  all other  legal  remedies  available  to it under the
circumstances.

     SECTION  6.10  Binding  Effect.   Except  as  otherwise  provided  in  this
Agreement,  this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors,  heirs, and assigns. Company and
Employee  shall not assign,  convey,  or otherwise  transfer,  voluntarily or by
operation of law, to any person or entity, this Agreement or any interest herein
without the prior written consent of Company.  Any attempt to do so without such
consent shall be null and void.





                            (Signature page follows)






                                      -9-
<PAGE>


     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.


                                     "Company"

                                     USA BIOMASS CORPORATION



                                     By:       FRED BEHRENS
                                        ------------------------------------
                                      Name:    Fred Behrens
                                           ---------------------------------
                                     Title:    Chairman
                                           ---------------------------------


                                     "Employee"



                                      --------------------------------------
                                      Fred Alexander









                                      -10-
<PAGE>

          IN  WITNESS  WHEREOF,  the  parties  hereto  have duly  executed  this
Agreement as of the date first above written.



                                     "Company"

                                     USA BIOMASS CORPORATION



                                     By:
                                        ------------------------------------
                                      Name:
                                           ---------------------------------
                                     Title:
                                           ---------------------------------


                                     "Employee"


                                            /s/ FRED ALEXANDER
                                      --------------------------------------
                                      Fred Alexander






                                      -10-
<PAGE>


                             USA Biomass Corporation
                                7314 Scout Avenue
                             Bell Gardens, CA 90201


                                  March 1, 2000


Dear Linda:

     This letter  confirms  that we have offered you  employment  with us on the
following terms, to begin March 4, 2000:

1.    Your initial position will be Accounting Supervisor.

2.    Your monthly base salary is $4,000.

3.    You are entitled to receive holidays, 4 weeks vacation, medical and dental
      insurance,  and other standard  Company  benefits,  all in accordance with
      standard Company plans and any revisions thereof.

4.    You shall be reimbursed  for reasonable  and necessary  business  expenses
      authorized and verified to Company's satisfaction.

5.    Your  employment is at will.  Either you or the Company may terminate this
      employment  relationship  at any  time  for any  reason,  with or  without
      "cause" (as defined  below).  If,  however,  the  Company  terminates  you
      without "cause" during the first 12 months of your  employment,  you shall
      be entitled to receive  your  monthly  base  salary and  standard  company
      benefits  until and through  the date that is twelve  months from the date
      you  began  your  employment  with us.  The  Company  may  terminate  your
      employment for "cause" due to any of the following acts or omissions:

     a.   Failure to perform your duties in a manner reasonably  consistent with
          the criteria established by the President and/or Board of Directors of
          Company;   provided,   however,  that  termination  pursuant  to  this
          paragraph  (a) shall be  preceded  by sixty  (60) days  prior  written
          notice  providing a  reasonable  opportunity  for your to correct your
          conduct, if the conduct in question can be corrected;


     b.   Your intentional breach of any statutory or common law duty of loyalty
          to the Company;

     c.   Any illegal act which materially and adversely  affects the Company or
          any of its affiliates;



<PAGE>

     d.   Engagement in serious  misconduct which is material to the performance
          of your duties and  obligations  for the Company,  including,  without
          limitation, the disclosure of confidential or proprietary information;

     e.   Conviction  of any felony or for any crime or offense  causing harm to
          the  Company  or any of its  affiliates  or  involving  acts of theft,
          fraud,  misappropriation  of funds,  embezzlement,  moral turpitude or
          similar conduct; or

     f.   Willful  or   intentiona1   misuse  or  diversion  of  Company  funds,
          misappropriation  of funds,  embezzlement,  or  fraudulent  or willful
          misrepresentations  or omissions on any written  reports  submitted to
          the Company.

6.   We each mutually  agree to arbitrate any and all  differences,  claims,  or
     disputes, of every kind (statutory or other) arising out of your employment
     or its termination. Such arbitration would be in Orange County, California,
     or  other  mutually agreed   location,   before  the  American  Arbitration
     Association, and in lieu of any court action.

     No other promises or representations have been made to you.

     Please sign below and return the original to me to accept employment.


                                                 Very truly yours,



                                                /s/ FRED BEHRENS
                                               ---------------------------------
                                               Fred Behrens


Agreed to this 10th day of March, 2000

LINDA ALEXANDER
--------------------------------
Linda Alexander


<PAGE>

                             USA Biomass Corporation
                                7314 Scout Avenue
                             Bell Gardens, CA 90201
                                  March 1, 2000


Dear Christine:

     This letter  confirms  that we have offered you  employment  with us on the
following  terms, to begin March 1, 2000:

1.   Your initial position will be Payroll Administrator.

2.   Monthly base salary of $2,815.

3.   Holidays,  vacation,  medical  and  dental  insurance,  and other  standard
     Company  benefits,  all in accordance  with standard  Company plans and any
     revisions thereof.

4.   Reimbursement of reasonable and necessary business expenses  authorized and
     verified to Company's satisfaction.

5.   Company will provide you with a vehicle, consistent with Company policy.


6.   Your  employment is at will.  Either you or the Company may terminate  this
     employment  relationship  at any time for any reason with or without cause.
     No one has the  authority  to change  this  except  by a written  agreement
     signed by both  parties.  Two weeks notice  would be expected  from you and
     would  be  given  to  you  (or  pay  in  lieu  of  notice)  absent  unusual
     circumstances.

7.   We each mutually  agree to arbitrate any and all  differences,  claims,  or
     disputes, of every kind (statutory or other) arising out of your employment
     or its termination. Such arbitration would be in Orange County, California,
     or  other  mutually-agreed   location,   before  the  American  Arbitration
     Association, and in lieu of any court action.

     No other promises or representations have been made to you.

     Please sign below and return the original to me to accept employment.


                                               Very truly your,


                                                /s/ FRED BEHRENS
                                               ---------------------------------
                                               Fred Behrens



Agreed to this    day of       , 2000



---------------------------------
Christine Alexander


<PAGE>


                             USA Biomass Corporation
                                7314 Scout Avenue
                             Bell Gardens, CA 90201

                                  March 1, 2000

Dear Bob:

     This letter  confirms  that we have offered you  employment  with us on the
following terms, to begin March 1, 2000:

3.   Your initial position will be Office Assistant.

4.   Monthly base salary of $1,000.

3.   Holidays,  vacation,  medical  and  dental  insurance,  and other  standard
     Company  benefits,  all in accordance  with standard  Company plans and any
     revisions thereof.

4.   Reimbursement of reasonable and necessary business expenses  authorized and
     verified to Company's satisfaction.

5.   Your  employment is at will.  Either you or the Company may terminate  this
     employment  relationship  at any time for any reason with or without cause.
     No one has the  authority  to change  this  except  by a written  agreement
     signed by both  parties.  Two weeks notice  would be expected  from you and
     would  be  given  to  you  (or  pay  in  lieu  of  notice)  absent  unusual
     circumstances.

6.   We each mutually  agree to arbitrate any and all  differences,  claims,  or
     disputes, of every kind (statutory or other) arising out of your employment
     or its termination. Such arbitration would be in Orange County, California,
     or  other  mutually-agreed   location,   before  the  American  Arbitration
     Association, and in lieu of any court action.

     No other promises or representations have been made to you.

     Please sign below and return the original to me to accept employment.


                                               Very truly yours,


                                                /s/ FRED BEHRENS
                                               ---------------------------------
                                               Fred Behrens


Agreed to this    day of        , 2000


---------------------------------
Bob Sharp


<PAGE>
                             USA BIOMASS CORPORATION


                       NONSTATUTORY STOCK OPTION AGREEMENT


     THIS  AGREEMENT  (the  "Agreement")  between  USA  BIOMASS  CORPORATION,  a
Delaware corporation (the "Company"), and FRED ALEXANDER ("Employee") is entered
into as of the 1st day of March, 2000.

                                    RECITALS

     Pursuant  to an  Employment  Agreement  dated  March 1, 2000,  between  the
Company and Employee  (the  "Employment  Agreement"),  the Company has agreed to
grant to Employee this option to purchase  shares of the Company's  common stock
as an inducement to Employee to enter into the Employment Agreement.

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Grant. The Company hereby grants to Employee the right to purchase up to
250,000 shares of common stock of the Company at a price of $3.50 per share,  on
the terms and  conditions  set forth  herein.  This  option is not  intended  to
qualify as an incentive  stock option under Section 422 of the Internal  Revenue
Code,  as amended,  and is not made  pursuant to any Company  stock option plan.
Employee agrees that Employee and any other person who may be entitled hereunder
to  exercise  this  option  shall be bound by all terms and  conditions  of this
Agreement.

     This  Agreement  and the grant of the option  herein shall not be effective
unless  and until  Employee  commences  full time  employment  with the  Company
pursuant to the terms of the Employment Agreement. If Employee does not commence
full time  employment  with the Company  pursuant to the terms of the Employment
Agreement,  this Agreement and the option granted herein shall be null and void,
and the parties  hereto shall be deemed to have no rights or  obligations  under
this Agreement whatsoever.

     2.  Exercisability.  The option granted herein shall become  exercisable at
the following times and in the following amounts:

          The   option   shall   become   exercisable   in
     cumulative increments of 125,000 shares on each of (a)
     September 1, 2000,  and (b) March 1, 2001. The option
     granted  hereunder  shall  lapse  and  expire  on the
     seventh (7th) anniversary of the date hereof,  unless
     terminated   sooner  as  provided  below;   provided,
     however,  that  the  term  of  the  option  shall  be
     extended  for any period that the ability of Employee
     to exercise his option is  suspended  pursuant to the
     provision of Section 9, hereof.

     If Employee  does not  purchase the full number of shares he is entitled to
purchase in any one year,  the right to purchase such shares carries over to the
subsequent years during the term of this option.



<PAGE>


     3.  Exercise.  This  option may be  exercised  on the terms and  conditions
contained  herein by giving ten (10) days' prior  written  notice of exercise to
the Company, specifying the number of shares to be purchased and the price to be
paid  therefor and by  delivering  a check in the amount of the  purchase  price
payable to the  Company.  The  purchase  price may also be paid,  in whole or in
part, by delivery to the Company of outstanding  shares of the Company's  common
stock previously held by the Employee valued at "Fair Market Value".

     For the purposes of this  Agreement,  "Fair  Market  Value" as of a certain
date (the  "Determination  Date") means: (a) the closing price of a share of the
Company's  common  stock  on the  principal  exchange  on  which  shares  of the
Company's common stock are then trading,  if any, on the Determination Date, or,
if  shares  were not  traded  on the  Determination  Date,  then on the  nearest
preceding trading day during which a sale occurred;  or (b) if such stock is not
traded on an exchange but is quoted on NASDAQ or a successor  quotation  system,
(i) the last sales price (if the stock is then listed as a National Market Issue
under The Nasdaq  National  Market  System) or (ii) the mean between the closing
representative  bid and asked  prices (in all other  cases) for the stock on the
Determination Date as reported by NASDAQ or such successor  quotation system; or
(c) if such stock is not publicly traded on an exchange and not quoted on NASDAQ
or a  successor  quotation  system,  the mean  between the closing bid and asked
prices for the stock, on the Determination  Date, as determined in good faith by
the Board; or (d) if the Company's stock is not publicly traded, the fair market
value established in good faith by the Board.

     4. Temination of Employment. If Employee's employment is terminated by the
Company for any reason (other than the conviction of a criminal act constituting
a felony and substantially  involving the Company),  the stock options will vest
on the dates set forth in Section 2,  hereof.  Employee,  or  Employee's  estate
shall have the right to exercise  these  options for one (1) year  following the
date of  vesting;  provided,  however,  that  the  term of the  option  shall be
extended  for any period that the ability of Employee to exercise  his option is
suspended pursuant to the provision of Section 9, hereof.

     5.  Transferability.  This option shall be transferable  only by will or by
the  law  of  descent  and   distribution  to  the  estate  (or  other  personal
representative) of Employee and shall be exercisable during Employee's  lifetime
only by him.  Except as otherwise  provided  herein,  any attempt at alienation,
assignment,  pledge,  hypothecation,  transfer,  sale, attachment,  execution or
similar process,  whether  voluntary or involuntary,  with respect to all or any
part of this option or any right under this Agreement, shall be null and void.

     6. Withholding Requirements. In the event the Company determines that it is
required to withhold  state or federal  income taxes as a result of the exercise
of this  option,  Employee  shall be  required,  as a condition  to the exercise
hereof, to make arrangements satisfactory to the Company to enable it to satisfy
such withholding requirements.

     7.  Rights as a  Stockholder.  Employee,  or any  permitted  transferee  of
Employee,  shall  have no rights as a  stockholder  with  respect  to any shares
covered by this option until the date of the issuance of a stock certificate for
such shares. No adjustment


                                      -2-
<PAGE>

shall  be made  for  dividends  (ordinary  or  extraordinary,  whether  in cash,
securities  or other  property),  distributions  or other  rights  for which the
record  date is prior to the date such stock  certificate  is issued,  except as
provided in Section 8 of this  Agreement.  This Agreement  shall not confer upon
Employee  any right of continued  employment  by the Company or interfere in any
way in the Company's right to terminate Employee.

     8.  Recapitalization.  Subject to any required action by stockholders,  the
number of shares of common stock  covered by this option and the exercise  price
thereof  shall be  proportionately  adjusted for any increase or decrease in the
number  of issued  shares  of  common  stock  resulting  from a  subdivision  or
consolidation  of such  shares or the payment of a stock  dividend  (but only of
common  stock) or any other  increase or decrease in the number of issued shares
of common  stock  effected  without  receipt of  consideration  by the  Company.
Subject to any required action by stockholders,  if the Company is the surviving
corporation in any merger or consolidation,  this option shall pertain and apply
to the,  securities  to which a holder of the  number of shares of common  stock
subject to the option would have been entitled.

     The  foregoing  adjustments  shall  be  made  by the  Company's  Board.  of
Directors,  whose  determination  shall be conclusive and binding on the Company
and Employee.

     9.  Securities Act and Other  Regulatory  Requirements.  This option is not
exercisable,  in whole or in part,  and the Company is not obligated to sell any
shares of the Company's common stock subject to this option, if such exercise or
sale, in the opinion of counsel for the Company,  would  violate the  Securities
Act of 1933 (or any other federal or state statutes having similar requirements)
as it may be in  effect  at  that  time.  In the  event  that he  option  is not
exercisable  pursuant to the  provisions  of this  Section 9 for a period of six
consecutive  months,  Company  shall  purchase  the  option  from  Employee  for
alternative  compensation  in an amount designed to approximate the value of the
option on such date.

     10.  Effect  of  Exercise.  Upon  the  exercise  of all or any part of this
option,  the number of shares of common  stock  subject to the option under this
Agreement  shall be reduced by the number of shares  with  respect to which such
exercise is made.

     11.  Notices.  Any  notice or other  communication  required  or  permitted
hereunder  or by law  shall be  validly  given or made  only if in  writing  and
delivered in person to an officer or duly authorized representative of the other
party,  or deposited in the United States mail,  duly  certified or  registered,
return receipt  requested,  postage prepaid,  and addressed to the party to whom
intended.  If  sent  to the  Company,  it  shall  be  addressed  in  care of the
President,  7314 Scout Avenue,  Bell Gardens,  California  90201, and if sent to
Employee,  it shall be addressed to Employee's  address on file with the Company
on the date of such  notice.  If sent by mail,  notice shall be deemed given two
days  after  deposit  of such  notice  in the mail and in  accordance  with this
section.  Any party  may from  time to time,  by  written  notice to the  other,
designate a different  address for notice  which shall be  substituted  for that
specified above.

     12.  Choice  of Law:  Counterparts.  This  Agreement,  and all  rights  and
obligations hereunder, shall be governed by the laws of the State of California.
This Agreement may be executed in one or more  counterparts,  each of which when
so


                                      -3-
<PAGE>

executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same instrument.

     13. Venue. The parties hereto  irrevocably and  unconditionally  consent to
submit to the exclusive  jurisdiction  of the courts of the State of California.
County of Orange,  and/or  the  United  States  District  Court for the  Central
District of California (Southen Division) for any actions, suits,  controversies
or proceedings arising out of or relating to this Agreement and the transactions
contemplated  hereby (and the parties agree not to commence any action,  suit or
proceeding relating thereto, except in such courts).

     14.  Successor.  This  Agreement  shall be  binding  upon and  inure to the
benefit  of  the  parties  hereto  and  their  respective   successors,   heirs,
beneficiaries, executors and administrators.

     15. Paragraph Headings: Employment.  Paragraph headings are for convenience
only and are not part of the  context.  This  Agreement  shall not  obligate the
Company or any affiliate to employ Employee for any period of time nor does this
Agreement constitute a contract or agreement for employment.



     IN WITNESS WHEREOF, this Agreement is executed as of the date first



                                                      USA BIOMASS CORPORATION



                                                      By:
                                                         -----------------------
                                                      Its:
                                                          ----------------------

                                                      EMPLOYEE:


                                                      /s/ Fred Alexander
                                                      --------------------------
                                                      Fred Alexander


                                      -4-

<PAGE>

executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same instrument.

     13. Venue. The parties hereto  irrevocably and  unconditionally  consent to
submit to the exclusive  jurisdiction  of the courts of the State of California,
County of Orange,  and/or  the  United  States  District  Court for the  Central
District of California (Southern Division) for any actions, suits, controversies
or proceedings arising out of or relating to this Agreement and the transactions
contemplated  hereby (and the parties agree not to commence any action,  suit or
proceeding relating thereto, except in such courts).

     14.  Successor.  This  Agreement  shall be  binding  upon and  inure to the
benefit  of  the  parties  hereto  and  their  respective   successors,   heirs,
beneficiaries, executors and administrators.

     15. Paragraph Headings: Employment.  Paragraph headings are for convenience
only and are not part of the  context.  This  Agreement  shall not  obligate the
Company or any affiliate to employ Employee for any period of time nor does this
Agreement constitute a contract or agreement for employment.


     IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.


                                       USA BIOMASS CORPORATION



                                       By:   /s/ FRED BEHRENS
                                          --------------------------------

                                       Its:  Chairman
                                           -------------------------------


                                       EMPLOYEE:



                                       -------------------------------
                                       Fred Alexander



                                      -4-


<PAGE>


                             USA BIOMASS CORPORATION
                                7314 Scout Avenue
                         Bell Gardens, California 90201

                                  March 1, 2000



Mr. Fred Alexander
1835 "A" South Center City Parkway,
#418
Escondido, California 92025

                   Re:  Appointment as Director
                        -----------------------
Dear Fred:

     This  letter  will  confirm  that the  Board of  Directors  of USA  Biomass
Corporation  ("USBC")  will appoint you as a director at the next meeting of the
Board of Directors and that your name will be included on the slate of directors
to be  submitted  to  the  shareholders  at  the  next  annual  meeting  of  the
shareholders of USBC.



                                            Sincerely,



                                            --------------------------------
                                            Fred Behrens
                                            President


<PAGE>

                               STATE OF CALIFORNIA

                                     [SEAL]

                               SECRETARY OF STATE

     I,  BILL  JONES,  Secretary  of State of the  State of  California,  hereby
certify:

     That the attached  transcript  of page(s) has been compared with the record
on file in this office,  of which it purports to be a copy, and that it is full,
true and Correct.


                                  IN WITNESS WHEREOF I execute this
                                     certificate and affix the Great
                                     Seal of the State of California
                                     this day of



                                     -------------------------------
[SEAL]

                                     /s/ Bill Jones
                                     Secretary of State


<PAGE>

                                                                   [STAMP]
                                                              ENDORSED - FILED
                                                            in the office of the
                                                            Secretary of State
                                                             of the State of
                                                                California

                                                                FEB 28 2000

                                                                BILL JONES,
                                                              Secretary of State


                            ARTICLES OF INCORPORATION

                                       OF

                              AWT ACQUISITION CORP.



                                        I

     The name of this corporation is AWT ACQUISITION CORP.

                                       II

     The purpose of this  corporation is to engage in any lawful act or activity
for which a corporation  may be organized  under the General  Corporation Law of
California  other than the banking  business,  the trust company business or the
practice  of a  profession  permitted  to  be  incorporated  by  the  California
Corporations Code.

                                       III

     The name in the State of California of this corporation's initial agent for
service of process is:  Corporation  Service  Company  which will do business in
California as CSC-Lawyers Incorporating Service.

                                       IV

     This  corporation is authorized to issue only one class of shares of stock;
and the total number of shares which this  corporation is authorized to issue is
1,000,000.

                                        V

     The liability of the  directors of this  corporation  for monetary  damages
shall be eliminated to the fullest extent permissible under California law.

                                       VI

     This  corporation  is authorized to provide  indemnification  of agents (as
defined  in Section  317 of the  California  Corporations  Code)  through  bylaw
provisions,  agreements with the agents,  vote of shareholders or  disinterested
directors or otherwise, in excess of the indemnification  otherwise permitted by
Section 317 of the California  Corporations Code, subject only to the applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to this corporation and its shareholders.


                                               /s/ Barbara Alder
DATED: February 25, 2000                       ---------------------------
                                               Barbara Alder, Incorporator




<PAGE>




                                     BYLAWS

                                       OF

                             AWT ACQUISITION CORP.





