SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING March 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _________________
Commission File Number 0-17594
USA BIOMASS CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 33-0329559
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7314 SCOUT AVENUE, BELL GARDENS, CALIFORNIA 90201
(Address of principal executive offices) (Zip Code)
(562) 928-9900
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [x] No [ ]
The number of shares outstanding of issuer's only class of Common Stock,
$.002 par value, was 11,088,666 on May 12, 1999.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introduction
USA Biomass Corporation ("Company") has prepared the consolidated financial
statements, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain formation and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principals have been condensed or omitted pursuant to such
rules and regulations. The Company believes that the disclosures are adequate to
make the information presented not misleading when read in conjunction with the
Company's consolidated financial statements for the year ended December 31,
1999. The financial information presented reflects all adjustments, consisting
only of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the results for the periods presented.
<PAGE>
USA Biomass Corporation
Index to the Consolidated Financial Statements
As of March 31, 2000 and December 31, 1999
And For the Three Months ended March 31, 2000 and 1999
Consolidated Financial Statements for USA Biomass Corporation
Balance Sheets ........................................... F-2
Statements of Operations ................................. F-3
Statements of Shareholder's Equity ....................... F-4
Statement of Cash Flows .................................. F-6
Notes to the Financial Statements ................................. F-9
<PAGE>
USA Biomass Corporation
Consolidated Balance Sheets
March 31, 2000 to December 31, 1999
(unaudited)
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Current assets:
Cash and equivalents $ 1,487,000 $ 1,362,000
Accounts receivable, net of allowance for doubtful 1,873,000 862,000
Receivable from affiliates 180,000 26,000
Other current assets 979,000 129,000
Net current assets of discontinued operations 1,349,000 1,249,000
----------- -----------
Total current assets 5,868,000 3,628,000
Property and equipment, net of accumulated depreciation 15,091,000 7,584,000
Other assets 24,000 32,000
Intangible assets, net of accumulated amortization 1,415,000 392,000
----------- -----------
Total assets $22,398,000 $11,636,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
<PAGE>
USA Biomass Corporation
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
(Unaudited)
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 2,271,000 $ 1,747,000
Accrued liabilities 1,308,000 1,355,000
Lines of credit 908,000 640,000
Notes payable:
Affiliates 140,000 191,000
Other 2,152,000 728,000
Capitalized lease obligations 1,088,000 810,000
------------ ------------
Total current liabilities 7,837,000 5,471,000
Notes payable, net of current portion:
Affiliates 633,000 1,021,000
Other 5,213,000 2,333,000
Capitalized lease obligations, net of current portion 2,835,000 2,552,000
------------ ------------
Total liabilities 16,518,000 11,377,000
------------ ------------
Commitments and contingencies
Shareholders' equity:
Preferred Stock:
Series A, 9% Convertible Preferred Stock 6,000 7,000
Series C, 6% Convertible Preferred Stock 1,000 --
Common stock 22,000 19,000
Additional paid-in capital 31,451,000 25,235,000
Accumulated deficit (25,329,000) (24,782,000)
Notes receivable on common stock (153,000) (103,000)
Treasury stock (118,000) (118,000)
------------ ------------
Total shareholders' equity 5,880,000 259,000
------------ ------------
Total liabilities and shareholders' equity $ 22,398,000 $ 11,636,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
USA Biomass Corporation
Consolidated Statements of Operations
For the Three Month Periods Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Month Period Ended March 31,
------------------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues $ 2,899,000 $ 2,067,000
Cost of revenues, less depreciation 2,160,000 1,755,000
----------- -----------
Gross margin 739,000 312,000
General and administrative expenses 488,000 596,000
Depreciation 400,000 277,000
Settlement gain (159,000) --
----------- -----------
