EXHIBIT 10.37
ATG INC.
ALLIED TECHNOLOGY GROUP
February 10, 1996
Mr. William M. Whitacre P.E.
Vice President/General Manager
ToxGon Corporation
631 South 96th Street
Seattle, Washington 98108
Fax: (206)763-9331
Subject: Engineering and Technical Support for a Gasification/Vitrification
System ATG Radioactive Waste Facility - Thermal Treatment
Dear Mr. Whitacre;
This purchase order authorizes ToxGon Corporation (TGC) to proceed with Work
Item 1 described below which includes the preparation of a conceptual design
package in support of a Clean Air Act permit application. All work performed
under this order shall be performed according to the terms and conditions
specified below. This purchase order constitute an "Agreement" between ATG, Inc.
hereinafter referred to as "Buyer", and ToxGon Corporation (TGC), hereinafter
referred to as "Seller".
ATG has the right to purchase the remaining Work Items after a "Permit to
Construct" is issued by Benton County. Hence, work on other portions shall not
be started unless authorized in writing by ATG.
This letter purchase order constitutes the entire Agreement between ATG and
ToxGon Corporation.
1. SYSTEM DESCRIPTION.
The overall System consists of several subsystems which are listed in
Table 1. Feedstock will be sorted and packaged in either plastic bags,
cardboard drums, or cardboard boxes. The packaged material will be
brought to the charging subsystem and dumped in airlock hopper and
pushed/fed into the process chamber at a controlled rate. Feedstock
loses its compaction while being gasified, and falls on the molten
glass. The char on top of molten glass reacts with oxygen to form
offgas. Inorganic/mineral residues remain on top and melt and sink into
molten glass.
ToxGon P.O. Page 1
2/10/96
47375 Fremont Blvd., Fremont, CA 94538
(510) 490-3008 FAX: (510) 651-3731
CERTAIN PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH A REQUEST FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED.
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 2 of 12
The process chamber is initially heated with propane/air until the glass
is hot enough to carry current, at which time a Joule heating subsystem
takes over. The process chamber is constructed of special refractory
bricks enclosed in a steel box. The chamber consists of a gasification
hearth and a polishing hearth. In oxidation mode, oxygen or air is used
for reaction with the feed material. In reduction mode oxygen mixed with
steam may be used for reaction.
Organic material reacts with oxygen in the gasification hearth and
inorganic/minerals melt and sink into the molten glass. Some ash and
fine particles become airborne with offgas leaving the gasification
hearth but will settle and fall into molten glass in the polishing
section.
During normal operation, molten glass is tapped periodically through a
side discharge valve and poured into a drum. During maintenance, the
glass is drained out of the chamber by a set of drain valves located in
the bottom of the chamber. Next the glass is poured into a water bath to
make pebbles. When maintenance is complete, these pebbles are fed back
into the process chamber and are reused.
The process chamber is followed by an air pollution control subsystem
which is not included in this agreement. Air pollution control subsystem
will consist of a rapid quencher, baghouse filter, scrubber, draft fan,
HEPA/charcoal filters and exhaust fans. Scrubber is an optional item and
may be excluded form the process since processing of waste that produces
a significant amount of acid gas is not anticipated.
2. SYSTEM FUNCTION
The primary function of the system is to significantly reduce the volume
of the feedstock. The secondary function of the system is to make a
solid product that is satisfactorily non-leachable.
3. FEEDSTOCK DESCRIPTION
Feedstock to the system is a highly heterogeneous low-level, radioactive
waste and may include individually or a mixture of organic and inorganic
material such as process sludges, powders, bulk plastics, wood,
clothing, mineral material, soil, absorbent material, rubber, wipers,
gloves, coveralls and the like. Metals will be removed from the
feedstock as much as possible, but small metal pieces such as pins,
clips, nails, buttons will be included in the feedstock. Metal buildup
in the melter will effect the service life of the melter.
ToxGon P.O. Page 2
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 3 of 12
4. RELATIONSHIP OF SELLER AND BUYER
Seller provides engineering, design, and operations guidance for feed
charging, process chamber, Joule heating, start-up heating, and glass
handling subsystems to be installed in Buyer's
gasification/vitrification system.
Buyer is responsible for permitting. Buyer is also responsible for
engineering, procurement, fabrication, assembly and operation of the
overall System.