<PAGE>


                                TABLE OF CONTENTS


                                                                            Page

ARTICLE I

OFFICES .......................................................................1
  Section 1.  Principal Offices ...............................................1
  Section 2.  Other Offices ...................................................1

ARTICLE II

MEETINGS OF SHAREHOLDERS ......................................................1
  Section 1.  Place of Meetings ...............................................1
  Section 2.  Annual Meetings .................................................1
  Section 3.  Special Meeting .................................................1
  Section 4.  Notice of Shareholders' Meetings ................................2
  Section 5.  Manner of Giving Notice: Affidavit of Notice ....................2
  Section 6.  Quorum ..........................................................3
  Section 7.  Adjourned Meeting: Notice .......................................3
  Section 8.  Votin ...........................................................3
  Section 9.  Waiver of Notice or Consent by Absent Shareholders ..............4
  Section 10. Shareholder Action by Written Consent Without a Meeting .........4
  Section 11. Record Date for Shareholder Notice. Voting, and
               Giving Consents ................................................5
  Section 12. Proxies .........................................................5
  Section 13. Inspectors of Election ..........................................6

ARTICLE III

DIRECTORS
  Section 1.  Powers ..........................................................6
  Section 2.  Number and Qualification ........................................6
  Section 3.  Election and Term of Office of Directors ........................7
  Section 4.  Vacancies .......................................................7
  Section 5.  Place of Meetings and Meetings by Telephone .....................8
  Section 6.  Annual Meeting ..................................................8
  Section 7.  Other Regular Meetings ..........................................9
  Section 8.  Special Meetings ................................................9
  Section 9.  Quorum ..........................................................9
  Section 10. Waiver of Notice ................................................9
  Section 11. Adjournment .....................................................9
  Section 12. Notice of Adjournment ..........................................10
  Section 13. Action Without Meeting .........................................10
  Section 14. Fees and Compensations of Directors ............................10

                                       i

<PAGE>


                                                                            Page
ARTICLE IV

COMMITTEES ...................................................................10
  Section 1.  Committees of Directors ........................................10
  Section 2.  Meetings and Action of Committees ..............................11

ARTICLE V

OFFICERS .....................................................................11
  Section 1.  Officers .......................................................11
  Section 2.  Election of Officers ...........................................11
  Section 3.  Subordinate Officers ...........................................11
  Section 4.  Removal and Resignation of Officers ............................12
  Section 5.  Vacancjes in Offices ...........................................12
  Section 6.  Chairman of the Board ..........................................12
  Section 7.  Chief Executive Officer ........................................12
  Section 8.  President ......................................................12
  Section 9.  Vice Presidents ................................................12
  Section 10. Secretary ......................................................13
  Section 11. Chief Financial Officer ........................................13

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS .......................................................................13

ARTICLE VII

RECORDS AND REPORTS ..........................................................14
  Section 1.  Maintenance and Inspection of Share Register ...................14
  Section 2.  Maintenance and Inspection of Bylaws ...........................15
  Section 3.  Maintenance and Inspection of Other Corporate Records ..........15
  Section 4.  Inspection by Directors ........................................15
  Section 5.  Annual Report to Shareholders ..................................15
  Section 6.  Financial Statements ...........................................15
  Section 7.  Annual Statement of General Information ........................16

ARTICLE VIII
GENERAL CORPORATE MATTERS ....................................................16
  Section 1.  Record Date for Purposes Other Than Notice and Voting ..........16
  Section 2.  Checks. Drafts. Evidences of Indebtedness ......................17
  Section 3.  Corporate Contracts and Instruments: How Executed ..............17
  Section 4.  Certificates for Shares ........................................17

                                       ii

<PAGE>


                                                                            Page

  Section 5.  Lost Certificates ..............................................17
  Section 6.  Representation of Shares of Other Corporations .................18
  Section 7.  Construction and Definitions ...................................18

ARTICLE IX

AMENDMENTS ...................................................................18
  Section 1. Amendment by Shareholders .......................................18
  Section 2. Amendment by Directors ..........................................18

CERTIFICATE OF SECRETARY .....................................................19


                                       iii

<PAGE>



                                     BYLAWS

                                       OF

                              AWT ACQUISITION CORP.


                                    ARTICLE I

                                     OFFICES

     Section 1. Principal Offices. The Board of Directors shall fix the location
of the  principal  executive  office of the  corporation  at any place within or
outside the State of California.  If the principal  executive  office is located
outside this state, and the corporation has one or more business offices in this
state,  the Board of  Directors  shall fix and  designate a  principal  business
office in the State of California.

     Section 2. Other Offices. The Board of Directors may at any time establish,
or may  designate  an  officer  of  the  corporation  to  establish,  branch  or
subordinate offices at any place or places where the corporation is qualified to
do business.


                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

     Section 1. Place of Meetings. Meetings of shareholders shall be held at any
place  within or  outside  the State of  California  designated  by the Board of
Directors. In the absence of any such designation,  shareholders' meetings shall
be held at the principal executive office of the corporation.

     Section 2. Annual  Meetings.  The annual meeting of  shareholders  shall be
held each year on a date and at a time designated by the Board of Directors.  At
each annual meeting,  directors shall be elected,  and any other proper business
may be transacted.

     Section 3. Special  Meeting.  A special meeting of the  shareholders may be
called at any time by the Board of  Directors,  or by the Chairman of the Board,
or by the  President,  or by one or  more  shareholders  holding  shares  in the
aggregate entitled to cast not less than 10% of the votes at that meeting.

     If a special  meeting  is called by any  person or  persons  other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business  proposed to be  transacted,  and
shall be delivered  personally or sent by registered  mail or by  telegraphic or
other  facsimile  transmission to the Chairman of the Board,  the Presiden,  any
Vice President,  or the Secretary of the corporation.  The officer receiving the
request shall cause notice to be promptly given to the shareholders  entitled to
vote, in accordance  with the provisions of Sections 4 and 5 of this Article II,
that

                                       1

<PAGE>


a meeting will be held at the time  requested  by the person or persons  calling
the meeting,  not less than thirty-five (35) nor more than sixty (60) days after
the receipt of the request.  If the notice is not given within  twenty (20) days
after receipt of the request,  the person or persons  requesting the meeting may
give the notice.  Nothing contained in this paragraph of this Section 3 shall be
construed  as  limiting,  fixing  or  affecting  the  time  when  a  meeting  of
shareholders called by action of the Board of Directors may be held.

     Section 4.  Notice of  Shareholders'  Meetings.  All notices of meetings of
shareholders  shall be sent or otherwise  given in accordance  with Section 5 of
this  Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting.  The notice shall  specify the place,  date and hour of the
meeting  and (i) in the case of a special  meeting,  the  general  nature of the
business  to be  transacted,  or (ii) in the case of the annual  meeting,  those
matters which the Board of Directors,  at the time of giving the notice, intends
to present  for action by the  shareholders.  The notice of any meeting at which
directors  are to be elected  shall  include the name of any nominee or nominees
whom, at the time of the notice, management intends to present for election.

     If action is  proposed  to be taken at any  meeting  for  approval  of(i) a
contract or transaction  in which a director has a direct or indirect  financial
interest,  pursuant to Section 310 of the California  Corporations Code, (ii) an
amendment  of the  articles  of  incorporation,  pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation,  pursuant to 1201 of that Code,
(iv) a voluntary  dissolution  of the  corporation,  pursuant to Section 1900 of
that Code, or (v) a distribution  in dissolution  other than in accordance  with
the rights of  outstanding  preferred  shares,  pursuant to Section 2007 of that
Code, the notice shall also state the general nature of that proposal.

     Section 5.  Manner of Giving  Notice;  Affidavit  of Notice.  Notice of any
meeting of shareholders  shall be given either personally or by first-class mail
or other  means of written  communication,  charges  prepaid,  addressed  to the
shareholder  at the address of that  shareholder  appearing  on the books of the
corporation or given by the  shareholder to the  corporation  for the purpose of
notice.  If no such  address  appears  on the  corporation's  books or is given,
notice  shall  be  deemed  to have  been  given if sent to that  shareholder  by
first-class mail or other means of written  communication  to the  corporation's
principal  executive  office,  or if  published  at least once in a newspaper of
general circulation in the county where that office is located.  Notice shall be
deemed to have been given at the time when delivered  personally or deposited in
the mail or sent by other means of written communication.

     If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the  corporation is returned to the corporation by the
United  States Postal  Service  marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address,  all
future  notices  or  reports  shall be deemed to have  been duly  given  without
further mailing if these shall be available to the shareholder on written demand
of the  shareholder at the principal  executive  office of the corporation for a
period of one year from the date of the giving of the notice.

     An  affidavit  of the  mailing  or other  means of giving any notice of any
shareholders'  meeting shall be executed by the secretary,  assistant secretary,
or any transfer

                                       2

<PAGE>


agent of the corporation giving the notice, and shall be filed and maintained in
the minute book of the corporation.

     Section 6.  Quorum.  The presence in person or by proxy of the holders of a
majority of the shares  entitled to vote at any  meeting of  shareholders  shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held  meeting at which a quorum is present  may  continue to do
business   until   adjournment,   notwithstanding   the   withdrawal  of  enough
shareholders  to leave  less than a quorum,  if any  action  taken  (other  than
adjournment)  is  approved  by at least a  majority  of the shares  required  to
constitute a quorum.

     Section 7. Adjourned Meeting;  Notice. Any shareholders' meeting, annual or
special,  whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy,  but in the absence of a quorum,  no other  business  may be
transacted at that meeting, except as provided in Section 6 of this Article II.

     When any meeting of shareholders, either annual or special, is adjourned to
another time or place,  notice need not be given of the adjourned meeting if the
time and place are  announced  at a meeting at which the  adjournment  is taken,
unless a new  record  date for the  adjourned  meeting  is fixed,  or unless the
adjournment  is for more  than  forty-five  (45)  days from the date set for the
original  meeting,  in which case the Board of Directors  shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder of
record  entitled  to  vote at the  adjourned  meeting  in  accordance  with  the
provisions of Sections 4 and 5 of this Article II. At any adjourned  meeting the
corporation  may transact any business  which might have been  transacted at the
original meeting.

     Section 8.  Voting.  The  shareholders  entitled  to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II, subject to the provisions of Sections 702 to 704, inclusive,
of the  California  Corporations  Code  (relating  to  voting  shares  held by a
fiduciary, in the name of a corporation, or in joint ownership).

     The  shareholders'  vote  may be by  voice  vote  or by  ballot;  provided,
however,  that any election for  directors  must be by ballot if demanded by any
shareholder  before the voting has begun.  On any matter other than elections of
directors,  any shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining  shares or vote them against the proposal,
but,  if the  shareholder  fails to  specify  the  number  of  shares  which the
shareholder is voting  affirmatively,  it will be conclusively presumed that the
shareholder's  approving vote is with respect to all shares that the shareholder
is  entitled  to vote.  If a quorum  is  present,  the  affirmative  vote of the
majority of the shares  represented  at the meeting and  entitled to vote on any
matter  (other  than  the  election  of  directors)  shall  be  the  act  of the
shareholders,  unless  the vote of a greater  number or  voting  by  classes  is
required by California Corporations Code or by the Articles of Incorporation.

     At a  shareholders'  meeting  at  which  directors  are to be  elected,  no
shareholder  shall be entitled to cumulate votes (i.e., cast for any one or more
candidates  a number  of votes  greater  than the  number  of the  shareholder's
shares) unless the candidates' names have


                                        3

<PAGE>


been placed in nomination  prior to commencement of the voting and a shareholder
has given  notice  prior to  commencement  of the  voting  of the  shareholder's
intention to cumulate votes.  If any  shareholder has given such a notice,  then
every  shareholder  entitled  to vote  may  cumulate  votes  for  candidates  in
nomination  and give one  candidate  a number  of votes  equal to the  number of
directors  to be  elected  multiplied  by the  number  of votes  to  which  that
shareholder's shares are entitled,  or distribute the shareholder's votes on the
same principle  among any or all of the candidates,  as the  shareholder  thinks
fit. The candidates  receiving the highest number of votes,  up to the number of
directors to be elected, shall be elected.

     Section  9.  Waiver of  Notice  or  Consent  by  Absent  Shareholders.  The
transactions of any meeting of shareholders,  either annual or special,  however
called and noticed, and wherever held, shall be as valid as though a meeting had
been duly held after regular call and notice,  if a quorum is present  either in
person or by proxy,  and if,  either  before or after the  meeting,  each person
entitled  to vote,  who was not  present in person or by proxy,  signs a Written
Waiver of Notice or a Consent to a holding of the meeting, or an approval of the
minutes. The Waiver of Notice or Consent need not specify either the business to
be transacted or the purpose of any annual or special  meeting of  shareholders,
except  that,  if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this Article II,
the Waiver of Notice or Consent shall state the general nature of the proposal.

     All such waivers,  consents or approvals  shall be filed with the corporate
records or made a part of the minutes of the meeting.

     Attendance  by a person  at a meeting  shall  also  constitute  a waiver of
notice of that meeting,  except when the person objects, at the beginning of the
meeting,  to the transaction of any business because the meeting is not lawfully
called or convened,  and except that  attendance at a meeting is not a waiver of
any right to object to the  consideration  of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.

     Section 10.  Shareholder  Action by Written Consent Without a Meeting.  Any
action which may be taken at any annual or special meeting of  shareholders  may
be taken without a meeting and without  prior  notice,  if a consent in writing,
setting  forth the  action so taken,  is signed by the  holders  of  outstanding
shares having not less than the minimum  number of votes that would be necessary
to  authorize  or take that action at a meeting at which all shares  entitled to
vote thereon were present and voted. In the case of election of directors,  such
a consent  shall be effective  only if signed by the holders of all  outstanding
shares entitled to vote for the election of directors; provided, however, that a
director  may be elected at any time to fill a vacancy on the Board of Directors
that has not been filled by the directors, by the written consent of the holders
of a majority of the  outstanding  shares  entitled to vote for the  election of
directors.  All  such  consents  shall  be  filed  with  the  Secretary  of  the
corporation  and shall be maintained in the corporate  records.  Any shareholder
giving a written consent, or the shareholder's proxy holders, or a transferee of
the shares or a personal  representative  of the shareholder or their respective
proxy holders,  may revoke the consent by a writing received by the secretary of
the  corporation  before  written  consents of the number of shares  required to
authorize the proposed action have been filed with the secretary.

                                       4

<PAGE>


     If the  consents  of all  shareholders  entitled  to  vote  have  not  been
solicited  in  writing,  and if  the  Unanimous  Written  Consent  of  all  such
shareholders  shall not have been  received,  the  Secretary  shall give  prompt
notice of the corporate action approved by the  shareholders  without a meeting.
This notice shall be given in the manner  specified in Section 5 of this Article
II. In the case of approval of(i)  contracts or transactions in which a director
has a direct or  indirect  financial  interest,  pursuant  to Section 310 of the
California Corporations Code, (ii) indemnification of agents of the corporation.
pursuant to Section 317 of that Code, (iii) a reorganization of the corporation,
pursuant to Section 1201 of that Code,  and (iv) a  distribution  in dissolution
other  than in  accordance  with the  rights of  outstanding  preferred  shares,
pursuant to Section  2007 of that Code,  the notice  shall be given at least ten
(10) days before the consummation of any action authorized by that approval.

     Section  11.  Record  Date  for  Shareholder  Notice,  Voting,  and  Giving
Consents. For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give  consent to  corporate  action  without a
meeting,  the Board of Directors may fix, in advance,  a record date which shall
not be more than sixty (60) days nor less than ten (10) days  before the date of
any such meeting nor more than sixty (60) days before any such action  without a
meeting,  and in this event only shareholders of record on the date so fixed are
entitled  to  notice  and to vote  or to  give  consents,  as the  case  may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date,  except as otherwise  provided in the  California  Corporations
Code.

     If the Board of Directors does not so fix a record date:

          (a) The record date for determining shareholders entitled to notice of
     or to vote at a meeting of  shareholders  shall be at the close of business
     on the business day next  preceding  the day on which notice is given or if
     notice  is  waived,  at the  close of  business  on the  business  day next
     preceding the day on which the meeting is held.

          (b) The record  date for  determining  shareholders  entitled  to give
     consent to corporate action in writing without a meeting, (i) when no prior
     action  by the board  has been  taken,  shall be the day on which the first
     written  consent is given,  or (ii) when prior action of the board has been
     taken,  shall be at the  close of  business  on the day on which  the board
     adopts the resolution relating to such prior action, or the sixtieth (60th)
     day before the date of such prior action, whichever is later.

     Section 12. Proxies.  Every person entitled to vote for directors or on any
other  matter  shall  have the right to do so either in person or by one or more
agents  authorized  by a written  proxy  signed by the person and filed with the
Secretary  of  the   corporation.   A  proxy  shall  be  deemed  signed  if  the
shareholder's  name  is  placed  on the  proxy  (whether  by  manual  signature,
typewriting,  telegraphic transmission,  or otherwise) by the shareholder or the
shareholder's  attorney-in-fact.  A validly  executed proxy which does not state
that it is  irrevocable  shall  continue  in full  force and  effect  unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation  stating that the proxy is revoked, or by a
subsequent  proxy executed by, or attendance at the meeting and voting in person
by,  the person  executing  the proxy;  or (ii)  written  notice of the death or
incapacity of the maker of that proxy is received by the corporation  before the
vote pursuant to that proxy is counted;  provided,  however, that no proxy shall
be valid after the expiration

                                       5

<PAGE>


of eleven (11) months from the date of the proxy,  unless otherwise  provided in
the  proxy.  The  revocability  of a proxy  that  states  on its face that it is
irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of
the California Corporations Code.

     Section 13. Inspectors of Election. Before any meeting of shareholders, the
Board of Directors may appoint any persons other than nominees for office to act
as Inspectors of Election at the meeting or its adjournment. If no Inspectors of
Election are so  appointed,  the Chairman of the meeting may, and on the request
of any  shareholder  or a  shareholder's  proxy  shall,  appoint  Inspectors  of
Election at the  meeting.  The number of  inspectors  shall be either one (1) or
three (3). If  inspectors  are  appointed  at a meeting on the request of one or
more  shareholders  or  proxies,  the  holders of a majority  of shares or their
proxies  present at the  meeting  shall  determine  whether one (1) or three (3)
inspectors are to be appointed.  If any person  appointed as inspector  fails to
appear or fails or refuses to act, the Chairman of the meeting may, and upon the
request of any shareholder or a shareholder's  proxy shall,  appoint a person to
fill that vacancy.

     These inspectors shall:

          (a) Determine the number of shares outstanding and the voting power of
     each, the shares represented at the meeting, the existence of a quorum, and
     the authenticity, validity, and effect of proxies;

          (b) Receive votes, ballots, or consents;

          (c) Hear and determine all challenges and questions in any way arising
     in connection with the right to vote;

          (d) Count and tabulate all votes or consents;

          (e) Determine when the polls shall close;

          (f) Determine the result; and

          (g) Do any other acts that may be proper to conduct  the  election  or
     vote with fairness to all shareholders.

                                   ARTICLE III

                                    DIRECTORS

     Section 1. Powers. Subject to the provisions of the California Corporations
Code and any  limitations  in the  articles of  incorporation  and these  bylaws
relating  to  action  required  to be  approved  by the  shareholders  or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all  corporate  powers shall be  exercised by or under the  direction of the
Board of Directors.

                                       6

<PAGE>


     Without  prejudice  to  these  general  powers,  and  subject  to the  same
limitations, the Board of Directors shall have the power to:

          (a) Select  and remove all  officers,  agents,  and  employees  of the
     corporation;  present  any powers  and duties for them that are  consistent
     with law, with the articles of  incorporation,  and with these bylaws;  fix
     their compensation; and require from them security for faithful service.

          (b) Change the principal  executive  office or the principal  business
     office in the State of California  from one location to another;  cause the
     corporation  to be qualified to do business in any other state,  territory,
     dependency,  or country and conduct business within or without the State of
     California;  and  designate  any  place  within  or  without  the  State of
     California  for the  holding of any  shareholders'  meeting,  or  meetings,
     including annual meetings.

          (c) Adopt,  make,  and use a corporate  seal;  prescribe  the forms of
     certificates of stock; and alter the form of the seal and certificates.

          (d)  Authorize the issuance of shares of stock of the  corporation  on
     any lawful terms,  in  consideration  of money paid,  labor done,  services
     actually  rendered,  debts or  securities  canceled,  or tangible  property
     actually received.

          (e) Borrow money and incur  indebtedness on behalf of the corporation,
     and cause to be executed and delivered for the corporation's  purposes,  in
     the corporate name,  promissory notes, bonds,  debentures,  deeds of trust,
     mortgages,  pledges,  hypothecations,  and  other  evidences  of  debt  and
     securities.

     Section 2. Number and Oualificationof  Directors.  The authorized number of
directors  shall be one (1) until  changed by a duly  adopted  amendment  to the
Articles of  Incorporation  or by an amendment to this bylaw adopted by the vote
or written consent of holders of a majority of the  outstanding  shares entitled
to vote;  provided,  however,  that if the number of  directors  should  ever be
increased to five (5) or more, an amendment to this Section 2 reducing the fixed
number of  directors  to a number  less than five (5)  cannot be  adopted if the
votes cast against its adoption at a meeting,  or the shares not  consenting  in
the case of action by  written  consent,  are equal to more than  16-2/3% of the
outstanding shares entitled to vote.

     Section 3.  Election and Term of Office of  Directors.  Directors  shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting.  Each director,  including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.

                                       7

<PAGE>


     Section 4. Vacancies.  Vacancies in the Board of Directors may be filled by
a majority of the remaining  directors,  though less than a quorum. or by a sole
remaining  director,  except that a vacancy created by the removal of a director
by the vote or written  consent  of the  shareholders  or by court  order may be
filled only by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present,  or by the written  consent
of holders of all shares  entitled to vote for the election of  directors.  Each
director  so elected  shall hold  office  until the next  annual  meeting of the
shareholders and until a successor has been elected and qualified.

     A vacancy or vacancies  in the Board of Directors  shall be deemed to exist
in the event of the death,  resignation,  or removal of any director,  or if the
Board of Directors by  resolution  declares  vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the  shareholders  fail,  at any  meeting  of  shareholders  at which  any
director or directors are elected,  to elect the number of directors to be voted
for at that meeting.

     The  shareholders may elect a director or directors at any time to fill any
vacancy or  vacancies  not filled by the  directors,  but any such  election  by
written  consent  shall  require the  consent of a majority  of the  outstanding
shares entitled to vote.

     Any director may resign  effective on giving written notice to the chairman
of the Board, the President,  the Secretary,  or the Board of Directors,  unless
the notice specifies a later time for that resignation to become  effective.  If
the  resignation  of a director  is  effective  at a future  time,  the Board of
Directors  may elect a successor  to take office  when the  resignation  becomes
effective.

     No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.

     Section 5. Place of Meetings and Meetings by Telephone. Regular meetings of
the Board of  Directors  may be held at any place within or outside the State of
California  that has been  designated  from  time to time by  resolution  of the
board. In the absence of such a designation,  regular  meetings shall be held at
the principal executive office of the corporation. Special meetings of the board
shall be held at any place  within or outside the State of  California  that has
been  designated in the notice of the meeting or, if not stated in the notice or
there is no notice, at the principal executive office of the corporation.