Operating income (loss) from continuing operations 10,000 (561,000)
Interest expense, net 141,000 212,000
----------- -----------
Loss from continuing operations and net loss $ 131,000 $ 773,000
=========== ===========
Net loss per common share, basic and diluted $ 0.11 $ .14
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
USA Biomass Corporation
Consolidated Statements of Shareholders' Equity
For the Three Month Periods Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Series A Series B Shares Series A
Preferred Preferred Common Held in Preferred
Shares Shares Shares Treasury Stock
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 747,500 394,414 7,761,385 (24,000) 7,475
Net loss -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Balance, March 31, 1999 747,500 394,414 7,761,385 (24,000) $ 7,422
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Common Retained
Series B Stock Additional Earnings
Preferred Common Held in Paid-in (Accumulated
Stock Stock Treasury Capital Deficit)
------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 4,000 16,000 $ (118,339) $ 21,970,000 $ (15,057,000)
Net loss -- -- -- -- (773,000)
------------ ------------ ------------ ------------ ------------
Balance, March 31, 1999 4,000 $ 16,000 $ (118,339) $ 21,970,000 $(15,830,000)
============ ============ ============ ============ ============
</TABLE>
Common
Total
----------
Balance, December 31, 1998 $6,822,081
Net loss (773,000)
---------
Balance, March 31, 1999 $6,049,000
=========
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
USA Biomass Corporation
Consolidated Statements of Shareholders' Equity
For the Three Month Periods Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Series A Series C Shares Series A
Preferred Preferred Common Held in Preferred
Shares Shares Shares Treasury Stock
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 742,200 -- 9,509,856 (24,250) $ 7,000
Conversion of Series A Convertible Preferred
Stock to common stock (126,700) -- 228,060 -- (1,000)
Common stock issued on exercise of stock options -- -- 350,750 -- --
Issuance of Series C Preferred stock -- 3,000 -- -- --
Shares issued in acquisition -- -- 1,000,000 -- --
Payment of Series A Dividends -- -- -- -- --
Net loss -- -- -- -- --
------------ ---------- ----------- ----------- -----------
Balance, March 31, 2000 615,500 3,000 11,088,666 (24,250) $ 6,000
============ ========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Common Retained
Series C Stock Additional Earnings
Preferred Common Held in Paid-in (Accumulated
Stock Stock Treasury Capital Deficit)
------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 -- $ 19,000 $ (118,000) $25,235,000 $(24,782,000)
Conversion of Series A Convertible Preferred
Stock to common stock -- -- -- 1,000 --
Common stock issued on exercise of stock options -- 1,000 -- 738,000 --
Issuance of Series C Preferred stock $1,000 -- -- 2,832,000 --
Shares issued in acquisition -- 2,000 -- 2,645,000 --
Payment of Series A Dividends -- -- -- -- (416,000)
Net loss -- -- -- -- (131,000)
---------- ----------- ----------- ----------- -----------
Balance, March 31, 2000 (Unaudited) $1,000 $ 22,000 $ (118,000) $ 31,451,000 $(25,329,000)
========== =========== =========== =========== ===========
</TABLE>
Notes
Receivable on
Common
Stock Total
---------- ------------
Balance, December 31, 1999 $(103,000) $ 258,000
Conversion of Series A Convertible Preferred
Stock to common stock -- --
Common stock issued on exercise of stock options (50,000) 689,000
Issuance of Series C Preferred stock -- 2,833,000
Shares issued in acquisition -- 2,647,000
Payment of Series A Dividends -- (416,000)
Net loss -- (131,000)
--------- ------------
Balance, March 31, 2000 (Unaudited) $(153,000) $ 5,880,000
========= ============
F-6
<PAGE>
USA Biomass Corporation
Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
March 31, March 31,
2000 1999
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (131,000) $ (773,000)
----------- -----------
Net loss from continuing operations (131,000) (773,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 400,000 277,000
Loss on sale of assets -- 12,000
Decrease (increase) in assets:
Accounts Receivable (411,000) (595,000)
Other current assets (734,000) (392,000)
Other assets -- (156,000)
Notes receivable -- (309,000)
Increase (decrease) in liabilities:
Accounts payable (193,000) 1,022,000
Accrued liabilities (233,000) 94,000
----------- -----------
Net cash provided by (used) in operating
