<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1998
REGISTRATION NO. 333-46107
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
ATG INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
<TABLE>
<CAPTION>
<S> <C> <C>
CALIFORNIA 4955 94-2657762
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
47375 FREMONT BOULEVARD
FREMONT, CALIFORNIA 94538
(510) 490-3008
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
DOREEN M. CHIU
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATG INC.
47375 FREMONT BOULEVARD
FREMONT, CALIFORNIA 94538
(510) 490-3008
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S AGENT FOR SERVICE)
COPIES OF COMMUNICATIONS TO:
<TABLE>
<CAPTION>
<S> <C> <C>
BRIAN A. SULLIVAN, ESQ. WILLIAM W. BARKER, ESQ. RICHARD A. PEERS, ESQ.
MILLER & HOLGUIN DAVID K. RITENOUR, ESQ. CHRISTINA L. VAIL, ESQ.
1801 CENTURY PARK EAST GRAHAM & JAMES LLP HELLER EHRMAN WHITE & MCAULIFFE
SEVENTH FLOOR 801 SOUTH FIGUEROA STREET, SUITE 1400 525 UNIVERSITY AVENUE
LOS ANGELES, CALIFORNIA 90067- 2302 LOS ANGELES, CALIFORNIA 90017-5554 PALO ALTO, CALIFORNIA 94301-1900
TELEPHONE: (310) 556-1990 TELEPHONE: (213) 624-2500 TELEPHONE: (650) 324-7000
FACSIMILE: (310) 557-2205 FACSIMILE: (213) 623-4581 FACSIMILE: (650) 324-0638
</TABLE>
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_] _________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, check the following box: [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock......................... 1,955,000 Shares $10.00 $19,550,000 $5,768
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 255,000 shares that the Underwriters may purchase from the
Registrant to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) promulgated under the Securities Act.
(3) The registration fee was paid by the Registrant in connection with the
filing of its Registration Statement on Form S-1 with the Securities and
Exchange Commission on February 11, 1998.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE A SALE OF ANY OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, APRIL 1, 1998
1,700,000 SHARES
[LOGO OF ALLIED TECHNOLOGY]
COMMON STOCK
All 1,700,000 shares of Common Stock offered hereby are being sold by ATG
Inc. (the "Company"). Prior to this offering (the "Offering") there has been no
public market for the Common Stock. It is currently estimated that the initial
public offering price will be between $8.00 and $10.00 per share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Company has applied to have the Common Stock
included on the Nasdaq National Market upon completion of this Offering under
the symbol "ATGC."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," COMMENCING ON PAGE 6 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===============================================================================
PRICE PROCEEDS
TO UNDERWRITING TO
PUBLIC DISCOUNTS(1) COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share....................................... $ $ $
- --------------------------------------------------------------------------------
Total(3)........................................ $ $ $
================================================================================
</TABLE>
(1) Excludes a non-accountable expense allowance payable to the representative
of the Underwriters (the "Representative") and the value of warrants to be
issued to the Representative to purchase up to 170,000 shares of Common
Stock at a price per share equal to 120% of the Price to Public as shown
above (the "Representative's Warrants"). See "Underwriting" for information
relating to indemnification of the Underwriters.
(2) Before deducting expenses payable by the Company, estimated at $1 million,
including the non-accountable expense allowance payable to the
Representative.
(3) The Company has granted to the Underwriters a 45-day option to purchase up
to 255,000 additional shares of Common Stock, solely for the purpose of
covering over-allotments, if any. To the extent that the option is
exercised, the Underwriters will offer the additional shares at the Price
to Public as shown above. If the Underwriters exercise this option in full,
the total Price to Public, Underwriting Discounts and Proceeds to Company
will be $ , $ and $ , respectively. See
"Underwriting."
The shares of Common Stock are offered by the several Underwriters subject to
receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of the certificates
representing such shares will be made against payment therefor at the offices
of Van Kasper & Company, San Francisco, California on or about ,
1998.
VAN KASPER & COMPANY
, 1998
<PAGE>
DESCRIPTION OF PHOTOGRAPHS
----------------
FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S OR ITS MANAGEMENT'S PLANS,
OBJECTIVES, EXPECTATIONS, INTENTIONS, BELIEFS AND ESTIMATES. THE CAUTIONARY
STATEMENTS MADE IN THIS PROSPECTUS SHOULD BE READ AS BEING APPLICABLE TO ALL
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE
DISCUSSED IN "RISK FACTORS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," AS WELL AS THOSE DISCUSSED
ELSEWHERE IN THIS PROSPECTUS.
THIS PROSPECTUS DOES NOT COMPRISE AN OFFER TO SELL COMMON STOCK, DIRECTLY OR
INDIRECTLY, TO ANY MEMBER OF THE PUBLIC IN HONG KONG OR THE REPUBLIC OF CHINA
(TAIWAN), OR ANY SECTION OF THE PUBLIC IN HONG KONG OR THE REPUBLIC OF CHINA
(TAIWAN). THIS PROSPECTUS HAS NOT BEEN APPROVED BY OR REGISTERED WITH ANY
REGULATORY AUTHORITY IN HONG KONG OR THE REPUBLIC OF CHINA (TAIWAN).
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY OVER-ALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS OR THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Company's Consolidated Financial
Statements and the Notes thereto, appearing elsewhere in this Prospectus.
THE COMPANY
The Company, founded in 1976, is a radioactive and hazardous waste management
company that offers comprehensive treatment solutions for low-level radioactive
waste ("LLRW") and low-level mixed waste ("LLMW") generated by the U.S.
Department of Defense ("DOD") and U.S. Department of Energy ("DOE"), as well as
commercial entities, such as nuclear power plants, medical facilities and
research institutions. The Company's thermal treatment technologies vitrify
waste into leach-resistant glass for long-term storage or disposal. Compared
with the more traditional incineration methods, the Company's vitrification
process results in significantly less effluents, provides a more stable end
product and achieves comparable volume and mass reduction at similar total
treatment and disposal costs.
The Company's growth strategy is to: (i) increase its share of the domestic
commercial LLRW treatment market; (ii) establish a significant position in the
emerging domestic LLMW treatment market; (iii) increase its participation in
large-scale domestic and international waste clean-up projects; (iv) expand
into selected Pacific Rim markets; and (v) enhance its on-site waste treatment
capabilities.
The Company operates one of only two commercial facilities in the United
States licensed to thermally treat a broad spectrum of LLRW, and is the only
company in the United States licensed to vitrify both commercial and
government-generated LLRW. Since 1988, the Company has treated several million
pounds of LLRW, over 150,000 pounds of which have been treated since September
1997 using the Company's SAFGLAS vitrification system. In the first quarter of
1998, the Company entered into service agreements with an additional seven
nuclear utilities, covering an additional fifteen nuclear power plants, to
accept and treat LLRW generated by such utilities.
In 1994, the Company commenced the licensing process for its Richland,
Washington facilities to treat LLMW, which is LLRW mixed with hazardous
constituents. The Company believes it will receive final approval in 1998 for
full-scale thermal and non-thermal LLMW processing, which is anticipated to
begin in 1999. The Company believes that its mixed waste treatment facility
will be the first privately owned facility in the United States licensed to
thermally and non-thermally treat a broad spectrum of commercial and
government-generated LLMW.
The Company operates through its Fixed Facilities Group, which manages its
waste treatment operations, and its Field Engineering Group, which addresses
on-site decontamination and decommissioning of radioactive facilities ("D&D")
and environmental restoration of sites contaminated with radioactive and
hazardous waste. Historically, a majority of the Company's revenue has been
derived from on-site services. The Company has completed over 150 environmental
restoration projects since 1989 and provided D&D services for over a decade.
The synergies between the on-site remediation services of its Field Engineering
Group and the waste treatment operations of its Fixed Facilities Group enhance
the Company's ability to compete for commercial and government LLRW and LLMW
treatment contracts.
In the last three years, the Company has formed teaming relationships with,
among others, Lockheed Martin Corporation ("Lockheed Martin"), Morrison Knudsen
Corporation ("Morrison Knudsen") and Jacobs Engineering Group Inc. ("Jacobs
Engineering") to pursue large contract awards requiring diverse waste
management and treatment expertise. The Company intends to continue to enter
into such relationships and is currently in the early stage of pursuing similar
strategic alliances with foreign entities in selected Pacific Rim markets with
established LLRW or LLMW clean-up initiatives or where scarcity of land and
high disposal costs create an opportunity for vitrification treatment
technologies.
The Company was incorporated in Texas in 1976 under the name "Allied Nuclear,
Inc.," reincorporated in California in 1980 and changed its name to "ATG Inc."
in 1987. Its principal executive offices are located at 47375 Fremont
Boulevard, Fremont, California 94538, and its telephone number is: (510) 490-
3008.
3
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Common Stock offered....................... 1,700,000 shares
Common Stock to be outstanding after the
Offering.................................. 13,215,896 shares(1)
Use of proceeds............................ For capital expenditures,
repayment of short-term
indebtedness, and working capital
and general corporate purposes,
which may include acquisitions
and joint ventures.
Proposed Nasdaq National Market symbol .... ATGC
</TABLE>
- --------------------
(1) Based on the number of shares outstanding on December 31, 1997. Excludes
1,000,000 shares of Common Stock reserved for issuance upon exercise of
outstanding stock options at a weighted average exercise price of $2.09 per
share, 298,927 of which were exercisable on such date. See "Description of
Capital Stock--Options."
Unless otherwise indicated, all information in this Prospectus assumes (i)
that the Underwriters' over-allotment option and the Representative's Warrants
are not exercised, and (ii) that all of the outstanding shares of the Company's
Series A Preferred Stock, no par value per share (the "Preferred Stock"), and
all of the outstanding shares of the Series A and Series B Redeemable Non-
Voting Preferred Stock issued by the Company's consolidated subsidiary, ATG
Richland Corporation ("ATG Richland"), are converted prior to the closing of
the Offering into an aggregate of 3,983,595 shares of Common Stock. Unless the
context suggests otherwise, references in this Prospectus to the "Company" mean
ATG Inc. and its consolidated subsidiaries. SAFGLAS(TM), GASVIT(TM) and
PLASTIMELT(TM) are trademarks of the Company for which registration is pending.
All other trademarks, service marks or trade names referred to in this
Prospectus are the property of the respective owners thereof.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue.......................................... $ 16,070 $ 18,235 $ 19,107
Gross profit..................................... 6,411 7,153 7,935
Operating income................................. 209 497 915
Interest income (expense), net................... (141) 13 58
-------- -------- --------
Income before income taxes....................... 68 510 973
Provision (benefit) for income taxes............. 2 2 (45)
-------- -------- --------
Net income....................................... $ 66 $ 508 $ 1,018
======== ======== ========
Pro forma net income per share(1)
Basic.......................................... $ 0.09
Diluted........................................ 0.08
========
Pro forma weighted average shares outstanding(1)
Basic.......................................... 11,516
Diluted........................................ 12,284
========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(3)
------- ------------ --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................... $ 1,652 $ 1,652 $14,881
Total assets.............................. 37,227 37,227 50,456
Total long-term debt...................... 6,202 6,202 6,202
Mandatorily redeemable preferred stock.... 19,416 -- --
Shareholders' equity...................... 296 19,712 32,941
</TABLE>
- --------------------
(1) See Note 2 of Notes to Consolidated Financial Statements for an explanation
of the basis for calculating pro forma net income per share.
(2) Presented on a pro forma basis to give effect to the conversion of all
outstanding shares of Mandatorily Redeemable Preferred Stock into an
aggregate of 3,983,595 shares of Common Stock prior to the closing of the
Offering.
(3) Adjusted to reflect the sale of 1,700,000 shares of Common Stock offered
hereby. See "Use of Proceeds" and "Capitalization."
5
<PAGE>
RISK FACTORS
In addition to the other information set forth in this Prospectus, investors
should carefully consider the following risk factors when evaluating the
Company and its business before purchasing shares of the Common Stock offered
hereby.
DEPENDENCE ON GOVERNMENT LICENSES, PERMITS AND APPROVALS
The radioactive and hazardous waste management industry is highly regulated.
The Company is required to have federal, state and local governmental
licenses, permits and approvals for its waste treatment facilities and
services. Such licenses, permits or approvals are subject to denial,
revocation or modification under a variety of circumstances. Failure to
obtain, or to comply with the conditions of, applicable licenses, permits or
approvals could adversely affect the Company's business, financial condition
and results of operations. As its business expands and as it introduces new
technologies, the Company will be required to obtain additional operating
licenses, permits or approvals. It may be required to obtain additional
operating licenses, permits or approvals if new environmental legislation or
regulations are enacted or promulgated or existing legislation or regulations
are amended, re-interpreted or enforced differently than in the past. Any new
requirements which raise compliance standards may require the Company to
modify its waste treatment technologies to conform to more stringent
regulatory requirements. There can be no assurance that the Company will be
able to continue to comply with all of the environmental and other regulatory
requirements applicable to its business. See "Business--Environmental Laws and
Regulations; Licensing Processes Applicable to LLRW and LLMW Treatment
Facilities."
NO ASSURANCE OF SUCCESSFUL DEVELOPMENT, COMMERCIALIZATION OR ACCEPTANCE OF
TECHNOLOGIES
The Company is in the process of developing, refining and implementing its
technologies for the treatment of LLRW, LLMW and other wastes. The Company's
future growth will be dependent in part upon the acceptance and implementation
of these technologies, particularly its recently developed vitrification
technologies for the treatment of LLRW and LLMW. There can be no assurance
that successful development of all these technologies will occur in the near
future, or even if successfully developed, that the Company will be able to
successfully commercialize such technologies. The successful commercialization
of the Company's vitrification technologies may depend in part on ongoing
comparisons with other competing technologies and more traditional treatment,
storage and disposal alternatives, as well as the continuing high cost and
limited availability of commercial disposal options. There can be no assurance
that the Company's vitrification and related technologies will prove to be
commercially viable or cost-effective, or if commercially viable and cost-
effective, that the Company will be successful in timely securing the
requisite regulatory licenses, permits and approvals for such technologies or
that such technologies will be selected for use in future waste treatment
projects. The Company's LLMW thermal treatment contract with the DOE's-Hanford
Reservation requires the Company to obtain all of the required licenses,
permits and approvals for, and to build and place in operation, its LLMW
treatment facility by December 31, 1999. The Company's inability to develop,
commercialize or secure the requisite licenses, permits and approvals for its
waste treatment technologies on a timely basis could have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--Waste Treatment Technologies."
DEPENDENCE ON ENVIRONMENTAL LAWS AND REGULATIONS
A substantial portion of the Company's revenue is generated as a result of
requirements arising under federal and state laws, regulations and programs
related to protection of the environment. Environmental laws and regulations
are, and will continue to be, a principal factor affecting demand for the
services offered by the Company. The level of enforcement activities by
federal, state and local environmental protection agencies and changes in such
laws and regulations also affect the demand for such services. If the
requirements of compliance with environmental laws and regulations were to be
modified in the future, particularly those relating to the transportation,
treatment, storage or disposal of LLRW, LLMW or other wastes, the demand for
the Company's services, and its business, financial condition and results of
operations, could be materially adversely affected.
6
<PAGE>
See "Business--Environmental Laws and Regulations; Licensing Processes
Applicable to LLRW and LLMW Treatment Facilities."
DEPENDENCE ON FEDERAL GOVERNMENT; LIMITS ON GOVERNMENT SPENDING; GOVERNMENT
CONTRACTING
For the fiscal years ended December 31, 1995, 1996 and 1997, approximately
86.3%, 76.8% and 71.3%, respectively, of the Company's total revenue was
derived from federal government contracts. The Company expects that the
percentage of its revenue attributable to such contracts will continue to be
substantial for the foreseeable future. The Company's government contracts
generally are subject to cancellation, delay or modification at the sole
option of the government. See "Management's Discussion and Analysis of
Financial Conditions and Results of Operations" and "Business--Customers."
The Company is dependent on government appropriations to fund many of its
contracts. Efforts to reduce the federal budget deficit could adversely affect
the availability and timing of government funding for the clean-up of DOE, DOD
and other federal government sites. The failure by the government to fund
future restoration of such sites could have an adverse effect on the Company's
business, financial condition and results of operations. In addition, the
taxing authority of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA" or "Superfund") has expired. Although bills to
reauthorize Superfund were introduced in Congress in late calendar 1997 and
action is anticipated in 1998, the potential for further delay could adversely
affect the environmental remediation industry. See "Business--Environmental
Laws and Regulations; Licensing Processes Applicable to LLRW and LLMW
Treatment Facilities."
As a provider of services to federal and other government agencies, the
Company also faces risks associated with government contracting, which include
substantial fines and penalties for, among other matters, failure to follow
procurement integrity and bidding rules and employing improper billing
practices or otherwise failing to follow prescribed cost accounting standards.
Government contracting requirements are complex, highly technical and subject
to varying interpretations. As a result of its government contracting
business, the Company has been, and expects to be in the future, the subject
of audits, and may in the future be subject to investigations, by government
agencies. Failure to comply with the terms of one or more of its government
contracts could result in damage to the Company's business reputation and the
Company's suspension or disqualification from future government contract
projects for a significant period of time. The fines and penalties which could
result from noncompliance with applicable standards and regulations, or the
Company's suspension or disqualification, could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business--Environmental Contractor Risks."
NEED FOR ADDITIONAL CAPITAL
In addition to the proceeds from the Offering, the Company believes that it
will need additional capital in order to implement its long-term growth
strategy. There can be no assurance that the Company will be successful in
raising the requisite amount of capital when needed, or, that if successful,
the terms of the financing will be favorable to the Company. In the event that
such financing is effected through the sale of shares of the Common Stock, or
securities convertible into such shares, the percentage ownership of the
Company's then shareholders will be diluted proportionately. If the Company is
not successful in raising such additional capital, it will need to curtail or
scale back its planned expansion, which could adversely affect the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources" and "Business--Growth Strategy."
SEASONALITY AND FLUCTUATION IN QUARTERLY RESULTS
The Company's revenue is dependent on its contract backlog and the timing
and performance requirements of each contract. Revenue in the first and second
quarters has historically been lower than in the third and fourth quarters, as
the Company's customers have tended to ship waste during the months in which
transportation is less likely to be adversely affected by weather conditions.
The Company's revenue is also affected by the timing
7
<PAGE>
of its clients' planned remediation activities and need for waste treatment
services, which generally increase during the third and fourth quarters. Due to
this variation in demand, the Company's quarterly results fluctuate.
Accordingly, specific quarterly or interim results should not be considered
indicative of results to be expected for any future quarter or for the full
year. Due to the foregoing factors, it is possible that in future quarters the
Company's operating results will not meet the expectations of securities
analysts and investors. In such event, the price of the Common Stock could be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Operating Results."