     Any meeting,  regular or special,  may be held by  conference  telephone or
similar communication  equipment,  so long as all directors participating in the
meeting  can hear one  another  and all such  directors  shall be  deemed  to be
present in person at the meeting.  With respect to any director who participates
in a  meeting  of the  board by  conference  telephone  or other  communications
equipment, the Chairman of the Board, Chief Executive Officer or President shall
verify by voice recognition or any other means reasonably selected at the outset
of such  meeting  (i) the  identity  of that  member  and (ii) that  statements,
questions, actions or votes by members so participating are made by such members
and not by persons who are not permitted to participate as directors.

                                       8

<PAGE>


     Section 6. Annual  Meeting.  Immediately  following  each annual meeting of
shareholders,  the  Board of  Directors  shall  hold a regular  meeting  for the
purpose of organization,  any desired election of officers,  and the transaction
of other business. Notice of this meeting shall not be required.

     Section 7. Other Regular  Meetings.  Other regular meetings of the Board of
Directors  shall be held without call at such time as shall from time to time be
fixed by the Board of  Directors.  Such  regular  meetings  may be held  without
notice.

     Section 8. Special Meetings. Special meetings of the Board of Directors for
any purpose or purposes  may be called at any time by the  Chairman of the Board
or the President or any Vice President or the Secretary or any two directors.

     Notice of the time and place of  special  meetings  shall be (i)  delivered
personally or by telephone  (intluding a voice messaging  system or other system
or  technology  designed  to  record  and  communicate   messages),   telegraph,
facsimile, electronic mail, or other electronic means, to each director at least
forty-eight  (48) hours  before the time of the  holding of the  meeting or (ii)
sent by  first-class  mail at least four (4) days before the time of the holding
of the meeting,  charges prepaid,  addressed to each director at that director's
address as it is shown on the records of the corporation.  Any oral notice given
personally  or by telephone may be  communicated  either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly  communicate  it to the  director.  The notice need not
specify the purpose of the meeting nor the place if the meeting is to be held at
the principal executive office of the corporation.

     Section 9. Ouorum.  A majority of the authorized  number of directors shall
constitute  a quorum  for the  transaction  of  business,  except to  adjourn as
provided in Section 11 of this Article III.  Every act or decision  done or made
by a majority of the directors  present at a meeting duly held at which a quorum
is present  shall be regarded as the act of the Board of  Directors,  subject to
the  provisions  of  Section  3 10 of the  California  Corporations  Code (as to
approval  of  contracts  or  transactions  in which a  director  has a direct or
indirect  material  financial  interest),  Section  311  of  that  Code  (as  to
appointment  of   committees),   and  Section  31  7(e)  of  that  Code  (as  to
indemnification of directors).  A meeting at which a quorum is initially present
may continue to transact business  notwithstanding  the withdrawal of directors,
if any action  taken is approved by at least a majority of the  required  quorum
for that meeting.

     Section 10. Waiver of Notice.  The  transactions of any meetingof the Board
of Directors,  however called and noticed or wherever held, shall be as valid as
though a meeting had been duly held after regular call and notice if a quorum is
present and if,  either  before or after the meeting,  each of the directors not
present signs a written waiver of notice, a consent to holding the meeting or an
approval of the  minutes.  The waiver of notice or consent  need not specify the
purpose of the meeting. All such waivers, consents, and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.  Notice
of a meeting  shall also be deemed given to any director who attends the meeting
without  protesting  before or at its  commencement,  the lack of notice to that
director.

                                       9

<PAGE>


     Section 11.  Adjournment.  A majority of the directors present,  whether or
not constituting a quorum, may adjourn any meeting to another time and place.

     Section 12. Notice of Adjournment.  Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for more
than  twenty-four  hours,  in which case  notice of the time and place  shall be
given  before the time of the  adjourned  meeting,  in the manner  specified  in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.

     Section 13. Action Without Meeting.  Any action required or permitted to be
taken by the Board of Directors may be taken  without a meeting,  if all members
of the board  shall  individually  or  collectively  consent  in writing to that
action. Such action by written consent shall have the same force and effect as a
unanimous vote of the Board of Directors. Such written consent or consents shall
be filed with the minutes of the proceedings of the board.

     Section 14. Fees and  Compensation  of Directors.  Directors and members of
committees may receive such compensation,  if any, for their services,  and such
reimbursement  of expenses,  as may be fixed or  determined by resolution of the
Board of  Directors.  This  Section 14 shall not be  construed  to preclude  any
director  from  serving  the  corporation  in any other  capacity as an officer,
agent, employee, or otherwise, and receiving compensation for those services.


                                   ARTICLE IV

                                   COMMITTEES

     Section  1.  Committees  of  Directors.  The  Board of  Directors  may,  by
resolution  adopted  by a  majority  of  the  authorized  number  of  directors,
designate one or more committees,  each consisting of one or more directors,  to
serve  at the  pleasure  of the  board.  The  board  may  designate  one or more
directors  as  alternate  members of any  committee,  who may replace any absent
member at any meeting of the committee. Any committee, to the extent provided in
the resolution of the board,  shall have all the authority of the board,  except
with respect to:

          (a)  The  approval  of  any  action   which,   under  the   California
     Corporations Code, also requires  shareholders' approval or approval of the
     outstanding shares;

          (b) The  filling  of  vacancies  on the Board of  Directors  or in any
     committee;

          (c) The fixing of  compensation  of the  directors  for serving on the
     board or on any committee;

          (d) The amendment or repeal of bylaws or the adoption of new bylaws.


                                       10

<PAGE>


          (e) The  amendment  or  repeal  of any  resolutions  of the  Board  of
     Directors which by its express terms is not so amendable or repealable;

          (f) A distribution to the shareholders of the corporation, except at a
     rate or in a  periodic  amount or within a price  range  determined  by the
     Board of Directors;

          (g) The appointment of any other  committees of the Board of Directors
     or the members of these committees.

     Section  2.  Meetings  and  Action of  Committees.  Meetings  and action of
committees  shall be governed  by, and held and taken in  accordance  with,  the
provisions  of Article III of these bylaws,  Sections 5 (place of  meetings),  7
(regular meetings),  8 (special meetings and notice), 9 (quorum),  10 (waiver of
notice),  11 (adjournment),  12 (notice of adjournment),  and 13 (action without
meetings),  with such changes in the context of those bylaws as are necessary to
substitute  the  committee  and its members for the Board of  Directors  and its
members,  except  that  the  time  of  regular  meetings  of  committees  may be
determined  either by  resolution  of the Board of Directors or by resolution of
the committee;  special  meetings of committees may also be called by resolution
of the Board of Directors;  and notice of special  meetings of committees  shall
also be given to all alternate  members,  who shall have the right to attend all
meetings  of the  committee.  The Board of  Directors  may  adopt  rules for the
government  of any  committee  not  inconsistent  with the  provisions  of these
bylaws.


                                    ARTICLE V

                                    OFFICERS

     Section 1. Officers.  The officers of the Corporation shall be a President,
a Secretary and a Chief Financial Officer. The Corporation may also have, at the
discretion of the Board, a Chairman of the Board, a Chief Executive Officer, one
or more Vice  Presidents,  one or more  Assistant Vice  Presidents,  one or more
Assistant  Secretaries,  one or more Assistant Chief Financial Officers and such
other officers as may be appointed in accordance  with the provisions of Section
3 of this Article V. Any number of offices may be held by the same  person.  The
salaries of all officers of the Corporation  shall be fixed from time to time by
the Board.

     Section 2. Election of Officers.  The officers of the  corporation,  except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article V, shall be chosen by the Board of  Directors,  and
each shall serve at the pleasure of the board, subject to the rights, if any, of
an officer under any contract of employment.

     Section 3. Subordinate  Officers.  The Board of Directors may appoint,  and
may empower the President,  or Chief Executive Officer, if any, to appoint, such
other  officers as the business of the  corporation  may  require,  each of whom
shall hold office for such period,  have such  authority and perform such duties
as are provided in the bylaws or as the Board of Directors may from time to time
determine.

                                       11

<PAGE>


     Section 4. Removal and Resignation of Officers.  Subject to the rights,  if
any, of an officer under any contract of employment, any officer may be removed,
either  with or without  cause,  by the Board of  Directors,  at any  regular or
special  meeting of the board,  or,  except in case of an officer  chosen by the
Board of  Directors,  by any  officer  upon whom such  power of  removal  may be
conferred by the Board of Directors.

     Any  officer  may  resign  at any  time by  giving  written  notice  to the
corporation.  Any  resignation  shall take  effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified  in that  notice,  the  acceptance  of the  resignation  shall  not be
necessary to make it  effective.  Any  resignation  is without  prejudice to the
rights,  if any, of the corporation under any contract to which the officer is a
party.

     Section 5. Vacancies in Offices.  A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for rdgular appointments to that office.

     Section 6.  Chairman of the Board.  The  Chairman of the Board,  if such an
officer be  elected,  shall,  if  present,  preside at  meetings of the Board of
Directors  and  exercise and perform such other powers and duties as may be from
time to time  assigned to him by the Board of  Directors  or  prescribed  by the
bylaws. If there is no Chief Executive Officer or President, the Chairman of the
Board shall in addition be the Chief  Executive  Officer of the  corporation and
shall have the powers and duties prescribed in Section 7 of this Article V.

     Section 7. Chief Executive Officer. The Chief Executive Officer, if such an
officer be elected,  shall,  subject to the control of the Board,  have  general
supervision,   direction  and  control  of  the  business  and  affairs  of  the
Corporation. In the absence or disability of the Chairman of the Board, or if no
such  officer is  elected,  the Chief  Executive  Officer  shall  preside at all
meetings of shareholders  and the Board of Directors.  He shall have the general
powers and duties of management usually vested in the chief executive officer of
a  corporation,  and shall have such other powers and duties with respect to the
administration  of the business and affairs of the  Corporation as may from time
to time be assigned to him by the Board of  Directors  or as  prescribed  by the
bylaws.

     Section 8. President. Subject to such supervisory powers as may be given by
the Board of  Directors  to the  Chairman  of the  Board or the Chief  Executive
Officer, if there be such officers,  the President shall have the general powers
and  duties of  management  usually  vested  in the  office  of  president  of a
corporation and shall have such other powers and duties as may from time to time
be prescribed by the Board of Directors or Chief Executive  Officer,  if any, or
as  prescribed  by the  bylaws.  If  there is no Chief  Executive  Officer,  the
President shall be the chief executive officer of the corporation and shall have
the powers and duties prescribed in Section 7 of this Article V.

     Section 9. Vice Presidents.  In the absence or disability of the President,
the Vice  Presidents,  if any,  in order of their  rank as fixed by the Board of
Directors  or,  if not  ranked,  a Vice  President  designated  by the  Board of
Directors,  shall  perform all the duties of the  President,  subject to all the
restrictions  upon the  President.  The Vice  Presidents  shall  have such other
powers and perform such other duties as from time to time may be

                                       12

<PAGE>


prescribed for them  respectively  by the Board of Directors or the bylaws,  and
the President, or the Chairman of the Board.

     Section 10. Secretary. The Secretary shall keep or cause to be kept, at the
principal  executive  office or such other place as the Board of  Directors  may
direct,  a book of minutes of all meetings and actions of directors,  committees
of  directors,  and  shareholders,  with the time and place of holding,  whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at  directors'  meetings or committee  meetings,  the number of
shares present or represented at shareholders' meetings, and the proceedings.

     The Secretary  shall keep, or cause to be kept, at the principal  executive
office or at the office of the  corporation's  transfer  agent or registrar,  as
determined  by  resolution of the Board of  Directors,  a share  register,  or a
duplicate  share  register,  showing  the  names of all  shareholders  and their
addresses, the number and classes of shares held by each, the number and date of
certificates  issued for the same,  and the number and date of  cancellation  of
every certificate surrendered for cancellation.


     The Secretary  shall give, or cause to be given,  notice of all meetings of
the shareholders and of the Board of Directors  required by the bylaws or by law
to be given, and he shall keep the seal of the corporation if one be adopted, in
safe custody,  and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or by the bylaws.

     Section 11. Chief Financial Officer. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records  of  accounts  of  the  properties  and  business  transactions  of  the
corporation,   including   accounts  of  its  assets,   liabilities,   receipts,
disbursements, gains, losses, capital, retained eaming, and shares. The books of
account shall at all reasonable times be open to inspection by any director.


     The Chief Financial Officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation  with such  depositories as may be
designated  by the  Board of  Directors.  He  shall  disburse  the  funds of the
corporation  as may be ordered by the Board of  Directors,  shall  render to the
President  and  directors,  whenever  they  request it, an account of all of his
transactions  as Chief Financial  Officer and of the financial  condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the Board of Directors or the bylaws.


                                   ARTICLE VI

                INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES

                                AND OTHER AGENTS

     The corporation  shall have the authority,  to the maximum extent permitted
by the  California  Corporations  Code, to indemnify  each of its agents against
expenses,

                                       13

<PAGE>


judgments, fines, settlements and other amounts actually and reasonably incurred
in connection  with any  proceeding  arising by reason of the fact that any such
person is or was an agent of the  corporation.  The corporation  shall also have
the authority,  to the maximum extent  permitted by the California  Corporations
Code, to advance expenses  incurred by any agent of the corporation in defending
any proceeding.

     The corporation shall have the authority to purchase and maintain insurance
on behalf of agents of the corporation against any liability asserted against or
incurred by any agent in such  capacity or arising out of the agent's  status as
agent.

     The corporation shall have the power to enter into binding  agreements with
its agents to provide the indemnification allowed under this Article.

     Nothing in this Article shall be construed either to allow  indemnification
of any agent for any acts or omissions or transactions from which such agent may
not be indemnified  under applicable  California law or to deny  indemnification
when applicable California law requires indemnification.

     For purposes of this Article,  an "agent" of the  corporation  includes any
person  who is or was a  director,  officer,  employee,  or  other  agent of the
corporation,  or is or was  serving  at the  request  of  the  corporation  as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise,  or was a director,  officer,  employee, or
agent of a corporation which was a predecessor corporation of the corporation or
of another  enterprise  at the  request  of such  predecessor  corporation.  For
purposes  of  this  Article,  "proceeding"  means  any  threatened,  pending  or
completed  action or proceeding,  whether  civil,  criminal,  administrative  or
investigative.  For  purposes  of this  Article,  "expenses"  includes,  without
limitation,  attorneys'  fees  and any  expenses  of  establishing  a  right  to
indemnification.


                                   ARTICLE VII

                               RECORDS AND REPORTS

     Section 1.  Maintenance and Inspection of Share  Register.  The corporation
shall keep at its principal  executive  office, or at the office of its transfer
agent or  registrar,  if either be appointed  and as determined by resolution of
the Board of  Directors,  a record  of its  shareholders,  giving  the names and
addresses  of all  shareholders  and the number and class of shares held by each
shareholder.

     A shareholder  or  shareholders  of the  corporation  holding at least five
percent  (5%)  in  the  aggregate  of  the  outstanding  voting  shares  of  the
corporation  may (i)  inspect and copy the  records of  shareholders'  names and
addresses and  shareholdings  during usual business hours on five (5) days prior
written  demand on the  corporation,  and (ii) obtain from the transfer agent of
the  corporation,  on written demand and on the tender of such transfer  agent's
usual charges for such list, a list of the  shareholders'  names and  addresses,
who are entitled to vote for the election of directors, and their shareholdings,
as of the most recent record date for which that list has been compiled or as of
the date specified by the

                                       14

<PAGE>


shareholder  after the date of demand.  This list shall be made available to any
such  shareholder  by the transfer agent on or before the later of five (5) days
after the demand is received or the date  specified in the demand as the date as
of which the list is to be compiled.  The record of  shareholders  shall also be
open to  inspection  on the  written  demand of any  shareholder  or holder of a
voting trust certificate, at any time during usual business hours, for a purpose
reasonably  related to the holder's  interests as a shareholder or as the holder
of a voting trust  certificate.  Any inspection and copying under this Section 1
may be made in person or by an agent or attorney of the shareholder or holder of
a voting trust certificate making the demand.

     Section 2. Maintenance and InsDection of Bylaws. The corporation shall keep
at its principal  executive office, or if its principal  executive office is not
in the State of California,  at its principal business office in this state, the
original  or a copy of the  bylaws as amended  to date,  which  shall be open to
inspection by the  shareholders at all reasonable  times during office hours. If
the  principal  executive  office of the  corporation  is  outside  the State of
California and the corporation  has no principal  business office in this state,
the Secretary  shall,  upon the written request of any  shareholder,  furnish to
that shareholder a copy of the bylaws as amended to date.

     Section 3.  Maintenance  and  Inspection of Other  Corporate  Records.  The
accounting  books and records and minutes of proceedings of the shareholders and
the Board of Directors and any committee or committees of the Board of Directors
shall be kept at such place or places designated by the Board of Directors,  or,
in the absence of such  designation,  at the principal  executive  office of the
corporation.  The minutes shall be kept either in written form or any other form
capable of being  converted into written form. The minutes and accounting  books
and  records  shall  be  open to  inspection  upon  the  written  demand  of any
shareholder  or holder of a voting trust  certificate,  at any  reasonable  time
during usual business hours,  for a purpose  reasonably  related to the holder's
interests as a shareholder or as the holder of a voting trust  certificate.  The
inspection  may be made in person or by an agent or attorney,  and shall include
the right to copy and make extracts.  These rights of inspection shall extend to
the records of each subsidiary corporation of the corporation.

     Section 4. Inspection by Directors.  Every director shall have the absolute
right at any  reasonable  time to inspect all books,  records,  and documents of
every  kind  and the  physical  properties  of the  corporation  and each of its
subsidiary corporations.  This inspection by a director may be made in person or
by an agent or attorney and the right of  inspection  includes the right to copy
and make extracts of documents.

     Section 5. Annual Renort to Shareholders. The annual report to shareholders
referred to in Section  1501 of the  California  Corporations  Code is expressly
dispensed with, but nothing herein shall be interpreted as prohibiting the Board
of Directors from issuing annual or other periodic  reports to the  shareholders
of the corporation as they consider appropnate.

     Section 6. Financial  Statements.  A copy of any annual financial statement
and any income  statement of the corporation  for each quarterly  period of each
fiscal year, and any accompanying balance sheet of the corporation as of the end
of each such period,  that has been prepared by the corporation shall be kept on
file in the principal executive office

                                       15

<PAGE>


of the  corporation  for twelve  (12)  months and each such  statement  shall be
exhibited at all reasonable times to any shareholder demanding an examination of
any such statement or a copy shall be mailed to any such shareholder.

     If a shareholder or shareholders  holding at least five percent (5%) of the
outstanding  shares  of any  class of stock of the  corporation  makes a written
request to the  corporation  for an income  statement of the corporation for the
three-month,  six (6) month or nine (9) month period of the then current  fiscal
year ended more than  thirty  (30) days  before the date of the  request,  and a
balance  sheet  of the  corporation  as of the end of  that  period,  the  Chief
Financial  Officer  shall cause that  statement to be  prepared,  if not already
prepared,  and shall deliver  personally or mail that statement or statements to
the person  making the request  within thirty (30) days after the receipt of the
request.  If the corporation has not sent to the  shareholders its annual report
for the last fiscal year,  this report shall  likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.

     The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual,  semi-annual,  or quarterly income
statement  which  it has  prepared,  and a  balance  sheet as of the end of that
period.

     The quarterly  income  statements  and balance  sheets  referred to in this
section  shall  be  accompanied  by the  report,  if  any.  of  any  independent
accountants  engaged by the  corporation  or the  certificate  of an  authorized
officer of the corporation  that the financial  statements were prepared without
audit from the books and records of the corporation.

     Section 7. Annual Statement of General  Information.  The corporation shall
in each year file with the Secretary of State of the State of California, on the
prescribed form, a statement  setting forth the authorized  number of directors,
the  names  and  complete  business  or  residence  addresses  of all  incumbent
directors,  the names and complete business or residence  addresses of the Chief
Executive Officer, Secretary. and Chief Financial Officer, the street address of
its principal  executive office or principal  business office in this state, and
the general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose  of service of  process,  all in  compliance  with  Section  1502 of the
California Corporations Code.


                                  ARTICLE VIII

                            GENERAL CORPORATE MATTERS

     Section 1. Record  Date for  Purposes  Other Than  Notice and  Voting.  For
purposes of  determining  the  shareholders  entitled to receive  payment of any
dividend  or other  distribution  or  allotment  of any  rights or  entitled  to
exercise any rights in respect of any other lawful  action (other than Action by
Shareholders by Written  Consent Without a Meeting),  the Board of Directors may
fix, in  advance,  a record  date,  which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are  entitled to receive the  dividend,  distribution  or  allotment of
rights  or to  exercise  the  rights,  as the case may be,  notwithstanding  any
transfer of any shares on the books of the

                                       16

<PAGE>


corporation after the record date so fixed,  except as otherwise provided in the
California Corporations Code.

     If the Board of Directors  does not so fix a record  date,  the record date
for  determining  shareholders  for any such  purpose  shall be at the  close of
business on the day on which the board adopts the  applicable  resolution or the
sixtieth (60th) day before the date of that action, whichever is later.

     Section 2. Checks, Drafts.  Evidences of Indebtedness.  All checks, drafts,
or other orders for payment of money, notes, or other evidences of indebtedness,
issued in the name or payable to the corporation. shall be signed or endorsed by
such  person or  persons  and in such  manner  as,  from time to time,  shall be
determined by resolution of the Board of Directors.

     Section 3. Corporate Contracts and Instruments;  How Executed. The Board of
Directors,  except as otherwise  provided in these  bylaws.  may  authorize  any
officer or officers,  agent or agents.  to enter into any contract or executeany
instrument in the name of and on behalf of the  corporation,  and this authority
may be general or confined to specific  instances;  and, unless so authorized or
ratified by the Board of Directors or within the agency power of an officer,  no
officer,  agent,  or  employee  shall  have any power or  authority  to bind the
corporation  by any contract or  engagement or to pledge its credit or to render
it liable for any purpose or for any amount.