activities of continuing operations (1,302,000) (36)
Net cash used in operating
activities of discontinued activities (252,000) (68)
----------- -----------
Cash provided by (used) in operating activities (1,554,000) (538,000)
----------- -----------
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
<PAGE>
USA Biomass Corporation
Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 31, 2000 and 1999
(Unaudited)
- --------------------------------------------------------------------------------
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
March 31, March 31,
2000 1999
------- -------
<S> <C> <C>
Cash flows provided by (used in) investing
Activities:
Purchase of property and equipment (778,000) (985)
Acquisition of AWT (228,000) --
----------- -----------
Net cash provided by (used in) investing
Activities of continuing operations (1,006,000) (985)
----------- -----------
Cash flows provided by (used in) financing
activities:
Proceeds from line of credit $ 128,000 $ --
Proceeds from notes and loans 174,000 250
Repayment of notes, loans, leases (973,000) (158)
Proceeds from sale of Preferred Stock 2,833,000
Proceeds from exercise of options 689,000
Payment of dividends (416,000)
----------- -----------
2,435,000
Net cash provided by (used in) financing
activities of continuing operations 2,435,000 92
Net cash provided by (used in) financing
activities of discontinued operations -- 1,689
----------- -----------
Cash provided by (used in) financing activities 2,435,000 1,781
----------- -----------
Net increase (decrease) in cash 125,000 (250)
Cash and equivalent at beginning of period 1,362,000 640
----------- -----------
Cash and equivalents at end of period 1,487,000 390
=========== ===========
Cash paid during the period for:
Interest:
Continuing operations 126,000 305
Discontinued operations 111,000 450
----------- -----------
$ 237,000 $ 755
=========== ===========
Fair value of asses acquired $ 8,229,000
Liabilities assumed 5,354,000
-----------
2,875,000
===========
Consideration paid:
Cash 228,000
Stock 2,647,000
-----------
$ 2,875,000
===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
<PAGE>
USA Biomass Corporation
Notes to the Consolidated Financial Statements
As of March 31, 2000
For the Three Month Periods Ended March 31, 2000 and 1999
- --------------------------------------------------------------------------------
1. Discontinued Operations
On December 22, 1998, the Company adopted a plan to dispose of its
agribusiness and real estate operations. In October 1999, the Company
transferred substantially all of its remaining real estate assets and
related liabilities to AMCOR Financial Corp. ("AFC"), a then wholly owned
subsidiary. In January 2000, the Company distributed to its common and
preferred shareholders all of its AFC common shares. The Company has
disputes with AFC regarding the nature and amount of assets and liabilities
transferred to AFC. Further, all the regulatory requirements related to the
distribution of the AFC shares to the Company's shareholders may not have
been satisfied. As a result, the Company continues to record its investment
related to these real estate assets as net assets of discontinued
operations in the consolidated balance sheets.
At March 31, 2000, the remaining assets of the discontinued operations are
the Company's receivable from a partnership that owned a golf course sold
in foreclosure in February 2000, certain housing development land in Texas,
and a 50% interest in PS III Farms, LLC, which owns 6,490 acres that it
leases to a limited liability company owned by the other 50% venture
partner. The real estate assets have been pledged as collateral on notes
payable on which the Company is primarily liable totaling $3,439 at March
31, 2000, which is included in the net assets of discontinued operations.
The lender that foreclosed upon the golf course property notified the
Company that a deficiency of $1,600,000 exists after the foreclosure and in
April 2000 filed a related lawsuit.
2. Loss per Common Share
Basic and diluted loss per common share have been computed by dividing the
loss available to common stockholders by the weighted-average number of
common shares for the period. Loss available to common stockholders is the
loss after adding to the loss any preferred stock dividend requirements.
The additional common shares that would be issuable for options and
warrants outstanding are ignored, as to include them in the calculation of
diluted loss per share would be antidilutive.