MANAGEMENT OF GROWTH
Since 1994, the Company has experienced significant growth, attributable in
large part to an increase in the number and size of contracts awarded. The
Company is currently pursuing a growth strategy intended to expand its business
domestically and internationally. The Company's historical growth has placed,
and any future growth may place, significant demands on its operational,
managerial and financial resources. There can be no assurance that the
Company's current management and systems will be adequate to address any future
expansion of the Company's business. In such event, any inability to manage the
Company's growth effectively could have a material adverse effect on the
Company's business, financial condition and results of operations.
EQUIPMENT PERFORMANCE; SAFETY AND LICENSE VIOLATIONS
The Company's ability to perform under current waste treatment contracts and
to successfully bid for future contracts is dependent upon the consistent
performance of its waste treatment systems at its fixed facilities in
conformity with safety and other requirements of the licenses under which the
Company operates. The Company's fixed facilities are subject to frequent
routine inspections by the regulatory authorities issuing such licenses. In the
event that any of the Company's principal waste treatment systems were to be
shut down for any appreciable period of time, either due to equipment breakdown
or as the result of regulatory action in response to an alleged safety or other
violation of the terms of the licenses under which the Company operates, the
Company's business, financial condition and results of operations could be
materially adversely affected. See "Business--Waste Treatment Technologies" and
"--Operations and Services."
ENVIRONMENTAL CONTRACTOR AND REGULATORY MATTERS
The rapidly developing and changing regulatory framework governing the
Company's business creates significant risks, including potential liabilities
from violations of environmental statutes and regulations and liabilities to
customers and third parties for damages arising from services performed. The
Company's failure to comply with such statutes and regulations, or with the
terms and conditions of licenses and permits it holds under these and other
statutes and regulations, may result in the imposition of substantial fines and
penalties and could adversely affect the Company's ability to carry on its
business as presently constituted. In performing services, the Company could
potentially be liable for claims brought by its customers for breach of
contract, personal injury, property damage, and negligence, including claims
for lack of timely performance or for failure to deliver the service promised
(including improper or negligent performance or design, failure to meet
specifications, and breaches of express or implied warranties). The damages
available to a customer, should it prevail in its claims, are potentially large
and could include consequential damages. The Company's potential liability is
amplified by the increasing tendency to attempt to shift various liabilities
arising out of remediation of environmental contamination to contractors
through contractual indemnities, such as provisions seeking to require the
contractor to assume liabilities for damage or injury to third parties and
property and for environmental fines and penalties. Radioactive and hazardous
waste management contractors also potentially face liabilities to third parties
from various claims, including claims for property damage, personal injury or
wrongful death stemming from a release of radioactive or hazardous substances,
improper handling of explosives and other hazardous materials, or otherwise. In
addition, increasing numbers of claimants assert that companies performing
radioactive and hazardous waste management services should be adjudged strictly
liable (i.e., liable for damages even though their services were performed
using reasonable care), on the grounds that such services involved "abnormally
dangerous activities." The Company has adopted a range of risk management
programs designed to reduce these
8
<PAGE>
risks and potential liabilities, including policies to seek contractual
indemnities, other contract administration procedures, and employee health,
safety, training and environmental monitoring programs; however, there can be
no assurance that such programs will protect the Company from such risks and
liabilities. See "Business--Environmental Contractor Risks," "--Operations and
Services" and "--Risk Management and Insurance."
COMPETITION
In general, the market for radioactive and hazardous waste management
services is highly competitive. The Company faces competition in its principal
current and planned business lines from both established domestic companies
and foreign companies attempting to introduce European waste treatment
technologies into the United States. Many of the Company's competitors have
greater financial, managerial, technical and marketing resources than the
Company. To the extent that competitors possess or develop superior or more
cost-effective waste treatment solutions or field service capabilities, or
otherwise possess or acquire competitive advantages compared to the Company,
the Company's ability to compete effectively could be materially adversely
affected. Any increase in the number of licensed commercial LLRW treatment
facilities or disposal sites in the United States or any decrease in the
treatment or disposal fees charged by such facilities or sites could increase
the competition faced by the Company or reduce the competitive advantage of
certain of the Company's treatment technologies. See "Business--Market
Overview" and "--Competition."
INTERNATIONAL EXPANSION
A key component of the Company's long-term growth strategy is to expand its
business into selected Pacific Rim markets. There can be no assurance that the
Company or its strategic alliance partners will be able to market its
technologies or services successfully in foreign markets. In addition, there
are certain risks inherent in foreign operations, including general economic
conditions in each country, varying regulations applicable to the Company's
business, seasonal reductions in business activities, fluctuations in foreign
currencies or the U.S. Dollar, expropriation, nationalization, war,
insurrection, terrorism and other political risks, the overlap of different
tax structures, risks of increases in taxes, tariffs and other governmental
fees and involuntary renegotiation of contracts with foreign governments. In
particular, recent economic instability in certain Pacific Rim countries could
substantially impede the Company's targeted expansion into that region. In
such event, the Company's business, financial condition and results of
operations could be materially adversely affected. There can be no assurance
that laws or administrative practices relating to taxation, foreign exchange
or other matters of foreign countries within which the Company operates or
will operate will not change. Any such change could have a material adverse
effect on the Company's business, financial condition and results of
operations. See "Business--Growth Strategy."
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends on its continuing ability to attract,
retain and motivate highly qualified managerial, technical and marketing
personnel. The Company is highly dependent upon the continuing contributions
of its key managerial, technical and marketing personnel. The Company's
employees may voluntarily terminate their employment with the Company at any
time, and competition for qualified technical personnel, in particular, is
intense. The loss of the services of any of the Company's managerial,
technical or marketing personnel could materially adversely affect the
Company's business, financial condition and results of operations. The Company
maintains a $1.5 million key man life insurance policy on the life of each of
Doreen M. Chiu and Frank Y. Chiu. There can be no assurance that such amount
will be sufficient to compensate the Company for the loss of the services of
these individuals. See "Business--Employees" and "Management."
FOCUS ON LARGER PROJECTS
The Company increasingly pursues large, multi-year contracts as a method of
achieving more predictable revenue, more consistent utilization of equipment
and personnel, and greater leverage of sales and marketing costs. These larger
projects impose significant risks if actual costs are higher than those
estimated at the time of
9
<PAGE>
bid. A loss on one or more of such larger contracts could have a material
adverse effect on the business, financial condition and results of operations
of the Company. In addition, failure to obtain, or delay in obtaining,
targeted large, multi-year contracts could result in significantly less
revenue to the Company than anticipated. See "Business--Customers," "--Sales
and Marketing" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Overview."
POTENTIAL ENVIRONMENTAL LIABILITY AND INSURANCE
Since the Company routinely works with radioactive and hazardous materials,
the Company may be subject to liability claims by employees, customers and
third parties. There can be no assurance that the Company's existing liability
insurance is adequate to cover claims asserted against the Company, that all
claims asserted against the Company will be covered by insurance or that the
Company will be able to maintain such insurance in the future. An uninsured
claim, if successful and of sufficient magnitude, could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Risk Management and Insurance."
DEPENDENCE ON AND LIMITED PROTECTION OF TECHNOLOGY AND INTELLECTUAL PROPERTY;
POTENTIAL LITIGATION
The Company's ability to compete effectively is dependent upon its
vitrification and other waste treatment technologies. The Company principally
relies upon a combination of trade secret and trademark laws, employee and
third party non-disclosure agreements, licenses from owners of patents and
other intellectual property rights, and other methods to establish and protect
the proprietary aspects of its waste treatment technologies. In addition, the
Company has filed one patent application currently pending in the U.S. Patent
and Trademark Office. There can be no assurance that the patent will issue,
and there can be no assurance regarding the scope, validity or value of any
patents or other methods of intellectual property rights protection relied
upon by the Company. Further, there can be no assurance that the steps taken
to protect proprietary technologies by the Company and the owners of any
licensed patents and other intellectual property rights will be adequate to
prevent the use of these technologies by third parties. There can be no
assurance that others will not develop proprietary technologies and processes
which are the same as or superior to those of the Company. In the event that
the Company pursues overseas projects, there can be no assurance that steps
taken by the Company and the owners of any licensed patents and other
intellectual property rights to protect their proprietary technologies will be
adequate under the laws of certain foreign countries. The loss of patent or
other forms of intellectual property rights protection on the Company's
technology or the circumvention of such protection by competitors could have a
material adverse effect on the Company's ability to compete successfully with
its waste treatment technologies. See "Business--Intellectual Property."
Many technology fields are characterized by the existence of a large number
of patents and frequent litigation regarding possible infringement. Although
the Company does not believe that any of its technologies infringes the patent
rights of third parties, there can be no assurance that infringement claims
will not be asserted against the Company in the future or that any such claims
will not require the Company to enter into royalty or other settlement
arrangements or result in costly litigation.
ABSENCE OF PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE;
DILUTION
Prior to the Offering there has been no public market for the Common Stock.
Although the Company has applied to have the Common Stock included on the
Nasdaq National Market, there can be no assurance that an active trading
market for the Common Stock will develop or be sustained after the Offering.
The initial public offering price will be determined through negotiations
between the Company and the Representative, and may not be indicative of the
market price at which the Common Stock will trade after the Offering. (See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price.) Additionally, the market price of the
Common Stock may be subject to significant fluctuations in response to
variations in actual and anticipated quarterly operating results and other
factors, including announcements of new
10
<PAGE>
contracts or technical innovations by the Company or its competitors, changes
in government regulations relating to the environment, the volume of market
transactions in the Common Stock and general market conditions.
Purchasers of the Common Stock offered hereby will incur immediate and
substantial dilution in the net tangible book value of their shares. See
"Dilution." To the extent that the Representative's Warrants, any of the
outstanding options to purchase an aggregate of 1,000,000 shares of Common
Stock or any options granted in the future under the Company's 1998 Stock
Ownership Incentive Plan or 1998 Non-Employee Directors' Stock Option Plan are
exercised, the percentage ownership of the Company's shareholders will be
diluted proportionately. See "Underwriting," "Description of Capital Stock--
Options," "Management--Employee Benefit Plans--Stock Ownership Incentive Plan"
and "--Board of Directors--Non-Employee Directors' Stock Option Plan."
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of Common Stock in the public market
could have an adverse effect on the market price of the Common Stock. Upon
completion of the Offering, the Company will have outstanding approximately
13,215,896 shares of Common Stock (13,470,896 shares, if the Underwriters'
over-allotment option is exercised in full), of which 1,700,000 shares offered
hereby (1,955,000 shares if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable without restriction or further
registration under the Securities Act to the extent they are not held by
"affiliates" of the Company, as that term is defined in Rule 144 ("Rule 144")
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"). The remaining 11,515,896 shares of Common Stock outstanding upon
completion of the Offering will be "restricted securities" as that term is
defined in Rule 144. The Company's officers, directors and certain
shareholders have executed lock-up agreements generally providing that they
will not sell or otherwise dispose of Common Stock for a period of 180 days
after the date of this Prospectus without the prior written consent of Van
Kasper & Company (and in certain cases that they will only sell subject to
certain conditions on sale for an additional 180 days thereafter). Taking into
account the existence of such lock-up agreements and assuming the shareholders
are not released from these agreements, all 11,515,896 shares constituting
restricted securities will become eligible for sale under Rule 144 180 days
after the date of this Prospectus, with 8,248,201 of such shares being subject
to certain conditions on sale for an additional 180 days thereafter, of which
2,520,926 shares will be held by affiliates. Shares eligible to be sold by
affiliates are generally subject to volume limitations under Rule 144. The
existence of a large number of shares eligible for future sale could have an
adverse effect on the Company's ability to raise additional equity capital or
on the price at which such equity capital could be raised. See "Shares
Eligible for Future Sale."
ABSENCE OF DIVIDENDS
The Company has never declared or paid any dividends on the Common Stock.
The Company currently anticipates that it will retain all future earnings for
use in the operation and growth of its business and does not anticipate paying
any cash dividends in the foreseeable future. In addition, the terms of the
Company's outstanding bank borrowings currently prohibit the payment by the
Company of dividends without the lender's prior approval. See "Dividend
Policy."
11
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby, at an assumed initial public offering price of $9.00 per share
(the midpoint of the price range set forth on the outside front cover page of
this Prospectus), and after deducting estimated offering expenses and
underwriting discounts, are estimated to be approximately $13,229,000
($15,329,000 if the Underwriters' over-allotment option is exercised in full).
The Company intends to use the net proceeds from the Offering approximately
as follows: (i) $4.0 million for capital equipment at its Richland, Washington
facilities; (ii) $4.0 million to repay all amounts of principal and interest
outstanding under its bank line of credit facility, which expires in June 1998
and bears interest at a rate per annum of prime plus 0.5%; and (iii) the
balance for working capital and general corporate purposes, which may include
the construction of additional fixed waste treatment facilities and possible
acquisitions or joint ventures in connection with the expansion of its
existing business lines. The Company is not currently a party to any
commitments or agreements relating to, and is not currently involved in any
negotiations with respect to, any such acquisitions or joint ventures.
The Company expects that the net proceeds of the Offering, together with
anticipated cash flow from operations and available borrowings under the
Company's credit facility, will satisfy its capital requirements for the next
12 months. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources." Pending
application of the net proceeds of the Offering to the uses described above,
the Company intends to invest the proceeds in short-term investment grade,
interest-bearing securities.
DIVIDEND POLICY
The Company currently intends to retain any future earnings for use in the
operation and growth of its business. The Company does not anticipate paying
any cash dividends on the Common Stock in the foreseeable future. Any future
decision to declare or pay cash dividends on the Common Stock will depend upon
the results of operations, financial condition and capital expenditure plans
of the Company at that time, as well as other factors that the Company's Board
of Directors (the "Board"), in its sole discretion, may consider relevant. In
addition, the terms of the Company's bank borrowings currently prohibit the
payment by the Company of cash dividends on the Common Stock without the
lender's prior approval.
12
<PAGE>
DILUTION
As of December 31, 1997, the pro forma net tangible book value per share of
the Common Stock was $1.67. Pro forma net tangible book value per share of
Common Stock is equal to the total tangible assets of the Company less total
liabilities, divided by the number of shares of Common Stock deemed to be
outstanding. After giving effect to the issuance of shares in the Offering at
an assumed initial public offering price of $9.00 per share, and after
deducting estimated offering expenses and underwriting discounts, the adjusted
pro forma net tangible book value per share of Common Stock as of December 31,
1997 would have been $2.46. This represents an immediate dilution of $6.54 per
share to new investors purchasing Common Stock in the Offering. The following
table illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share ................ $9.00
Pro forma net tangible book value per share as of December 31,
1997(1) ..................................................... $1.67
Increase attributable to the Offering ........................ .79
-----
Adjusted pro forma net tangible book value per share after
Offering ...................................................... 2.46
-----
Dilution to new investors....................................... $6.54
=====
</TABLE>
The following table summarizes, on a pro forma basis as of December 31,
1997, the number of shares purchased from the Company, the total consideration
paid and the average price per share paid by the existing shareholders of the
Company and new investors purchasing shares offered hereby, assuming an
initial public offering price of $9.00 per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing
shareholders(1)........ 11,515,896 87.1% $21,488,000 58.4% $1.87
New investors........... 1,700,000 12.9 15,300,000 41.6 9.00
---------- ----- ----------- -----
Total................. 13,215,896 100.0% $36,788,000 100.0%
========== ===== =========== =====
</TABLE>
- ---------------------
(1) The above computations assume no exercise after December 31, 1997 of any
of the outstanding options to purchase shares of the Common Stock. As of
December 31, 1997, there were options outstanding to purchase a total of
1,000,000 shares of Common Stock at a weighted average exercise price of
$2.09 per share, 298,927 of which were exercisable on such date. To the
extent these options are exercised, there will be further dilution to new
investors. See "Description of Capital Stock--Options."
13
<PAGE>
CAPITALIZATION
The following table sets forth the actual and pro forma capitalization of
the Company as of December 31, 1997, and the pro forma capitalization as
adjusted to give effect to the sale of 1,700,000 shares of Common Stock
offered hereby, and the receipt and application of the estimated net proceeds
therefrom. The pro forma capitalization gives effect to the conversion of all
outstanding shares of Mandatorily Redeemable Preferred Stock into an aggregate
of 3,983,595 shares of Common Stock prior to the closing of the Offering. The
capitalization information set forth in the table below is unaudited and
qualified by and should be read in conjunction with the Company's more
detailed Consolidated Financial Statements and the Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term borrowings, including current portion
of long-term debt.............................. $ 5,376 $ 5,376 $ 1,380
======= ======= =======
Long-term debt, less current portion............ $ 6,202 $ 6,202 $ 6,202
------- ------- -------
Mandatorily Redeemable Preferred Stock:
Series A and ATG Richland's Series A and B
Preferred Stock, no par value, 6,000,000
shares authorized, 3,029,291 shares issued
and outstanding (actual); none issued and
outstanding (pro forma and as adjusted)...... 19,416 -- --
------- ------- -------
Shareholders' equity:
Common Stock, no par value, 20,000,000 shares
authorized, 7,532,301 shares issued and
outstanding (actual); 11,515,896 shares
issued and outstanding (pro forma);
13,215,896 shares issued and outstanding (as
adjusted).................................... 6,337 21,795 35,024
Deferred compensation......................... (272) (272) (272)
Accumulated deficit........................... (5,769) (1,811) (1,811)
------- ------- -------
Total shareholders' equity.................. 296 19,712 32,941
------- ------- -------
Total capitalization...................... $25,914 $25,914 $39,143
======= ======= =======
</TABLE>
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected statement of operations data for the years ended
December 31, 1995, 1996 and 1997 and the selected balance sheet data as of
December 31, 1996 and 1997 are derived from and are qualified by reference to
and should be read in conjunction with the more detailed Consolidated
Financial Statements and the Notes thereto included elsewhere in this
Prospectus, audited by Coopers & Lybrand L.L.P., independent accountants. The
selected statement of operations data for the year ended December 31, 1994 and
selected balance sheet data as of December 31, 1994 and 1995 are also derived
from audited financial statements of the Company which are not included
herein. The selected statement of operations data for the year ended
December 31, 1993 and the selected balance sheet data as of December 31, 1993
are derived from unaudited financial statements of the Company which are not
included herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1993 1994 1995 1996 1997
----------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................ $11,451 $11,723 $16,070 $18,235 $19,107
Cost of revenue................ 6,277 7,194 9,659 11,082 11,172
------- ------- ------- ------- -------
Gross profit................... 5,174 4,529 6,411 7,153 7,935
Sales, general and
administrative expenses....... 4,453 4,876 6,202 6,656 7,020
------- ------- ------- ------- -------
Operating income (loss)........ 721 (347) 209 497 915
Interest income (expense), net. (394) (19) (141) 13 58
------- ------- ------- ------- -------
Income (loss) before income
taxes......................... 327 (366) 68 510 973
Income tax expense (benefit)... -- (2) 2 2 (45)
------- ------- ------- ------- -------
Net income (loss).............. $ 327 $ (364) $ 66 $ 508 $ 1,018
======= ======= ======= ======= =======
Pro forma net income per
share(1)
Basic........................ $ 0.09
Diluted...................... 0.08
=======
Pro forma weighted average
shares outstanding(1)
Basic........................ 11,516
Diluted...................... 12,284
=======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------
PRO FORMA
1993 1994 1995 1996 1997 1997
----------- ------- ------- ------- ------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital ........ $ 569 $ 2,359 $ 3,903 $ 4,333 $ 1,652 $ 1,652
Total assets............ 10,396 15,699 21,182 26,976 37,227 37,227
Total long-term debt.... 4,600 4,007 4,080 2,930 6,202 6,202
Mandatorily redeemable
preferred stock........ -- 5,444 9,403 16,319 19,416 --
Shareholders' equity.... 1,480 1,491 890 630 296 19,712
</TABLE>
- ---------------------
(1) See Note 2 of Notes to Consolidated Financial Statements--Computation of
Pro Forma Net Income Per Share. Historical income (loss) per share prior
to 1997 has not been presented since such amounts are not deemed
meaningful due to the significant change in the Company's capital
structure that will occur in connection with the Offering.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto and the
other financial information included elsewhere in this Prospectus. Except for
the historical information contained herein, the discussions in this
Prospectus contain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and in the section
entitled "Risk Factors" as well as those discussed elsewhere in this
Prospectus.