     Section 4.  Certificates  for Shares.  A certificate  or  certificates  for
shares  of the  capital  stock  of the  corporation  shall  be  issued  to  each
shareholder  when any of these shares are fully paid, and the Board of Directors
may  authorize  the issuance of  certificates  or shares as partly paid provided
that these  certificates  shall state the amount of the consideration to be paid
for them and the amount paid.  All  certificates  shall be signed in the name of
the corporation by the Chairman of the Board or the Chief  Executive  Officer or
the  President  or Vice  President  and by the  Chief  Financial  Officer  or an
Assistant  Financial  Officer  or  the  Secretary  or any  Assistant  Secretary,
certifying  the number of shares and the class or series of shares  owned by the
shareholder.  Any or all of the signatures on the  certificate may be facsimile.
In case any  officer,  transfer  agent,  or  registrar  who has  signed or whose
facsimile  signature  has been placed on a  certificate  shall have ceased to be
that officer, transfer agent, or registrar before that certificate is issued, it
may be issued by the corporation  with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.

     Section 5. Lost Certificates.  Except as provided in this Section 5, no new
certificates for shares shall be issued to replace an old certificate unless the
latter is  surrendered  to the  corporation  and canceled at the same time.  The
Board of Directors may, in case any share  certificate  or  certificate  for any
other  security is lost,  stolen,  or  destroyed,  authorize  the  issuance of a
replacement  certificate  on such terms and conditions as the board may require,
including  provision for indemnification of the corporation secured by a bond or
other adequate security  sufficient to protect the corporation against any claim
that may be made against it,  including any expense or liability,  on account of
the alleged loss,  theft,  or destruction of the  certificate or the issuance of
the replacement certificate.

                                       17

<PAGE>


     Section 6. Representation of Shares of Other Corporations.  The Chairman of
the Board, the President,  or any Vice President, or any other person authorized
by resolution  of the Board of Directors or by any of the  foregoing  designated
officers,  is authorized to vote on behalf of the corporation any and all shares
of any other corporation or corporations,  foreign or domestic,  standing in the
name of the  corporation.  The  authority  granted to these  officers to vote or
represent  on  behalf  of  the  corporation  any  and  all  shares  held  by the
corporation in any other  corporation or corporations may be exercised by any of
these  officers in person or by any person  authorized  to do so by a proxy duly
executed by these officers.

     Section  7.  Construction  and  Definitions.  Unless the  context  requires
otherwise, the general provisions, rules of construction, and definitions in the
California  Corporations  Code shall govern the  construction  of these  bylaws.
Without limiting the generality of this provision,  the singular number includes
the plural,  the plural  number  includes the  singular,  and the tert  "person"
includes both a corporation and a natural person.


                                   ARTICLE IX

                                   AMENDMENTS

     Section 1.  Amendment by  Shareholders.  New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided,  however, that if
the  Articles  of  Incorporation  of the  corporation  set forth  the  number of
authorized directors of the corporation,  the authorized number of directors may
be changed only by an amendment of the Articles of Incorporation.

     Section  2.  Amendment  by  Directors.  In  addition  to the  rights of the
shareholders  as provided in Section 1 of this Article IX, to adopt,  amend,  or
repeal  bylaws,  bylaws may be  adopted,  amended,  or  repealed by the Board of
Directors,  provided,  however, that the Board of Directors may adopt a bylaw or
amendment of a bylaw  changing the  authorized  number of directors only for the
purpose of fixing the exact number of directors  within the limits  specified in
the Articles of Incorporation or in Section 2 of Article III of these bylaws.

                                       18

<PAGE>


                            CERTIFICATE OF SECRETARY


     The undersigned hereby certifies that:

     1.  The  undersigned  is the  duly  elected  and  acting  Secretary  of AWT
Acquisition Corp., a California corporation; and

     2. The foregoing  bylaws  constitute the bylaws of said corporation as duly
adopted by Unanimous Written Consent of the Board of Directors dated as of March
1, 2000.

     IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal
of said corporation on March 1, 2000.

                                                  /s/ Michael J. Silva
                                                  ------------------------------
                                                  Michael J. Silva, Secretary

                                       19

<PAGE>

================================================================================
THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH ON THE REVERSE HEREOF

                               February 28, 2000


Number 1                                                            2,000 Shares
                                                                    Common Stock

                             AWT ACQUISITION CORP.
                            a California Corporation

                    1,000,000 Shares Authorized Common Stock


     THIS CERTIFIES THAT: USA Biomass Corporation,  a Delaware  corporation,  is
the  registered  holder of two  thousand  (2,000)  shares of Common Stock of AWT
ACQUISITION  CORP.,  transferable only on the share register of this corporation
by the holder hereof, in person or by duly authorized authorized attorney,  upon
surrender of this certificate  properly  endorsed or assigned.  This certificate
and the shares  represented  hereby are issued and shall be held  subject to all
the  provisions  of the  Articles  of  Incorporation  and  the  Bylaws  of  this
corporation,  a copy  of  each  of  which  is on  file  at the  office  of  this
corporation,  to all of which the  holder  of this  certificate,  by  acceptance
hereof, assents and agrees to be bound.

     WITNESS  the  Seal  of this  corporation  and the  signatures  of its  duly
authorized officers this __ day of March 2000.


/s/ Michael J. Silva                              /s/ Michael J. Silva
------------------------------                    ------------------------------
Micheal J. Silva, Secretary                       Micheal J. Silva, President
================================================================================


<PAGE>

                              State of California
                                     [SEAL]
                               SECRETARY OF STATE

     I,  BILL  JONES,  Secretary  of State of the  State of  California,  hereby
certify:

     That the attached transcript of 1 page(s) has been compared with the record
on file in this office,  of which it purports to be a copy, and that it is full,
true and correct.

IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the
State of California this day of



[SEAL]                                             /s/ Bill Jones
                                                   ------------------
                                                   Secretary of State



<PAGE>



                                                          ENDORSED - FILED
                                         in the office at the Secretary of State
                                                      of the State of California

                                                             FEB 28 2000

                                                  BILL JONES, Secretary of State


                            ARTICLES OF INCORPORATION

                                       OF

                              AGI ACQUISITION CORP.


                                        I

              The name of this corporation is AGI ACQUISITION CORP.

                                       II

     The purpose of this  corporation is to engage in any lawful act or activity
for which a corporation  may be organized  under the General  Corporation Law of
California  other than the banking  business,  the trust company business or the
practice  of a  profession  permitted  to  be  incorporated  by  the  California
Corporations Code.

                                       III

     The name in the State of California of this corporation's initial agent for
service of process is:  Corporation  Service  Company  which will do business in
California as CSC-Lawyers Incorporating Service.

                                       IV

     This  corporation is authorized to issue only one class of shares of stock;
and the total number of shares which this  corporation is authorized to issue is
1,000,000.

                                        V

     The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.

                                       VI

     This  corporation  is authorized to provide  indemnification  of agents (as
defined  in Section  317 of the  California  Corporations  Code)  through  bylaw
provisions,  agreements with the agents,  vote of shareholders or  disinterested
directors or otherwise, in excess of the indemnification  otherwise permitted by
Section 317 of the California  Corporations Code, subject only to the applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to this corporation and its shareholders.


DATED: February 25, 2000                /s/ Barbara Alder
                                       -------------------------------
                                        Barbara Alder, Incorporator


                                                                  [SEAL OMITTED]

<PAGE>



                                     BYLAWS

                                       OF

                             AGI ACQUISITION CORP.


<PAGE>




                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

                                                                              Page
                                                                              ----

ARTICLE I

<S>                                                                            <C>
OFFICES ........................................................................1
  Section 1.  Principal Offices ................................................1
  Section 2.  Other Offices ....................................................1

ARTICLE II

MEETINGS OF SHAREHOLDERS .......................................................1
  Section 1.  Place of Meetings ................................................I
  Section 2.  Annual Meetings ..................................................1
  Section 3.  Special Meeting ..................................................1
  Section 4.  Notice of Shareholders' Meetings .................................2
  Section 5.  Manner of Giving Notice: Affidavit of Notice .....................2
  Section 6.  Quorum ...........................................................3
  Section 7.  Adjourned Meeting: Notice ........................................3
  Section 8.  Voting ...........................................................3
  Section 9.  Waiver of Notice or Consent by Absent Shareholders ...............4
  Section 10. Shareholder Action by Written Consent Without a Meeting ..........4
  Section 11. Record Date for Shareholder Notice, Voting, and Giving Consents ..5
  Section 12. Proxies ..........................................................5
  Section 13. Inspectors of Election ...........................................6

ARTICLE III

DIRECTORS
  Section 1.  Powers ...........................................................6
  Section 2.  Number and Qualification of Directors ............................7
  Section 3.  Election and Term of Office of Directors .........................7
  Section 4.  Vacancies ........................................................8
  Section 5.  Place of Meetings and Meetings by Telephone ......................8
  Section 6.  Annual Meeting ...................................................9
  Section 7.  Other Regular Meetings ...........................................9
  Section 8.  Special Meetings .................................................9
  Section 9.  Quorum ...........................................................9
  Section 10. Waiver of Notice .................................................9
  Section 11. Adjournment .....................................................10
  Section 12. Notice of Adjournment ...........................................10
  Section 13. Action Without Meeting ..........................................10
  Section 14. Fees and Compensation of Directors ..............................10
</TABLE>


                                       i
<PAGE>

<TABLE>
<CAPTION>

                                                                              Page
                                                                              ----
ARTICLE IV

<S>                                                                           <C>
COMMITTEES ....................................................................10
  Section 1.  Committees of Directors .........................................10
  Section 2.  Meetings and Action of Committees ...............................11

ARTICLE V

OFFICERS ......................................................................11
  Section 1.  Officers ........................................................11
  Section 2.  Election of Officer's ...........................................11
  Section 3.  Subordinate Officers ............................................11
  Section 4.  Removal and Resignation of Officers .............................12
  Section 5.  Vacancies in Offices ............................................12
  Section 6.  Chairman of the Board ...........................................12
  Section 7.  Chief Executive Officer .........................................12
  Section 8.  President .......................................................12
  Section 9.  Vice Presidents .................................................12
  Section 10. Secretary .......................................................13
  Section 11. Chief Financial Officer .........................................13

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS ........................................................................13

ARTICLE VII

RECORDS AND REPORTS ...........................................................14
  Section 1.  Maintenance and Inspection of Share Register ....................14
  Section 2.  Maintenance and Inspection of Bylaws ............................15
  Section 3.  Maintenance and Inspection of Other Corporate Records ...........15
  Section 4.  Inspection by Directors .........................................15
  Section 5.  Annual Report to Shareholders ...................................15
  Section 6.  Financial Statements ............................................15
  Section 7.  Annual Statement of General Information .........................16

ARTICLE VIII

GENERAL CORPORATE MATTERS .....................................................16
  Section 1.  Record Date for Purposes Other Than Notice and Voting ...........16
  Section 2.  Checks, Drafts. Evidences of Indebtedness .......................17
  Section 3.  Corporate Contracts and Instruments: How Executed ...............17
  Section 4.  Certificates for Shares .........................................17
</TABLE>


                                       ii
<PAGE>



<TABLE>
<CAPTION>

                                                                              Page
                                                                              ----

<S>                                                                           <C>
  Section 5. Lost Certificates ................................................17
  Section 6. Representation of Shares of Other Corporations ...................18
  Section 7. Construction and Definitions .....................................18

ARTICLE IX

AMENDMENTS ....................................................................18
  Section 1. Amendment by Shareholders ........................................18
  Section 2. Amendment by Directors ...........................................18

CERTIFICATE OF SECRETARY ......................................................19
</TABLE>


                                       iii
<PAGE>

                                     BYLAWS

                                       OF

                              AGI ACQUISITION CORP.


                                    ARTICLE I

                                     OFFICES

     Section 1. Principal Offices. The Board of Directors shall fix the location
of the  principal  executive  office of the  corporation  at any place within or
outside the State of California.  If the principal  executive  office is located
outside this state, and the corporation has one or more business offices in this
state,  the Board of  Directors  shall fix and  designate a  principal  business
office in the State of California.

     Section 2. Other Offices. The Board of Directors may at any time establish,
or may  designate  an  officer  of  the  corporation  to  establish,  branch  or
subordinate offices at any place or places where the corporation is qualified to
do business.


                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

     Section 1. Place of Meetings. Meetings of shareholders shall be held at any
place  within or  outside  the State of  California  designated  by the Board of
Directors. In the absence of any such designation,  shareholders' meetings shall
be held at the principal executive office of the corporation.

     Section 2. Annual  Meetings.  The annual meeting of  shareholders  shall be
held each year on a date and at a time designated by the Board of Directors.  At
each annual meeting,  directors shall be elected,  and any other proper business
may be transacted.

     Section 3. Special  Meeting.  A special meeting of the  shareholders may be
called at any time by the Board of  Directors,  or by the Chairman of the Board,
or by the  President,  or by one or  more  shareholders  holding  shares  in the
aggregate entitled to cast not less than 10% of the votes at that meeting.

     If a special  meeting  is called by any  person or  persons  other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business  proposed to be  transacted,  and
shall be delivered  personally or sent by registered  mail or by  telegraphic or
other facsimile  transmission to the Chairman of the Board,  the President,  any
Vice President,  or the Secretary of the corporation.  The officer receiving the
request shall cause notice to be promptly given to the shareholders  entitled to
vote, in accordance  with the provisions of Sections 4 and 5 of this Article II,
that


                                        1
<PAGE>


a meeting will be held at the time  requested  by the person or persons  calling
the meeting,  not less than thirty-five (35) nor more than sixty (60) days after
the receipt of the request.  If the notice is not given within  twenty (20) days
after receipt of the request,  the person or persons  requesting the meeting may
give the notice.  Nothing contained in this paragraph of this Section 3 shall be
construed  as  limiting,  fixing  or  affecting  the  time  when  a  meeting  of
shareholders called by action of the Board of Directors may be held.

     Section 4.  Notice of  Shareholders'  Meetings.  All notices of meetings of
shareholders  shall be sent or otherwise  given in accordance  with Section 5 of
this  Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting.  The notice shall  specify the place,  date and hour of the
meeting  and (i) in the case of a special  meeting,  the  general  nature of the
business  to be  transacted,  or (ii) in the case of the annual  meeting,  those
matters which the Board of Directors,  at the time of giving the notice, intends
to present  for action by the  shareholders.  The notice of any meeting at which
directors  are to be elected  shall  include the name of any nominee or nominees
whom, at the time of the notice, management intends to present for election.

     If action is  proposed  to be taken at any  meeting  for  approval of (i) a
contract or transaction  in which a director has a direct or indirect  financial
interest,  pursuant to Section 310 of the California  Corporations Code, (ii) an
amendment  of the  articles  of  incorporation,  pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation,  pursuant to 1201 of that Code,
(iv) a voluntary  dissolution  of the  corporation,  pursuant to Section 1900 of
that Code, or (v) a distribution  in dissolution  other than in accordance  with
the rights of  outstanding  preferred  shares,  pursuant to Section 2007 of that
Code, the notice shall also state the general nature of that proposal.

     Section 5.  Manner of Giving  Notice;  Affidavit  of Notice.  Notice of any
meeting of shareholders  shall be given either personally or by first-class mail
or other  means of written  communication,  charges  prepaid,  addressed  to the
shareholder  at the address of that  shareholder  appearing  on the books of the
corporation or given by the  shareholder to the  corporation  for the purpose of
notice.  If no such  address  appears  on the  corporation's  books or is given,
notice  shall  be  deemed  to have  been  given if sent to that  shareholder  by
first-class mail or other means of written  communication  to the  corporation's
principal  executive  office,  or if  published  at least once in a newspaper of
general circulation in the county where that office is located.  Notice shall be
deemed to have been given at the time when delivered  personally or deposited in
the mail or sent by other means of written communication.

     If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the  corporation is returned to the corporation by the
United  States Postal  Service  marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address,  all
future  notices  or  reports  shall be deemed to have  been duly  given  without
further mailing if these shall be available to the shareholder on written demand
of the  shareholder at the principal  executive  office of the corporation for a
period of one year from the date of the giving of the notice.

     An  affidavit  of the  mailing  or other  means of giving any notice of any
shareholders'  meeting shall be executed by the secretary,  assistant secretary,
or any transfer


                                           2
<PAGE>


agent of the corporation giving the notice, and shall be filed and maintained in
the minute book of the corporation.

     Section 6.  Quorum.  The presence in person or by proxy of the holders of a
majority,  of the shares entitled to vote at any meeting of  shareholders  shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held  meeting at which a quorum is present  may  continue to do
business   until   adjournment,   notwithstanding   the   withdrawal  of  enough
shareholders  to leave  less than a quorum,  if any  action  taken  (other  than
adjournment)  is  approved  by at least a  majority  of the shares  required  to
constitute a quorum.

     Section 7. Adjourned Meeting;  Notice. Any shareholders' meeting, annual or
special,  whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy,  but in the absence of a quorum,  no other  business  may be
transacted at that meeting, except as provided in Section 6 of this Article II.

     When any meeting of shareholders, either annual or special, is adjourned to
another time or place,  notice need not be given of the adjourned meeting if the
time and place are  announced  at a meeting at which the  adjournment  is taken,
unless a new  record  date for the  adjourned  meeting  is fixed,  or unless the
adjournment  is for more  than  forty-five  (45)  days from the date set for the
original  meeting,  in which case the Board of Directors  shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder of
record  entitled  to  vote at the  adjourned  meeting  in  accordance  with  the
provisions of Sections 4 and 5 of this Article II. At any adjourned  meeting the
corporation  may transact any business  which might have been  transacted at the
original meeting.

     Section 8.  Voting.  The  shareholders  entitled  to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II, subject to the provisions of Sections 702 to 704, inclusive,
of the  California  Corporations  Code  (relating  to  voting  shares  held by a
fiduciary, in the name of a corporation, or in joint ownership).

     The  shareholders'  vote  may be by  voice  vote  or by  ballot;  provided,
however,  that any election for  directors  must be by ballot if demanded by any
shareholder  before the voting has begun.  On any matter other than elections of
directors,  any shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining  shares or vote them against the proposal;
but,  if the  shareholder  fails to  specify  the  number  of  shares  which the
shareholder is voting  affirmatively,  it will be conclusively presumed that the
shareholder's  approving vote is with respect to all shares that the shareholder
is  entitled  to vote.  If a quorum  is  present,  the  affirmative  vote of the
majority of the shares  represented  at the meeting and  entitled to vote on any
matter  (other  than  the  election  of  directors)  shall  be  the  act  of the
shareholders,  unless  the vote of a greater  number or  voting  by  classes  is
required by California Corporations Code or by the Articles of Incorporation.

     At a  shareholders'  meeting  at  which  directors  are to be  elected,  no
shareholder  shall be entitled to cumulate votes (i.e., cast for any one or more
candidates  a number  of votes  greater  than the  number  of the  shareholder's
shares) unless the candidates' names have


                                        3
<PAGE>


been placed in nomination  prior to commencement of the voting and a shareholder
has given  notice  prior to  commencement  of the  voting  of the  shareholder's
intention to cumulate votes.  If any  shareholder has given such a notice,  then
every  shareholder  entitled  to vote  may  cumulate  votes  for  candidates  in
nomination  and give one  candidate  a number  of votes  equal to the  number of
directors  to be  elected  multiplied  by the  number  of votes  to  which  that
shareholder's shares are entitled,  or distribute the shareholder's votes on the
same principle  among any or all of the candidates,  as the  shareholder  thinks
fit. The candidates  receiving the highest number of votes,  up to the number of
directors to be elected, shall be elected.

     Section  9.  Waiver of  Notice  or  Consent  by  Absent  Shareholders.  The
transactions of any meeting of shareholders,  either annual or special,  however
called and noticed, and wherever held, shall be as valid as though a meeting had
been duly held after regular call and notice,  if a quorum is present  either in
person or by proxy,  and if,  either  before or after the  meeting,  each person
entitled  to vote,  who was not  present in person or by proxy,  signs a Written
Waiver of Notice or a Consent to a holding of the meeting, or an approval of the
minutes. The Waiver of Notice or Consent need not specify either the business to
be transacted or the purpose of any annual or special  meeting of  shareholders,
except  that,  if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this Article II,
the Waiver of Notice or Consent shall state the general nature of the proposal.

     All such waivers,  consents or approvals  shall be filed with the corporate
records or made a part of the minutes of the meeting.

     Attendance  by a person  at a meeting  shall  also  constitute  a waiver of
notice of that meeting,  except when the person objects, at the beginning of the
meeting,  to the transaction of any business because the meeting is not lawfully
called or convened,  and except that  attendance at a meeting is not a waiver of
any right to object to the  consideration  of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.

     Section 10.  Shareholder  Action by Written Consent Without a Meeting.  Any
action which may be taken at any annual or special meeting of  shareholders  may
be taken without a meeting and without  prior  notice,  if a consent in writing,
setting  forth the  action so taken,  is signed by the  holders  of  outstanding
shares having not less than the minimum  number of votes that would be necessary
to  authorize  or take that action at a meeting at which all shares  entitled to
vote thereon were present and voted. In the case of election of directors,  such
a consent  shall be effective  only if signed by the holders of all  outstanding
shares entitled to vote for the election of directors; provided, however, that a
director  may be elected at any time to fill a vacancy on the Board of Directors
that has not been filled by the directors, by the written consent of the holders
of a majority of the  outstanding  shares  entitled to vote for the  election of
directors.  All  such  consents  shall  be  filed  with  the  Secretary  of  the
corporation  and shall be maintained in the corporate  records.  Any shareholder
giving a written consent, or the shareholder's proxy holders, or a transferee of
the shares or a personal  representative  of the shareholder or their respective
proxy holders,  may revoke the consent by a writing received by the secretary of
the  corporation  before  written  consents of the number of shares  required to
authorize the proposed action have been filed with the secretary.