The computations of basic and diluted loss per common share are as follows:
Three month period Ended March 31,
----------------------------------
2000 1999
----------- -----------
Loss from continuing operations $ 131,000 $ 773,000
Add: dividends on preferred
shares-declared 416,000 --
Add: dividends on preferred shares
- cumulative, not declared 554,000 277,000
----------- -----------
Net loss available to common
shareholders $ 1,101,000 $ 1,050,000
=========== ===========
Weighted average shares - basic and
diluted 10,299,261 7,761,385
=========== ===========
Net loss per share available to
Common shareholders - basic and
diluted $ .11 $ 0.14
=========== ===========
F-9
<PAGE>
USA Biomass Corporation
Notes to the Consolidated Financial Statements
As of March 31, 2000
For the Three Month Periods Ended March 31, 2000 and 1999
- --------------------------------------------------------------------------------
2. Loss per Common Share, Continued
The effect of the potentially dilutive securities listed below were not
included in the computation of diluted earnings per share because to do so
would have been antidilutive for the periods presented.
Three month period Ended March 31,
----------------------------------
2000 1999
--------- ---------
Shares of common stock issuable under:
Employee stock options 256,100 982,883
Warrants 239,500 479,500
Series A Convertible Preferred Stock 1,107,000 1,345,500
Series B Convertible Preferred Stock -- 591,621
Series C Convertible Preferred Stock 340,000 --
3. Business Segments
SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, establishes standards for reporting information about
operating segments in annual financial statements and requires selected
information about operating segments in interim financial reports issued to
stockholders. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance.
Each of these operating segments is considered a reportable segment. The
Company evaluates the performance of its segments and allocates resources
to them based on revenue and EBITDA. The Company defines EBITDA as earnings
before interest, income taxes, depreciation and amortization, and other
nonoperating income and expense.
Certain financial information is presented below:
<TABLE>
<CAPTION>
Green Waste Waste
Recycling Transport Other Total
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Three months ended March 31, 2000:
Revenue $ 636,000 $ 2,263,000 -- $ 2,899,000
EBITDA 165,000 318,000 $ (73,000) 410,000
Assets 2,206,000 15,696,000 4,496,000 22,398,000
Depreciation and amortization 85,000 315,000 -- 400,000
Interest, net 23,000 117,000 2,000 142,000
Three months ended December 31, 1999:
Revenue 797,000 1,270,000 -- 2,067,000
EBITDA 107,00 321,000 (498,000) (284,000)
Assets 1,975,000 5,850,000 3,811,000 11,636,000
Depreciation and amortization 127,000 150,000 -- 277,000
Interest, net 112,000 109,000 (10,000) 212,000
</TABLE>
F-10
<PAGE>
USA Biomass Corporation
Notes to the Consolidated Financial Statements
As of March 31, 2000
For the Three Month Periods Ended March 31, 2000 and 1999
- --------------------------------------------------------------------------------
4. Acquisition of American Waste Transport
In March 2000, the Company acquired substantially all of the outstanding
shares of American Waste Transport ("AWT") for cash in the amount of
$750,000 and up to one million shares of the Company's common stock,
subject to resolution of certain contingencies. This business combination
is to be accounted for using the purchase method.
The following unaudited pro forma consolidated results of operations are
presented as if the acquisition of AWT had taken place at January 1, 2000
and 1999.
Three month period Ended March 31,
----------------------------------
2000 1999
---------- ----------
Revenue $5,052,000 $5,610,000
========== ==========
Net loss from continuing operations $ 103,000 $ 371,000
========== ==========
Net loss $ 103,000 $ 371,000
========== ==========
The assets and liabilities of AWT included in the consolidated balance
sheet at March 31, 2000 follows:
Current assets:
Cash $ 299,000
Accounts receivable 896,000
Due from related party 135,000
Other current assets 392,000
-----------
Total current assets 1,722,000
Property and equipment 7,479,000
Goodwill 1,036,000
-----------
Total assets $10,237,000
===========
Current liabilities:
Accounts payable $ 1,007,000
Line of credit 892,000
Capitalized leases and notes payable
1,889,000
Other current liabilities 475,000
-----------
Total current liabilities 4,263,000
Capitalized leases and notes payable 2,319,000
-----------
6,582,000
Equity 3,655,000
-----------
Total liabilities and shareholders' equity $10,237,000
===========
F-11
<PAGE>
USA Biomass Corporation
Notes to the Consolidated Financial Statements
As of March 31, 2000
For the Three Month Periods Ended March 31, 2000 and 1999
- --------------------------------------------------------------------------------
5. Sale of Series C Convertible Preferred Stock
In March 2000, the Company issued 3,000 shares of its Series C Convertible
Preferred stock at $1,000 per share. In conjunction with the offering, the
Company issued warrants to purchase 100,000 shares of the Company's common
stock at $4.65 per share. The warrants may be exercised at any time until
they expire on March 31, 2005.
