Sample Business Contracts

Purchase Order - ATG Inc. and ToxGon Corp.

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ATG INC.                                
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.


        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
                    47375 Fremont Blvd., Fremont, CA 94538
                      (510) 490-3008  FAX: (510) 651-3731

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

        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.


        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.


        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
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 3 of 12


        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.


        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

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

        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.

        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

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

ToxGon P.O.                                                             Page 5

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

        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
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 7 of 12


        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

        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.


        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

February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 8 of 12


        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


        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


        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
February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 9 of 12


        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-


/s/ Frank Chiu
Frank Chiu
Executive Vice President, ATG, Inc.


/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

February 10, 1996
Mr. William M. Whitacre P.E.
ToxGon Corporation
Page 10 of 12


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
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 
        . 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
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