                                        4
<PAGE>


     If the  consents  of all  shareholders  entitled  to  vote  have  not  been
solicited  in  writing,  and if  the  Unanimous  Written  Consent  of  all  such
shareholders  shall not have been  received,  the  Secretary  shall give  prompt
notice of the corporate action approved by the  shareholders  without a meeting.
This notice shall be given in the manner  specified in Section 5 of this Article
II. In the case of approval of (i) contracts or transactions in which a director
has a direct or  indirect  financial  interest,  pursuant  to Section 310 of the
California Corporations Code, (ii) indemnification of agents of the corporation,
pursuant to Section 317 of that Code, (iii) a reorganization of the corporation,
pursuant to Section 1201 of that Code,  and (iv) a  distribution  in dissolution
other  than in  accordance  with the  rights of  outstanding  preferred  shares,
pursuant to Section  2007 of that Code,  the notice  shall be given at least ten
(10) days before the consummation of any action authorized by that approval.

     Section  11.  Record  Date  for  Shareholder  Notice,  Voting,  and  Giving
Consents. For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give  consent to  corporate  action  without a
meeting,  the Board of Directors may fix, in advance,  a record date which shall
not be more than sixty (60) days nor less than ten (10) days  before the date of
any such meeting nor more than sixty (60) days before any such action  without a
meeting,  and in this event only shareholders of record on the date so fixed are
entitled  to  notice  and to vote  or to  give  consents,  as the  case  may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date,  except as otherwise  provided in the  California  Corporations
Code.

     If the Board of Directors does not so fix a record date:

          (a) The record date for determining shareholders entitled to notice of
     or to vote at a meeting of  shareholders  shall be at the close of business
     on the business day next  preceding  the day on which notice is given or if
     notice  is  waived,  at the  close of  business  on the  business  day next
     preceding the day on which the meeting is held.

          (b) The record  date for  determining  shareholders  entitled  to give
     consent to corporate action in writing without a meeting, (i) when no prior
     action  by the board  has been  taken,  shall be the day on which the first
     written  consent is given,  or (ii) when prior action of the board has been
     taken,  shall be at the  close of  business  on the day on which  the board
     adopts the resolution relating to such prior action, or the sixtieth (60th)
     day before the date of such prior action, whichever is later.

     Section 12. Proxies.  Every person entitled to vote for directors or on any
other  matter  shall  have the right to do so either in person or by one or more
agents  authorized  by a written  proxy  signed by the person and filed with the
Secretary  of  the   corporation.   A  proxy  shall  be  deemed  signed  if  the
shareholder's  name  is  placed  on the  proxy  (whether  by  manual  signature,
typewriting,  telegraphic transmission,  or otherwise) by the shareholder or the
shareholder's  attorney-in-fact.  A validly  executed proxy which does not state
that it is  irrevocable  shall  continue  in full  force and  effect  unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation  stating that the proxy is revoked, or by a
subsequent  proxy executed by, or attendance at the meeting and voting in person
by,  the person  executing  the proxy;  or (ii)  written  notice of the death or
incapacity of the maker of that proxy is received by the corporation  before the
vote pursuant to that proxy is counted;  provided,  however, that no proxy shall
be valid after the expiration


                                        5
<PAGE>


of eleven (11) months from the date of the proxy,  unless otherwise  provided in
the  proxy.  The  revocability  of a proxy  that  states  on its face that it is
irrevocable  shall be governed by the provisions of Sections 705(e) and 705(0 of
the California Corporations Code.

     Section 13. Inspectors of Election. Before any meeting of shareholders, the
Board of Directors may appoint any persons other than nominees for office to act
as Inspectors of Election at the meeting or its adjournment. If no Inspectors of
Election are so  appointed,  the Chairman of the meeting may, and on the request
of any  shareholder  or a  shareholder's  proxy  shall,  appoint  Inspectors  of
Election at the  meeting.  The number of  inspectors  shall be either one (1) or
three (3). If  inspectors  are  appointed  at a meeting on the request of one or
more  shareholders  or  proxies,  the  holders of a majority  of shares or their
proxies  present at the  meeting  shall  determine  whether one (1) or three (3)
inspectors are to be appointed.  If any person  appointed as inspector  fails to
appear or fails or refuses to act, the Chairman of the meeting may, and upon the
request of any shareholder or a shareholder's  proxy shall,  appoint a person to
fill that vacancy.

     These inspectors shall:

          (a) Determine the number of shares outstanding and the voting power of
     each, the shares represented at the meeting, the existence of a quorum, and
     the authenticity, validity, and effect of proxies;

          (b) Receive votes, ballots, or consents;

          (c) Hear and determine all challenges and questions in any way arising
     in connection with the right to vote;

          (d) Count and tabulate all votes or consents;

          (e) Determine when the polls shall close;

          (f) Determine the result; and

          (g) Do any other acts that may be proper to conduct  the  election  or
     vote with fairness to all shareholders.


                                   ARTICLE III

                                    DIRECTORS

     Section 1. Powers. Subject to the provisions of the California Corporations
Code and any  limitations  in the  articles of  incorporation  and these  bylaws
relating  to  action  required  to be  approved  by the  shareholders  or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all  corporate  powers shall be  exercised by or under the  direction of the
Board of Directors.


                                        6
<PAGE>


     Without  prejudice  to  these  general  powers,  and  subject  to the  same
limitations, the Board of Directors shall have the power to:

          (a) Select  and remove all  officers,  agents,  and  employees  of the
     corporation;  present  any powers  and duties for them that are  consistent
     with law, with the articles of  incorporation,  and with these bylaws;  fix
     their compensation; and require from them security for faithful service.

          (b) Change the principal  executive  office or the principal  business
     office in the State of California  from one location to another;  cause the
     corporation  to be qualified to do business in any other state,  territory,
     dependency,  or country and conduct business within or without the State of
     California;  and  designate  any  place  within  or  without  the  State of
     California  for the  holding of any  shareholders'  meeting,  or  meetings,
     including annual meetings.

          (c) Adopt,  make,  and use a corporate  seal;  prescribe  the forms of
     certificates of stock; and alter the form of the seal and certificates.

          (d)  Authorize the issuance of shares of stock of the  corporation  on
     any lawful terms,  in  consideration  of money paid,  labor done,  services
     actually  rendered,  debts or  securities  canceled,  or tangible  property
     actually received.

          (e) Borrow money and incur  indebtedness on behalf of the corporation,
     and cause to be executed and delivered for the corporation's  purposes,  in
     the corporate name,  promissory notes, bonds,  debentures,  deeds of trust,
     mortgages,  pledges,  hypothecations,  and  other  evidences  of  debt  and
     securities.

     Section 2. Number and Qualification of Directors.  The authorized number of
directors  shall be one (1) until  changed by a duly  adopted  amendment  to the
Articles of  Incorporation  or by an amendment to this bylaw adopted by the vote
or written consent of holders of a majority of the  outstanding  shares entitled
to vote;  provided,  however,  that if the number of  directors  should  ever be
increased to five (5) or more, an amendment to this Section 2 reducing the fixed
number of  directors  to a number  less than five (5)  cannot be  adopted if the
votes cast against its adoption at a meeting,  or the shares not  consenting  in
the case of action by  written  consent,  are equal to more than  16-2/3% of the
outstanding shares entitled to vote.

     Section 3.  Election and Term of Office of  Directors.  Directors  shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting.  Each director,  including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.


                                        7
<PAGE>


     Section 4. Vacancies.  Vacancies in the Board of Directors may be filled by
a majority of the remaining  directors,  though less than a quorum, or by a sole
remaining  director,  except that a vacancy created by the removal of a director
by the vote or written  consent  of the  shareholders  or by court  order may be
filled only by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present,  or by the written  consent
of holders of all shares  entitled to vote for the election of  directors.  Each
director  so elected  shall hold  office  until the next  annual  meeting of the
shareholders and until a successor has been elected and qualified.

     A vacancy or vacancies  in the Board of Directors  shall be deemed to exist
in the event of the death,  resignation,  or removal of any director,  or if the
Board of Directors by  resolution  declares  vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the  shareholders  fail,  at any  meeting  of  shareholders  at which  any
director or directors are elected,  to elect the number of directors to be voted
for at that meeting.

     The  shareholders may elect a director or directors at any time to fill any
vacancy or  vacancies  not filled by the  directors,  but any such  election  by
written  consent  shall  require the  consent of a majority  of the  outstanding
shares entitled to vote.

     Any director may resign  effective on giving written notice to the chairman
of the Board, the President,  the Secretary,  or the Board of Directors,  unless
the notice specifies a later time for that resignation to become  effective.  If
the  resignation  of a director  is  effective  at a future  time,  the Board of
Directors  may elect a successor  to take office  when the  resignation  becomes
effective.

     No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.

     Section 5. Place of Meetings and Meetings by Telephone. Regular meetings of
the Board of  Directors  may be held at any place within or outside the State of
California  that has been  designated  from  time to time by  resolution  of the
board. In the absence of such a designation,  regular  meetings shall be held at
the principal executive office of the corporation. Special meetings of the board
shall be held at any place  within or outside the State of  California  that has
been  designated in the notice of the meeting or, if not stated in the notice or
there is no notice, at the principal executive office of the corporation.

     Any meeting,   regular or special,  may be held by conference  telephone or
similar communication  equipment,  so long as all directors participating in the
meeting  can hear one  another  and all such  directors  shall be  deemed  to be
present in person at the meeting.  With respect to any director who participates
in a  meeting  of the  board by  conference  telephone  or other  communications
equipment, the Chairman of the Board, Chief Executive Officer or President shall
verify by voice recognition or any other means reasonably selected at the outset
of such  meeting  (i) the  identity  of that  member  and (ii) that  statements,
questions, actions or votes by members so participating are made by such members
and not by persons who are not permitted to participate as directors.


                                        8
<PAGE>


     Section 6. Annual  Meeting.  Immediately  following  each annual meeting of
shareholders,  the  Board of  Directors  shall  hold a regular  meeting  for the
purpose of organization,  any desired election of officers,  and the transaction
of other business. Notice of this meeting shall not be required.

     Section 7. Other Regular  Meetings.  Other regular meetings of the Board of
Directors  shall be held without call at such time as shall from time to time be
fixed by the Board of  Directors.  Such  regular  meetings  may be held  without
notice.

     Section 8. Special Meetings. Special meetings of the Board of Directors for
any purpose or purposes  may be called at any time by the  Chairman of the Board
or the President or any Vice President or the Secretary or any two directors.

     Notice of the time and place of  special  meetings  shall be (i)  delivered
personally or by telephone  (including a voice messaging  system or other system
or  technology  designed  to  record  and  communicate   messages),   telegraph,
facsimile, electronic mail, or other electronic means, to each director at least
forty-eight  (48) hours  before the time of the  holding of the  meeting or (ii)
sent by  first-class  mail at least four (4) days before the time of the holding
of the meeting,  charges prepaid,  addressed to each director at that director's
address as it is shown on the records of the corporation.  Any oral notice given
personally  or by telephone may be  communicated  either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly  communicate  it to the  director.  The notice need not
specify the purpose of the meeting nor the place if the meeting is to be held at
the principal executive office of the corporation.

     Section 9. Ouorum.  A majority of the authorized  number of directors shall
constitute  a quorum  for the  transaction  of  business,  except to  adjourn as
provided in Section 11 of this Article III.  Every act or decision  done or made
by a majority of the directors  present at a meeting duly held at which a quorum
is present  shall be regarded as the act of the Board of  Directors,  subject to
the  provisions  of  Section  310 of the  California  Corporations  Code  (as to
approval  of  contracts  or  transactions  in which a  director  has a direct or
indirect  material  financial  interest),  Section  311  of  that  Code  (as  to
appointment   of   committees),   and  Section   317(e)  of  that  Code  (as  to
indemnification of directors).  A meeting at which a quorum is initially present
may continue to transact business  notwithstanding  the withdrawal of directors,
if any action  taken is approved by at least a majority of the  required  quorum
for that meeting.

     Section 10. Waiver of Notice.  The transactions of any meeting of the Board
of Directors,  however called and noticed or wherever held, shall be as valid as
though a meeting had been duly held after regular call and notice if a quorum is
present and if,  either  before or after the meeting,  each of the directors not
present signs a written waiver of notice, a consent to holding the meeting or an
approval of the  minutes.  The waiver of notice or consent  need not specify the
purpose of the meeting. All such waivers, consents, and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.  Notice
of a meeting  shall also be deemed given to any director who attends the meeting
without  protesting  before or at its  commencement,  the lack of notice to that
director.


                                        9
<PAGE>


     Section 11.  Adjournment.  A majority of the directors present,  whether or
not constituting a quorum, may adjourn any meeting to another time and place.

     Section 12. Notice of Adjournment.  Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for more
than  twenty-four  hours,  in which case  notice of the time and place  shall be
given  before the time of the  adjourned  meeting,  in the manner  specified  in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.

     Section 13. Action Without Meeting.  Any action required or permitted to be
taken by the Board of Directors may be taken  without a meeting,  if all members
of the board  shall  individually  or  collectively  consent  in writing to that
action. Such action by written consent shall have the same force and effect as a
unanimous vote of the Board of Directors. Such written consent or consents shall
be filed with the minutes of the proceedings of the board.

     Section 14. Fees and  Compensation  of Directors.  Directors and members of
committees may receive such compensation,  if any, for their services,  and such
reimbursement  of expenses,  as may be fixed or  determined by resolution of the
Board of  Directors.  This  Section 14 shall not be  construed  to preclude  any
director  from  serving  the  corporation  in any other  capacity as an officer,
agent, employee, or otherwise, and receiving compensation for those services.


                                   ARTICLE IV

                                   COMMITTEES

     Section  1.  Committees  of  Directors.  The  Board of  Directors  may,  by
resolution  adopted  by a  majority  of  the  authorized  number  of  directors.
designate one or more committees,  each consisting of one or more directors,  to
serve  at the  pleasure  of the  board.  The  board  may  designate  one or more
directors  as  alternate  members of any  committee,  who may replace any absent
member at any meeting of the committee. Any committee, to the extent provided in
the resolution of the board,  shall have all the authority of the board,  except
with respect to:

          (a)  The  approval  of  any  action   which,   under  the   California
     Corporations Code, also requires  shareholders' approval or approval of the
     outstanding shares;

          (b) The  filling  of  vacancies  on the Board of  Directors  or in any
     committee;

          (c) The fixing of  compensation  of the  directors  for serving on the
     board or on any committee;

          (d) The amendment or repeal of bylaws or the adoption of new bylaws.


                                       10
<PAGE>


          (e) The  amendment  or  repeal  of any  resolutions  of the  Board  of
     Directors which by its express terms is not so amendable or repealable;

          (f) A distribution to the shareholders of the corporation, except at a
     rate or in a  periodic  amount or within a price  range  determined  by the
     Board of Directors;

          (g) The appointment of any other  committees of the Board of Directors
     or the members of these committees.

     Section  2.  Meetings  and  Action of  Committees.  Meetings  and action of
committees  shall be governed  by, and held and taken in  accordance  with,  the
provisions  of Article III of these bylaws,  Sections 5 (place of  meetings),  7
(regular meetings),  8 (special meetings and notice), 9 (quorum),  10 (waiver of
notice),  11 (adjournment),  12 (notice of adjournment),  and 13 (action without
meetings).  with such changes in the context of those bylaws as are necessary to
substitute  the  committee  and its members for the Board of  Directors  and its
members,  except  that  the  time  of  regular  meetings  of  committees  may be
determined  either by  resolution  of the Board of Directors or by resolution of
the committee;  special  meetings of committees may also be called by resolution
of the Board of Directors;  and notice of special  meetings of committees  shall
also be given to all alternate  members,  who shall have the right to attend all
meetings  of the  committee.  The Board of  Directors  may  adopt  rules for the
government  of any  committee  not  inconsistent  with the  provisions  of these
bylaws.


                                    ARTICLE V

                                    OFFICERS

     Section 1. Officers.  The officers of the Corporation shall be a President,
a Secretary and a Chief Financial Officer. The Corporation may also have, at the
discretion of the Board, a Chairman of the Board, a Chief Executive Officer, one
or more Vice  Presidents,  one or more  Assistant Vice  Presidents,  one or more
Assistant  Secretaries,  one or more Assistant Chief Financial Officers and such
other officers as may be appointed in accordance  with the provisions of Section
3 of this Article V. Any number of offices may be held by the same  person.  The
salaries of all officers of the Corporation  shall be fixed from time to time by
the Board.

     Section 2. Election of Officers.  The officers of the  corporation,  except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article V, shall be chosen by the Board of  Directors,  and
each shall serve at the pleasure of the board, subject to the rights, if any, of
an officer under any contract of employment.

     Section 3. Subordinate  Officers.  The Board of Directors may appoint,  and
may empower the President,  or Chief Executive Officer, if any, to appoint, such
other  officers as the business of the  corporation  may  require,  each of whom
shall hold office for such period,  have such  authority and perform such duties
as are provided in the bylaws or as the Board of Directors may from time to time
determine.


                                       11
<PAGE>


     Section 4. Removal and Resignation of Officers.  Subject to the rights,  if
any, of an officer under any contract of employment, any officer may be removed,
either  with or without  cause,  by the Board of  Directors,  at any  regular or
special  meeting of the board,  or,  except in case of an officer  chosen by the
Board of  Directors,  by any  officer  upon whom such  power of  removal  may be
conferred by the Board of Directors.

     Any  officer  may  resign  at any  time by  giving  written  notice  to the
corporation.  Any  resignation  shall take  effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified  in that  notice,  the  acceptance  of the  resignation  shall  not be
necessary to make it  effective.  Any  resignation  is without  prejudice to the
rights,  if any, of the corporation under any contract to which the officer is a
party.

     Section 5. Vacancies in Offices.  A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.

     Section 6.  Chairman of the Board.  The  Chairman of the Board,  if such an
officer be  elected,  shall,  if  present,  preside at  meetings of the Board of
Directors  and  exercise and perform such other powers and duties as may be from
time to time  assigned to him by the Board of  Directors  or  prescribed  by the
bylaws. If there is no Chief Executive Officer or President, the Chairman of the
Board shall in addition be the Chief  Executive  Officer of the  corporation and
shall have the powers and duties prescribed in Section 7 of this Article V.

     Section 7. Chief Executive Officer. The Chief Executive Officer, if such an
officer be elected,  shall,  subject to the control of the Board,  have  general
supervision,   direction  and  control  of  the  business  and  affairs  of  the
Corporation. In the absence or disability of the Chairman of the Board, or if no
such  officer is  elected,  the Chief  Executive  Officer  shall  preside at all
meetings of shareholders  and the Board of Directors.  He shall have the general
powers and duties of management usually vested in the chief executive officer of
a  corporation.  and shall have such other powers and duties with respect to the
administration  of the business and affairs of the  Corporation as may from time
to time be assigned to him by the Board of  Directors  or as  prescribed  by the
bylaws.

     Section 8. President. Subject to such supervisory powers as may be given by
the Board of  Directors  to the  Chairman  of the  Board or the Chief  Executive
Officer, if there be such officers,  the President shall have the general powers
and  duties of  management  usually  vested  in the  office  of  president  of a
corporation and shall have such other powers and duties as may from time to time
be prescribed by the Board of Directors or Chief Executive  Officer,  if any, or
as  prescribed  by the  bylaws.  If  there is no Chief  Executive  Officer,  the
President shall be the chief executive officer of the corporation and shall have
the powers and duties prescribed in Section 7 of this Article V.

     Section 9. Vice Presidents.  In the absence or disability of the President,
the Vice  Presidents,  if any,  in order of their  rank as fixed by the Board of
Directors  or,  if not  ranked,  a Vice  President  designated  by the  Board of
Directors,  shall  perform all the duties of the  President,  subject to all the
restrictions  upon the  President.  The Vice  Presidents  shall  have such other
powers and perform such other duties as from time to time may be


                                       12
<PAGE>


prescribed for them  respectively  by the Board of Directors or the bylaws.  and
the President, or the Chairman of the Board.

     Section 10. Secretary. The Secretary shall keep or cause to be kept, at the
principal  executive  office or such other place as the Board of  Directors  may
direct,  a book of minutes of all meetings and actions of directors,  committees
of  directors,  and  shareholders,  with the time and place of holding,  whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at  directors'  meetings or committee  meetings,  the number of
shares present or represented at shareholders' meetings, and the proceedings.

     The Secretary  shall keep, or cause to be kept, at the principal  executive
office or at the office of the  corporation's  transfer  agent or registrar,  as
determined  by  resolution of the Board of  Directors,  a share  register,  or a
duplicate  share  register,  showing  the  names of all  shareholders  and their
addresses, the number and classes of shares held by each, the number and date of
certificates  issued for the same,  and the number and date of  cancellation  of
every certificate surrendered for cancellation.

     The Secretary  shall give, or cause to be given,  notice of all meetings of
the shareholders and of the Board of Directors  required by the bylaws or by law
to be given, and he shall keep the seal of the corporation if one be adopted, in
safe custody,  and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or by the bylaws.

     Section 11. Chief Financial Officer. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records  of  accounts  of  the  properties  and  business  transactions  of  the
corporation,   including   accounts  of  its  assets,   liabilities,   receipts,
disbursements,  gains, losses, capital,  retained earning, and shares. The books
of account shall at all reasonable times be open to inspection by any director.

     The Chief Financial Officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation  with such  depositories as may be
designated  by the  Board of  Directors.  He  shall  disburse  the  funds of the
corporation  as may be ordered by the Board of  Directors,  shall  render to the
President  and  directors,  whenever  they  request it, an account of all of his
transactions  as Chief Financial  Officer and of the financial  condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the Board of Directors or the bylaws.


                                   ARTICLE VI

                INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES

                                AND OTHER AGENTS

     The corporation  shall have the authority,  to the maximum extent permitted
by the  California  Corporations  Code, to indemnify  each of its agents against
expenses,


                                       13
<PAGE>


judgments. fines, settlements and other amounts actually and reasonably incurred
in connection  with any  proceeding  arising by reason of the fact that any such
person is or was an agent of the  corporation.  The corporation  shall also have
the authority,  to the maximum extent  permitted by the California  Corporations
Code, to advance expenses  incurred by any agent of the corporation in defending
any proceeding.

     The corporation shall have the authority to purchase and maintain insurance
on behalf of agents of the corporation against any liability asserted against or
incurred by any agent in such  capacity or arising out of the agent's  status as
agent.

     The corporation shall have the power to enter into binding  agreements with
its agents to provide the indemnification allowed under this Article.