OVERVIEW
The Company is a radioactive and hazardous waste management company that
offers comprehensive treatment solutions for LLRW, LLMW and other waste
generated by the DOD, DOE and commercial entities such as nuclear power
plants, medical facilities and research institutions. Founded in 1976 to
provide technical consulting and support services to participants in the
nuclear power industry, the Company expanded into D&D services in 1980 when it
received its first multi-year contract for a DOE facility. Following an
employee leveraged buy-out in 1984, new management commenced the
diversification of the Company's business into waste processing and treatment.
The Company principally derives its revenue from the waste treatment
operations of its Fixed Facilities Group and the on-site remediation services
of its Field Engineering Group.
The U.S. government represented 86.3%, 76.8% and 71.3% of the Company's
total annual revenue for the years 1995, 1996 and 1997, respectively. Revenue
from commercial entities, primarily nuclear power plants, industrial concerns
and medical and research institutions, has increased in recent years and is
expected to represent an increasing portion of the Company's business. Revenue
from waste treatment processing is recognized as waste is processed. Field
engineering services are provided under fixed price, cost plus or unit price
contracts. Revenue from fixed price and cost plus contracts is recognized
utilizing the percentage of completion method of accounting; revenue from unit
price contracts is recognized as the units are processed and completed.
Revenue also includes non-refundable fees received under the terms of
technology transfer agreements.
Gross profit percentages reflect the mix of the Company's business, which
varies from time to time. Gross profit margins are generally higher for
technology transfer agreements involving up-front, non-refundable, exclusive
licensing fees payable to the Company, and, due to the extensive expertise the
Company has developed in this area, when the Company is processing radioactive
waste, while margins on nonradioactive waste projects generally are lower. The
Company intends to focus a significant portion of its business on SAFGLAS
vitrification of LLRW in 1998 and on LLMW processing in 1999.
The Company operates its fixed facilities under regulation of, and licenses
and permits issued by, various federal, state and local agencies. There is no
assurance as to the successful outcome of any pending licensing and permitting
efforts. The licensing and permitting process is subject to regulatory
approval, time delays, community opposition and potentially stricter
governmental regulation. The Company's inability to obtain licenses or permits
on a timely basis, delays or changes in facility construction programs or the
cancellation of pending projects could have a material adverse effect on the
Company's financial position and results of operations.
The Company has historically relied upon the integration of proven
technologies with the Company's know-how and processes, and has not incurred
significant levels of research and development spending. Most of the research
and development activities conducted to date have related to the design and
construction of its fixed operating facilities, particularly in connection
with the SAFGLAS system. The Company anticipates that its research and
development efforts will continue to be moderate and that the costs associated
with future research and development will not be material to the Company's
results of operations.
The Company increasingly pursues multi-year and longer term contracts as a
method of achieving more predictable revenue, more consistent utilization of
equipment and personnel, and greater leverage of sales and
16
<PAGE>
marketing costs. The Company currently focuses on large, multi-year site-
specific and term contracts in the areas of LLRW and LLMW treatment,
environmental restoration and D&D, and has in recent years been awarded a
number of large government term contracts which, in most cases, require
several years to complete. These government term contracts are subject to
cancellation, delay or modification at the sole option of the government at
any time, to annual funding limitations and public sector budget constraints
and, in many cases, to actual delivery orders being released. Such projects,
which may create an opportunity for the Company to realize margins higher than
on other types of contracts, also impose heightened risks of loss if, for
example, actual costs are higher than those estimated at the time of bid. A
loss on one or more of such larger contracts could have a material adverse
effect on the Company's financial condition and results of operations. In
addition, failure to obtain, or delay in obtaining, targeted large, multi-year
contracts could result in significantly less revenue to the Company than
anticipated.
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data as a
percentage of total revenue for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Revenue............................................... 100.0% 100.0% 100.0%
Cost of revenue....................................... 60.1 60.8 58.5
----- ----- -----
Gross profit.......................................... 39.9 39.2 41.5
Sales, general and administrative expenses............ 38.6 36.5 36.7
----- ----- -----
Operating income...................................... 1.3 2.7 4.8
Interest income (expense), net........................ (0.9) 0.1 0.3
Benefit for income taxes.............................. -- -- 0.2
----- ----- -----
Net income............................................ 0.4% 2.8% 5.3%
===== ===== =====
</TABLE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996
Revenue. Revenue for 1997 was $19.1 million, an increase of $0.9 million, or
4.8%, compared to $18.2 million in 1996. The growth in revenue resulted from a
change in mix of the business services and the receipt of fees for technology
transfer agreements. Revenue from waste treatment services was $9.6 million in
1997 compared to $8.9 million in 1996. Revenue from field engineering services
was $9.5 million in 1997 compared to $9.3 million in 1996. During 1997 the
Company entered into two technology transfer agreements (with total 1997
revenue of approximately $2.0 million derived from up-front, non-refundable,
exclusive licensing fees) that provided for the transfer of rights to the
processes and technology of the Company on an exclusive basis in selected
Asian territories. Revenue from various agencies of the U.S. government
accounted for 71.3% and 76.8% of total revenue in 1997 and 1996, respectively.
One contract with an agency of the U.S. government accounted for approximately
21.0% of the Company's total revenue for 1997. Two contracts with agencies of
the U.S. government accounted for 12.5% and 12.0%, respectively, of the
Company's total revenue for 1996.
Gross Profit. Gross profit for 1997 was $7.9 million, an increase of $0.7
million, or 10.9%, compared to $7.2 million for 1996. Gross profit as a
percentage of revenue increased to 41.5% in 1997 compared to 39.2% in 1996.
Gross profit percentages reflect the various mixes of the Company's business
services from time to time. Gross profit in 1997 includes the effect of the
technology transfer licensing fee revenue. Gross profit margins are generally
higher for technology transfer agreements and, due to the extensive expertise
the Company has developed in this area, when the Company is processing
radioactive waste, while margins on nonradioactive waste projects generally
are lower. Although the gross profit margins increased from 1997 to 1996,
there can be no assurance that similar margins will be attained in future
periods. Any shift in the mix of business in future periods to lower margin
projects could adversely affect the Company's results of operations.
17
<PAGE>
Sales, General and Administrative Expenses. Sales, general and
administrative expenses (including stock-based compensation expense) were $7.0
million for 1997, an increase of $0.3 million, or 5.5%, compared to $6.7
million in 1996. Sales, general and administrative expenses were 36.7% of
revenue in 1997 compared to 36.5% of revenue in 1996. Sales, general and
administrative expenses include indirect engineering and operating overhead,
depreciation and amortization, and expenses to support the domestic sales and
marketing activities and the financial and administrative functions of the
Company. The overall increase as a percentage of revenue is attributable to
the Company's hiring in 1997 of senior management personnel to support the
Company's future growth.
Interest Income and Interest Expense. Interest income was $58,000 in 1997
compared to $142,000 in 1996. The decrease in interest income is attributable
to a lower overall average of cash available for investment in 1997. In 1996
the Company sold $5.9 million of preferred stock and invested the net proceeds
in interest bearing accounts until they were needed for capital expenditures
and working capital. In 1997 the Company sold $1.7 million in additional
preferred stock. Interest expense was nil in 1997 as the result of the Company
capitalizing $891,000 of interest on construction in progress in accordance
with generally accepted accounting principles. (See Note 5 of Notes to
Consolidated Financial Statements.) Interest expense in 1996 was $129,000,
which was net of $446,000 of interest capitalized on construction in progress.
COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1995
Revenue. Revenue for 1996 was $18.2 million, an increase of $2.1 million, or
13.5%, compared to $16.1 million for 1995. The growth in revenue resulted from
increases in the size and number of both field engineering and waste treatment
projects, and an increase in the number of new customers. Revenue from waste
treatment services was $8.9 million in 1996 compared to $8.0 million in 1995.
Revenue from field engineering services was $9.3 million in 1996 compared to
$8.1 million in 1995. Revenue from various agencies of the U.S. government
accounted for 76.8% and 86.3% of total revenue in 1996 and 1995, respectively.
One contract with an agency of the U.S. government accounted for 12.5% and
21.9% of the Company's total revenue in 1996 and 1995, respectively. A
contract with one other agency of the U.S. government accounted for 12.0% of
the Company's total revenue for 1996.
Gross Profit. Gross profit for 1996 was $7.2 million, an increase of $0.8
million, or 11.6%, compared to $6.4 million in 1995. Gross profit as a
percentage of revenue remained relatively constant at 39.2% in 1996 compared
to 39.9% in 1995. Gross profit percentages reflect the various mixes of the
Company's business services from time to time. The decrease in the gross
profit percentage from 1995 to 1996 reflects this change in mix.
Sales, General and Administrative Expenses. Sales, general and
administrative expenses (including stock-based compensation expense) were $6.7
million for 1996, an increase of $0.5 million, or 7.3%, compared to $6.2
million for 1995. Sales, general and administrative expenses were 36.5% of
revenue in 1996 compared to 38.6% of revenue in 1995. The overall decrease as
a percentage of revenue is attributable to the Company's effort to maintain a
level of costs that does not increase at the same rate as revenue.
Interest Income and Interest Expense. Interest income was $142,000 in 1996
compared to $185,000 in 1995. The decrease in interest income is attributable
to a lower overall average of cash available for investment in 1996 than in
1995 due to the timing of sales of preferred stock and the use of the cash for
capital expenditures and working capital. Interest expense for 1996 was
$129,000 compared to $326,000 for 1995. The higher interest expense in 1995
resulted from an increase in working capital borrowing to finance the increase
in accounts receivable in 1995 over 1994. Accounts receivable increased from
approximately $3.9 million at fiscal year-end 1994 to $7.4 million at fiscal
year-end 1995. Additionally, in 1995 and 1996 the Company capitalized a
portion of its interest expense in accordance with generally accepted
accounting principles. The interest expense capitalized was directly
attributable to construction in progress on the SAFGLAS system.
QUARTERLY OPERATING RESULTS
The following table sets forth selected consolidated unaudited quarterly
financial data for 1997. The quarterly consolidated financial data were
derived from unaudited interim financial statements for those periods prepared
on the same basis as the audited financial statements and, in the opinion of
management of the
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<PAGE>
Company, include all adjustments necessary (consisting only of normal recurring
adjustments) for a fair presentation of such financial data when read in
conjunction with the Consolidated Financial Statements and Notes thereto
included elsewhere herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1997 1997
--------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenue................................... $3,145 $3,895 $4,145 $7,922
Gross profit.............................. 1,778 1,791 2,335 2,031
Operating income.......................... 139 289 390 97
Income before income taxes................ 180 299 393 101
Provision (benefit) for income taxes...... 0 1 0 (46)
------ ------ ------ ------
Net income................................ $ 180 $ 298 $ 393 $ 147
====== ====== ====== ======
AS A PERCENTAGE OF REVENUE:
Revenue................................... 100.0% 100.0% 100.0% 100.0%
Gross profit.............................. 56.5 46.0 56.3 25.6
Operating income.......................... 4.4 7.4 9.4 1.2
Income before income taxes................ 5.7 7.7 9.5 1.3
Provision (benefit) for income taxes...... 0.0 0.0 0.0 (0.6)
------ ------ ------ ------
Net income................................ 5.7% 7.7% 9.5% 1.9%
====== ====== ====== ======
</TABLE>
Revenue and Gross Profit. In the fourth quarter of 1997, the Company
performed a contract for which a significant change order was pending as of
December 31, 1997. As a consequence, the Company did not recognize revenue from
the change order or record any gross profit with respect to the contract in the
fourth quarter of 1997, and will recognize such revenue when and to the extent
acceptance by the customer of the change order is deemed probable.
The Company's revenue is dependent on the amount of its contract backlog, the
timing and performance requirements of each contract and, in the case of
government contracts, annual budget limitations and public sector budget
constraints. Revenue in the first and second quarters has historically been
lower than in the third and fourth quarters, as the Company's customers have
tended to ship waste during the months in which transportation is less likely
to be adversely affected by weather conditions. The Company's revenue is also
affected by the timing of its clients' planned remediation activities and need
for waste treatment services, which generally increase during the third and
fourth quarters. The Company's gross profit margins are affected by numerous
factors, including the revenue factors referred to above, growth in the
Company's operations infrastructure, international expansion and the extent and
timing of change orders, which factors can vary significantly from quarter to
quarter. Due to these factors, the Company's quarterly results fluctuate.
Accordingly, specific quarterly or interim results should not be considered
indicative of results to be expected for any future quarter or for the full
year. See "Risk Factors--Seasonality and Fluctuation in Quarterly Results."
LIQUIDITY AND CAPITAL RESOURCES
Prior to 1994, the Company financed its operations, acquired equipment and
met its working capital requirements through sales of common stock, borrowings
under its revolving line of credit and long-term loans and capital leases
secured by property and equipment. In 1994 the Company sold 900,000 shares of
Preferred Stock at $5.00 per share. The proceeds from this financing were used
to acquire property and equipment in the amount of $3.2 million, and the
balance for working capital needs.
In 1995 the Company's subsidiary, ATG Richland, sold 860,000 shares of its
Series A Redeemable Non-Voting Preferred Stock at $5.00 per share and in 1996
sold 990,355 shares of its Series B Redeemable Non-Voting Preferred Stock at
$6.00 per share. Of the $10.2 million raised in these two financings, $7.3
million was used to acquire property and equipment, and $2.9 million for
working capital. In 1997 ATG Richland sold an
19
<PAGE>
additional 278,936 shares of its Series B Redeemable Non-Voting Preferred
Stock at $6.00 per share. The $1.7 million raised in this transaction was
primarily used to fund the installation and start-up of the SAFGLAS system at
the Company's Richland facilities.
During 1995 the Company used cash of $3.4 million in its operating
activities. Operating cash used in 1995 resulted primarily from an increase in
accounts receivable related to significant growth in sales. In 1996, cash of
$2.9 million was generated from operations, primarily from increased
profitability and reduction in accounts receivable as well as other working
capital changes. In 1997, cash of $1.0 million was generated from operations,
primarily from increased profitability.
Significant outlays of cash have been needed to acquire property and
equipment, primarily for the Company's Richland facilities. Property and
equipment acquisitions totaled $2.7 million, $4.6 million and $7.8 million in
1995, 1996 and 1997, respectively. The Company anticipates that continued
expansion of its Richland LLRW treatment facilities will cost approximately
$4.0 million, which the Company plans to finance from the proceeds of the
Offering. The Company currently expects to spend in 1999 in excess of
$10 million for the construction of the mixed waste treatment facility to be
sited at its Richland facilities.
The working capital of the Company was approximately $1.7 million at
December 31, 1997. The Company's principal sources of liquidity at December
31, 1997 consisted of $2.6 million of cash and cash equivalents. It is
anticipated that bank borrowings will be repaid from the proceeds of the
Offering.
Under the terms of a revolving credit facility with a bank, the Company may
borrow up to the lesser of 90% of eligible accounts receivable or $5.0
million. Borrowings under this credit facility were $4.0 million at December
31, 1997, bear interest at an annual rate of prime plus 0.50% (9.0% at
December 31, 1997) and are collateralized by accounts receivable, property and
equipment and the personal guarantee of the Company's principal shareholder.
The credit agreement requires the Company to comply with certain covenants,
including covenants relating to quick ratio, capital expenditure limits,
limits on additional indebtedness, debt service coverage, minimum levels of
tangible net worth and dividend payment restrictions. At December 31, 1997 and
at various dates throughout the year, the Company was in violation of the
quick ratio, capital expenditure and additional indebtedness covenants. The
Company has obtained waivers in respect of each of these violations as of
December 31, 1997.
The Company believes that the net proceeds from the Offering, together with
the availability of its line of credit and cash generated from operations,
will be sufficient to meet the Company's capital requirements for the next 12
months. Depending on its rate of growth and profitability, the Company may
require additional equity or debt financing to meet its future working capital
or capital expenditure needs. There can be no assurance that such additional
financing will be available or, if available, that such financing can be
obtained on terms satisfactory to the Company.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and displaying comprehensive income and its components in the
consolidated financial statements. It does not, however, require a specific
format for the statement, but requires the Company to display an amount
representing total comprehensive income for the period in that financial
statement. SFAS No. 130 is effective for the Company's 1998 fiscal year.
YEAR 2000 MODIFICATIONS
The Company is not highly dependent on internal computer systems, and does
not, as a general matter, interact electronically with its customers or
suppliers. The Company is currently reviewing its computer systems in order to
evaluate what, if any, corrections or modifications may be necessary for the
year 2000.
20
<PAGE>
BUSINESS
See "Glossary" for definition of certain terms used in this section and
elsewhere in this Prospectus.
GENERAL
The Company, founded in 1976, is a radioactive and hazardous waste
management company that offers comprehensive treatment solutions for LLRW and
LLMW generated by the DOD, the DOE and commercial entities such as nuclear
power plants, medical facilities and research institutions. The Company's
thermal treatment technologies vitrify waste into leach-resistant glass for
long-term storage or disposal. Compared with the more traditional incineration
methods, the Company's vitrification process results in significantly less
effluents, provides a more stable end product and achieves comparable volume
and mass reduction at similar total treatment and disposal costs.