The Series C Convertible Preferred shares may be converted at any time at
$4.65 per share and provide for a 6% annual dividend rate. In addition, the
Company is precluded from payment of dividends on or purchase of its common
stock.
A portion of the proceeds of this offering was used for the AWT acquisition
described above and for the payment of dividends on the Series A
Convertible Preferred stock. The remaining proceeds of this offering will
be used for working capital.
F-12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company's operations at March 31, 2000 included: (i) "clean green" waste
processing and recycling ("biomass") and (ii) contract waste transport services.
During 1997, the Company's focus shifted from agribusiness and land
planning/development to biomass. Subsequently, in June 1998, the Company
broadened its new focus to include solid waste transportation and developed a
strategic alliance with Waste Management, Inc., formerly USA Waste Services
("Waste Management"). During the second half of 1998, in light of the Company's
strategic alliance with Waste Management and related existing and potential
biomass and solid waste transportation opportunities, the Company's Board of
Directors determined that the Company's shift in focus from agribusiness and
land planning/development to solid waste transportation and biomass should be
complete and permanent. Consequently, the Board of Directors approved the
Company's name change effective August 31, 1998 and subsequently, on December
22, 1998 adopted a Plan of Discontinued Operations (the "Plan") pursuant to
which the Company will discontinue its agribusiness and land
planning/development activities and will focus on its solid waste transportation
and biomass activities. In addition, on January 12, 1999, the Board of Directors
approved a change in the Company's fiscal year end to December 31.
Implementation of the Plan has had a material impact on the presentation of the
Company's financial statements. All business activity, cash flows and net assets
of these operations for the year ended December 31, 1999, and for the three
months ended March 31, 2000 have been classified as discontinued operations, and
the assets of these operations have been reduced to the lower of cost or net
realizable value.
Results of Operations
The Company's continuing operations consist of solid waste transportation and
biomass activities, which include green waste recycling. The Company has sold
its unprofitable municipal tree maintenance operations in March 1999. The
Company's discontinued operations consist of agribusiness and land
planning/development. A discussion of the material factors that affected the
Company's results of continuing operations and, where applicable, the results of
its discontinued operations, are presented separately below.
Results of Continuing Operations
Revenues:
The Company's revenues from continuing operations for the three months ended
March 31, 2000, reflect exclusively its biomass activities and waste transport
revenue, whereas revenues for the three months ended March 31, 1999, also
reflect $363,000 of revenues from tree maintenance operations which were sold
late in the first quarter, 1999. Revenues for the three months ended March 31,
2000 were $2,899,000, which included $982,000 of revenues from the acquisition
of American Waste Transport ("AWT") in March 2000, and were up significantly
(40%) from $2,067,000 for the three months ended March 31, 1999. The Company
expects revenues to continue to increase in fiscal 2000 as the transportation
division revenues grow both internally and as new contracts are phased in as the
Company expands its biomass operations, and from acquisitions, such as AWT.
Cost of Revenues:
Cost of revenues (excluding $400,000 of depreciation) of $2,160,000 for the
three months ended March 31, 2000, were up $378,000 (21%) from the comparable
three months period ending March 31, 1999, mainly from internal growth in
biomass activities, and from the acquisition of AWT which was completed
effective March 1, 2000, and contributed 34% of the first quarter revenues.
Gross profit from operations (excluding depreciation) was $739,000 (25%)
compared to $285,000 (14%) for the prior three month period, due largely to
higher volume in 2000 and the related economies of scale. However, the
1999-quarter also included tree maintenance operations, which generated a loss
of $146,000, thereby adversely impacting the prior period's gross profit.