     Nothing in this Article shall be construed either to allow  indemnification
of any agent for any .acts or  omissions or  transactions  from which such agent
may  not  be   indemnified   under   applicable   California   law  or  to  deny
indemnification when applicable California law requires indemnification.

     For purposes of this Article,  an "agent" of the  corporation  includes any
person  who is or was a  director,  officer,  employee,  or  other  agent of the
corporation,  or is or was  serving  at the  request  of  the  corporation  as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise,  or was a director,  officer,  employee, or
agent of a corporation which was a predecessor corporation of the corporation or
of another  enterprise  at the  request  of such  predecessor  corporation.  For
purposes  of  this  Article,  "proceeding"  means  any  threatened,  pending  or
completed  action or proceeding,  whether  civil,  criminal,  administrative  or
investigative.  For  purposes  of this  Article,  "expenses"  includes,  without
limitation,  attorneys'  fees  and any  expenses  of  establishing  a  right  to
indemnification.


                                   ARTICLE VII

                               RECORDS AND REPORTS

     Section 1.  Maintenance and Inspection of Share  Register.  The corporation
shall keep at its principal  executive  office, or at the office of its transfer
agent or  registrar,  if either be appointed  and as determined by resolution of
the Board of  Directors,  a record  of its  shareholders,  giving  the names and
addresses  of all  shareholders  and the number and class of shares held by each
shareholder.

     A shareholder  or  shareholders  of the  corporation  holding at least five
percent  (5%)  in  the  aggregate  of  the  outstanding  voting  shares  of  the
corporation  may (i)  inspect and copy the  records of  shareholders'  names and
addresses and  shareholdings  during usual business hours on five (5) days prior
written  demand on the  corporation,  and (ii) obtain from the transfer agent of
the  corporation,  on written demand and on the tender of such transfer  agent's
usual charges for such list, a list of the  shareholders'  names and  addresses,
who are entitled to vote for the election of directors, and their shareholdings,
as of the most recent record date for which that list has been compiled or as of
the date specified by the


                                       14
<PAGE>


shareholder  after the date of demand.  This list shall be made available to any
such  shareholder  by the transfer agent on or before the later of five (5) days
after the demand is received or the date  specified in the demand as the date as
of which the list is to be compiled.  The record of  shareholders  shall also be
open to  inspection  on the  written  demand of any  shareholder  or holder of a
voting trust certificate, at any time during usual business hours, for a purpose
reasonably  related to the holder's  interests as a shareholder or as the holder
of a voting trust  certificate.  Any inspection and copying under this Section 1
may be made in person or by an agent or attorney of the shareholder or holder of
a voting trust certificate making the demand.

     Section 2. Maintenance and Inspection of Bylaws. The corporation shall keep
at its principal  executive office, or if its principal  executive office is not
in the State of California,  at its principal business office in this state, the
original  or a copy of the  bylaws as amended  to date,  which  shall be open to
inspection by the  shareholders at all reasonable  times during office hours. If
the  principal  executive  office of the  corporation  is  outside  the State of
California and the corporation  has no principal  business office in this state,
the Secretary  shall,  upon the written request of any  shareholder,  furnish to
that shareholder a copy of the bylaws as amended to date.

     Section 3.  Maintenance  and  Inspection of Other  Corporate  Records.  The
accounting  books and records and minutes of proceedings of the shareholders and
the Board of Directors and any committee or committees of the Board of Directors
shall be kept at such place or places designated by the Board of Directors,  or,
in the absence of such  designation,  at the principal  executive  office of the
corporation.  The minutes shall be kept either in written form or any other form
capable of being  converted into written form. The minutes and accounting  books
and  records  shall  be  open to  inspection  upon  the  written  demand  of any
shareholder  or holder of a voting trust  certificate,  at any  reasonable  time
during usual business hours,  for a purpose  reasonably  related to the holder's
interests as a shareholder or as the holder of a voting trust  certificate.  The
inspection  may be made in person or by an agent or attorney,  and shall include
the right to copy and make extracts.  These rights of inspection shall extend to
the records of each subsidiary corporation of the corporation.

     Section 4. Inspection by Directors.  Every director shall have the absolute
right at any  reasonable  time to inspect all books,  records,  and documents of
every  kind  and the  physical  properties  of the  corporation  and each of its
subsidiary corporations.  This inspection by a director may be made in person or
by an agent or attorney and the right of  inspection  includes the right to copy
and make extracts of documents.

     Section 5. Annual Report to Shareholders. The annual report to shareholders
referred to in Section  1501 of the  California  Corporations  Code is expressly
dispensed with, but nothing herein shall be interpreted as prohibiting the Board
of Directors from issuing annual or other periodic  reports to the  shareholders
of the corporation as they consider appropriate.

     Section 6. Financial  Statements.  A copy of any annual financial statement
and any income  statement of the corporation  for each quarterly  period of each
fiscal year, and any accompanying balance sheet of the corporation as of the end
of each such period,  that has been prepared by the corporation shall be kept on
file in the principal executive office


                                       15
<PAGE>


of the  corporation  for twelve  (12)  months and each such  statement  shall be
exhibited at all reasonable times to any shareholder demanding an examination of
any such statement or a copy shall be mailed to any such shareholder.

     If a shareholder or shareholders  holding at least five percent (5%) of the
outstanding  shares  of any  class of stock of the  corporation  makes a written
request to the  corporation  for an income  statement of the corporation for the
three-month,  six (6) month or nine (9) month period of the then current  fiscal
year ended more than  thirty  (30) days  before the date of the  request,  and a
balance  sheet  of the  corporation  as of the end of  that  period,  the  Chief
Financial  Officer  shall cause that  statement to be  prepared,  if not already
prepared,  and shall deliver  personally or mail that statement or statements to
the person  making the request  within thirty (30) days after the receipt of the
request.  If the corporation has not sent to the  shareholders its annual report
for the last fiscal year,  this report shall  likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.

     The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual,  semi-annual,  or quarterly income
statement  which  it has  prepared,  and a  balance  sheet as of the end of that
period.

     The quarterly  income  statements  and balance  sheets  referred to in this
section  shall  be  accompanied  by the  report,  if  any,  of  any  independent
accountants  engaged by the  corporation  or the  certificate  of an  authorized
officer of the corporation  that the financial  statements were prepared without
audit from the books and records of the corporation.

     Section 7. Annual Statement of General  Information.  The corporation shall
in each year file with the Secretary of State of the State of California, on the
prescribed form, a statement  setting forth the authorized  number of directors,
the  names  and  complete  business  or  residence  addresses  of all  incumbent
directors,  the names and complete business or residence  addresses of the Chief
Executive Officer, Secretary, and Chief Financial Officer, the street address of
its principal  executive office or principal  business office in this state, and
the general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose  of service of  process,  all in  compliance  with  Section  1502 of the
California Corporations Code.


                                  ARTICLE VIII

                            GENERAL CORPORATE MATTERS

     Section 1. Record  Date for  Purposes  Other Than  Notice and  Voting.  For
purposes of  determining  the  shareholders  entitled to receive  payment of any
dividend  or other  distribution  or  allotment  of any  rights or  entitled  to
exercise any rights in respect of any other lawful  action (other than Action by
Shareholders by Written  Consent Without a Meeting),  the Board of Directors may
fix, in  advance,  a record  date,  which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are  entitled to receive the  dividend,  distribution  or  allotment of
rights  or to  exercise  the  rights,  as the case may be,  notwithstanding  any
transfer of any shares on the books of the


                                       16
<PAGE>


corporation after the record date so fixed,  except as otherwise provided in the
California Corporations Code.

     If the Board of Directors  does not so fix a record  date,  the record date
for  determining  shareholders  for any such  purpose  shall be at the  close of
business on the day on which the board adopts the  applicable  resolution or the
sixtieth (60th) day before the date of that action, whichever is later.

     Section 2. Checks, Drafts,  Evidences of Indebtedness.  All checks, drafts,
or other orders for payment of money, notes, or other evidences of indebtedness,
issued in the name or payable to the corporation, shall be signed or endorsed by
such  person or  persons  and in such  manner  as,  from time to time,  shall be
determined by resolution of the Board of Directors.

     Section 3. Corporate Contracts and Instruments;  How Executed. The Board of
Directors,  except as otherwise  provided in these  bylaws,  may  authorize  any
officer or officers,  agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the  corporation,  and this authority
may be general or confined to specific  instances;  and, unless so authorized or
ratified by the Board of Directors or within the agency power of an officer,  no
officer,  agent,  or  employee  shall  have any power or  authority  to bind the
corporation  by any contract or  engagement or to pledge its credit or to render
it liable for any purpose or for any amount.

     Section 4.  Certificates  for Shares.  A certificate  or  certificates  for
shares  of the  capital  stock  of the  corporation  shall  be  issued  to  each
shareholder  when any of these shares are fully paid, and the Board of Directors
may  authorize  the issuance of  certificates  or shares as partly paid provided
that these  certificates  shall state the amount of the consideration to be paid
for them and the amount paid.  All  certificates  shall be signed in the name of
the corporation by the Chairman of the Board or the Chief  Executive  Officer or
the  President  or Vice  President  and by the  Chief  Financial  Officer  or an
Assistant  Financial  Officer  or  the  Secretary  or any  Assistant  Secretary,
certifying  the number of shares and the class or series of shares  owned by the
shareholder.  Any or all of the signatures on the  certificate may be facsimile.
In case any  officer,  transfer  agent,  or  registrar  who has  signed or whose
facsimile  signature  has been placed on a  certificate  shall have ceased to be
that officer, transfer agent, or registrar before that certificate is issued, it
may be issued by the corporation  with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.

     Section 5. Lost Certificates.  Except as provided in this Section 5, no new
certificates for shares shall be issued to replace an old certificate unless the
latter is  surrendered  to the  corporation  and canceled at the same time.  The
Board of Directors may, in case any share  certificate  or  certificate  for any
other  security is lost,  stolen,  or  destroyed,  authorize  the  issuance of a
replacement  certificate  on such terms and conditions as the board may require,
including  provision for indemnification of the corporation secured by a bond or
other adequate security  sufficient to protect the corporation against any claim
that may be made against it,  including any expense or liability,  on account of
the alleged loss,  theft,  or destruction of the  certificate or the issuance of
the replacement certificate.


                                       17
<PAGE>


                            CERTIFICATE OF SECRETARY


     The undersigned hereby certifies that:

     1.  The  undersigned  is the  duly  elected  and  acting  Secretary  of AGI
Acquisition Corp., a California corporation; and

     2. The foregoing  bylaws  constitute the bylaws of said corporation as duly
adopted  by  Unanimous  Written  Consent of the Board of  Directors  dated as of
3/1/2000.

     IN WITNESS WHEREOF. I have hereunto subscribed my name and affixed the seal
of said corporation on March 1, 2000.


                                                 /s/ Michael J. Silva
                                                 -------------------------------
                                                 Michael J. Silva, Secretary


                                       19
<PAGE>


     Section 6. Representation of Shares of Other Corporations.  The Chairman of
the Board, the President,  or any Vice President, or any other person authorized
by resolution  of the Board of Directors or by any of the  foregoing  designated
officers,  is authorized to vote on behalf of the corporation any and all shares
of any other corporation or corporations,  foreign or domestic,  standing in the
name of the  corporation.  The  authority  granted to these  officers to vote or
represent  on  behalf  of  the  corporation  any  and  all  shares  held  by the
corporation in any other  corporation or corporations may be exercised by any of
these  officers in person or by any person  authorized  to do so by a proxy duly
executed by these officers.

     Section  7.  Construction  and  Definitions.  Unless the  context  requires
otherwise, the general provisions, rules of construction, and definitions in the
California  Corporations  Code shall govern the  construction  of these  bylaws.
Without limiting the generality of this provision,  the singular number includes
the plural,  the plural  number  includes the  singular,  and the term  "person"
includes both a corporation and a natural person.


                                   ARTICLE IX

                                   AMENDMENTS

     Section 1.  Amendment by  Shareholders.  New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided,  however, that if
the  Articles  of  Incorporation  of the  corporation  set forth  the  number of
authorized directors of the corporation,  the authorized number of directors may
be changed only by an amendment of the Articles of Incorporation.

     Section  2.  Amendment  by  Directors.  In  addition  to the  rights of the
shareholders  as provided in Section 1 of this Article IX, to adopt,  amend,  or
repeal  bylaws,  bylaws may be  adopted,  amended,  or  repealed by the Board of
Directors,  provided,  however, that the Board of Directors may adopt a bylaw or
amendment of a bylaw  changing the  authorized  number of directors only for the
purpose of fixing the exact number of directors  within the limits  specified in
the Articles of Incorporation or in Section 2 of Article III of these bylaws.


                                       18
<PAGE>


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

THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH ON THE REVERSE HEREOF

                               February 28, 2000


Number 1                                                            2,000 Shares
                                                                    Common Stock


                             AGI ACQUISITION CORP.
                            a California Corporation

                    1,000,000 Shares Authorized Common Stock


     THIS CERTIFIES THAT: USA Biomass Corporation,  a Delaware  corporation,  is
the  registered  holder of two  thousand  (2,000)  shares of Common Stock of AGI
ACQUISITION  CORP.,  transferable only on the share register of this corporation
by the holder hereof, in person or by duly authorized  attorney,  upon surrender
of this  certificate  properly  endorsed or assigned.  This  certificate and the
shares  represented  hereby  are issued  and  shall be held  subject  to all the
provisions of the Articles of Incorporation  and the Bylaws of this corporation,
a copy of each of which is on file at the office of this corporation,  to all of
which the holder of this certificate,  by acceptance hereof,  assents and agrees
to be bound.

     WITNESS  the  Seal  of this  corporation  and the  signatures  of its  duly
authorized officers this ___ day of March, 2000.


/s/ Michael J. Silva                            /s/ Michael J. Silva
-------------------------------                 --------------------------------
Michael J. Silva, Secretary                     Michael J. Silva, President

================================================================================
<PAGE>

                              STATE OF CALIFORNIA

                                     [SEAL]


                               SECRETARY OF STATE


     I,  BILL  JONES,  Scretary  of State of the  state  of  California,  hereby
certify:

     That the attached transcript of 1 page(s) has been compared with the record
on file in this office,  of which it purports to be a copy, and that it is full,
true and correct.




[SEAL]              IN WITNESS WHEREOF, I execute this certificate and affix the
                    Great Seal of the State of California this day of


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

                    /s/ Bill Jones
                    Scretary of State


<PAGE>

                                                          ENDORSED - FILED
                                         in the office of the Secretary of State
                                                      of the State of California

                                                             FEB 28 2000

                                                  BILL JONES, Secretary of State


                            ARTICLES OF INCORPORATION

                                       OF

                              AGI ACQUISITION CORP.


                                        I

              The name of this corporation is AGI ACQUISITION CORP.

                                       II

     The purpose of this  corporation is to engage in any lawful act or activity
for which a corporation  may be organized  under the General  Corporation Law of
California  other than the banking  business,  the trust company business or the
practice  of a  profession  permitted  to  be  incorporated  by  the  California
Corporations Code.

                                       III

     The name in the State of California of this corporation's initial agent for
service of process is:  Corporation  Service  Company  which will do business in
California as CSC-Lawyers Incorporating Service.

                                       IV

     This  corporation is authorized to issue only one class of shares of stock;
and the total number of shares which this  corporation is authorized to issue is
1,000,000.

                                        V

     The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.

                                       VI

     This  corporation  is authorized to provide  indemnification  of agents (as
defined  in Section  317 of the  California  Corporations  Code)  through  bylaw
provisions,  agreements with the agents,  vote of shareholders or  disinterested
directors or otherwise, in excess of the indemnification  otherwise permitted by
Section 317 of the California  Corporations Code, subject only to the applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to this corporation and its shareholders.


DATED: February 25, 2000                /s/ Barbara Alder
                                       -------------------------------
                                        Barbara Alder, Incorporator


                                                                  [SEAL OMITTED]



<PAGE>

                                     BYLAWS

                                       OF

                             AFI ACQUISITION CORP.


<PAGE>


                                TABLE OF CONTENTS


                                                                           Page

ARTICLE I

OFFICES .....................................................................1
  Section 1. Principal Offices ..............................................1
  Section 2. Other Offices ..................................................1

ARTICLE II

MEETINGS OF SHAREHOLDERS ....................................................1
  Section 1. Place of Meetings ..............................................1
  Section 2. Annual Meetings ................................................1
  Section 3. Special Meeting ................................................1
  Section 4. Notice of Shareholders' Meetings ...............................2
  Section 5. Manner of Giving Notice: Affidavit of Notice ...................2
  Section 6. Quorum .........................................................3
  Section 7. Adjourned Meeting: Notice ......................................3
  Section 8. Voting .........................................................3
  Section 9. Waiver of Notice or Consent by Absent Shareholders .............4
  Section 10.Shareholder Action by Written Consent Without a Meeting ........4
  Section 11.Record Date for Shareholder Notice. Voting, and Giving Consents.5
  Section 12.Proxies ........................................................5
  Section 13.Inspectors of Election .........................................6

ARTICLE III

DIRECTORS
  Section 1. Powers .........................................................6
  Section 2. Number and Qualification of Directors ..........................7
  Section 3. Election and Term of Office of Directors .......................7
  Section 4. Vacancies ......................................................8
  Section 5. Place of Meetings and Meetings by Telephone ....................8
  Section 6. Annual Meeting .................................................9
  Section 7. Other Regular Meetings .........................................9
  Section 8. Special Meetings ...............................................9
  Section 9. Quorum .........................................................9
  Section 10.Waiver of Notice ...............................................9
  Section 11.Adjournment ...................................................10
  Section 12.Notice of Adjournment .........................................10
  Section 13.Action Without Meeting ........................................10
  Section 14.Fees and Compensation of Directors ............................10

                                       i

<PAGE>

                                                                           Page
ARTICLE IV
COMMITTEES .................................................................10
     Section 1. Committees of Directors ....................................10
     Section 2. Meetings and Action of Committees ..........................11

ARTICLE V
OFFICERS 11
  Section 1. Officers ......................................................11
  Section 2. Election of Officers ..........................................11
  Section 3. Subordinate Officers ..........................................11
  Section 4. Removal and Resignation of Officers ...........................12
  Section 5. Vacancies in Offices ..........................................12
  Section 6. Chairman of the Board .........................................12
  Section 7. Chief Executive Officer .......................................12
  Section 8. President .....................................................12
  Section 9. Vice Presidents ...............................................12
  Section 10.Secretary .....................................................13
  Section 11.Chief Financial Officer .......................................13

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS .....................................................................13

ARTICLE VII
RECORDS AND REPORTS ........................................................14
  Section 1. Maintenance and Inspection of Share Register ..................14
  Section 2. Maintenance and Inspection of Bylaws ..........................15
  Section 3. Maintenance and Inspection of Other Corporate Records .........15
  Section 4. Inspection by Directors .......................................15
  Section 5. Annual Report to Shareholders .................................15
  Section 6. Financial Statements ..........................................15
  Section 7. Annual Statement of General Information .......................16

ARTICLE VIII
GENERAL CORPORATE MATTERS ..................................................16
  Section 1. Record Date for Purposes Other Than Notice and Voting .........16
  Section 2. Checks. Drafts, Evidences of Indebtedness .....................17
  Section 3. Corporate Contracts and Instruments: How Executed .............17
  Section 4. Certificates for Shares .......................................17

                                       ii

<PAGE>

                                                                           Page

  Section 5. Lost Certificates .............................................17
  Section 6. Representation of Shares of Other Corporations ................18
  Section 7. Construction and Definitions ..................................18


ARTICLE IX
AMENDMENTS .................................................................18
  Section 1. Amendment by Shareholders .....................................18
  Section 2. Amendment by Directors ........................................18

CERTIFICATE OF SECRETARY ...................................................19

                                      iii

<PAGE>

                                     BYLAWS

                                       OF

                              AFT ACQUISITION CORP.



                                    ARTICLE I

                                     OFFICES

     Section 1. Principal Offices. The Board of Directors shall fix the location
of the  principal  executive  office of the  corporation  at any place within or
outside the State of California.  If the principal  executive  office is located
outside this state, and the corporation has one or more business offices in this
state,  the Board of  Directors  shall fix and  designate a  principal  business
office in the State of California.

     Section 2. Other Offices. The Board of Directors may at any time establish,
or may  designate  an  officer  of  the  corporation  to  establish,  branch  or
subordinate offices at any place or places where the corporation is qualified to
do business.


                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

     Section 1. Place of Meetings. Meetings of shareholders shall be held at any
place  within or  outside  the State of  California  designated  by the Board of
Directors. In the absence of any such designation,  shareholders' meetings shall
be held at the principal executive office of the corporation.

     Section 2. Annual  Meetings.  The annual meeting of  shareholders  shall be
held each year on a date and at a time designated by the Board of Directors.  At
each annual meeting,  directors shall be elected,  and any other proper business
may be transacted.

     Section 3. Special  Meeting.  A special meeting of the  shareholders may be
called at any time by the Board of  Directors,  or by the Chairman of the Board,
or by the  President,  or by one or  more  shareholders  holding  shares  in the
aggregate entitled to cast not less than 10% of the votes at that meeting.

     If a special  meeting  is called by any  person or  persons  other than the
Board of Directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business  proposed to be  transacted,  and
shall be delivered  personally or sent by registered  mail or by  telegraphic or
other facsimile  transmission to the Chairman of the Board,  the President,  any
Vice President,  or the Secretary of the corporation.  The officer receiving the
request shall cause notice to be promptly given to the shareholders  entitled to
vote, in accordance  with the provisions of Sections 4 and 5 of this Article II,
that

                                       1

<PAGE>


a meeting will be held at the time  requested  by the person or persons  calling
the meeting,  not less than thirty-five (35) nor more than sixty (60) days after
the receipt of the request.  If the notice is not given within  twenty (20) days
after receipt of the request,  the person or persons  requesting the meeting may
give the notice.  Nothing contained in this paragraph of this Section 3 shall be
construed  as  limiting,  fixing  or  affecting  the  time  when  a  meeting  of
shareholders called by action of the Board of Directors may be held.