The Company operates through its Fixed Facilities Group, which manages its
waste treatment operations, and its Field Engineering Group, which addresses
D&D of radioactive facilities and environmental restoration of sites
contaminated with radioactive and hazardous waste. The synergies between the
on-site remediation services of its Field Engineering Group and the waste
treatment operations of its Fixed Facilities Group enhance the Company's
ability to compete for commercial and government LLRW and LLMW treatment
contracts. The Company directs waste removed from the field to its fixed
facilities for treatment when more cost-effective for the customer. In
addition, the Company's radioactive material license issued by the State of
Washington with respect to its Richland facilities includes reciprocity
provisions that the Company believes allow it to thermally and non-thermally
treat radioactive waste at customer sites in all fifty states.
The Company believes that it possesses a number of competitive advantages
which distinguish it from other radioactive and hazardous waste management
companies, including the broad and comprehensive spectrum of the services it
offers, the extensive portfolio of licenses and permits it holds or is in the
process of obtaining, the cost-efficiency and environmental integrity of its
waste treatment technologies, and its established positioning with both
commercial and government customers, as well as with U.S. federal, state and
local environmental regulators.
MARKET OVERVIEW
General. The worldwide environmental services industry is diverse and
growing. This growth has been driven by extensive legislation and governmental
regulation aimed at protecting the environment and requiring responsible
parties to clean up existing environmental hazards. According to industry
sources, the overall market for environmental services, including solid waste
management and water treatment services, is approximately $190 billion a year
in the United States and $25 billion a year in Asia (excluding Japan), and is
projected to grow at an annual rate of 4%, in the U.S. and 17% in Asia
(excluding Japan) through the year 2001. Although the ultimate impact of the
recent economic instability in certain Pacific Rim countries on the local
economies cannot yet be determined, the underlying structural problems, if not
ameliorated in the near term, could lead to a significant reduction in the
projected demand for environmental services in that region.
The Company believes that the specific environmental services markets within
which it competes have evolved so that actual remediation and site clean-up,
including the treatment and disposal of LLRW, LLMW and hazardous waste, will
command a growing portion of environmental resources worldwide. The following
is a description of each of these types of waste and a summary of the
potential market for the services offered by the Company.
LLRW Treatment Market. Radioactive waste is categorized as either high-level
radioactive waste or low-level radioactive waste. Such waste is generated by
government facilities and by commercial enterprises such as nuclear power
plants, medical laboratories and university and industrial research and
development facilities. LLRW is all radioactive material other than high-level
radioactive waste ("HLW"). HLW is primarily comprised of spent nuclear fuel
rods from nuclear reactors and highly radioactive waste generated by the
processing of nuclear materials for weapons production. Most LLRW consists of
relatively large amounts of
21
<PAGE>
waste materials contaminated with small amounts of radioactivity, such as
contaminated equipment, protective clothing, paper, rags, packing material,
liquids and sludge. The Company has been engaged in the business of handling,
treating, storing and disposing of LLRW since 1988.
The Company estimates that currently more than $150 million is spent
annually in the United States on the treatment of commercial LLRW. The Company
believes that the size of the commercial LLRW treatment market in the United
States will increase significantly as the result of the LLRW required to be
treated in connection with the expected decommissioning of up to ten nuclear
power plants in the United States over the next decade. Significant demand
exists in the United States for the volume and mass reduction of commercially
generated LLRW, as there are at present only two full-service disposal sites
in the nation accepting such waste. These sites, which are located in
Barnwell, South Carolina and Richland, Washington, base the disposal fees
charged to customers on the volume and mass of the waste to be disposed. The
Barnwell disposal site, which currently services the majority of commercial
LLRW generators in the United States, has increased its disposal fees by
approximately 300% over the past five years. The current disposal fees at this
site are approximately $400 per cubic foot, and from $4.00 to $7.00 per pound,
depending upon the waste's density and activity levels. The disposal fees
charged by the Richland site are significantly lower, but this site is only
permitted to accept waste generated in 11 states. In addition, there is a
disposal facility in Clive, Utah that also charges disposal fees significantly
lower than those charged by the Barnwell site, but it is currently permitted
to accept LLRW with only small concentrations of radioactivity. See "--
Competition." There are at present only two companies licensed to offer volume
and mass reduction by thermal treatment of a broad spectrum of commercial LLRW
in the United States: the Company, through its SAFGLAS vitrification
technology, and GTS Duratek, Inc. ("Duratek"), through its incineration
treatment processes.
Significant amounts of LLRW are also generated by and stored on federal
government sites, principally the former nuclear weapon production facilities
administered by the DOE. The DOE estimates that there is in excess of 53
million cubic feet of LLRW either currently stored or expected to be generated
during the next 20 years at DOE facilities throughout the United States alone.
Of this estimated total, the DOE's Hanford and Savannah River Reservations
account for approximately 6% and 34%, respectively. The DOE also estimates
that the total treatment costs for the LLRW at these two sites alone will
exceed $850 million through the year 2010.
LLMW Treatment Market. Low-level mixed waste is low-level radioactive waste
co-mingled with hazardous substances regulated by the Resource Conservation
and Recovery Act of 1976 ("RCRA") and/or toxic substances regulated by the
Toxic Substances Control Act of 1976 ("TSCA"). LLMW results from a variety of
activities, including the processing of nuclear materials used in nuclear
weapon production, nuclear energy research and the generation of nuclear
energy. The clean-up of government-generated LLMW is driven by the Federal
Facilities Compliance Act of 1992 (the "FFCA"), which requires that
radioactivity-contaminated federal facilities meet waste clean-up targets by
specified dates. For example, DOE-Hanford is required to commence non-thermal
treatment of the LLMW stored there by September 30, 1999, and thermal
treatment of such waste by December 31, 2000.
Significant quantities of untreated LLMW have accumulated in the United
States, as approved treatment solutions applicable to a broad range of such
waste streams have previously not been available. The DOE estimates that there
is in excess of 7.7 million cubic feet of LLMW either currently stored or
anticipated to be generated over the next two decades throughout the United
States at DOE facilities alone, with approximately 16% and 9% of this
estimated total allocated to the DOE's Hanford and Savannah River
Reservations, respectively. The DOE also estimates that the treatment cost for
the LLMW at these sites alone will exceed $580 million through the year 2010.
The Company is not aware of any reliable estimates of the existing backlog of
commercially generated LLMW awaiting treatment at generators' sites. However,
according to a survey study sponsored by the Nuclear Regulatory Commission
("NRC") and the Environmental Protection Agency ("EPA"), approximately 140,000
cubic feet of LLMW was commercially generated in the United States in 1990.
The Company believes that the size of the commercial LLMW treatment market in
the United States will increase significantly as the result of the LLMW
required to be treated in connection with the expected decommissioning of up
to ten nuclear power plants in the United States over the next decade.
22
<PAGE>
The Company believes that its mixed waste treatment facility will, upon
completion of its pending permitting process, be the first privately owned
facility in the United States licensed to thermally and non-thermally treat a
broad spectrum of commercial and government-generated LLMW.
Hazardous Waste Treatment Market. Hazardous waste is waste that is
classified as hazardous under RCRA and/or toxic under TSCA. The list of
"hazardous substances" covered by these laws is extensive and includes a large
number of chemicals, metals, pesticides, biological agents, toxic pollutants
and other substances. The Company to date has not attempted to penetrate the
large and highly competitive hazardous waste treatment market, except as a
component of the environmental restoration and D&D services provided by its
Field Engineering Group. Historically, the Company has processed a broad range
of hazardous substances at client sites in the execution of environmental
restoration and D&D projects.
GROWTH STRATEGY
To expand its business, the Company plans to (i) establish significant
positions in certain emerging or underserved, higher-margin segments within
the markets for treatment of LLRW, LLMW, hazardous and other waste, (ii)
increase its participation on teams bidding for and executing large-scale,
multi-year D&D and environmental restoration contracts, and (iii) enhance its
ability to provide on-site full-service solutions for D&D and environmental
restoration projects. The Company's growth strategy is focused on achieving
the following five objectives:
Increase Market Share in Domestic Commercial LLRW Treatment Market. The
Company intends to increase its share of the domestic commercial LLRW
treatment market by marketing its SAFGLAS vitrification system as a
competitive alternative to incineration, the only other thermal treatment
method widely available in the United States for commercial LLRW. As
disposal costs have increased significantly in recent years, the volume and
mass reduction achievable by thermal treatment has become a critical factor
in selecting a waste treatment solution for many commercial LLRW
generators. With the commencement of the commercial operation of its
SAFGLAS system in the third quarter of 1997, the Company now offers a non-
incineration thermal process that results in total treatment and disposal
costs for the customer comparable to those achieved by incineration.
Additionally, the end-stage glass product resulting from this process is
more suitable for long-term storage and disposal than incineration fly ash.
The Company believes that any competitor attempting to build and operate a
commercial LLRW thermal treatment facility in the United States would
require several years to secure the requisite regulatory approvals. As of
December 31, 1997, the Company was a party to service agreements with three
nuclear utilities, covering four nuclear power plants, to accept and treat
LLRW generated by such utilities. In the first quarter of 1998, the Company
entered into such service agreements with an additional seven nuclear
utilities, covering an additional fifteen nuclear power plants.
Establish Significant Position in Domestic LLMW Treatment Market. The
Company intends to establish a significant position in the United States
market for treatment of LLMW. The market for domestic LLMW treatment is in
an early stage because approved technologies capable of treating a broad
spectrum of low-level mixed waste streams previously have not been
available. The Company has developed its GASVIT vitrification system for
LLMW treatment and anticipates completing the pending licensing process for
both thermal and non-thermal LLMW treatment methods at its Richland
facilities in the fourth quarter of 1998. Thereafter, the Company expects
to take approximately six and 12 months, respectively, to place its non-
thermal and thermal treatment processes in operation. As a consequence, the
Company believes it is positioned to be the first company to own and
operate a private facility in the United States capable of thermally and
non-thermally treating a broad spectrum of low-level mixed waste streams
produced by commercial and government waste generators. The Company
believes that any competitor attempting to build and operate a commercial
LLMW thermal treatment facility in the United States would require a
significant start-up period in which to develop and commercialize its
technology and secure the requisite regulatory approvals. Consequently, the
Company may have several years in which to establish its position in this
market before experiencing significant competition.
23
<PAGE>
Enhance its Ability to Compete for Large Project Contract Awards. The
Company intends to increase its participation on project teams led by large
firms when such relationships are a practical requirement to compete
successfully for large project contract awards. Increasingly, large-scale,
multi-year D&D and environmental restoration contracts, whether to be
performed domestically or overseas, require a team of companies with
complementary expertise and skills within the industry, usually led by a
large, multinational engineering or construction company. The Company
believes that its expertise in niche areas within the radioactive and
hazardous waste management industry makes it an attractive candidate for
inclusion in teams competing for such contracts. In the last three years,
the Company has been a member of teams executing DOE and DOD projects led
by, among others, Lockheed Martin, Morrison Knudsen and Jacobs Engineering.
Expand into Pacific Rim Markets. The Company intends to offer its SAFGLAS
and GASVIT vitrification technologies for local treatment of LLRW and LLMW
in selected Pacific Rim markets. The high cost of LLRW and LLMW disposal
costs in a number of Pacific Rim countries favors thermal treatment for
such wastes, while regulatory restrictions and other environmental concerns
may limit incineration as a treatment process. The Company also believes
there is a significant market for vitrification in the treatment and
recycling of fly ash resulting from incineration of municipal waste in
certain Pacific Rim markets where scarce land resources make landfill
disposal of the ash uneconomical. Vitrification of fly ash through the
Company's GASVIT system will allow the ash to be recycled for use as
construction material and for other reuse purposes. To further promote use
of its technologies and to establish strategic alliance relationships
designed to accelerate penetration of these markets, the Company has
entered into exclusive technology transfer agreements covering its
technologies for Hong Kong, Taiwan and The People's Republic of China.
Enhance On-Site Full-Service Treatment Capabilities. In order to enhance
its ability to provide in-house a full range of D&D and environmental
restoration services, including the application of vitrification treatment
technology on-site, the Company is in the process of developing smaller-
scale, transportable field applications of its GASVIT technology. The
Company believes there is a significant trend in favor of D&D and
environmental restoration contractors able to provide in-house a full range
of such services on-site, including site assessment, feasibility study
preparation, remediation design, remediation and removal actions, and
thermal and non-thermal waste treatment. The Company believes that the
development of smaller-scale, transportable GASVIT units will further
distinguish it from most other radioactive and hazardous waste management
companies.
WASTE TREATMENT TECHNOLOGIES
A summary description of the Company's principal waste treatment
technologies for LLRW and LLMW is provided in the following table:
PRINCIPAL TECHNOLOGIES
<TABLE>
- ----------------------------------------------------------------------------
<CAPTION>
WASTE STREAMS NATURE OF
TECHNOLOGY TREATED PROCESS OPERATING STATUS
- ----------------------------------------------------------------------------
<C> <C> <C> <S>
SAFGLAS LLRW Thermal Commercial operation commenced
in September 1997.
- ----------------------------------------------------------------------------
GASVIT LLRW Thermal Commercial operation:
LLMW LLRW scheduled for mid-1998
LLMW scheduled for late 1999
- ----------------------------------------------------------------------------
PLASTIMELT LLMW Non-Thermal Commercial operation scheduled
for early 1999.
</TABLE>
The core technology employed in the SAFGLAS and GASVIT systems is
vitrification. Although not widely utilized in this country to date,
vitrification technologies have been successfully used in Europe for over
thirty
24
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years, principally in the area of HLW treatment. The EPA has identified
vitrification as the Best Demonstrated Achievable Technology (BDAT) for the
treatment of HLW, and the Company believes that vitrification will prove to be
equally effective in the treatment of waste contaminated with lower levels of
radioactivity. In addition, the vitrification process results in significantly
less effluents than the more traditional incineration methods of waste
treatment. Accordingly, the Company believes vitrification is widely perceived
as an environmentally superior waste treatment method. There can be no
assurance that the steps taken to protect the Company's technologies will be
adequate to prevent the use of such technologies by third parties. See "Risk
Factors--Dependence on and Limited Protection of Technology and Intellectual
Property; Potential Litigation."
SAFGLAS--Thermal Treatment of LLRW by Vitrification. The SAFGLAS system
treats a broad spectrum of LLRW in the form of dry active wastes (protective
clothing, paper, rags, plastics, wood), low activity resins, aqueous based
liquids and sludges, and oils, which eliminates the customer's need to pre-
sort wastes to fit the specialized capabilities of a particular waste
processor's technology. The primary unit is a Joule-heated glass melter with a
multi-zone process chamber based on a technology that has been successfully
used for over 15 years in research on hazardous waste treatment. LLRW is fed
into a closed pool of molten glass at temperatures in excess of
2000(degrees)F. Most of the organic constituents are destroyed and the
radioactive solids are captured within the glass, which is periodically
drained into drums for disposal. The Company adapted the basic process to the
treatment of LLRW, including devising the systems for feed preparation, waste
feeding, and effluent treatment and monitoring. The SAFGLAS system can reduce
the volume of the input waste by a factor of up to 200 to 1 and the mass of
the input waste by a factor of up to 96%. The Company believes that the highly
stable and leach-resistant nature of the glass produced by the SAFGLAS
process, as compared to incineration ash, will be significant for waste
generators concerned with the potential long-term liabilities associated with
the land disposal of LLRW.
The basic SAFGLAS system is currently being enhanced through the addition of
a high temperature drum oven that will process biological LLRW as well as
materials with a high water content, and a small (100 lbs./hr.) version of the
Company's GASVIT system that will process wastes that either require small
batch processing or have very corrosive effluent gas that requires "scrubbing"
to remove corrosive constituents. Both the drum oven and the small GASVIT unit
exhaust into the second chamber of the basic SAFGLAS unit. The Company
therefore refers to the combination of these integrated technologies as the
SAFGLAS system, which is expected to be fully operational in the second
quarter of 1998. The combination of these processes is permitted to treat
approximately 12,000 pounds per day at full capacity. The basic SAFGLAS unit
has a permitted capacity of approximately 5,000-6,000 pounds per day,
depending on the type of feedstock. The Company's license allows it to operate
the SAFGLAS system 24 hours a day.
GASVIT--Thermal Destruction of LLMW by Gasification/Vitrification. The
Company has acquired licensing rights to use a proprietary plasma arc
technology developed by Integrated Environmental Technologies, LLC ("IET"),
for the treatment of LLMW. The IET plasma arc technology is being integrated
with the Company's technologies to form the GASVIT system. The GASVIT system
will be used as part of the SAFGLAS system for processing LLRW and will also
be used as the primary component in the Company's LLMW thermal processing
facility. Materials are fed into a process chamber where a combination of a
carbon induced plasma and joule heating at temperatures in excess of
2200(degrees)F transforms complex organic materials into a "syngas," which is
a mixture of hydrogen and carbon monoxide. The syngas can be either used as
fuel or destroyed in a subsequent flameless oxidation process. As with the
SAFGLAS system process, the end result of the GASVIT system process is a
glass-like material. The GASVIT system can reduce the volume of the input
waste by a factor of up to 200 to 1, and the mass of the input waste by a
factor of up to 96%. A 50 lbs./hr. prototype gasification/vitrification
process chamber has been in operation at IET's facilities in Richland,
Washington since June 1997. IET's process chamber is based on several
prototype units constructed and tested for the DOE, including a 100 lbs./hr.
process chamber which has been tested at the DOE's Hanford Reservation since
1996. The GASVIT system is being licensed for a total throughput of 12,000
pounds per day; however, the initial unit will provide only 50% of the
permitted capacity. The Company intends to add another unit as its capacity
needs increase.
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<PAGE>
PLASTIMELT--Non-Thermal Encapsulation of LLMW. The Company has developed the
PLASTIMELT process for the encapsulation of LLMW in a plastic matrix when the
volume or mass reduction achievable by thermal treatment methods is
uneconomical or impractical. In this process, molten plastic is extruded into
or around the LLMW to create a waste form that meets applicable requirements
for land disposal. The Company has integrated this technology with its
supercompaction processes in a system which achieves a volume reduction factor
of greater than 9 to 1.
OPERATIONS AND SERVICES
The Company provides radioactive and hazardous waste management services
through two operating units, the Fixed Facilities Group and the Field
Engineering Group.