<PAGE>
General and Administrative Expenses:
For the three months ended March 31, 2000, total general and administrative
expenses of $488,000 were down $81,000 (14%) from the comparable three month
period ending March 31, 1999, mainly due to the phasing down of the Company's
discontinued agribusiness and land planning/development activities, and other
cost cutting by management pursuant to the Plan of Discontinued Operations.
Settlement Gain:
During the three months ended March 31, 2000, the Company realized a settlement
gain of $159,000 based on proceeds received from the settlement of a lawsuit in
late 1999. There was no such gain in the comparable three month period in 1999.
Interest Expense, Net of Interest Income:
For the three months ended March 31, 2000, interest expense, net of interest
income was $141,000, a decrease of $71,000 (33%) from the comparable three month
period ending March 31, 1999, mainly due to the Company's debt being reduced 42%
in 1999 from the sale of discontinued operations, which was partially offset by
$26,000 of interest incurred by AWT.
Results from Continuing Operations:
For the three months ended March 31, the Company reported a loss from continuing
operations of $131,000 compared to a net loss of $773,000 for the comparable
three month period ending March 31, 1999, the improvement due mainly to
increased margins from transportation and biomass, and the absence of losses
from tree maintenance operations which were $220,000 for the quarter ended March
31, 1999.
Results of Discontinued Operations:
For the three months ended March 31, 2000, results from discontinued operations
were zero, the same as the comparable three month period ending March 31, 1999,
mainly due to the previous accrual of all operating losses for discontinued
operations.
Liquidity and Capital Resources:
The Company's overall financial condition as of March 31, 2000, as compared to
December 31, 1999, has improved considerably with shareholders' equity
increasing over 2,100% to $5,880,000, due primarily to the issuance of $3
million of new preferred stock and from the acquisition of AWT -- both
transactions occurring in March 2000. During 1999, total debt was reduced by
$8.3 million (42%) to $11.4 million, which has yielded significant interest
savings for the first quarter. (The acquisition of AWT did, however, cause total
debt to increase to $16.5 million.) In addition, revenues from expanding biomass
operations increased 70% over the comparable quarter (excluding $363,000 of tree
maintenance revenues) and are expected to exceed all of 1999's revenues by June
30, 2000. This increase is largely due to the acquisition of AWT which, when
consolidated with the Company, should generate revenues at the annual rate of
$25 million -- an increase of 227% over 1999, and with improving margins, should
generate adequate funds for operations. For example, for the quarter ended March
31, 2000, EBITDA (Earnings Before Interest, Taxes, Depreciation, and
Amortization) was $410,000 (positive) compared to a negative $284,000 EBITDA the
comparable prior three month period. Moreover, USA Biomass now has a contractual
backlog in place of more than $350 million with terms generally exceeding 10
years or longer, ensuring consistent revenue for future periods.
The Company's current ratio, at .75, improved marginally from .66 at December
31, 1999. This is primarily due to over $1.4 million of term notes becoming
current in the first quarter, which the Company intends to refinance during
2000. However, liquidity is expected to improve during 2000 as a result of the
following: (i) the intense management of cash flow; (ii) the Company has
adequate lines of credit in place and has plans to moderately expand both senior
and subordinated debt to fund working capital related to the Company's large
contract backlog; (iii) during 2000 the Company expects to liquidate all or a
part of its $2.6 million agricultural property investment, (iv) the Company has
tax-loss carry-forwards exceeding $22 million which can be applied to shelter
future earnings thereby
<PAGE>
enhancing cash flow, and (v) the Company intends to, where appropriate, make
acquisitions using its common stock for the generation of earnings and cash
flow. It is for the foregoing reasons that the Company believes that its
liquidity needs for the year 2000 will be sufficiently satisfied. Moreover, with
its discontinued operations now partially liquidated, the Company has
strategically positioned itself to profitably capitalize on the numerous
opportunities now available in the biomass industry.
Year 2000 Compliance
To date management of the Company believes that its software packages currently
in use are Year 2000 compliant. Management does not expect that the financial
impact of required modification to such software, if any, will be material to
the Company's financial position, cash flows or results of operations in any
given year.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
In December 1997, a judgment was entered against the Company and two of its
officers, who are also shareholders. The Company has filed an appeal of this
judgment.