     Section 4.  Notice of  Shareholders'  Meetings.  All notices of meetings of
shareholders  shall be sent or otherwise  given in accordance  with Section 5 of
this  Article II not less than ten (10) nor more than sixty (60) days before the
date of the meeting.  The notice shall  specify the place,  date and hour of the
meeting  and (i) in the case of a special  meeting,  the  general  nature of the
business  to be  transacted,  or (ii) in the case of the annual  meeting,  those
matters which the Board of Directors,  at the time of giving the notice, intends
to present  for action by the  shareholders.  The notice of any meeting at which
directors  are to be elected  shall  include the name of any nominee or nominees
whom, at the time of the notice, management intends to present for election.

     If action is  proposed  to be taken at any  meeting  for  approval of (i) a
contract or transaction  in which a director has a direct or indirect  financial
interest,  pursuant to Section 310 of the California  Corporations Code, (ii) an
amendment  of the  articles  of  incorporation,  pursuant to Section 902 of that
Code, (iii) a reorganization of the corporation,  pursuant to 1201 of that Code,
(iv) a voluntary  dissolution  of the  corporation,  pursuant to Section 1900 of
that Code, or (v) a distribution  in dissolution  other than in accordance  with
the rights of  outstanding  preferred  shares,  pursuant to Section 2007 of that
Code, the notice shall also state the general nature of that proposal.

     Section 5.  Manner of Giving  Notice;  Affidavit  of Notice.  Notice of any
meeting of shareholders  shall be given either personally or by first-class mail
or other  means of written  communication,  charges  prepaid,  addressed  to the
shareholder  at the address of that  shareholder  appearing  on the books of the
corporation or given by the  shareholder to the  corporation  for the purpose of
notice.  If no such  address  appears  on the  corporation's  books or is given,
notice  shall  be  deemed  to have  been  given if sent to that  shareholder  by
first-class mail or other means of written  communication  to the  corporation's
principal  executive  office,  or if  published  at least once in a newspaper of
general circulation in the county where that office is located.  Notice shall be
deemed to have been given at the time when delivered  personally or deposited in
the mail or sent by other means of written communication.

     If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the  corporation is returned to the corporation by the
United  States Postal  Service  marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address,  all
future  notices  or  reports  shall be deemed to have  been duly  given  without
further mailing if these shall be available to the shareholder on written demand
of the  shareholder at the principal  executive  office of the corporation for a
period of one year from the date of the giving of the notice.

     An  affidavit  of the  mailing  or other  means of giving any notice of any
shareholders'  meeting shall be executed by the secretary,  assistant secretary,
or any transfer

                                       2

<PAGE>

agent of the corporation giving the notice, and shall be filed and maintained in
the minute book of the corporation.

     Section 6.  Quorum.  The presence in person or by proxy of the holders of a
majority of the shares  entitled to vote at any  meeting of  shareholders  shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held  meeting at which a quorum is present  may  continue to do
business   until   adjournment,   notwithstanding   the   withdrawal  of  enough
shareholders  to leave  less than a quorum,  if any  action  taken  (other  than
adjournment)  is  approved  by at least a  majority  of the shares  required  to
constitute a quorum.

     Section 7. Adjourned Meeting;  Notice. Any shareholders' meeting, annual or
special,  whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the shares represented at that meeting, either in
person or by proxy,  but in the absence of a quorum,  no other  business  may be
transacted at that meeting, except as provided in Section 6 of this Article II.

     When any meeting of shareholders, either annual or special, is adjourned to
another time or place,  notice need not be given of the adjourned meeting if the
time and place are  announced  at a meeting at which the  adjournment  is taken,
unless a new  record  date for the  adjourned  meeting  is fixed,  or unless the
adjournment  is for more  than  forty-five  (45)  days from the date set for the
original  meeting,  in which case the Board of Directors  shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder of
record  entitled  to  vote at the  adjourned  meeting  in  accordance  with  the
provisions of Sections 4 and 5 of this Article II. At any adjourned  meeting the
corporation  may transact any business  which might have been  transacted at the
original meeting.

     Section 8.  Voting.  The  shareholders  entitled  to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II, subject to the provisions of Sections 702 to 704, inclusive,
of the  California  Corporations  Code  (relating  to  voting  shares  held by a
fiduciary, in the name of a corporation, or in joint ownership).

     The  shareholders'  vote  may be by  voice  vote  or by  ballot;  provided,
however,  that any election for  directors  must be by ballot if demanded by any
shareholder  before the voting has begun.  On any matter other than elections of
directors,  any shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining  shares or vote them against the proposal,
but,  if the  shareholder  fails to  specify  the  number  of  shares  which the
shareholder is voting  affirmatively,  it will be conclusively presumed that the
shareholder's  approving vote is with respect to all shares that the shareholder
is  entitled  to vote.  If a quorum  is  present,  the  affirmative  vote of the
majority of the shares  represented  at the meeting and  entitled to vote on any
matter  (other  than  the  election  of  directors)  shall  be  the  act  of the
shareholders,  unless  the vote of a greater  number or  voting  by  classes  is
required by California Corporations Code or by the Articles of Incorporation.

     At a  shareholders'  meeting  at  which  directors  are to be  elected,  no
shareholder  shall be entitled to cumulate votes (i.e., cast for any one or more
candidates  a number  of votes  greater  than the  number  of the  shareholder's
shares) unless the candidates' names have

                                       3

<PAGE>

been placed in nomination  prior to commencement of the voting and a shareholder
has given  notice  prior to  commencement  of the  voting  of the  shareholder's
intention to cumulate votes.  If any  shareholder has given such a notice,  then
every  shareholder  entitled  to vote  may  cumulate  votes  for  candidates  in
nomination  and give one  candidate  a number  of votes  equal to the  number of
directors  to be  elected  multiplied  by the  number  of votes  to  which  that
shareholder's shares are entitled,  or distribute the shareholder's votes on the
same principle  among any or all of the candidates,  as the  shareholder  thinks
fit. The candidates  receiving the highest number of votes,  up to the number of
directors to be elected, shall be elected.

     Section  9.  Waiver of  Notice  or  Consent  by  Absent  Shareholders.  The
transactions of any meeting of shareholders,  either annual or special,  however
called and noticed, and wherever held, shall be as valid as though a meeting had
been duly held after regular call and notice,  if a quorum is present  either in
person or by proxy,  and it either  before  or after the  meeting,  each  person
entitled  to vote,  who was not  present in person or by proxy,  signs a Written
Waiver of Notice or a Consent to a holding of the meeting, or an approval of the
minutes. The Waiver of Notice or Consent need not specify either the business to
be transacted or the purpose of any annual or special  meeting of  shareholders,
except  that,  if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 4 of this Article II,
the Waiver of Notice or Consent shall state the general nature of the proposal.

     All such waivers,  consents or approvals  shall be filed with the corporate
records or made a part of the minutes of the meeting.

     Attendance  by a person  at a meeting  shall  also  constitute  a waiver of
notice of that meeting,  except when the person objects, at the beginning of the
meeting,  to the transaction of any business because the meeting is not lawfully
called or convened,  and except that  attendance at a meeting is not a waiver of
any right to object to the  consideration  of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.

     Section 10.  Shareholder  Action by Written Consent Without a Meeting.  Any
action which may be taken at any annual or special meeting of  shareholders  may
be taken without a meeting and without  prior  notice,  if a consent in writing,
setting  forth the  action so taken,  is signed by the  holders  of  outstanding
shares having not less than the minimum  number of votes that would be necessary
to  authorize  or take that action at a meeting at which all shares  entitled to
vote thereon were present and voted. In the case of election of directors,  such
a consent  shall be effective  only if signed by the holders of all  outstanding
shares entitled to vote for the election of directors; provided, however, that a
director  may be elected at any time to fill a vacancy on the Board of Directors
that has not been filled by the directors, by the written consent of the holders
of a majority of the  outstanding  shares  entitled to vote for the  election of
directors.  All  such  consents  shall  be  filed  with  the  Secretary  of  the
corporation  and shall be maintained in the corporate  records.  Any shareholder
giving a written consent, or the shareholder's proxy holders, or a transferee of
the shares or a personal  representative  of the shareholder or their respective
proxy holders,  may revoke the consent by a writing received by the secretary of
the  corporation  before  written  consents of the number of shares  required to
authorize the proposed action have been filed with the secretary.

                                       4

<PAGE>


     If the  consents  of all  shareholders  entitled  to  vote  have  not  been
solicited  in  writing,  and if  the  Unanimous  Written  Consent  of  all  such
shareholders  shall not have been  received,  the  Secretary  shall give  prompt
notice of the corporate action approved by the  shareholders  without a meeting.
This notice shall be given in the manner  specified in Section 5 of this Article
II. In the case of approval of (i) contracts or transactions in which a director
has a direct or  indirect  financial  interest,  pursuant  to Section 310 of the
California Corporations Code, (ii) indemnification of agents of the corporation,
pursuant to Section 317 of that Code, (iii) a reorganization of the corporation,
pursuant to Section 1201 of that Code,  and (iv) a  distribution  in dissolution
other  than in  accordance  with the  rights of  outstanding  preferred  shares,
pursuant to Section  2007 of that Code,  the notice  shall be given at least ten
(10) days before the consummation of any action authorized by that approval.

     Section  11.  Record  Date  for  Shareholder  Notice,  Voting,  and  Giving
Consents. For purposes of determining the shareholders entitled to notice of any
meeting or to vote or entitled to give  consent to  corporate  action  without a
meeting,  the Board of Directors may fix, in advance,  a record date which shall
not be more than sixty (60) days nor less than ten (10) days  before the date of
any such meeting nor more than sixty (60) days before any such action  without a
meeting,  and in this event only shareholders of record on the date so fixed are
entitled  to  notice  and to vote  or to  give  consents,  as the  case  may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date,  except as otherwise  provided in the  California  Corporations
Code.

     If the Board of Directors does not so fix a record date:

         (a) The record date for determining  shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business on the
business  day next  preceding  the day on which  notice is given or if notice is
waived,  at the close of business on the business day next  preceding the day on
which the meeting is held.

         (b) The  record  date for  determining  shareholders  entitled  to give
consent  to  corporate  action in writing  without a meeting,  (i) when no prior
action by the board has been taken,  shall be the day on which the first written
consent is given,  or (ii) when prior action of the board has been taken,  shall
be at the close of business on the day on which the board adopts the  resolution
relating to such prior  action,  or the  sixtieth  (60th) day before the date of
such prior action, whichever is later.

     Section 12. Proxies.  Every person entitled to vote for directors or on any
other  matter  shall  have the right to do so either in person or by one or more
agents  authorized  by a written  proxy  signed by the person and filed with the
Secretary  of  the   corporation.   A  proxy  shall  be  deemed  signed  if  the
shareholder's  name  is  placed  on the  proxy  (whether  by  manual  signature,
typewriting,  telegraphic transmission,  or otherwise) by the shareholder or the
shareholder's  attorney-in-fact.  A validly  executed proxy which does not state
that it is  irrevocable  shall  continue  in full  force and  effect  unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation  stating that the proxy is revoked, or by a
subsequent  proxy executed by, or attendance at the meeting and voting in person
by,  the person  executing  the proxy;  or (ii)  written  notice of the death or
incapacity of the maker of that proxy is received by the corporation  before the
vote pursuant to that proxy is counted;  provided,  however, that no proxy shall
be valid after the expiration

                                       5

<PAGE>

of eleven (11) months from the date of the proxy,  unless otherwise  provided in
the  proxy.  The  revocability  of a proxy  that  states  on its face that it is
irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of
the California Corporations Code.

     Section 13. Inspectors of Election. Before any meeting of shareholders, the
Board of Directors may appoint any persons other than nominees for office to act
as Inspectors of Election at the meeting or its adjournment. If no Inspectors of
Election are so  appointed,  the Chairman of the meeting may, and on the request
of any  shareholder  or a  shareholder's  proxy  shall,  appoint  Inspectors  of
Election at the  meeting.  The number of  inspectors  shall be either one (1) or
three (3). If  inspectors  are  appointed  at a meeting on the request of one or
more  shareholders  or  proxies,  the  holders of a majority  of shares or their
proxies  present at the  meeting  shall  determine  whether one (1) or three (3)
inspectors are to be appointed.  If any person  appointed as inspector  fails to
appear or fails or refuses to act, the Chairman of the meeting may, and upon the
request of any shareholder or a shareholder's  proxy shall,  appoint a person to
fill that vacancy.

     These inspectors shall:

         (a) Determine the number of shares  outstanding and the voting power of
each, the shares represented at the meeting,  the existence of a quorum, and the
authenticity, validity, and effect of proxies;

         (b) Receive votes, ballots, or consents;

         (c) Hear and determine all  challenges and questions in any way arising
in connection with the right to vote;

         (d) Count and tabulate all votes or consents;

         (e) Determine when the polls shall close;

         (f) Determine the result; and

         (g) Do any other acts that may be proper to  conduct  the  election  or
vote with fairness to all shareholders.

                                   ARTICLE III

                                    DIRECTORS

     Section 1. Powers. Subject to the provisions of the California Corporations
Code and any  limitations  in the  articles of  incorporation  and these  bylaws
relating  to  action  required  to be  approved  by the  shareholders  or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all  corporate  powers shall be  exercised by or under the  direction of the
Board of Directors.

                                       6

<PAGE>


     Without  prejudice  to  these  general  powers,  and  subject  to the  same
limitations, the Board of Directors shall have the power to:

         (a) Select  and  remove all  officers,  agents,  and  employees  of the
corporation;  present  any powers and duties for them that are  consistent  with
law,  with the  articles  of  incorporation,  and with these  bylaws;  fix their
compensation; and require from them security for faithful service.

         (b) Change the principal  executive  office or the  principal  business
office  in the State of  California  from one  location  to  another;  cause the
corporation  to be  qualified  to do  business  in any other  state,  territory,
dependency,  or country  and  conduct  business  within or without  the State of
California;  and  designate  any place within or without the State of California
for the holding of any  shareholders'  meeting,  or meetings,  including  annual
meetings.

         (c) Adopt,  make,  and use a  corporate  seal;  prescribe  the forms of
certificates of stock; and alter the form of the seal and certificates.

         (d) Authorize the issuance of shares of stock of the corporation on any
lawful terms, in  consideration  of money paid,  labor done,  services  actually
rendered, debts or securities canceled, or tangible property actually received.

         (e) Borrow money and incur  indebtedness on behalf of the  corporation,
and cause to be executed and delivered for the  corporation's  purposes,  in the
corporate name, promissory notes, bonds, debentures,  deeds of trust, mortgages,
pledges, hypothecations, and other evidences of debt and securities.

     Section 2. Number and Oualification of Directors.  The authorized number of
directors  shall be one (1) until  changed by a duly  adopted  amendment  to the
Articles of  Incorporation  or by an amendment to this bylaw adopted by the vote
or written consent of holders of a majority of the  outstanding  shares entitled
to vote;  provided,  however,  that if the number of  directors  should  ever be
increased to five (5) or more, an amendment to this Section 2 reducing the fixed
number of  directors  to a number  less than five (5)  cannot be  adopted if the
votes cast against its adoption at a meeting,  or the shares not  consenting  in
the case of action by  written  consent,  are equal to more than  16-2/3% of the
outstanding shares entitled to vote.

     Section 3.  Election and Term of Office of  Directors.  Directors  shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting.  Each director,  including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.

                                       7

<PAGE>




     Without  prejudice  to  these  general  powers,  and  subject  to the  same
limitations, the Board of Directors shall have the power to:

         (a) Select  and  remove all  officers,  agents,  and  employees  of the
corporation;  present  any powers and duties for them that are  consistent  with
law,  with the  articles  of  incorporation,  and with these  bylaws;  fix their
compensation; and require from them security for faithful service.

         (b) Change the principal  executive  office or the  principal  business
office  in the State of  California  from one  location  to  another;  cause the
corporation  to be  qualified  to do  business  in any other  state,  territory,
dependency,  or country  and  conduct  business  within or without  the State of
California;  and  designate  any place within or without the State of California
for the holding of any  shareholders'  meeting,  or meetings,  including  annual
meetings.

         (c) Adopt,  make,  and use a  corporate  seal;  prescribe  the forms of
certificates of stock; and alter the form of the seal and certificates.

         (d) Authorize the issuance of shares of stock of the corporation on any
lawful terms, in  consideration  of money paid,  labor done,  services  actually
rendered, debts or securities canceled, or tangible property actually received.

         (e) Borrow money and incur  indebtedness on behalf of the  corporation,
and cause to be executed and delivered for the  corporation's  purposes,  in the
corporate name, promissory notes, bonds, debentures,  deeds of trust, mortgages,
pledges, hypothecations, and other evidences of debt and securities.

     Section 2. Number and Qualification of Directors.  The authorized number of
directors  shall be one (1) until  changed by a duly  adopted  amendment  to the
Articles of  Incorporation  or by an amendment to this bylaw adopted by the vote
or written consent of holders of a majority of the  outstanding  shares entitled
to vote;  provided,  however,  that if the number of  directors  should  ever be
increased to five (5) or more, an amendment to this Section 2 reducing the fixed
number of  directors  to a number  less than five (5)  cannot be  adopted if the
votes cast against its adoption at a meeting,  or the shares not  consenting  in
the case of action by  written  consent,  are equal to more than  16-2/3% of the
outstanding shares entitled to vote.

     Section 3.  Election and Term of Office of  Directors.  Directors  shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting.  Each director,  including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.

                                       7

<PAGE>

                           <*****PAGE 8 MISSING*****>

<PAGE>


     Section 6. Annual  Meeting.  Immediately  following  each annual meeting of
shareholders,  the  Board of  Directors  shall  hold a regular  meeting  for the
purpose of organization,  any desired election of officers,  and the transaction
of other business. Notice of this meeting shall not be required.

     Section 7. Other Regular  Meetings.  Other regular meetings of the Board of
Directors  shall be held without call at such time as shall from time to time be
fixed by the Board of  Directors.  Such  regular  meetings  may be held  without
notice.

     Section 8. Special Meetings. Special meetings of the Board of Directors for
any purpose or purposes  may be called at any time by the  Chairman of the Board
or the President or any Vice President or the Secretary or any two directors.

     Notice of the time and place of  special  meetings  shall be (i)  delivered
personally or by telephone  (ihcluding a voice messaging  system or other system
or  technology  designed  to  record  and  communicate   messages),   telegraph,
facsimile, electronic mail, or other electronic means, to each director at least
forty-eight  (48) hours  before the time of the  holding of the  meeting or (ii)
sent by  first-class  mail at least four (4) days before the time of the holding
of the meeting,  charges prepaid,  addressed to each director at that director's
address as it is shown on the records of the corporation.  Any oral notice given
personally  or by telephone may be  communicated  either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly  communicate  it to the  director.  The notice need not
specify the purpose of the meeting nor the place if the meeting is to be held at
the principal executive office of the corporation.

     Section 9. Quorum.  A majority of the authorized  number of directors shall
constitute  a quorum  for the  transaction  of  business,  except to  adjourn as
provided in Section 11 of this Article III.  Every act or decision  done or made
by a majority of the directors  present at a meeting duly held at which a quorum
is present  shall be regarded as the act of the Board of  Directors,  subject to
the  provisions  of  Section  310 of the  California  Corporations  Code  (as to
approval  of  contracts  or  transactions  in which a  director  has a direct or
indirect  material  financial  interest),  Section  311  of  that  Code  (as  to
appointment  of   committees),   and  Section  31  7(e)  of  that  Code  (as  to
indemnification of directors).  A meeting at which a quorum is initially present
may continue to transact business  notwithstanding  the withdrawal of directors,
if any action  taken is approved by at least a majority of the  required  quorum
for that meeting.

     Section 10. Waiver of Notice.  The transactions of any meeting of the Board
of Directors,  however called and noticed or wherever held, shall be as valid as
though a meeting had been duly held after regular call and notice if a quorum is
present and if,  either  before or after the meeting,  each of the directors not
present signs a written waiver of notice, a consent to holding the meeting or an
approval of the  minutes.  The waiver of notice or consent  need not specify the
purpose of the meeting. All such waivers, consents, and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.  Notice
of a meeting  shall also be deemed given to any director who attends the meeting
without  protesting  before or at its  commencement,  the lack of notice to that
director.

                                       9

<PAGE>

     Section 11.  Adjournment.  A majority of the directors present,  whether or
not constituting a quorum, may adjourn any meeting to another time and place.

     Section 12. Notice of Adjournment.  Notice of the time and place of holding
an adjourned meeting need not be given, unless the meeting is adjourned for more
than  twenty-four  hours,  in which case  notice of the time and place  shall be
given  before the time of the  adjourned  meeting,  in the manner  specified  in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.

     Section 13. Action Without Meeting.  Any action required or permitted to be
taken by the Board of Directors may be taken  without a meeting,  if all members
of the board  shall  individually  or  collectively  consent  in writing to that
action. Such action by written consent shall have the same force and effect as a
unanimous vote of the Board of Directors. Such written consent or consents shall
be filed with the minutes of the proceedings of the board.

     Section 14. Fees and  Compensation  of Directors.  Directors and members of
committees may receive such compensation,  if any, for their services,  and such
reimbursement  of expenses,  as may be fixed or  determined by resolution of the
Board of  Directors.  This  Section 14 shall not be  construed  to preclude  any
director  from  serving  the  corporation  in any other  capacity as an officer,
agent, employee, or otherwise, and receiving compensation for those services.


                                   ARTICLE IV

                                   COMMITTEES

     Section  1.  Committees  of  Directors.  The  Board of  Directors  may,  by
resolution  adopted  by a  majority  of  the  authorized  number  of  directors,
designate one or more committees,  each consisting of one or more directors,  to
serve  at the  pleasure  of the  board.  The  board  may  designate  one or more
directors  as  alternate  members of any  committee,  who may replace any absent
member at any meeting of the committee. Any committee, to the extent provided in
the resolution of the board,  shall have all the authority of the board,  except
with respect to:

         (a) The approval of any action which, under the California Corporations
Code,  also  requires  shareholders'  approval or  approval  of the  outstanding
shares;

         (b) The  filling  of  vacancies  on the  Board of  Directors  or in any
committee;

         (c) The fixing of  compensation  of the  directors  for  serving on the
board or on any committee;

         (d) The amendment or repeal of bylaws or the adoption of new bylaws.