FIXED FACILITIES GROUP. The core of the Company's fixed facilities
operations, situated on a 45-acre site in Richland, Washington adjacent to the
DOE's Hanford Reservation, is one of the largest commercial radioactive waste
treatment and storage centers in the United States. This facility is currently
licensed to handle, treat and store a wide variety of LLRW and the Company is
in the process of securing the licenses, permits and approvals required in
order for this facility to thermally and non-thermally treat a broad spectrum
of low-level mixed waste streams produced by both commercial and government
generators. The Company also owns a four acre facility in Fremont, California
which houses the Company's corporate offices, as well as an LLRW storage and
transfer station that supports its Richland operations. The Company utilizes a
fleet of Company-owned trucks to transport waste intra-state to or from its
Richland and Fremont facilities, and utilizes third party commercial carriers
to transport waste inter-state to or from these facilities.
In 1997, the Company purchased 30 acres of undeveloped industrial land in
Aiken, South Carolina, located adjacent to the DOE's Savannah River
Reservation. The Company is currently considering construction of a fixed
facility principally devoted to LLRW treatment on this site. If constructed,
this facility will provide the Company with two LLRW processing sites, each
situated adjacent to one of the two full-service commercial LLRW disposal
sites currently open in the United States.
LLRW Treatment Services. Since 1988, the Company has treated and recycled
several million pounds of LLRW at its Richland facilities. Since being placed
in operation in September 1997, the SAFGLAS system has processed in excess of
150,000 pounds of LLRW. In addition to the DOE, DOD and other agencies of the
U.S. government, customers for the Company's LLRW treatment services include
over 20% of the nation's nuclear power plants, many major corporations, and
numerous universities, laboratories, hospitals and other research and medical
institutions. In 1995, the DOE awarded the Company, in a competitive bidding
process, a fixed unit price contract to process LLRW generated by the Hanford
Reservation. The maximum value of the contract to the Company is $17 million
over five years.
LLMW Treatment Services. In December 1994, the Company began the licensing,
design and facility construction process for a mixed waste treatment and
storage facility to be sited at its Richland facilities. The Company intends
to use the mixed waste facility to treat LLMW, initially from the Hanford
Reservation, and subsequently from other DOE and other U.S. government and
commercial generators of LLMW. The Company intends to thermally treat LLMW by
means of its GASVIT system; when it is uneconomical or impractical to treat
LLMW by a thermal method, the Company intends to employ a number of
stabilization and encapsulation processes, including the Company's PLASTIMELT
process.
In November 1995, the DOE awarded the Company, in a competitive bidding
process, the first privatized contract to thermally treat LLMW generated by
the Hanford Reservation. This contract has a maximum value to the Company of
$24 million for treating 175,000 cubic feet of waste over ten years. The
Company has until the year 1999 to permit and construct an LLMW treatment
facility and to commence LLMW treatment. In addition, the DOE awarded the
Company in September 1997, in a competitive bidding process, the first
privatized contract to non-thermally treat LLMW generated by the Hanford
Reservation. This contract has a maximum value to the Company of $5 million
over a three year period commencing when the Company begins LLMW treatment
thereunder.
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FIELD ENGINEERING GROUP. The principal services provided by the Company's
Field Engineering Group are (i) D&D of nuclear power plants and other
facilities contaminated with LLRW, LLMW and hazardous waste, and (ii)
environmental restoration of sites contaminated with LLRW, LLMW and hazardous
waste. The Company's comprehensive capabilities include site investigation,
characterization and assessment, negotiation with regulatory agencies and
procurement of required regulatory approvals, preparation of feasibility and
remedial design studies, removal and remediation actions, waste brokerage and
transportation, waste treatment using the Company's technologies on-site or at
the Company's fixed facilities, and storage of waste at the Company's fixed
facilities.
Decontamination and Decommissioning Services. Historically, D&D services
have been the Company's core specialty area. The Company has been involved in
D&D projects for over a decade and currently is involved in several D&D
projects for the DOE. Customers for the Company's D&D services include nuclear
power plants, universities and other research institutions that utilize
radioactive isotopes in a variety of research projects, hospitals with
radiological medicine departments, companies employing nuclear materials in
manufacturing and the DOE and DOD, which oversee the nation's nuclear weapon
production facilities.
The Company believes that there are significant near-term opportunities in
domestic D&D, particularly in the commercial D&D market, as up to ten U.S.
nuclear power plants are expected to be decommissioned over the next decade.
Based on recent studies prepared by utilities of the cost to decontaminate and
decommission nuclear power plants, as reported by the Nuclear Energy
Institute, a nuclear energy industry policy organization, the Company
estimates that the average total cost of decontaminating and decommissioning a
domestic nuclear power plant is approximately $300-$400 million. In addition,
there are over 5,000 radioactivity-contaminated DOD and DOE facilities which
are scheduled to be decommissioned over the next decade.
Environmental Restoration Services. The Company has historically
concentrated on environmental removal and remediation actions at contaminated
DOD sites. There are over 420 DOD sites contaminated with LLRW or LLMW.
According to the Defense Environmental Restoration Program Annual Report to
Congress for Fiscal Year 1996, allocations for funding environmental
restoration work on DOD sites are projected to be $2 billion a year through
the year 2000.
Since 1989 the Company has executed more than 150 field engineering projects
relating to the environmental restoration of sites contaminated with LLRW,
LLMW, or hazardous waste throughout the United States and U.S. territories. In
addition, the Company is currently performing under three Total Environmental
Restoration Contracts (TERCs) with the U.S. Army Corps of Engineers, two Pre-
placed Remedial Action Contracts (PRACs) with the U.S. Army Corps of
Engineers, two Remedial Action Contracts (RACs) with the U.S. Navy and four
environmental restoration contracts with the DOE, collectively covering a 40
state area.
For its military and industrial clients, the Company executes environmental
restoration projects either on a planned or quick response basis. In the
execution of both planned and quick response environmental restoration
projects involving both LLRW and LLMW, the Company believes that it is one of
only six domestic companies having the in-house capability of providing on-
site full-service solutions from site investigation through the waste
treatment stage for D&D and environmental restoration projects involving LLRW
and LLMW. The Company believes that the reciprocity provisions of its
radioactive material license issued by the State of Washington with respect to
the Company's Richland facilities allow the Company to thermally and non-
thermally treat radioactive waste at customer sites in all fifty states.
BACKLOG
The Company's backlog consists of confirmed purchase order contracts that
have been received and which are scheduled for completion within 12 months. A
large percentage of these contracts are with agencies and facilities within
the U.S. government, principally the DOD and DOE, and many have been awarded
under indefinite delivery or quantity terms. These contracts are subject to
cancellation, delay or modification at the sole option of the government at
any time, to annual funding limitations and public sector budget constraints
and to
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actual delivery orders being released. Accordingly, the Company's backlog as
of a particular date may not be indicative of sales for any period and the
Company therefore believes that backlog is not a reliable indicator of future
revenue. The Company's backlog for contracts planned to be completed in fiscal
1998 that are not subject to indefinite delivery or quantity terms is
approximately $16 million. See "Risk Factors--Dependence on Federal
Government; Limits on Government Spending; Government Contracting" and "--
Seasonality and Fluctuation in Quarterly Results."
CUSTOMERS
The Company's services are provided to a broad range of federal, state and
local government and commercial clients in the United States. Demand for the
Company's services and the distribution of such demand are heavily influenced
by the level of implementation and enforcement of existing and new
environmental regulations, funding levels for government projects and spending
patterns of commercial clients.
Primarily due to its technical expertise, extensive portfolio of
environmental licenses and permits and full-service capabilities on-site, the
Company has successfully bid on and executed a substantial number of waste
treatment, environmental restoration, D&D and other contracts with the DOD,
DOE and a number of other federal government agencies, as both a prime
contractor and as a subcontractor. In fiscal 1995, 1996 and 1997, the
percentage of the Company's total revenue attributable to such contracts was
86.3%, 76.8% and 71.3%, respectively. One contract with the U.S. Army Corps of
Engineers-Sacramento District accounted for 21.0% of the Company's total
revenue in the year ended December 31, 1997. One contract with the U.S. Army--
Fort Irwin accounted for 21.9% and 12.5% of the Company's total revenue in the
years ended December 31, 1995 and 1996, respectively. A contract with the U.S.
Army--Presidio accounted for 12.0% of the Company's total revenue in the year
ended December 31, 1996. The Company also serves numerous commercial clients,
including large industrial concerns, nuclear power plants, hospitals,
laboratories and other medical institutions, and universities. A substantial
portion of the Company's commercial work represents new contracts awarded by
existing clients. No single commercial client accounted for 10% or more of the
Company's revenue in fiscal years 1995, 1996 or 1997. See "Risk Factors--
Dependence on Federal Government; Limits on Government Spending; Government
Contracting."
SALES AND MARKETING
The Company relies on a direct sales and marketing staff of six employees,
its executive management team and project managers, and brokers and other
intermediaries, to market its waste treatment and field engineering services
nationwide and internationally. Historically, the Company relied on discrete
waste treatment projects and limited term remediation projects that typically
involved planned clean-ups of sites that were contaminated in the normal
course of manufacturing activity or quick response clean-ups of spills. The
Company now targets its marketing efforts on large, multi-year private sector
and government site-specific and term contracts in the areas of LLRW and LLMW
treatment, environmental restoration and D&D.
The Company's key marketing strategy in the waste treatment area is to focus
its resources on emerging or underserved markets in which it has technological
or licensing advantages over existing and potential competitors. The Company
intends to further develop its network of strong client relationships with the
DOD, the DOE, other federal government agencies, leading domestic and foreign
industrial concerns and its other most significant clients, and with major
national and multinational engineering, construction and architectural
engineering firms and other of its co-participants in teams executing large,
multi-year environmental restoration and D&D projects. The Company believes
that these strategies have been validated by the significant number of
additional contracts awarded to it by existing customers for which it
previously provided significant services, and the number of teams on which it
has participated in recent years in the execution of large, multi-year
environmental restoration and D&D projects. See "Risk Factors--Focus on Larger
Projects."
To further promote use of its technologies and to establish strategic
alliances designed to accelerate its penetration of selected Pacific Rim
markets, the Company has entered into exclusive technology transfer
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agreements covering its technologies for Hong Kong, Taiwan, and The People's
Republic of China. These agreements require the Company to provide assistance
and know-how to its alliance partners, which have the right to exclusively
market the Company's technologies in these territories. The Company will share
in any profits generated from these efforts and is also entitled to a royalty
on revenue generated by the use of its vitrification technologies in these
territories. The Company is entitled to independently pursue opportunities
within these territories if its alliance partners decline to do so, and, if
certain minimum revenue is not achieved in these territories within an agreed
upon period, the Company may terminate the agreements.
COMPETITION
In general, the radioactive and hazardous waste management industry is
highly competitive. The Company faces varying levels of competition in its
principal current and planned business lines. The Company believes that it
currently has only one principal competitor, Duratek, for the thermal
treatment of domestic LLRW, and a handful of small to mid-size competitors in
the non-thermal treatment of domestic LLRW. With respect to the domestic LLMW
treatment market, the Company believes that there are only four other
companies currently processing LLMW at their own facilities, all of which are
doing so under limited licenses which restrict them from accepting a broad
spectrum of low-level mixed waste streams. Upon completion of the pending
licensing process for its mixed waste treatment facility, the Company believes
that it will operate the first private facility in the nation licensed to
thermally and non-thermally treat a broad spectrum of low-level mixed waste
streams produced by both commercial and government generators.
The Company is aware that the commercial LLRW disposal site in Clive, Utah
is seeking to expand its acceptance criteria so that it can receive waste with
radioactivity levels higher than it is currently permitted to accept, and that
one or more additional domestic commercial LLRW disposal sites have commenced
the licensing process. Any increase in the number of licensed commercial LLRW
disposal sites in the United States or any decrease in the disposal fees for
LLRW charged by such sites could increase the competition faced by the Company
or reduce the competitive advantage of certain of the Company's treatment
technologies.
The market for D&D and environmental restoration services is highly
competitive, with numerous companies of varying size, geographical presence
and capabilities participating. The Company believes that fewer than six of
these companies have the in-house capability of providing on-site full-service
solutions from site investigation through the waste treatment stage for D&D
and environmental restoration projects involving LLRW and LLMW.
The Company believes that the principal competitive factors applicable to
all areas of its business are price, breadth of services offered, range and
breadth of environmental licenses and permits held, reputation for customer
service and dependability, technical proficiency and environmental integrity,
operational experience, quality of working relations with federal, state and
local environmental regulators and proximity to customers and licensed waste
disposal sites. The Company believes that it is, and will continue to be, able
to compete favorably on the basis of these factors. The Company also believes
that it has several competitive advantages, including its vitrification
technologies, broad range of environmental services offered, ability to
provide in-house full-service environmental solutions at customers' sites, the
range and breadth of environmental licenses and permits held and applied for,
geographical positioning, and integrated technological approach to waste
treatment solutions. Many of the Company's competitors have substantially
greater managerial, technical and marketing resources than the Company, and
there can be no assurance that one or more of the Company's competitors do not
possess or will not develop waste treatment technologies or field service
capabilities that are superior to or more cost effective than those of the
Company. In certain aspects of the Company's business, substantial capital
resources are required for facilities and equipment, and many of the Company's
competitors have substantially greater financial resources than the Company.
See "Risk Factors--Competition."
ENVIRONMENTAL CONTRACTOR RISKS
Although the Company believes that it generally benefits from increased
environmental regulations affecting business, and from enforcement of those
regulations, increased regulation and enforcement also create significant
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risks for the Company. The assessment, remediation, analysis, handling,
treatment and management of radioactive or hazardous substances necessarily
involve significant risks, including the risk of potentially large liabilities
arising from violations of environmental laws and regulations and of
liabilities to customers and third parties for damages arising from performing
services, either of which could have a material adverse effect on the
Company's business, financial condition and results of operations. In
addition, the Company, as a provider of services to federal and other
government agencies, is also subject to the specific risks associated with
government contracting.
In May 1997, the U.S. Army terminated for default its contract with the
Company under which the Company acted as a prime contractor to "surface clear"
ordnance from a U.S. Army firing range at Fort Irwin, California. This
contract was otherwise scheduled to expire in June 1997. The termination
related to services provided by a Company subcontractor, and was based on the
U.S. Army's contention that scrap ordnance had been improperly certified by
the subcontractor as free of hazardous and explosive material. Subsequently,
the U.S. Army also demanded repayment from the Company of alleged
reprocurement costs totaling $945,000. The Company believes that it fully
complied with the terms of the contract and applicable laws and regulations,
and has challenged the default termination in the Court of Federal Claims.
Additionally, the Company believes it has no obligation to make repayments to
the U.S. Army because the costs sought are not proper reprocurement costs. The
Company has tendered the Army's claim to its insurance carrier and believes
that all costs and liability (if any) associated with the claim will be
covered by the Company's comprehensive general liability policy. The matter is
presently being handled on behalf of the Company by its insurer. See "Risk
Factors--Environmental Contractor and Regulatory Matters" and "--Dependence on
Federal Government; Limits on Government Spending; Government Contracting."
RISK MANAGEMENT AND INSURANCE
The Company has adopted a range of risk management programs designed to
reduce potential liabilities, including policies to seek indemnity in its
contracts, other contract administration procedures, and employee health,
safety, training, and environmental monitoring programs. In addition, as a
result of the substantial number of government contracts it has been awarded
over the past several years, the Company has implemented a government
contracts compliance program. Although the Company believes its risk
management programs are appropriate, the Company cannot assure their adequacy
and their failure to adequately protect the Company could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company carries nuclear liability, comprehensive general liability,
comprehensive property damage, workers' compensation and other insurance
coverage that management considers adequate for the protection of the
Company's assets and operations. However, there can be no assurance that the
coverage limits of such policies will be adequate or that insurance will
continue to be available to the Company on commercially reasonable terms in
the future. A successful claim against the Company in excess of its insurance
coverage, or outside the scope of such coverage, could have a material adverse
effect on the Company's business, financial condition and results of
operations. Claims against the Company, regardless of their merit or outcome,
and whether or not insured, may also have an adverse effect on the Company's
reputation, which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Risk Factors--
Potential Environmental Liability and Insurance."
INTELLECTUAL PROPERTY
The Company regards aspects of its waste treatment technologies and know-how
as proprietary and relies primarily on a combination of trade secret and
trademark laws, employee and third party non-disclosure agreements, licenses
from owners of patents and other intellectual property rights, and other
methods to protect such technologies and know-how. The Company presently has a
patent application pending for the SAFGLAS system as incorporating a multi-
zone process chamber; however, there can be no assurance that such application
will be granted. The Company believes that the ownership of patents is not
presently a significant factor in its
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business and that its success does not depend on the ownership of patents.
However, there can be no assurance that the Company will be successful in
protecting the proprietary aspects of its technology, nor that its proprietary
rights will preclude competitors from developing waste treatment technologies
equivalent or superior to that of the Company. In addition, effective
protection for the proprietary aspects of the Company's technologies may be
unavailable or limited in certain foreign countries. While the Company is not
aware that any of its waste treatment technologies infringe the rights of any
third parties, there can be no assurance that third parties will not claim
infringement by the Company with respect to its existing or future waste
treatment technologies. See "Risk Factors--Dependence on and Limited
Protection of Technology and Intellectual Property; Potential Litigation."
The Company from time to time licenses the rights to use the intellectual
property of third parties embodied in certain subsystems of the Company's
technologies. In particular, the Company licenses certain such rights from the
owner of the patented technology embodied in the basic SAFGLAS system melter
and from IET in connection with the design, construction and use of the melter
incorporated into the GASVIT system. The former license is non-exclusive and
royalty-free, but requires the Company to pay to the owner of the patent a
license fee in the amount of $35,000 for each SAFGLAS process chamber built by
the Company during a five-year period. With respect to any melter purchased by
the Company from IET, other than the two units it has initially contracted to
purchase, the Company's license with IET requires the payment of a royalty fee
to IET in the amount of 3% of the gross revenue generated by the Company from
processing radioactive waste using a treatment system incorporating such a
melter. The Company from time to time receives letters of inquiry from the
owners of patents requesting that the Company demonstrate that the technology
licensed to the Company by third parties does not infringe such patents. The
Company routinely refers these letters of inquiry to such licensors, who are
required pursuant to the terms of their license agreements with the Company to
defend the Company against infringement claims asserted by third parties
relating to the licensed technology and to indemnify the Company against any
resulting losses. With respect to each such letter of inquiry previously
received by the Company, the Company has been advised by the licensor that, in
the judgement of the licensor, the licensed technology as used by the Company
did not infringe the subject patents.
The Company requires each of its technical and engineering employees to
enter into standard agreements pursuant to which the employee agrees to keep
confidential all proprietary information of the Company and to assign to the
Company all rights in any proprietary information or technology developed by
the employee during his or her employment or made thereafter as a result of
any inventions conceived or work done during such employment. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use the Company's technology without authorization or to develop similar
technology independently.