On April 5, 2000, a bank filed a lawsuit against the Company related to a
deficiency pertaining to real property the bank foreclosed on in Texas. The
Company intends to vigorously defend against this lawsuit and believes that it
has recorded its liability related thereto in its financial statement. The
Company does not expect that this matter will have a material adverse effect on
the Company's financial condition or results of operations.
The Company is not involved in any other pending legal proceedings other than
legal proceedings occurring in the ordinary course of business. Such other legal
proceedings in the aggregate are believed by management to be immaterial.
Item 2. Change in Securities
None.
Item 3. Defaults Upon Senior Securities
As of the date of filing this report, the Company is in arrears as to quarterly
dividends on its Series A 9% Convertible Preferred Stock. The total amount of
dividend arrearages was $553,959.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
1 Not applicable
2 Plan of Discontinued Operations (1)
3.1 Certificate of Incorporation of the Company filed with the
Secretary of State of Delaware on March 10, 1988 (2)
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company filed with the Secretary of State of Delaware on December
21, 1988 (2)
3.3 Certificate of Amendment of Certificate of Incorporation of the
Company filed with the Secretary of State of Delaware on March
21, 1989 (2)
3.4 Certificate of Designations, Preferences and Relative Rights,
Qualifications and Restrictions of the Series A 9% Convertible
Preferred Stock of the Company filed with the Secretary of State
of Delaware on May 13, 1994 (3)
3.5 Certificate of Amendment of Certificate of Incorporation of the
Company filed with the Secretary of State of Delaware on February
24, 1997 (4)
3.7 Bylaws of the Company, as amended (4)
4.1 Certificate of Designations, Preferences and Relative Rights,
Qualifications and Restrictions of the Series C 6% Convertible
Preferred Stock of the Company filed with the Secretary of State
of Delaware on April 13, 2000
4.2 Trust Indenture between the Company and First City Bank of Dallas
(2)
10.1 Stock Option Agreement dated July 2, 1990 between the Company and
Fred H. Behrens (6)
10.2 Stock Option Agreement dated July 2, 1990 between the Company and
Robert A. Wright (6)
10.3 Stock Option Agreement dated July 2, 1990 between the Company and
Marlene A. Tapie (6)
10.4 Stock Acquisition Agreement dated as of November 25, 1997 by and
among Gus Franklin and Susan K. Franklin, the Company and TPE (1)
<PAGE>
10.5 Agreement Regarding Transportation Services dated as of June 8,
1998 by and between USA Waste of California, Inc., the Company
and AMCOR Biomass, Inc. (1)
10.6 Commercial Lease dated effective as of November 1, 1998 by and
between Desert Mist Cooling and the Company (1)
10.7 Securities Purchase Agreement dated March 14, 2000 by and between
Siete Investors LLC, a Delaware limited liability company, and
the Company, including Registration Rights Agreement as exhibit
thereto(8)
10.8 Agreement and Plan of Merger dated March 1, 2000 by and between
Fred Alexander, Linda Alexander, AWT Acquisition Corp., AGI
Acquisition Corp., American Waste Transport, Inc. and American
Green Waste, Inc.
11. Statement re: Computation of Per Share Earnings (Loss)(5)
21 Subsidiaries of the Company (7)
27 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K, for event dated January 12, 1999, incorporated herein by this
reference as filed with the Commission on January 27, 1999, reporting on Item 8,
Change in Fiscal Year, in connection with the Company's Board of Directors'
decision to change the Company's fiscal year from August 31 to December 31,
commencing with the calendar year/fiscal year ended December 31, 1998.
Form 8-K, for event dated March 1, 2000, incorporated herein by this
reference as filed with the Commission on March 15, 2000, reporting on Item 2,
Acquisition of Assets, in connection with the acquisition of 100% of the common
stock of American Waste Transport, Inc. from Fred and Linda Alexander,
non-affiliates of the Company.