5. SELLER'S SCOPE OF WORK
Seller's scope of work for this fixed price contract shall be the
following Work Items:
WORK ITEM 1 - SYSTEM CONCEPTUAL DESIGN PHASE. ATG shall pay Seller [*]
for conceptual design efforts. Seller to provide engineering and design
document to support ATG's system conceptual design documents preparation
efforts. Based on Seller supplied conceptual design, ATG will prepare
and submit a permit application to Benton County Air Pollution Control
Authority. Seller's deliverable documents in this phase shall include
(a) a process flow diagram, (b) mass and heat balance calculations, (c)
outline specifications for major equipment, (d) electrical single line
diagram, (e) equipment outline drawing, and (f) a cost estimate for the
following subsystems which are included as Seller's scope:
. Manual feed charging system including ram and frit charges, cooling
jacket as necessary, airlock hoppers, instrumentation and controls
and all other associated appurtenances and attachments.
. Process chamber subsystem consisting of the gasification and
polishing hearth section, refractory brick structure, oxidation gas
distribution and sparge piping, discharge duct connecting the
process chamber offgas discharge to the air pollution control
system inlet, and all other appurtenances and attachments.
. Glass handling subsystem including process chamber glass discharge
valve (side discharge), maintenance drain valves (bottom
discharge), discharge valve electrodes, glass flow shut-off cooling
device and all other appurtenances and attachments.
ToxGon P.O. Page 3
2/10/96
[*] CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 4 of 12
. Joule heating subsystem consisting of electrodes/holders/cooling
assembly, power supply units, thermocouple and other
instrumentation devices, and Joule heating subsystem controls.
. Start-up heating subsystem including propane gas burners, piping,
valves and controls, all in compliance with the standards and
regulations.
Seller will process 100 bags (approximately 1500 lb.) of feedstock
supplied by Buyer in Seller's demonstration unit. Buyer shall pays
separately for air sampling by AM Test.
WORK ITEM 2 - SYSTEM DETAILED DESIGN PHASE. Upon receipt of "a Permit to
Construct" from Benton County Air Quality Control Board and at ATG's
option to proceed with the next phase of the project, ATG shall pay
Seller progress payments monthly as set forth in paragraph 9, to a total
of $[*] upon Seller's completion and delivery of all
fabrication/assembly drawings, material procurement specifications, and
requisitions for the subsystems included in Seller's scope and which are
listed in Work Item 1 above. Seller shall provide for ATG's approval a
material requisition and specification for long-lead items as early as
possible. The final deliverable or this work Item is a detailed design
package consisting of drawings and specifications needed for completing
fabrication and assembly of the subsystems included in Seller's scope.
WORK ITEM 3 - CONSULTATION ON FABRICATION, ASSEMBLY, STARTUP, TRAINING
FOR OPERATION, AND OPERATION. Buyer shall pay Seller $[*] per hour for
Seller's senior staff and $[*] per hour for Seller's technical staff to
provide consultation on fabrication, assembly, startup, training of
operators and assistance during the operation on as need basis. Buyer
shall also pay for Seller's personnel reasonable travel and living space
cost when Seller's staff travel to Buyer's facility in Richland,
Washington. Seller's support services under Work Item 3 shall be
provides as requested by Buyer and Seller shall invoice Buyer for these
costs on a monthly basis.
6. SCHEDULE
Seller shall deliver conceptual design documents within three (3) weeks
after receipt of order (ARO). Detailed design package shall be completed
ten (10) weeks after Work Item 2 is authorized.
ToxGon P.O. Page 4
2/10/96
[*] CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 5 of 12
7. FIXED PRICE
Should ATG decides to purchase both Work Items 1 and 2 the total fixed
price for these Work Items shall be $[*]. Work Item 3 shall be performed
on a time and material basis.
The amount authorized by this purchase order is $[*] for Work Item 1
only as described above.
8. LICENSE
Effective upon payment of all sums due under this Agreement, Seller
hereby grants to Buyer a non-exclusive royalty-free right to use
Seller's rights and patent rights, including, without limitation,
Seller's rights under U.S. Patent 4,299,611 and the design features and
technology provided by Seller pursuant to the process chamber to be
constructed by Buyer or any rebuilding thereof. This and all other
licenses shall be for the use of Buyer, and not for resale.
Buyer may use the Licensed Rights to build additional process chambers;
provided, however, that Buyer shall pay Seller an additional $[*] for
any such process chamber Buyer builds during the period ending 5 years
after the final payment under this Agreement. In addition, Buyer shall
pay Seller reasonable design fees for modifications.
Seller represents and warrants to Buyer that Seller has all right,
title, ownership and interest in the Licensed Rights required for Seller
to grant Buyer the non-exclusive license herein. If litigation is
commenced against buyer or Seller by a third party claiming that the
Licensed Rights infringe on another patent, or intellectual property
rights of another person, or claim of ownership of Licensed Rights by
another person, Seller, upon notice of this litigation, agrees to
indemnify, defend and hold Buyer harmless from and against all
judgments, costs, and expenses, including reasonable attorneys' fees,
arising as a result of said litigation. At its sole cost and expense,
buyer has the right, but not the duty, to participate in this
litigation.