                                       10

<PAGE>

     (e) The  amendment or repeal of any  resolutions  of the Board of Directors
which by its express terms is not so amendable or repealable;

     (f) A distribution to the shareholders of the corporation, except at a rate
or in a  periodic  amount or  within a price  range  determined  by the Board of
Directors;

     (g) The  appointment  of any other  committees of the Board of Directors or
the members of these committees.

     Section  2.  Meetings  and  Action of  Committees.  Meetings  and action of
committees  shall be governed  by, and held and taken in  accordance  with,  the
provisions  of Article III of these bylaws,  Sections 5 (place of  meetings),  7
(regular meetings),  8 (special meetings and notice), 9 (quorum),  10 (waiver of
notice),  11  (adjournment),  12 (notice of adjournment),  and 13 (action whhout
meetings),  with such changes in the context of those bylaws as are necessary to
substitute  the  committee  and its members for the Board of  Directors  and its
members,  except  that  the  time  of  regular  meetings  of  committees  may be
determined  either by  resolution  of the Board of Directors or by resolution of
the committee;  special  meetings of committees may also be called by resolution
of the Board of Directors;  and notice of special  meetings of committees  shall
also be given to all alternate  members,  who shall have the right to attend all
meetings  of the  committee.  The Board of  Directors  may  adopt  rules for the
government  of any  committee  not  inconsistent  with the  provisions  of these
bylaws.


                                    ARTICLE V

                                    OFFICERS

     Section 1. Officers.  The officers of the Corporation shall be a President,
a Secretary and a Chief Financial Officer. The Corporation may also have, at the
discretion of the Board, a Chairman of the Board, a Chief Executive Officer, one
or more Vice  Presidents,  one or more  Assistant Vice  Presidents,  one or more
Assistant  Secretaries,  one or more Assistant Chief Financial Officers and such
other officers as may be appointed in accordance  with the provisions of Section
3 of this Article V. Any number of offices may be held by the same  person.  The
salaries of all officers of the Corporation  shall be fixed from time to time by
the Board.

     Section 2. Election of Officers.  The officers of the  corporation,  except
such officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article V, shall be chosen by the Board of  Directors,  and
each shall serve at the pleasure of the board, subject to the rights, if any, of
an officer under any contract of employment.

     Section 3. Subordinate  Officers.  The Board of Directors may appoint,  and
may empower the President,  or Chief Executive Officer, if any, to appoint, such
other  officers as the business of the  corporation  may  require,  each of whom
shall hold office for such period,  have such  authority and perform such duties
as are provided in the bylaws or as the Board of Directors may from time to time
determine.

                                       11

<PAGE>

     Section 4. Removal and Resignation of Officers.  Subject to the rights,  if
any, of an officer under any contract of employment, any officer may be removed,
either  with or without  cause,  by the Board of  Directors,  at any  regular or
special  meeting of the board,  or,  except in case of an officer  chosen by the
Board of  Directors,  by any  officer  upon whom such  power of  removal  may be
conferred by the Board of Directors.

     Any  officer  may  resign  at any  time by  giving  written  notice  to the
corporation.  Any  resignation  shall take  effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified  in that  notice,  the  acceptance  of the  resignation  shall  not be
necessary to make it  effective.  Any  resignation  is without  prejudice to the
rights,  if any, of the corporation under any contract to which the officer is a
party.

     Section 5. Vacancies in Offices.  A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.

     Section 6.  Chairman of the Board.  The  Chairman of the Board,  if such an
officer be  elected,  shall,  if  present,  preside at  meetings of the Board of
Directors  and  exercise and perform such other powers and duties as may be from
time to time  assigned to him by the Board of  Directors  or  prescribed  by the
bylaws. If there is no Chief Executive Officer or President, the Chairman of the
Board shall in addition be the Chief  Executive  Officer of the  corporation and
shall have the powers and duties prescribed in Section 7 of this Article V.

     Section 7. Chief Executive Officer. The Chief Executive Officer, if such an
officer be elected,  shall,  subject to the control of the Board,  have  general
supervision,   direction  and  control  of  the  business  and  affairs  of  the
Corporation. In the absence or disability of the Chairman of the Board, or if no
such  officer is  elected,  the Chief  Executive  Officer  shall  preside at all
meetings of shareholders  and the Board of Directors.  He shall have the general
powers and duties of management usually vested in the chief executive officer of
a  corporation,  and shall have such other powers and duties with respect to the
administration  of the business and affairs of the  Corporation as may from time
to time be assigned to him by the Board of  Directors  or as  prescribed  by the
bylaws.

     Section 8. President. Subject to such supervisory powers as may be given by
the Board of  Directors  to the  Chairman  of the  Board or the Chief  Executive
Officer, if there be such officers,  the President shall have the general powers
and  duties of  management  usually  vested  in the  office  of  president  of a
corporation and shall have such other powers and duties as may from time to time
be prescribed by the Board of Directors or Chief Executive  Officer,  if any, or
as  prescribed  by the  bylaws.  If  there is no Chief  Executive  Officer,  the
President shall be the chief executive officer of the corporation and shall have
the powers and duties prescribed in Section 7 of this Article V.

     Section 9. Vice Presidents.  In the absence or disability of the President,
the Vice  Presidents,  if any,  in order of their  rank as fixed by the Board of
Directors  or,  if not  ranked,  a Vice  President  designated  by the  Board of
Directors,  shall  perform all the duties of the  President,  subject to all the
restrictions  upon the  President.  The Vice  Presidents  shall  have such other
powers and perform such other duties as from time to time may be

                                       12

<PAGE>

prescribed for them  respectively  by the Board of Directors or the bylaws,  and
the President, or the Chairman of the Board.

     Section 10. Secretary. The Secretary shall keep or cause to be kept, at the
principal  executive  office or such other place as the Board of  Directors  may
direct,  a book of minutes of all meetings and actions of directors,  committees
of  directors,  and  shareholders,  with the time and place of holding,  whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at  directors'  meetings or committee  meetings,  the number of
shares present or represented at shareholders' meetings, and the proceedings.

     The Secretary  shall keep, or cause to be kept, at the principal  executive
office or at the office of the  corporation's  transfer  agent or registrar,  as
determined  by  resolution of the Board of  Directors,  a share  register,  or a
duplicate  share  register,  showing  the  names of all  shareholders  and their
addresses, the number and classes of shares held by each, the number and date of
certificates  issued for the same,  and the number and date of  cancellation  of
every certificate surrendered for cancellation.

     The Secretary  shall give, or cause to be given,  notice of all meetings of
the shareholders and of the Board of Directors  required by the bylaws or by law
to be given, and he shall keep the seal of the corporation if one be adopted, in
safe custody,  and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or by the bylaws.

     Section 11. Chief Financial Officer. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records  of  accounts  of  the  properties  and  business  transactions  of  the
corporation,   including   accounts  of  its  assets,   liabilities,   receipts,
disbursements,  gains, losses, capital,  retained earning, and shares. The books
of account shall at all reasonable times be open to inspection by any director.

     The Chief Financial Officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation  with such  depositories as may be
designated  by the  Board of  Directors.  He  shall  disburse  the  funds of the
corporation  as may be ordered by the Board of  Directors,  shall  render to the
President  and  directors,  whenever  they  request it, an account of all of his
transactions  as Chief Financial  Officer and of the financial  condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the Board of Directors or the bylaws.


                                   ARTICLE VI

                INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES

                                AND OTHER AGENTS

     The corporation  shall have the authority,  to the maximum extent permitted
by the  California  Corporations  Code, to indemnify  each of its agents against
expenses,

                                       13

<PAGE>

judgments, fines, settlements and other amounts actually and reasonably incurred
in connection  with any  proceeding  arising by reason of the fact that any such
person is or was an agent of the  corporation.  The corporation  shall also have
the authority,  to the maximum extent  permitted by the California  Corporations
Code, to advance expenses  incurred by any agent of the corporation in defending
any proceeding.

     The corporation shall have the authority to purchase and maintain insurance
on behalf of agents of the corporation against any liability asserted against or
incurred by any agent in such  capacity or arising out of the agent's  status as
agent.

     The corporation shall have the power to enter into binding  agreements with
its agents to provide the indemnification allowed under this Article.

     Nothing in this Article shall be construed either to allow  indemnification
of any agent for any acts or omissions or transactions from which such agent may
not be indemnified  under applicable  California law or to deny  indemnification
when applicable California law requires indemnification.

     For purposes of this Article,  an "agent" of the  corporation  includes any
person  who is or was a  director,  officer,  employee,  or  other  agent of the
corporation,  or is or was  serving  at the  request  of  the  corporation  as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise,  or was a director,  officer,  employee, or
agent of a corporation which was a predecessor corporation of the corporation or
of another  enterprise  at the  request  of such  predecessor  corporation.  For
purposes  of  this  Article,  "proceeding"  means  any  threatened,  pending  or
completed  action or proceeding,  whether  civil,  criminal,  administrative  or
investigative.  For  purposes  of  this  Article,  expenses"  includes,  without
limitation,  attorneys'  fees  and any  expenses  of  establishing  a  right  to
indemnification.


                                   ARTICLE VII

                               RECORDS AND REPORTS

     Section 1.  Maintenance and Inspection of Share  Register.  The corporation
shall keep at its principal  executive  office, or at the office of its transfer
agent or  registrar,  if either be appointed  and as determined by resolution of
the Board of  Directors,  a record  of its  shareholders;  giving  the names and
addresses  of all  shareholders  and the number and class of shares held by each
shareholder.

     A shareholder  or  shareholders  of the  corporation  holding at least five
percent  (5%)  in  the  aggregate  of  the  outstanding  voting  shares  of  the
corporation  may (i)  inspect and copy the  records of  shareholders'  names and
addresses and  shareholdings  during usual business hours on five (5) days prior
written  demand on the  corporation,  and (ii) obtain from the transfer agent of
the  corporation,  on written demand and on the tender of such transfer  agent's
usual charges for such list, a list of the  shareholders'  names and  addresses,
who are entitled to vote for the election of directors, and their shareholdings,
as of the most recent record date for which that list has been compiled or as of
the date specified by the

                                       14

<PAGE>

shareholder  after the date of demand.  This list shall be made available to any
such  shareholder  by the transfer agent on or before the later of five (5) days
after the demand is received or the date  specified in the demand as the date as
of which the list is to be compiled.  The record of  shareholders  shall also be
open to  inspection  on the  written  demand of any  shareholder  or holder of a
voting trust certificate, at any time during usual business hours, for a purpose
reasonably  related to the holder's  interests as a shareholder or as the holder
of a voting trust  certificate.  Any inspection and copying under this Section 1
may be made in person or by an agent or attorney of the shareholder or holder of
a voting trust certificate making the demand.

     Section 2. Maintenance and Inspection of Bylaws. The corporation shall keep
at its principal  executive office, or if its principal  executive office is not
in the State of California,  at its principal business office in this state, the
original  or a copy of the  bylaws as amended  to date,  which  shall be open to
inspection by the  shareholders at all reasonable  times during office hours. If
the  principal  executive  office of the  corporation  is  outside  the State of
California and the corporation  has no principal  business office in this state,
the Secretary  shall,  upon the written request of any  shareholder,  furnish to
that shareholder a copy of the bylaws as amended to date.

     Section 3.  Maintenance  and  Inspection of Other  Corporate  Records.  The
accounting  books and records and minutes of proceedings of the shareholders and
the Board of Directors and any committee or committees of the Board of Directors
shall be kept at such place or places designated by the Board of Directors,  or,
in the absence of such  designation,  at the principal  executive  office of the
corporation.  The minutes shall be kept either in written form or any other form
capable of being  converted into written form. The minutes and accounting  books
and  records  shall  be  open to  inspection  upon  the  written  demand  of any
shareholder  or holder of a voting trust  certificate,  at any  reasonable  time
during usual business hours,  for a purpose  reasonably  related to the holder's
interests as a shareholder or as the holder of a voting trust  certificate.  The
inspection  may be made in person or by an agent or attorney,  and shall include
the right to copy and make extracts.  These rights of inspection shall extend to
the records of each subsidiary corporation of the corporation.

     Section 4. Inspection by Directors.  Every director shall have the absolute
right at any  reasonable  time to inspect all books,  records,  and documents of
every  kind  and the  physical  properties  of the  corporation  and each of its
subsidiary corporations.  This inspection by a director may be made in person or
by an agent or attorney and the right of  inspection  includes the right to copy
and make extracts of documents.

     Section 5. Annual Report to Shareholders. The annual report to shareholders
referred to in Section  1501 of the  California  Corporations  Code is expressly
dispensed with, but nothing herein shall be interpreted as prohibiting the Board
of Directors from issuing annual or other periodic  reports to the  shareholders
of the corporation as they consider appropriate.

     Section 6. Financial  Statements.  A copy of any annual financial statement
and any income  statement of the corporation  for each quarterly  period of each
fiscal year, and any accompanying balance sheet of the corporation as of the end
of each such period,  that has been prepared by the corporation shall be kept on
file in the principal executive office

                                       15

<PAGE>

of the  corporation  for twelve  (12)  months and each such  statement  shall be
exhibited at all reasonable times to any shareholder demanding an examination of
any such statement or a copy shall be mailed to any such shareholder.

     If a shareholder or shareholders  holding at least five percent (5%) of the
outstanding  shares  of any  class of stock of the  corporation  makes a written
request to the  corporation  for an income  statement of the corporation for the
three-month,  six (6) month or nine (9) month period of the then current  fiscal
year ended more than  thirty  (30) days  before the date of the  request,  and a
balance  sheet  of the  corporation  as of the end of  that  period,  the  Chief
Financial  Officer  shall cause that  statement to be  prepared,  if not already
prepared,  and shall deliver  personally or mail that statement or statements to
the person  making the request  within thirty (30) days after the receipt of the
request.  If the corporation has not sent to the  shareholders its annual report
for the last fiscal year,  this report shall  likewise be delivered or mailed to
the shareholder or shareholders within thirty (30) days after the request.

     The corporation shall also, on the written request of any shareholder, mail
to the shareholder a copy of the last annual,  semi-annual,  or quarterly income
statement  which  it has  prepared,  and a  balance  sheet as of the end of that
period.

     The quarterly  income  statements  and balance  sheets  referred to in this
section  shall  be  accompanied  by the  report,  if  any,  of  any  independent
accountants  engaged by the  corporation  or the  certificate  of an  authorized
officer of the corporation  that the financial  statements were prepared without
audit from the books and records of the corporation.

     Section 7. Annual Statement of General  Information.  The corporation shall
in each year file with the Secretary of State of the State of California, on the
prescribed form, a statement  setting forth the authorized  number of directors,
the  names  and  complete  business  or  residence  addresses  of all  incumbent
directors,  the names and complete business or residence  addresses of the Chief
Executive Officer, Secretary, and Chief Financial Officer, the street address of
its principal  executive office or principal  business office in this state, and
the general type of business constituting the principal business activity of the
corporation, together with a designation of the agent of the corporation for the
purpose  of service of  process,  all in  compliance  with  Section  1502 of the
California Corporations Code.


                                  ARTICLE VIII

                            GENERAL CORPORATE MATTERS

     Section 1. Record  Date for  Purposes  Other Than  Notice and  Voting.  For
purposes of  determining  the  shareholders  entitled to receive  payment of any
dividend  or other  distribution  or  allotment  of any  rights or  entitled  to
exercise any rights in respect of any other lawful  action (other than Action by
Shareholders by Written  Consent Without a Meeting),  the Board of Directors may
fix, in  advance,  a record  date,  which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are  entitled to receive the  dividend,  distribution  or  allotment of
rights or to exercise the rig as the case may be,  notwithstanding  any transfer
of any shares on the books of the

                                       16

<PAGE>

corporation after the record date so fixed,  except as otherwise provided in the
California Corporations Code.

     If the Board of Directors  does not so fix a record  date,  the record date
for  determining  shareholders  for any such  purpose  shall be at the  close of
business on the day on which the board adopts the  applicable  resolution or the
sixtieth (60th) day before the date of that action, whichever is later.

     Section 2. Checks, Drafts,  Evidences of Indebtedness.  All checks, drafts,
or other orders for payment of money, notes, or other evidences of indebtedness,
issued in the name or payable to the corporation, shall be signed or endorsed by
such  person or  persons  and in such  manner  as,  from time to time,  shall be
determined by resolution of the Board of Directors.

     Section 3. Corporate Contracts and Instruments;  How Executed. The Board of
Directors,  except as otherwise  provided in these  bylaws,  may  authorize  any
officer or officers,  agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the  corporation,  and this authority
may be general or confined to specific  instances;  and, unless so authorized or
ratified by the Board of Directors or within the agency power of an officer,  no
officer,  agent,  or  employee  shall  have any power or  authority  to bind the
corporation  by any contract or  engagement or to pledge its credit or to render
it liable for any purpose or for any amount.

     Section 4.  Certificates  for Shares.  A certificate  or  certificates  for
shares  of the  capital  stock  of the  corporation  shall  be  issued  to  each
shareholder  when any of these shares are fully paid, and the Board of Directors
may  authorize  the issuance of  certificates  or shares as partly paid provided
that these  certificates  shall state the amount of the consideration to be paid
for them and the amount paid.  All  certificates  shall be signed in the name of
the corporation by the Chairman of the Board or the Chief  Executive  Officer or
the  President  or Vice  President  and by the  Chief  Financial  Officer  or an
Assistant  Financial  Officer  or  the  Secretary  or any  Assistant  Secretary,
certifying  the number of shares and the class or series of shares  owned by the
shareholder.  Any or all of the signatures on the  certificate may be facsimile.
In case any  officer,  transfer  agent,  or  registrar  who has  signed or whose
facsimile  signature  has been placed on a  certificate  shall have ceased to be
that officer, transfer agent, or registrar before that certificate is issued, it
may be issued by the corporation  with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.

     Section 5. Lost Certificates.  Except as provided in this Section 5, no new
certificates for shares shall be issued to replace an old certificate unless the
latter is  surrendered  to the  corporation  and canceled at the same time.  The
Board of Directors may, in case any share  certificate  or  certificate  for any
other  security is lost,  stolen,  or  destroyed,  authorize  the  issuance of a
replacement  certificate  on such terms and conditions as the board may require,
including  provision for indemnification of the corporation secured by a bond or
other adequate security  sufficient to protect the corporation against any claim
that may be made against it,  including any expense or liability,  on account of
the alleged loss,  theft,  or destruction of the  certificate or the issuance of
the replacement certificate.

                                       17

<PAGE>

     Section 6. Representation of Shares of Other Corporations.  The Chairman of
the Board, the President,  or any Vice President, or any other person authorized
by resolution  of the Board of Directors or by any of the  foregoing  designated
officers,  is authorized to vote on behalf of the corporation any and all shares
of any other corporation or corporations,  foreign or domestic,  standing in the
name of the  corporation.  The  authority  granted to these  officers to vote or
represent  on  behalf  of  the  corporation  any  and  all  shares  held  by the
corporation in any other  corporation or corporations may be exercised by any of
these  officers in person or by any person  authorized  to do so by a proxy duly
executed by these officers.

     Section  7.  Construction  and  Definitions.  Unless the  context  requires
otherwise, the general provisions, rules of construction, and definitions in the
California  Corporations  Code shall govern the  construction  of these  bylaws.
Without limiting the generality of this provision,  the singular number includes
the plural,  the plural  number  includes the  singular,  and the term  "person"
includes both a corporation and a natural person.


                                   ARTICLE IX

                                   AMENDMENTS

     Section 1.  Amendment by  Shareholders.  New bylaws may be adopted or these
bylaws may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote; provided,  however, that if
the  Articles  of  Incorporation  of the  corporation  set forth  the  number of
authorized directors of the corporation,  the authorized number of directors may
be changed only by an amendment of the Articles of Incorporation.

     Section  2.  Amendment  by  Directors.  In  addition  to the  rights of the
shareholders  as provided in Section 1 of this Article IX, to adopt,  amend,  or
repeal  bylaws,  bylaws may be  adopted,  amended,  or  repealed by the Board of
Directors,  provided,  however, that the Board of Directors may adopt a bylaw or
amendment of a bylaw  changing the  authorized  number of directors only for the
purpose of fixing the exact number of directors  within the limits  specified in
the Articles of Incorporation or in Section 2 of Article III of these bylaws.

                                       18

<PAGE>

                            CERTIFICATE OF SECRETARY

     The undersigned hereby certifies that:

     1.  The  undersigned  is the  duly  elected  and  acting  Secretary  of AFI
Acquisition Corp.. a California corporation; and

     2. The foregoing  bylaws  constitute the bylaws of said corporation as duly
adopted by Unanimous Written Consent of the Board of Directors dated as of March
1, 2000.

     IN WITNESS WHEREOF,  I have hereunto  subscribed my and affixed the seal of
said corporation on March 1, 2000



                                             /s/ Michael J. Silva
                                             ----------------------------------
                                             Michael J. Silva, Secretary


                                       19


<PAGE>

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


THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH ON THE REVERSE HEREOF

                               February 28, 2000

Number 1                                                            2,000 Shares
                                                                    Common Stock

                             AFI ACQUISITION CORP.
                            a California Corporation

                    1,000,000 Shares Authorized Common Stock


     THIS CERTIFIES THAT: USA Biomass Corporation,  a Delaware  corporation,  is
the registered holder of two thousand (2,000) shares of Common Stock of AFI
ACQUISITION CORP., transferable only on the share register of this corporation
by the holder hereof, in person or by duly authorized attorney, upon surrender
of this certificate properly endorsed or assigned.  This certificate and the
shares represented hereby are issued and shall be held subject to all the
provisions of the Articles of Incorporation and the Bylaws of this corporation,
a copy of each of which is on file at the office of this corporation, to all of
which the holder of this certificate, by acceptance hereof, assents and agrees
to be bound.

     WITNESS  the  Seal  of this  corporation  and the  signatures  of its  duly
authorized officers this ____ day of March, 2000.


/s/ Michael J. Silva                                 /s/ Michael J. Silva
---------------------------                          ---------------------------
Michael J. Silva, Secretary                          Michael J. Silva, President

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