ENVIRONMENTAL LAWS AND REGULATIONS; LICENSING PROCESSES APPLICABLE TO LLRW AND
LLMW TREATMENT FACILITIES
Environmental Laws and Regulations. Extensive and evolving environmental
protection laws and regulations have been adopted in the United States during
recent decades in response to public concern over the environment. The
operations of the Company and of the Company's customers are subject to these
evolving laws and regulations. The requirements of these laws and regulations
impose substantial potential liabilities. For example, a failure to comply
with current or future regulations could result in substantial fines,
suspension of production, alteration of manufacturing processes, cessation of
operations, or the expenditure of substantial clean-up costs. The requirements
also create a demand for many of the services offered by the Company.
The Company believes that its compliance with environmental laws and
regulations will not have a material effect on its capital expenditures,
earnings or competitive position, except with respect to capital expenditures
for environmental control facilities. While it does not anticipate that the
amount of such expenditures will be material in 1998, the Company expects that
the amount of such expenditures required to be made in 1999, particularly in
connection with the construction of the mixed waste facility to be sited at
the Company's Richland facilities, will be material.
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Under the Atomic Energy Act of 1954 (the "AEA") and the Energy
Reorganization Act of 1974, the NRC regulates the receipt, possession, use and
transfer of radioactive materials. Pursuant to its authority under the AEA,
the NRC has adopted regulations that address the management and disposal of
LLRW and that require the licensing of commercial LLRW disposal sites.
RCRA provides a comprehensive framework for regulation of the handling,
transportation, treatment, storage and disposal of hazardous waste. Strict
standards are imposed under RCRA on hazardous waste generators and
transporters, and on operators of hazardous waste treatment, storage and
disposal facilities. The Land Disposal Restrictions developed under the
Hazardous and Solid Waste Amendments of 1984 prohibit land disposal of
specified wastes unless these wastes meet or are treated to meet Best
Demonstrated Achievable Technology (BDAT) treatment standards, subject to
certain exemptions. Under current regulations, waste residues derived from
listed hazardous wastes are generally considered to be hazardous wastes
subject to RCRA standards unless they are delisted through a formal rulemaking
process that may last for several years. Liability under RCRA may be imposed
for improper handling, transportation, treatment, storage or disposal of
hazardous wastes, or for failure to take corrective action to address releases
of hazardous wastes.
CERCLA, and subsequent amendments including the Superfund Amendments and
Reauthorization Act ("SARA"), imposes strict, joint and several liability upon
(among other parties) owners or operators of facilities where a release of
hazardous substances has occurred, upon parties who generated hazardous
substances that were released at such facilities and upon parties who arranged
for the transportation of hazardous substances to such facilities. Liability
under CERCLA may be imposed on the Company if releases of hazardous substances
occur at treatment, storage, or disposal sites used by the Company. This
liability potentially extends to off-site storage and disposal facilities used
by the Company, any LLMW treatment and storage facilities owned by the
Company, and releases at a customer's facility caused by the Company. Because
customers of the Company also face the same type of liabilities, CERCLA and
SARA create incentives for potential customers of the Company to avoid off-
site treatment and disposal of hazardous substances in favor of on-site
treatment and recycling.
The Emergency Planning Community Right-to-Know Act, which is part of SARA,
requires full disclosure of certain environmental releases to the public and
contributes to public awareness and activism regarding corporate environmental
management issues. To the extent a generator's waste can be reported as being
recycled, public pressure can be eliminated or significantly reduced and the
generator's image enhanced.
The radioactive and hazardous components of LLMW are governed by separate
sets of laws and regulations discussed above. The radioactive component is
governed by the AEA and is regulated by the DOE for waste at DOE facilities
and by the NRC for commercially generated waste. The hazardous waste component
is governed by RCRA, CERCLA, and/or TSCA, and is regulated by the EPA, and by
the laws of the individual states. The Company designs its LLMW and hazardous
waste treatment and processing systems with the goal of minimizing the
potential for release of hazardous substances into the environment. In
addition, the Company has developed plans to manage and minimize the risk of
CERCLA or RCRA liability, including the training of operators, use of
operational controls and structuring of its relationships with the entities
responsible for the handling of waste materials and by-products.
In transporting radioactive materials, the Company is subject to the
requirements developed by the U.S. Department of Transportation under the
Hazardous Materials Transportation Act, as amended by the Hazardous Materials
Transportation Uniform Safety Act. Shippers and carriers of radioactive
materials must comply with both the general requirements for hazardous
materials transportation and with specific requirements for the transportation
of radioactive materials.
The Clean Air Act of 1970, as amended (the "Clean Air Act"), imposes strict
requirements upon owners and operators of facilities and equipment which emit
pollutants into the environment, including incinerators. Although the Company
believes that its waste treatment systems effectively trap particulates and
prevent hazardous emissions from being released into the environment, the
Clean Air Act may require additional controls.
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The Clean Water Act of 1972 (the "Clean Water Act") establishes standards,
permits and procedures for controlling the discharge of pollutants from
industrial and municipal wastewater sources. The Company believes that its
waste treatment technologies generally will not be subject to the water
pollution control requirements of the Clean Water Act because they are
designed to have no residual wastewater discharge.
TSCA provides the EPA with the authority to regulate certain commercially
produced chemical substances. TSCA also established a comprehensive regulatory
program for polychlorinated biphenyls ("PCBs") which is analogous to the RCRA
program for hazardous waste.
Other federal, state, and local environmental, health and safety
requirements may also be applicable to the Company's business. For example,
the federal Occupational Safety and Health Act imposes requirements designed
to protect the health and safety of workers, and the NRC has set regulatory
standards for worker exposure to radioactive materials. In addition, the
requirements of various other statutes, including the FFCA and the Uranium
Mill Tailings Radiation Control Act, may create opportunities for additional
use of the Company's services.
Licensing Processes Applicable to LLRW and LLMW Treatment Facilities. The
process of applying for and obtaining the licenses and permits necessary to
operate a radioactive waste treatment facility is lengthy and complex. The
basic requirement is to obtain a radioactive material license from the state
in which the facility is to be located. The first step in this process is
securing site and land use designation approval from local authorities. Most
local authorities require a public hearing before such an approval is granted.
Due to public concern about the safety of radioactive material handling, the
initial site approval step is often the most difficult. Upon site approval,
the applicant must submit an application to the NRC or the state's nuclear
regulatory agency if the state has signed an agreement to implement the NRC's
regulations. This stage of the process may take two years or longer, and in
some cases, may result in denial of a license. If the applicant intends to use
a thermal treatment method at its site, then additional permits would be
needed from the local authorities responsible for implementing the Clean Air
Act regulations. The process for approving a thermal treatment method will
generally include public hearings, environmental assessments and numerous
interactions with regulators to resolve licensing and permitting issues.
The licensing requirements applicable to a mixed waste facility are even
more complex. In addition to the steps summarized above, the applicant must
submit a RCRA Part A and Part B permit application to the appropriate
agencies. For processing of PCBs, a TSCA permit from the EPA must also be
obtained. In parallel with the RCRA/TSCA Part B permitting process, the
applicant must submit an application to the agencies that issue radioactive
material licenses and those that issue permits pursuant to the Clean Air Act.
Several revisions to each document submitted may have to be made before the
review process is complete and the application is granted. From the time the
initial application is filed, the mixed waste licensing and permitting process
could take as long as five years.
The Company initiated the mixed waste licensing process for its Richland
facilities in 1995 and expects to be able to commence non-thermal mixed waste
treatment there in the second quarter of 1999. In March of 1995, the Company
submitted a siting application to the Washington State Department of Ecology
("WDOE"). After conducting two different public hearings, WDOE approved the
Company's siting application in December of 1995. Immediately after procuring
this approval, the Company submitted a RCRA Part A and Part B permit
application to WDOE for an integrated waste treatment plant utilizing
stabilization, macro-encapsulation, physical extraction and other non-thermal
treatment processes. In 1996, the application was amended to include the
processing of mixed wastes using the GASVIT thermal treatment technology. A
copy of the application was also submitted to the EPA for a joint EPA/WDOE
permitting process covering PCBs under TSCA regulation. The Company is at
present involved in negotiations with the agencies to resolve their comments
thereon. The next step in the permitting process is the development of the
permit language by the agencies and the holding of public hearings to solicit
public comments, as required by RCRA and TSCA regulations. The Company
presently
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anticipates receiving final approval from WDOE and the EPA of its applications
relating to non-thermal and thermal treatment prior to the end of the fourth
quarter of fiscal 1998.
In the event that the Company were to engage in the business of treating
LLRW and LLMW received from foreign generators at its fixed facilities, it
would be required to obtain a radioactive waste import permit from the NRC.
The Company's fixed facilities may have to obtain permits under the Clean
Water Act, the Clean Air Act, RCRA and state equivalents. The requirement to
obtain such permits depends upon a facility's location and the expected
emissions from the facility. Additional state and local licenses or approvals
may also be required.
EMPLOYEES
At December 31, 1997, the Company employed 168 full-time employees. To date,
the Company has been successful in attracting and retaining qualified
managerial and technical personnel, although there can be no assurance that
this success will continue. See "Risk Factors--Dependence on Key Personnel."
At December 31, 1997, 34 of the Company's employees were represented by
labor unions under collective bargaining agreements. The Company cannot
predict whether any of its employees who currently are not represented by
unions will elect to be so represented in the future. The Company considers
its relations with its employees to be good and has never experienced a work
stoppage or strike.
PROPERTIES AND FACILITIES
The Company's principal properties, all of which are owned by the Company,
are located in Richland, Wash., Fremont, Calif. and Aiken, S.C., and occupy
45, four and 30 acres, respectively. The facilities sited on the Richland
property presently consist of 13 buildings, covering an area of approximately
100,000 square feet, devoted to the Company's existing LLRW and future LLMW
treatment operations. The Company presently plans to construct two additional
buildings on this site of approximately 14,000 square feet in aggregate. The
facilities sited on the Fremont property include a 10,000 square foot
corporate office building, as well as an LLRW storage area. The Company's
Aiken property has not been developed to date.
In addition, the Company leases an approximately 1,200 square foot project
management office in Honolulu, Hawaii, and an approximately 2,500 square foot
project management office in Oak Ridge, Tennessee (approximately one mile from
the DOE's Oak Ridge Reservation). The Honolulu lease expires in June 2000,
while the Oak Ridge lease is month-to-month.
The Company's Fremont property is encumbered by a deed of trust (the "First
Deed of Trust") securing the performance of the Company under a $1.5 million
Promissory Note held by Midland Loan Services. The First Deed of Trust
provides for an interest rate of 9.5% per annum, a maturity date of December
2001, monthly payments of principal and interest of $13,736 and a balloon
payment at maturity. At December 31, 1997, the principal amount secured by the
First Deed of Trust was $1,456,586.
The Company's Fremont property is also encumbered by a second deed of trust
(the "Second Deed of Trust") securing the performance of the Company under a
$400,000 Term Loan Agreement with Sanwa Bank California. The Term Loan
Agreement provides for a variable annual interest rate of prime plus 1.75%, a
maturity date of September 30, 2002, and monthly payments of principal and
interest of $6,667. At December 31, 1997, the principal amount secured by the
Second Deed of Trust was $379,999.
The Company's Richland property is encumbered by a deed of trust (the
"Richland Deed of Trust") securing the payment by the Company of a $750,000
Promissory Note held by West One Bank (the "West One
34
<PAGE>
Note"). The West One Note provides for an interest rate of 8.75% during the
first 42 months and an interest rate of prime plus 2.75% (with a ceiling of
12% and a floor of 5.5%) during the final 42 months until maturity. At
December 31, 1997, the principal balance secured by the Richland Deed of Trust
was $342,589. There are no encumbrances on the Company's Aiken, South Carolina
property.
The Company believes that its existing and planned facilities will support
its operations for the foreseeable future and are adequately covered by
insurance.
LEGAL PROCEEDINGS
The Company is not a party to any material litigation.
35
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers, directors and director designees of the Company and
their ages as of the date of this Prospectus are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Doreen M. Chiu.......... 44 Chairman of the Board, President and Chief Executive Officer
Frank Y. Chiu........... 44 Executive Vice-President and Director
William M. Hewitt....... 51 President--Waste Management Services and Director Designee(1)
Steven J. Guerrettaz.... 52 Chief Financial Officer and Director Designee(1)
Fred Feizollahi......... 52 Vice-President--Technology and Engineering
Eric C. Su.............. 37 Vice-President--Marketing and Planning
Edward L. Vinecour...... 59 Director
Andrew C. Kadak......... 51 Director Designee(1)(2)
Earl E. Gjelde.......... 53 Director Designee(1)(2)
Yasushi Chikagami....... 59 Director Designee(1)(2)
</TABLE>
- ---------------------
(1) Each Director Designee has been elected, and has consented to become, a
director of the Company effective upon the consummation of the Offering.
(2) Has agreed to serve as member of Audit and Compensation Committees from
effective date of election to the Board.
Doreen M. Chiu has served as President, Chief Executive Officer and Chairman
of the Board since joining the Company in 1984. Prior to joining the Company,
Ms. Chiu owned her own certified public accounting firm. Ms. Chiu is a
California CPA and holds a Bachelor of Arts degree in Business Administration
from the University of Wisconsin. Ms. Chiu is the wife of Frank Chiu.
Frank Y. Chiu joined the Company in 1980 as Financial Controller, became
Vice-President and a director of the Company in 1984, and became Executive
Vice-President in 1992. Mr. Chiu holds a Bachelor of Arts degree in Business
Administration and a Master's degree in Business Administration from the
University of Wisconsin. Mr. Chiu is the husband of Doreen Chiu.
William M. Hewitt joined the Company in April 1997 as President--Waste
Management Services, and has been elected and has agreed to serve as, a
director of the Company effective upon the consummation of the Offering. Mr.
Hewitt has over 25 years of domestic and international professional management
experience, primarily in the waste minimization and environmental fields. From
1994 until joining the Company, Mr. Hewitt was the President of Hewitt
Management Services, Inc., a consulting firm providing strategic planning and
other business advice in the areas of pollution prevention, waste minimization
and strategic environmental management. During this period, Mr. Hewitt also
served as a Group President of Philip Environmental Services Companies, in
which capacity he designed and implemented the strategic, organizational and
marketing approach for integrating that group of companies. From 1990 to 1994,
he held a number of positions with companies in the WMX Technologies
Affiliates group, including Vice-President, Strategic Planning, of Rust
International, Inc. from 1993 to 1994, and President of Rust Federal
Environmental Services (formerly CWM FES) from 1991 to 1993. Prior to joining
WMX, Mr. Hewitt was the Vice-President for Major Programs and served on the
Board of Directors of Roy F. Weston Inc. Mr. Hewitt holds a Bachelor of
Science degree in Chemical Engineering from the University of Rhode Island and
a Master of Science degree in Mechanical/Nuclear Engineering from Catholic
University of America.
36
<PAGE>
Steven J. Guerrettaz has served as Chief Financial Officer since joining the
Company in December 1997, and has been elected, and has agreed to serve as, a
director of the Company effective upon the consummation of the Offering. From
May 1994 until joining the Company, Mr. Guerrettaz was the Vice President--
Finance of Thermatrix Inc., a publicly traded supplier of flameless thermal
oxidation equipment for the thermal treatment of volatile organic compounds
and hazardous air pollutants. From 1988 to 1994, Mr. Guerrettaz was the Vice
President--Regional Controller for Chemical Waste Management, Inc. Mr.
Guerrettaz is a former audit partner of Arthur Andersen LLP. He is a
California CPA and holds a Bachelor of Science degree in accounting from San
Jose State University.
Fred Feizollahi joined the Company in 1995 as Director of Technology and
Engineering, and since 1995 has been Vice-President--Technology and
Engineering. Mr. Feizollahi has over 26 years of experience in radioactive and
hazardous waste remediation and management, decontamination and
decommissioning, and the design and operation of waste treatment equipment and
technologies. Prior to joining the Company, he worked as a Senior Project
Manager for Morrison Knudsen from 1991 to 1995 and as a Staff Engineer/Project
Engineer for Bechtel Power Corporation from 1981 to 1991. Mr. Feizollahi, who
holds a Bachelor of Science degree in Mechanical Engineering from the
University of Maryland, is a registered California Professional Engineer.
Eric C. Su has served as Vice-President--Marketing and Planning since 1995.
Mr. Su joined the Company in 1993 as Director of Business Development. Prior
to joining the Company, he acted as a sales and marketing consultant for a
number of companies, including the Company, from 1990 to 1993. From 1987 to
1990, Mr. Su held various marketing positions with General Electric Company.
Prior thereto, he held positions in sales and marketing with W.R. Grace and
Company from 1984 to 1987, and in process engineering with E.I. DuPont de
Nemours and Company from 1982 to 1984. Mr. Su holds a Bachelor of Science
degree in Chemical Engineering from Arizona State University.
Edward L. Vinecour has served as a director of the Company since 1984. Mr.
Vinecour joined the Company in 1984, serving as its Vice President--Marketing
before retiring and becoming a consultant to the Company in 1992. Mr. Vinecour
has a Bachelor of Science degree in Biochemistry from Suffolk University. Mr.
Vinecour's term as a director expires upon the consummation of the Offering.
Andrew C. Kadak has been elected, and has agreed to serve as, a director of
the Company effective upon the consummation of the Offering. Mr. Kadak has
over 30 years of experience in the nuclear power industry. Since 1997 he has
been President of Kadak Associates, Incorporated, a firm providing consulting
services to the nuclear power industry. From 1989 to 1997, Mr. Kadak served as
President and Chief Executive Officer of Yankee Atomic Electric Company
("Yankee"), a company which operates nuclear power plants in the Northeastern
United States. In that capacity, he oversaw the decommissioning of Yankee's
nuclear power plant in Rowe, Massachusetts. Mr. Kadak serves on the Board of
Directors of the American Nuclear Society, a nuclear industry trade group, and
is currently a visiting Senior Lecturer in the Nuclear Engineering Department
of the Massachusetts Institute of Technology ("MIT"). He holds a Bachelor of
Science degree in Mechanical Engineering from Union College, a Master's degree
in Business Administration from Northeastern University and a Master of
Science degree and a Ph.D. in Nuclear Engineering from MIT.
Earl E. Gjelde has been elected, and has agreed to serve as, a director of
the Company effective upon the consummation of the Offering. Since 1993 Mr.