ToxGon P.O. Page 5
2/10/96
[*] CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 6 of 12
9. PAYMENT FOR WORK
ATG shall pay to Seller as compensation for the deliverables set forth
in the Work Scope. Within 30 days of the date Seller's invoice is
received by ATG, ATG shall pay the full amount of such invoice. However,
in case if there are objections, ATG shall notify Seller of ATG's
objection and the grounds therefor within 15 days of the date of receipt
of invoice. Subsequent to ATG's notification, ATG and Seller shall make
every effort to settle the disputed portion of the invoice.
After the 30-day payment due period, ATG shall pay an additional charge
equal to the Prime Interest Rate as set by 1st. Interstate Bank of
California plus 2 points which shall be levied against the unpaid
balance of the invoice, to the extent legally payable. The additional
charge shall not apply to any disputed portion of any invoice resolved
in favor of ATG.
10. WARRANTY
Seller shall warrant that the process chamber and other subsystems
engineered by Seller, if built and operated according to Seller's
instructions, will thermally destroy the feedstock specified herein
with chosen additives to make glass, aiming for the least volume
feasible. Melter to be designed for similar capacity as Seller's
demonstration unit which is roughly 4 tons/day (glass capacity). The
actual destruction capacity will vary with the feedstock.
The limitation on this warranty is that Buyer must operate the
subsystems according to Seller's instructions using competent operators.
If the Seller engineered process chamber and subsystems are not
performing as expected above, Seller's engineer(s) shall be available
immediately, but no later than 48 hours after receiving a notice of
inadequate operation from Buyer, to provide technical guidance/support
as needed to train and advise Buyer personnel to remedy the inadequate
performance.
For the first 90 calendar days after the system is put into commercial
operation, the cost of Seller's technical guidance/support shall be paid
by Seller only if the melter is constructed by Seller. Any further
support services after 90 days shall be paid by Buyer at the rates
specified under Work Item 3. The total of claims against Seller shall
not be greater than the total value of this purchase order.
ToxGon P.O. Page 6
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 7 of 12
11. CONFIDENTIALITY
CONFIDENTIALITY OF THIS PURCHASE ORDER. Seller, its employees and
subcontractors shall keep the existence, nature and content of this
purchase order in confidence and no information about this order shall
be released to a third party without a written approval from ATG. Seller
shall not use ATG's name in its promotional brochures, reports and
papers published by the Seller without a written approval from ATG.
CONFIDENTIALITY OF DOCUMENTS. All documents, reports, drawings,
pictures, test data and other material transmitted by Buyer to Seller or
Buyer documents generated as a result of this order shall be considered
ATG's confidential and proprietary, kept by Seller in confidence, and
shall be returned to Buyer at the end of the contract or upon request by
ATG.
INTELLECTUAL PROPERTY. All Intellectual Property provided to Buyer by
Seller in connection with System constituents Buyer's confidential and
proprietary information of Seller. Likewise, all information provided to
Seller by Buyer in connection with Project constitutes Seller's
confidential and proprietary information. Buyer and Seller shall not
publish or disclose any such confidential and proprietary information
without a written consent from each other. Buyer and Seller shall take
all reasonable or necessary steps to ensure non-disclosure of such
confidential and proprietary information by their employees or others,
including without limitation, providing such information only to those
of their employees who need the information to operate or maintain
System and instructing those employees as to the confidential nature of
System and Project and the obligation of each party to maintain
confidentiality. The obligation of confidence imposed herein shall
survive termination or expiration of any agreement between the parties,
regardless of the reason therefor, for a period of no less than two (2)
years after a termination or expiration occurs.
12. QUALITY ASSURANCE
Quality assurance requirements shall be according to the industry
standard practice. ATG on-site representative will inspect the quality
of the work performed by ATG and ensure that qualified labor and
craftsmen are employed for the fabrication of the System. In process
quality control measures and check points shall be developed during the
course of the fabrication and shall be documented.