Form 8-K, for event dated April 8, 2000, incorporated herein by this
reference as filed with the Commission on April 17, 2000, reporting on Item 5,
Other Events, in connection with the grant of a leave of absence to Robert A.
Wright from the service of the Company as president of the Company.
Form 8-K, for event dated April 19, 2000, incorporated herein by this
reference as filed with the Commission on April 20, 2000, reporting on Item 5,
Other Events, in connection with the filing of a pro forma balance sheet at
February 29, 2000, to exhibit the Company's compliance with the NASDAQ net
tangible equity requirement for continued listing on the Small Cap Quotation
Service.
<PAGE>
- ----------
(1) Filed as an exhibit to the Company's Form 10-KSB for the fiscal year ended
August 31, 1998 and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Form 10-K for the fiscal year ended
November 30, 1988 and incorporated herein by reference.
(3) Filed as Exhibit 4.2 to the Company's Form 10-QSB for the quarterly period
ended May 31, 1994, and incorporated herein by reference.
(4) Amended Bylaws filed as an exhibit to the Company's Form 10-KSB for the
fiscal year ended August 31, 1997 as filed with the Commission on December
5, 1997 and incorporated herein by reference. Additional amendment to
Bylaws filed as an exhibit to the Company's Form 10-QSB for the quarterly
period ended February 28, 1998 as filed with the Commission on April 15,
1998 and incorporated herein by reference.
(5) Included in Financial Statements
(6) Filed as an exhibit to the Company's Form 10-K for the fiscal years ended
November 30, 1992, 1991, and 1990 as filed with the Commission on March 15,
1991 and incorporated herein by reference.
(7) Filed as an exhibit to the Company's Form 10-KSB for the fiscal year ended
August 31, 1997 as filed with the Commission on December 5, 1997 and
incorporated herein by reference.
(8) Filed as an exhibit to the Company's Form 10-KSB filed with the Commission
on April 14, 2000, and incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Long Beach, State of
California.
Date: May 15, 2000
USABiomass, Inc.,
a Delaware corporation
By:
----------------------------------
Fred Behrens
Its: Chief Executive Officer
-----------------------------------
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
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<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
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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.
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<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.
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<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
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<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.
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<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,
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<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
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<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,
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<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
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<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.]
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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
-------------------------------
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<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:
-------------------------------
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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:
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<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.
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<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.
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<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,
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<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]
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<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
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<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
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<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).
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<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
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<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
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<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
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<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
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<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)
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<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
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<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
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<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
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<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
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<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
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<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
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<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.
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<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:
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<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
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<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)
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<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
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<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
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<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
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<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
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<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.
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<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.
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<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
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<PAGE>
"USA Biomass"
USA BIOMASS CORPORATION, a Delaware
corporation
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
"Shareholder"
FRED ALEXANDER
----------------------------------------
Fred Alexander, an individual
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<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
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<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.
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<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)
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<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
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<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
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<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
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<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
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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
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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.
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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.
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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.
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(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.
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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
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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,
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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
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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
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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
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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.
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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.
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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
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================================================================================
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.
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TABLE OF CONTENTS
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ARTICLE I
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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
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ARTICLE IV
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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
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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.
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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.
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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.
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(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.
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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
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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,
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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
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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
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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
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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.
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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
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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.
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================================================================================
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
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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
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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.
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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.
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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.
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(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.
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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,
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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
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<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
================================================================================
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,487,000
<SECURITIES> 0
<RECEIVABLES> 1,994,000
<ALLOWANCES> 121,000
<INVENTORY> 0
<CURRENT-ASSETS> 5,868,000
<PP&E> 18,083,000
<DEPRECIATION> 2,991,000
<TOTAL-ASSETS> 22,398,000
<CURRENT-LIABILITIES> 7,837,000
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0
<COMMON> 22,000
<OTHER-SE> 5,851,000
<TOTAL-LIABILITY-AND-EQUITY> 22,398,000
<SALES> 2,899,000
<TOTAL-REVENUES> 2,899,000
<CGS> 21,600,000
<TOTAL-COSTS> 729,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,000
<INCOME-PRETAX> (131,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (131,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-BASIC> (0.11)
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