Gjelde has been Managing Director of Summit Energy Group, Ltd., an energy
development company. From 1991 to 1993, he served as Vice President of Waste
Management Inc., and from 1989 to 1993 as Vice President of Chemical Waste
Management, Inc. From 1982 to 1989, he served in a number of senior federal
government positions, including Under Secretary of the U.S. Department of the
Interior ("Interior") from 1987 to 1989, and as Chief Operating Officer of
Interior from 1985 to 1989. Mr. Gjelde is currently a member of the boards of
directors of two publicly held companies: DIDAX, Inc., a company in the
Internet field, and Electrosource, Inc., a technology company specializing in
metals and bi-metals extrusion and battery development and manufacturing. He
holds a Bachelor of Science degree in Engineering from Oregon State
University.
37
<PAGE>
Yasushi Chikagami has been elected, and has agreed to serve as, a director
of the Company effective upon the consummation of the Offering. Since 1993,
Mr. Chikagami has served as the Chairman of the Board of Keian K.K. Company, a
Japanese trading company. Prior thereto, he founded in 1979 and served as
Chairman and President from 1979 to 1993 of GVC Corporation, a Taiwanese
company that manufactures electronic computer equipment. In addition to being
a member of the board of directors of GVC Corporation, Mr. Chikagami is
currently a member of the boards of directors of two U.S. publicly held
companies: Trident Microsystems, Inc., a company specializing in computer
videographics and multimedia products, and Silicon Storage Technology, Inc., a
supplier of computer memory devices. He holds a Bachelor of Science degree in
Engineering from National Taiwan University and a Master of Science degree in
the same field from National Tokyo University..
BOARD OF DIRECTORS
There are currently three members of the Board, with the number of directors
increasing to seven upon the consummation of the Offering. The directors serve
until the next annual meeting of shareholders or until successors are elected
and qualified. The Company's executive officers are appointed by and serve at
the discretion of the Board.
The Board has established an Audit Committee and a Compensation Committee.
The functions of the Audit Committee include recommending to the Board the
selection and retention of independent auditors, reviewing the scope of the
annual audit and the progress and results of the auditors' work, and reviewing
the Company's financial statements and internal accounting and auditing
procedures. The functions of the Compensation Committee include establishing
the compensation of the Chief Executive Officer, reviewing and approving
executive compensation policies and practices, reviewing salaries and bonuses
for certain executive officers, and considering such other matters as the
Board may, from time to time, delegate to the Compensation Committee.
Each non-employee director will receive a cash fee of $2,000 per Board
meeting attended and an additional $2,000 per Board committee meeting attended
if such committee meeting is held on a day different from that of a Board
meeting. The directors are reimbursed for expenses incurred in connection with
the performance of their services as directors.
Non-Employee Directors' Stock Option Plan
In February 1998, the Board adopted the Company's 1998 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan") to provide for the
automatic grant of options to purchase shares of Common Stock to non-employee
directors of the Company. The Directors' Plan is administered by the Board. To
date, no options have been granted under the Directors' Plan.
The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 200,000. Pursuant to the terms of
the Directors' Plan, each person serving as a director of the Company who is
not an employee of the Company (a "Non-Employee Director") shall automatically
be granted an option to purchase 20,000 shares of Common Stock upon the later
of the date such person first becomes a Non-Employee Director or the date of
the effectiveness of the initial public offering of the Common Stock, with
5,000 of such shares vesting immediately and the balance vesting in three
equal installments on the three succeeding anniversaries of the grant date.
The exercise price of the options granted under the Directors' Plan must
equal or exceed the fair market value of the Common Stock on the date of
grant. No option granted under the Directors' Plan may be exercised after the
expiration of ten years from the date it was granted. Options granted under
the Directors' Plan are generally non-transferable except by will or by the
laws of descent and distribution. The Directors' Plan will terminate at the
discretion of the Board; provided, however, that in no event will the term of
the Directors' Plan extend beyond the tenth anniversary of its adoption by the
Board.
In the event of certain changes of control of the Company (as defined in the
Directors' Plan), any outstanding options will automatically become fully
vested and will terminate if not exercised prior to such change of control.
38
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During its fiscal year ended December 31, 1997, the Company had no
compensation committee or other committee of the Board performing similar
functions, and all decisions concerning compensation of executive officers
were made by the Chairman of the Board. On January 14, 1998, the Board created
a Compensation Committee consisting of Doreen M. Chiu, Frank Y. Chiu and
Edward L. Vinecour. No interlocking relationship exists between any member of
the Company's Compensation Committee and any member of any other company's
board of directors or compensation committee. See "Management--Executive
Officers and Directors."
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid
by the Company during the fiscal year ended December 31, 1997, to the Chief
Executive Officer and the three other most highly compensated executive
officers of the Company whose total salary and bonus during such year exceeded
$100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------
NAME AND PRINCIPAL POSITION SALARY BONUS
--------------------------- ---------- ---------
<S> <C> <C>
Doreen M. Chiu......................................... $ 150,000 $ 0
Chief Executive Officer
Frank Y. Chiu.......................................... 120,000 0
Executive Vice-President
William M. Hewitt(1)................................... 103,269 30,000
President--Waste Management Services
Eric C. Su............................................. 108,127 0
Vice-President--Marketing and Planning
</TABLE>
- ---------------------
(1) Mr. Hewitt joined the Company in April 1997 at an initial annual base
salary of $150,000. The amount of salary reflected in the table is the
prorated amount paid to him in 1997.
Steven J. Guerrettaz was appointed to the position of Chief Financial
Officer of the Company in December 1997, with an initial annual base salary of
$150,000. Options to purchase an aggregate of 60,000 shares of Common Stock,
at an exercise price of $5.00 per share, have been granted to Mr. Guerrettaz.
The options vest in four equal installments during the period beginning on
June 30, 1998 and ending on December 31, 2000, with accelerated vesting as to
options covering 10,000 shares upon an initial public offering of the Common
Stock and as to options covering 20,000 shares upon the Company's obtaining
specified financing for its LLMW treatment facility.
Each of the Named Executive Officers receives perquisites and other personal
benefits from the Company, the aggregate amount of which during fiscal 1997
did not exceed the lesser of $50,000 or 10% of the annual base salary reported
for such Named Executive Officer. The Named Executive Officers did not receive
any additional compensation in fiscal 1997. To date, the Company has not made
any awards under its 1998 Stock Ownership Incentive Plan to any of the Named
Executive Officers or any other person. None of the Named Executive Officers
is a party to an employment agreement with the Company.
39
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to the Named Executive Officers during fiscal 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE FAIR VALUE TERM(4)
OPTIONS EMPLOYEES PRICE PER AT DATE EXPIRATION --------------------------
NAME GRANTED IN YEAR SHARE OF GRANT DATE 0% 5% 10%
---- ---------- ---------- --------- ---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Doreen M. Chiu(1)....... 150,000 27.8% $1.00 $2.00 12/31/06 $150,000 $338,668 $628,123
Frank Y. Chiu(1)........ 159,900 29.7% 1.00 2.00 12/31/06 159,900 361,021 669,579
William M. Hewitt(2).... 70,000 15.9% 5.00 5.00 03/31/07 -- 220,113 557,810
Eric C. Su(3)........... 20,000 3.7% 1.00 2.00 12/31/06 20,000 45,156 83,750
</TABLE>
- -------------------
(1) 500 of the option shares vest on each of December 31, 1997, 1998 and 1999,
the balance vesting on December 31, 2000.
(2) 36,666 of the option shares vest on May 1, 1998, and 16,667 of the option
shares vest on each of May 1, 1999 and May 1, 2000.
(3) 500 of the option shares vest on December 31, 1997, 9,500 of the option
shares vest on December 31, 1998 and the remaining 10,000 option shares
vest on December 31, 1999.
(4) This column shows the hypothetical gains or option spreads of the options
granted based on (i) the fair market value of the Common Stock on the date
of grant, as determined by the Board, and (ii) assumed annual compound
stock appreciation rates of 0%, 5% and 10% over 10 years. The assumed
rates of appreciation are mandated by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of future Common Stock prices.
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding the year-end
value of options held by the Named Executive Officers. No options were
exercised by the Named Executive Officers during 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT VALUE OF UNEXERCISED
TO UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Doreen M. Chiu........... 500 149,500 $ 3,000 $ 897,000
Frank Y. Chiu............ 3,500 222,400 23,700 1,391,100
William M. Hewitt........ 0 70,000 0 140,000
Eric C. Su............... 70,500 19,500 486,000 117,000
</TABLE>
- -------------------
(1) Based on the estimated fair market value of the Common Stock as of
December 31, 1997 ($7.00), as determined by the Board, minus the per share
exercise price, multiplied by the number of shares underlying the option.
40
<PAGE>
EMPLOYEE BENEFIT PLANS
Stock Ownership Incentive Plan
In February 1998, the Board adopted the Company's 1998 Stock Ownership
Incentive Plan (the "Incentive Plan"). The Incentive Plan authorizes the award
of stock options, shares of restricted stock and performance units (which may
be paid in cash or shares of Common Stock). The Incentive Plan reserves for
issuance an aggregate of 500,000 shares of Common Stock, no more than 250,000
shares of which may be issued in the form of shares of restricted stock. The
Incentive Plan is intended to advance the interests of the Company by
encouraging the Company's employees who contribute to the Company's long-term
success and development to acquire and retain an ownership interest in the
Company. To date, no awards have been made under the Incentive Plan.
The Incentive Plan will be administered by the Board. The Board will select
employees to receive awards under the Incentive Plan and determine the terms,
conditions and limitations applicable to each award. Each award will be
evidenced by a grant letter from the Board to the recipient setting forth the
terms and conditions of the award. The Incentive Plan will terminate at the
discretion of the Board; provided, however, that in no event will the term of
the Incentive Plan extend beyond the tenth anniversary of its adoption by the
Board.
Stock options granted pursuant to the Incentive Plan may either be incentive
stock options ("ISOs") intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or stock options not intended
to so qualify. Each stock option awarded under the Incentive Plan must have an
exercise price equal to at least 100% of the fair market value of the Common
Stock on the date of grant, and ISOs granted to any employee possessing more
than 10% of the combined voting power of all classes of stock of the Company
must have an exercise price equal to at least 110% of such fair market value.
Optionees may exercise options under the Incentive Plan by paying cash, by
tendering shares of Common Stock, by using a cashless exercise procedure
provided for in the Incentive Plan, or by a combination thereof, as permitted
by the Board. Options vest in equal installments over a five year period and,
upon a change of control of the Company (as defined in the Incentive Plan),
any outstanding options become fully vested and immediately exercisable.
Options granted under the Incentive Plan are generally non-transferable except
by will or by the laws of descent and distribution. No option granted under
the Incentive Plan may be exercised after the expiration of ten years from the
date it was granted.
Employee Stock Purchase Plan
In February 1998, the Board approved the Company's Employee Stock Purchase
Plan (the "Purchase Plan") covering an aggregate of 200,000 shares of Common
Stock. The Purchase Plan is intended to qualify as an employee stock purchase
plan within the meaning of Section 423 of the Code. Under the Purchase Plan,
the Board may authorize participation by eligible employees of the Company,
including officers, in periodic offerings following the adoption of the
Purchase Plan. The offering period for any offering will be determined by the
Board, but in no event will be more than 27 months.
Employees are eligible to participate if they are employed by the Company or
an affiliate of the Company designated by the Board. Employees who participate
in an offering may have up to 15% of their earnings (provided that such amount
does not exceed $25,000 in value per calendar year) withheld pursuant to the
Purchase Plan and applied, on specified dates determined by the Board, to the
purchase of shares of Common Stock. The price of Common Stock purchased under
the Purchase Plan will be equal to 85% of the lower of the fair market value
of the Common Stock on the commencement date of each offering period or the
relevant purchase date. Employees may end their participation in the offering
at any time during the offering period, and participation ends automatically
on termination of employment with the Company.
In the event of certain changes of control of the Company (as defined in the
Purchase Plan), the Board has discretion to provide that each right to
purchase Common Stock will be assumed or an equivalent right substituted by
the successor corporation, or the Board may shorten the offering period and
provide for all sums
41
<PAGE>
collected by payroll deductions to be applied to purchase stock immediately
prior to the change in control. The Purchase Plan will terminate at the
discretion of the Board.
401(k) Plan
In 1995, the Company established a tax-qualified employee savings and
retirement plan (the "401(k) Plan") covering all of its employees. Pursuant to
the 401(k) Plan, employees may elect to reduce their current compensation by
up to the lower of 15% of such compensation or the annual limit prescribed by
statute ($9,500 in 1997) and contribute the amount of such reduction to the
401(k) Plan. The 401(k) Plan allows for matching contributions to the 401(k)
Plan by the Company, such matching and the amount of such matching to be
determined at the sole discretion of the Board. To date, no such matching
contributions have been made with respect to the 401(k) Plan. The trustee
under the 401(k) Plan, at the direction of each participant, invests the
assets of the 401(k) Plan in numerous investment options. The 401(k) Plan is
intended to qualify under Section 401 of the Code so that contributions by
employees to the 401(k) Plan, and income earned on plan contributions, are not
taxable until withdrawn, and so that the contributions by employees will be
deductible by the Company when made.
LIMITATION ON DIRECTORS' LIABILITY
The Company's Articles of Incorporation (the "Articles") provide that,
pursuant to the California Corporations Code, the liability of the directors
of the Company for monetary damages shall be eliminated to the fullest extent
permissible under California law. This is intended to eliminate the personal
liability of a director for monetary damages in an action brought by, or in
the right of, the Company for breach of a director's duties to the Company or
its shareholders. This provision in the Articles does not eliminate the
directors' fiduciary duty and does not apply to certain liabilities: (i) for
acts or omissions that involve intentional misconduct or a knowing and
culpable violation of law; (ii) for acts or omissions that a director believes
to be contrary to the best interests of the Company or its shareholders or
that involve the absence of good faith on the part of the director; (iii) for
any transaction from which a director derived an improper personal benefit;
(iv) for acts or omissions that show a reckless disregard for the director's
duty to the Company or its shareholders in circumstances in which the director
was aware, or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the Company or its
shareholders; (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
Company or its shareholders; (vi) with respect to certain transactions or the
approval of transactions in which a director has a material financial
interest; and (vii) expressly imposed by statute for approval of certain
improper distributions to shareholders or certain loans or guarantees. This
provision also does not limit or eliminate the rights of the Company or any
shareholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care.
The inclusion of the above provision in the Articles may have the effect of
reducing the likelihood of shareholder derivative suits against directors and
may discourage or deter shareholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Company and its
shareholders. The Company believes that it is the position of the Securities
and Exchange Commission (the "Commission") that insofar as the foregoing
provision may be invoked to disclaim liability for damages arising under the
Securities Act, the provision is against public policy as expressed in the
Securities Act and is therefore unenforceable. The Company believes that the
foregoing provision of its Articles is necessary to attract and retain
qualified persons as directors.
42
<PAGE>
CERTAIN TRANSACTIONS
The following is a summary of certain transactions to which the Company was
or is a party and in which certain executive officers, directors or
shareholders of the Company had or have a direct or indirect material
interest.
From 1992 to 1997, Doreen M. Chiu, the Company's Chairman of the Board and
Chief Executive Officer, extended a series of loans to the Company, each of
which is repayable in full upon demand (collectively, the "Loan"). The Loan,
which is unsecured, bears interest at an annual rate of 10%, payable
concurrently with principal. The outstanding principal balance of the Loan,
including accrued interest, at December 31, 1997 was $1,280,180.
Doreen M. Chiu and Frank Y. Chiu, the Executive Vice-President and a
director of the Company, have each guaranteed the obligations of the Company
under (i) a credit facility between the Company and Sanwa Bank California, up
to a maximum principal liability amount of $8,000,000; (ii) a Promissory Note
in the principal amount of $3,000,500 held by Safeco Credit Company, Inc.;
(iii) a Term Loan Agreement in the principal amount of $400,000 held by Sanwa
Bank California; (iv) an Equipment Lease between the Company and Great Western
Leasing that provides for an aggregate rental amount of $215,673; (v) an
Equipment Lease between the Company and The CIT Group/Equipment Financing,
Inc. that provides for an aggregate rental amount of $174,640; and (vi) a
Commercial Lease Agreement between the Company and California Thrift and Loan
with an aggregate rental amount of $125,767.
In connection with the sale by the Company of shares of Preferred Stock,
Doreen M. Chiu and Frank Y. Chiu entered into a Co-Sale and Put Option
Agreement with the Company and each purchaser of such shares (the "Co-Sale
Agreement"), pursuant to which Mr. and Mrs. Chiu are obligated to purchase
shares of the Preferred Stock from the holders in the event that the Company
fails to redeem such shares in accordance with the Company's Restated Articles
of Incorporation or in the event of a sale of Common Stock by Mr. and Mrs.
Chiu in contravention of the rights to participate pro rata in any such sale
conferred on such holders by the terms of the Co-Sale Agreement. The
obligations of Mr. and Mrs. Chiu to purchase shares of Preferred Stock under
the Co-Sale Agreement are secured by a security interest in certain of their
personal assets.
In connection with the repurchase by the Company of all of the shares of
Common Stock owned by him, Edward L. Vinecour, a director of the Company, in
1992 entered with the Company into (i) a Consultant Agreement, pursuant to
which, in consideration of certain future consulting services to be rendered
by Mr. Vinecour to the Company, the Company agreed to pay him consulting fees
in a monthly amount of $5,000 for a period of 10 years commencing in August of
1992 and assumed the payment obligations under a mortgage loan with a then
remaining principal balance of $146,351, requiring monthly mortgage payments
of $1,816 over a period of 15 years, and (ii) a Non-Competition Agreement,
pursuant to which, in consideration of Mr. Vinecour's agreement not to compete
with the business of the Company, the Company agreed to pay him the sum of
$290,000 in installments. Of the original sum of $290,000 due to Mr. Vinecour
under the Non-Competition Agreement, $65,000 has been paid by the Company as
of December 31, 1997, with Mr. Vinecour agreeing to extend payment of the
entire balance until the year 2000.
In connection with the issuance of certain bonds, undertakings and other
instruments of guarantee in favor of the Company, Doreen M. Chiu and Frank Y.
Chiu have each executed (i) a blanket Indemnity Agreement in favor of ACTSTAR
Insurance Company ("ACTSTAR"), indemnifying ACTSTAR against any losses that
ACTSTAR may incur in connection with the issuance of any such bonds,
undertakings or other instruments of guarantee, and (ii) a blanket Continuing
Agreement of Indemnity-Contractor's Form for the benefit of Reliance Insurance
Company, United Pacific Insurance Company, Reliance National Indemnity Company
and Reliance Surety Company, indemnifying such entities against any losses
that such entities may incur in connection with the issuance of any such
bonds, undertakings or other instruments of guarantee. As of December 31,
1997, the potential aggregate liability of Mr. and Mrs. Chiu under these
blanket indemnities was approximately $7 million.