ToxGon P.O. Page 7
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 8 of 12
13. CORRESPONDENCE
All correspondence, including any notices and submittals relative to
legal and financial matters and technical submittals relative to this
order shall be mailed to:
ATG Inc. ToxGon Corporation
Mr. Fred Feizollahi, P.E. Mr. William Whitacre
Vice President Vice President & General Manager
47375 Fremont Blvd. 631 South 96th Street
Fremont, California, 94538 Seattle, WA 98108
FAX: 510/651-3731 FAX: 206/736-9331
14. TERMINATION FOR CONVENIENCE
If Buyer is unable to obtain the necessary permits, or for any other
reasons that Buyer may deem appropriate, Buyer may terminate the
performance of Work Items described in this order. Buyer shall terminate
by delivering a Notice of Termination specifying the extent and the date
of termination. After the receipt of a notice, Seller shall stop all
work canceled and deliver to Buyer all work completed as of the
cancellation date. Also, Seller shall submit a final termination
settlement invoice to Buyer no later than 4 week after the date of
termination
15. VENUE AND DISPUTES
This agreement is to be interpreted in accordance with the laws of the
State of Washington. Any dispute arising from this agreement that the
parties cannot resolve are to be settled by binding arbitration by the
American Arbitration Association in Seattle under their then existing
rules for commercial arbitration.
In the event of commencement of suit by either party to enforce the
provisions of this agreement, the prevailing party shall be entitled to
receive such attorneys' fees and costs with interest as may be adjudged
reasonable in addition to any other relief granted.
ToxGon P.O. Page 8
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 9 of 12
16. ENTIRE AGREEMENT
This agreement is the complete understanding between the parties. Any
changes or additions must be in writing signed by both parties, with
negotiated change in price.
We are pleased to have your firm as our contractor on this important project and
look forward to a good working relationship with your company. If there are any
questions, please do not hesitate to contact me or Fred Feizollahi at 510/490-
3008.
Sincerely,
/s/ Frank Chiu
Frank Chiu
Executive Vice President, ATG, Inc.
ACCEPTED BY TOXGON CORPORATION
- ------------------------------
/s/ William M. Whitacre, P.E. Date: 2/12/96
- ----------------------------- -------
William M. Whitacre, P.E.
Vice President/General Manager,
Attachment: Table 1, Gasification/vitrification equipment/subsystem/system list
ToxGon P.O. Page 9
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 10 of 12
TABLE 1. GASIFICATION/VITRIFICATION EQUIPMENT/SUBSYSTEM/SYSTEM DESIGNATIONS
The term system refers to all of the subsystems listed below.
1. Feed Preparation Subsystem (by ATG)
. Sorting unit
. Metal detection unit
. Conveyor bins (CBs)
2. Feed Charging Subsystem (by ToxGon)
. Solids Chargers (means ram feeders)
. Frit Charger (means sludge, dry powder feeders)
. Cooling unit
3. Process Chamber Subsystem (by ToxGon)
. Gasification hearth (means first section of the glass melter)
. Polishing hearth (means second section of the melter)
. Refractory material
. Gas mixers/spargers
. Cooling unit
4. Joule Heating Subsystem (by ToxGon)
. Power supply
. Control panels
. Electrodes
. Electrode holders/connectors
. Cooling Jacket
. Cooling unit (piping and chiller unit)
5. Oxygen/Steam Subsystem (by ATG)
. Oxygen generator
. Boiler
. Superheated
. Compressor
ToxGon P.O. Page 10
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 11 of 12
6. Start-up Heating Subsystem (by ToxGon)
. Gas burner
. Piping/valves
7. High Temperature Filter Subsystem (by ATG)
. Filter housing
. Filter media
8. Glass Handling Subsystem (by ToxGon)
. Glass discharge valve (means overflow discharge valve used during
normal operation)
. Glass drain valves (means bottom emergency drain valve used for
maintenance)
. Drum cart
. Discharge loading flange/enclosure
. Pebble making assembly (means water bath)
9. Air Pollution Control Subsystem (by ATG)
. Rapid quench
. Particulate filter (means baghouse)
. Scrubber
. Scrubber liquid container
. Draft fan
. Flare/quencher
. HEPA/charcoal filters
. Concentrates solidification unit
10. Emission Monitoring Subsystem (by ATG)
. Continuous emission monitor (CEM)
. Continuous activity monitor (CAM)
11. Instrumentation/Control Subsystem (by ATG)
. Main process controls/PLC
. APC controls
. BOP controls
ToxGon P.O. Page 11
2/10/96
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 12 of 12
12. Electrical Subsystem (see below)
. Process Chamber (by ToxGon)
. APC (by ATG)
. BOP (by ATG)
13. Mechanical/Utility Subsystem (by ATG)
. Water
. Gas
. Air
. Compressed gas (nitrogen, etc.)
. Jib cranes
14. Civil/Structural Subsystems (by ATG)
. Building Annex
. Pit
. Foundation framing/etc.
ToxGon P.O. Page 12
2/10/96