The Company believes that each of the foregoing transactions was on terms at
least as favorable to the Company as those that could have been obtained from
nonaffiliated third parties. The Company currently intends that any future
transactions with affiliates of the Company will be on terms at least as
favorable to the Company as those that can be obtained from nonaffiliated
third parties.
43
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of December 31, 1997, and immediately following
the completion of the Offering, by (i) each person who is known by the Company
to own beneficially more than 2.5% of the outstanding shares of Common Stock,
(ii) each director, director designee and Named Executive Officer having
beneficial ownership of Common Stock, and (iii) all executive officers,
directors and director designees as a group:
<TABLE>
<CAPTION>
PERCENT OF SHARES
OUTSTANDING
-----------------
NAME AND ADDRESS OF BENEFICIAL SHARES BENEFICIALLY BEFORE AFTER
OWNER(2) OWNED(1) OFFERING OFFERING
------------------------------ ------------------- -------- --------
<S> <C> <C> <C>
Doreen M. Chiu(3)**................... 2,514,926 21.84% 19.03%
First Taiwan(4)**..................... 934,360 8.11% 7.07%
Chi-San Fang**........................ 685,993 5.95% 5.19%
George Doubleday**.................... 501,843 4.36% 3.80%
First Formosa(5)**.................... 453,030 3.93% 3.43%
Liang Lo Ching Yung**................. 375,000 3.26% 2.84%
Chan Mei Ngan**....................... 373,000 3.24% 2.82%
Jeannette Ching-Tsun**................ 340,000 2.95% 2.57%
Bo-Yuan Chiu**........................ 333,333 2.89% 2.52%
Alice Eng**........................... 325,553 2.83% 2.46%
Yau Tin Kam**......................... 295,499 2.57% 2.24%
Edward L. Vinecour.................... 100,000 * *
Eric C. Su............................ 80,500 * *
William M. Hewitt..................... 36,666 * *
All executive officers, directors and
director designees as a group
(9 persons).......................... 2,787,092 23.66% 20.67%
</TABLE>
- ---------------------
* Less than 1%.
** Each person named in the above table whose name is followed by "**" has
entered into a lock-up agreement generally providing that such person will
not sell or otherwise dispose of Common Stock for a period of 180 days
after this Prospectus without the prior written consent of Van Kasper &
Company, and will sell Common Stock only subject to certain conditions on
sale for an additional 180 days thereafter. See "Underwriting."
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Common Stock
subject to options or warrants held by that person that are currently
exercisable, or will become exercisable within 60 days from the date
hereof, are deemed outstanding. Such shares, however, are not deemed
outstanding for purposes of computing the percentage ownership of any
other person.
(2) The address of each beneficial owner identified is care of the Company,
47375 Fremont Boulevard, Fremont, California 94538. Each person has sole
voting and investment power over the shares of Common Stock listed
opposite his or her name, subject to community property laws where
applicable.
(3) Includes 3,500 shares beneficially owned by spouse.
(4) First Taiwan Investment and Development, Inc. ("FTID"), owns 474,532
shares of Common Stock; First Taiwan Venture Capital, an affiliate of
FTID, owns 211,461 shares of Common Stock. Shares beneficially owned by
First Taiwan also include 248,367 shares owned by Hang-Chien Hsu, the
Chairman of FTID.
(5) First Formosa Technology Corporation ("FFTC") owns 250,000 shares of
Common Stock; First Formosa Technology II Corporation and First Formosa
Technology II Investment Corporation, each of which is an affiliate of
FFTC, own respectively 166,666 and 36,364 shares of Common Stock.
44
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description of the capital stock of the Company and material
provisions of the Articles is a summary and is qualified in its entirety by
the provisions of the Articles, which have been filed as an exhibit to the
Company's Registration Statement of which this Prospectus is a part.
The authorized capital stock of the Company currently consists of 20,000,000
shares of Common Stock, no par value per share ("Common Stock"), of which
7,532,301 shares are currently outstanding, and 1,000,000 shares of Preferred
Stock, of which 900,000 shares are currently outstanding. As of December 31,
1997, there were 66 record holders of the Common Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the shareholders. The holders of
Common Stock are entitled to cumulative voting rights with respect to the
election of directors so long as at least one shareholder has given notice at
the meeting of shareholders prior to the voting of that shareholder's desire
to cumulate votes. Under cumulative voting, each shareholder may give any one
candidate whose name is placed in nomination prior to the commencement of
voting a number of votes equal to the number of directors to be elected,
multiplied by the number of votes to which the shareholder's shares are
normally entitled, or distribute such number of votes among as many
candidates, in whatever proportions, as the shareholder sees fit. The effect
of cumulative voting is that the holders of a majority of the outstanding
shares of Common Stock may not be able to elect all of the Company's
directors. Subject to preferences that may be applicable to any shares of
preferred stock issued in the future, holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board out of funds
legally available therefor. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably with the holders of any then outstanding
preferred stock in all assets remaining after payment of liabilities and the
liquidation preference of any then outstanding preferred stock. Holders of
Common Stock have no preemptive rights and no right to convert their Common
Stock into any other securities. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are, and all shares of Common Stock to be outstanding upon completion of
the Offering will be, fully paid and nonassessable.
PREFERRED STOCK
The following is a brief summary of the material rights, preferences,
privileges, restrictions and limitations of the outstanding shares of
Preferred Stock.
Dividends. Any dividends declared by the Board are to be distributed pari
passu among all holders of Preferred Stock and all holders of Common Stock in
proportion to the number of shares of Common Stock which would be held by each
such holder if all shares of Preferred Stock were converted into Common Stock
at the then effective Conversion Price (as defined below).
Liquidation Preference; Right of First Offer. In the event of a liquidation,
dissolution or winding up of the Company, the holders of Preferred Stock are
entitled to a cash payment equal to the Liquidation Value (as defined below)
of each share held, before any distribution of the Company's assets to holders
of the Common Stock. The "Liquidation Value" per share means an amount equal
to (i) $5.00 plus (ii) a premium equal to an annual rate of ten percent (10%)
of such amount compounded annually from the date the share was issued (the
"Issue Date"), plus (iii) all declared but unpaid dividends thereon. Each
holder of Preferred Stock has certain rights of first offer to subscribe for
new issuances of securities by the Company (not including securities offered
to the public pursuant to a registration statement filed under the Securities
Act).
Voluntary Conversion. Each share of Preferred Stock is, at the option of the
holder, convertible into such number of shares as results from dividing $5.00
by the Conversion Price then in effect. The initial Conversion Price is $5.00,
subject to adjustments for subsequent dilutive issuances of securities by the
Company. In addition, the Conversion Price is specifically adjusted upon the
closing of an underwritten public offering of the Common Stock after July 1,
1996 to the lower of (i) the then current Conversion Price and (ii) the price
determined by multiplying the price to the public in such underwriting by .25.
The Conversion Price is currently $5.00.
45
<PAGE>
Automatic Conversion. Immediately prior to the closing of a firm commitment,
underwritten public offering of the Common Stock having an aggregate price to
the public of not less than $12 million and closing on or prior to June 30,
1998, each share of Preferred Stock is automatically converted into 1 2/3
shares of Common Stock. Each such share is also automatically converted into
shares of Common Stock at the then effective Conversion Price at the election
of the holders of a majority of the outstanding shares of Preferred Stock.
Redemption. Commencing on or about the third anniversary of the Issue Date,
each holder of Preferred Stock will have the right to demand that the Company
redeem all or any part of the shares of Preferred Stock held by him at a
redemption price per share consisting of a base redemption price of $6.67,
plus any declared but unpaid dividends thereon.
Voting Rights. Except as otherwise required by law and as to certain matters
set forth in the Articles as requiring the prior affirmative vote or written
consent of the holders of not less than a majority of the outstanding shares
of Preferred Stock, the Preferred Stock is non-voting. The matters set forth
in the Articles include (i) the payment by the Company of cash dividends, (ii)
the redemption or repurchase by the Company of any of the Common Stock (other
than from employees, officers, directors and consultants of the Company upon
the termination of their relationship with the Company), (iii) the sale of all
or substantially all of the assets of the Company or the consummation by the
Company of any transaction or series of transactions resulting in a change of
control of the Company, and (iv) the Company's incurrence of any indebtedness
or grant of any security interest in any of the Company's assets, other than
in connection with equipment leases entered into in the ordinary course of
business, a revolving credit line from a commercial bank that does not exceed
80% of eligible accounts receivable or the refinancing of existing mortgages.
Registration Rights. Pursuant to the terms of a Shareholder Rights Agreement
between the Company and each purchaser of Preferred Stock, if the Company
determines to register any of its securities (other than a registration
relating solely to employee benefit plans or a transaction covered by Rule 145
promulgated under the Securities Act), then the holders of Preferred Stock
have piggyback registration rights to cause the Company to include the shares
of Common Stock issued upon conversion of the Preferred Stock (the
"Registrable Shares") to be included in the related registration statement (a
"Piggyback Registration"). The Company may, however, reduce on a pro rata
basis, to the extent so advised by the underwriters of the offering, the
amount of Registrable Shares to be included in any such registration.
Additionally, the holders of an aggregate of at least 300,000 Registrable
Shares (as adjusted for stock splits or reverse stock splits), or a lesser
number, if the offering thereof results in aggregate proceeds (net of selling
expenses) exceeding $15 million, have a demand right on two separate occasions
to cause the Company to register such Registrable Shares, and each holder of
Registrable Shares has the additional right on an unlimited number of
occasions, subject to certain timing limitations, to cause the Company to
register his Registrable Shares on Form S-3 under the Securities Act, if the
aggregate price to the public of the shares offered thereby exceeds $1.5
million (each, a "Demand Registration"). The Company is obligated to pay all
registration expenses (other than underwriting discounts and commissions and
subject to certain limitations) incurred by virtue of including shares of
Common Stock subject to such registration rights in either a Demand
Registration or Piggyback Registration.
OTHER CONVERSION RIGHTS
Immediately prior to the closing of a firm commitment, underwritten public
offering of the Common Stock having an aggregate price to the public of not
less than $12 million and closing on or prior to June 30, 1998, each
outstanding share of the Series A and Series B Redeemable Non-Voting Preferred
Stock issued by ATG Richland is automatically converted into Common Stock at a
stated conversion ratio of one share of Series A Redeemable Non-Voting
Preferred Stock into 1.4119814 shares of Common Stock and one share of Series
B Redeemable Non-Voting Preferred Stock into 1 share of Common Stock. As of
December 31, 1997, 860,000 shares of Series A Redeemable Non-Voting Preferred
Stock and 1,269,291 shares of Series B Redeemable Non-Voting Preferred Stock
were outstanding.
46
<PAGE>
OTHER REGISTRATION RIGHTS
As parties to certain portions of the Shareholder Rights Agreement between
the Company and each purchaser of Preferred Stock, certain holders of Common
Stock have acquired piggyback registration rights, with respect to all shares
of Common Stock owned by them, identical to those held by the purchasers of
Preferred Stock with respect to the Registrable Shares owned by them. Certain
other holders of Common Stock who are not parties to certain portions of the
Shareholder Rights Agreement have piggyback registration rights, with respect
to all shares of Common Stock owned by them, similar to the piggyback
registration rights held by the purchasers of the Preferred Stock.
OPTIONS
At December 31, 1997, options to purchase up to 1,000,000 shares of Common
Stock, at a weighted average exercise price of $2.09, were outstanding,
298,927 of which were exercisable on such date.
OVER-ALLOTMENT OPTION AND REPRESENTATIVE'S WARRANTS
The Company has granted the Underwriters an over-allotment option, pursuant
to which the Underwriters have the right, exercisable during the 45-day period
after the date of this Prospectus, to purchase up to 255,000 additional shares
of Common Stock from the Company at the same price per share as the Company
will receive for the 1,700,000 shares that the Underwriters have agreed to
purchase in the Offering. In addition, the Company has agreed to issue to Van
Kasper & Company, as the Representative, for nominal consideration, the
Representative's Warrants, pursuant to which the Representative will have the
right, exercisable for a period of four years beginning one year from the date
of this Prospectus, to purchase up to 170,000 shares of Common Stock at an
exercise price per share equal to 120% of the initial public offering price of
the Offering. See "Underwriting."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is U.S. Stock Transfer
Corporation.
47
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 13,215,896 shares of
Common Stock outstanding (assuming no exercise of outstanding stock options
after December 31, 1997). Of these shares, the 1,700,000 shares sold in the
Offering will be freely tradeable without restriction or registration under
the Securities Act unless they are held by "affiliates" of the Company, as
that term is defined in Rule 144. The remaining 11,515,896 shares will be
"restricted securities" as defined in Rule 144 ("Restricted Shares"). Of such
Restricted Shares, 9,590,841 shares may not be sold without the consent of Van
Kasper & Company for 180 days after the date of this Prospectus, and 8,248,201
of such shares are subject to certain conditions on sale for an additional 180
days. As a result of the lock-up agreements and the provisions of Rule 144(k)
and Rule 144 generally, all currently outstanding shares will be available for
sale in the public market 180 days after the date of this Prospectus, subject
to the provisions of Rule 144 and, as to 8,248,201 of such shares, certain
conditions on sale for an additional 180 days. See "Underwriting."
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for
at least one year is entitled to sell, within any three-month period, a number
of such shares that does not exceed the greater of (i) 1.0% of the then
outstanding shares of the Common Stock (approximately 132,159 shares
immediately after the Offering) and (ii) the average weekly trading volume
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also currently subject to certain requirements as to the manner of sale,
notice and availability of current public information about the Company. Rule
144 also provides that affiliates who own securities that are not Restricted
Shares must nonetheless comply with the same restrictions applicable
thereunder to Restricted Shares, as if such securities were Restricted Shares,
with the exception of the one-year holding period requirement. A person who
has not been an affiliate of the Company at any time within three months prior
to the sale and has beneficially owned the Restricted Shares for at least two
years is entitled to sell such shares under Rule 144(k) without regard to the
volume limitations or any of the other requirements described above.
An employee, officer or director of or consultant to the Company who
purchased or was awarded shares or options to purchase shares pursuant to a
written compensatory plan or contract is entitled to rely on the resale
provisions of Rule 701 promulgated under the Securities Act, which permits
affiliates and non-affiliates to sell their Rule 701 shares without having to
comply with Rule 144's holding period restrictions, in each case commencing 90
days after the date of this Prospectus. In addition, non-affiliates may sell
Rule 701 shares without complying with the public information, volume and
notice provisions of Rule 144.
The Company intends to file with the Commission registration statements on
Form S-8 under the Securities Act to register the shares of Common Stock
reserved for issuance under the Incentive Plan, the Directors' Plan and the
Purchase Plan, thus permitting the resale of shares issued under such plans by
non-affiliates in the public market without restriction under the Securities
Act. Such registration statements will be filed at management's discretion
following the closing of the Offering and will be automatically effective upon
filing.
Prior to the Offering, there has been no public market for the Common Stock,
and any sale of substantial amounts of Common Stock in the open market may
adversely affect the market price of Common Stock offered hereby.
48
<PAGE>
UNDERWRITING
The Underwriters, acting through the Representative, have severally agreed,
subject to the terms and conditions set forth in the Underwriting Agreement
with the Company, to purchase from the Company the number of shares of Common
Stock set forth opposite their respective names:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Van Kasper & Company...............................................
---------
Total............................................................ 1,700,000
=========
</TABLE>
The shares of Common Stock are being offered by the Underwriters named
herein, subject to their right to reject any order in whole or in part, and to
certain other conditions. The Underwriters are committed to purchase all of
the above shares of Common Stock if any are purchased.
The Representative has advised the Company that the Underwriters propose to
offer the shares of Common Stock at the offering price set forth on the
outside front cover page of this Prospectus: (i) to the public; and (ii) to
certain dealers at that price less a concession of not more than $0. per
share, of which a discount of $0. may be reallowed to other dealers. After
the consummation of the Offering, the public offering price, concession and
reallowance to dealers may be changed by the Representative as a result of
market conditions and other factors. No such change shall affect the amount of
proceeds to be received by the Company as set forth on the outside front cover
page of this Prospectus.
The Company has granted the Underwriters the over-allotment option, pursuant
to which the Underwriters have the right, exercisable during the 45-day period
after the date of this Prospectus, to purchase up to 255,000 additional shares
of Common Stock from the Company at the initial offering price, less
underwriting discounts. The Underwriters may exercise such option only to
cover over-allotments made in connection with the sale of Common Stock offered
hereby. To the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment to purchase approximately the same
percentage of the additional Common Stock that the number of shares of Common
Stock to be purchased by the Underwriter set forth in the above table bears to
the total number of shares of Common Stock listed in such table.
Upon completion of the Offering, the Company has agreed to sell to the
Representative, for nominal consideration, the Representative's Warrants,
pursuant to which the Representative will have the right to purchase up to
170,000 shares of Common Stock at an exercise price per share equal to 120% of
the initial public offering price. The Representative's Warrants are
exercisable for a period of four years beginning one year from the date of
this Prospectus. The Representative's Warrants will be restricted from
transfer for a period of one year from the date of this Prospectus, except for
transfers to officers or partners of the Representative and members of the
selling group. The Representative's Warrants will contain provisions providing
for adjustment of exercise price and number and type of securities issuable
upon exercise should one or more of certain specified events occur, including
the Company's declaration of a stock dividend, a split or reverse split of the
Common Stock, reclassification of the Common Stock, the Company's distribution
of property to all holders of the Common Stock and the issuance to all such
holders of rights or warrants to purchase Common Stock at an exercise price
less than the then current market value. In addition, the Company has granted
certain rights to the holders of the Representative's Warrants to register the
Representative's Warrants and the Common Stock underlying the Representative's
Warrants under the Securities Act.
The Company has agreed to pay the Representative a non-accountable expense
allowance equal to 1.5% of the total proceeds of the Offering (including with
respect to shares of Common Stock underlying the over-
49
<PAGE>
allotment option, if and to the extent it is exercised) for expenses in
connection with the Offering, payable at the close of the Offering.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters and the Company against certain civil liabilities, including
liabilities under the Securities Act.
The Company's officers and directors and certain beneficial owners of the
Common Stock have agreed not to, directly or indirectly, offer to sell,
contract to sell, sell or otherwise dispose of any shares of Common Stock or
any securities convertible into or exchangeable for shares of Common Stock or
any rights to purchase or acquire Common Stock for the 180-day period
commencing with the date of this Prospectus (the "lock-up period") without the
prior written consent of Van Kasper & Company, and, in certain cases, that
they will only sell subject to certain conditions on sale for an additional
period of 180 days thereafter. All 9,590,841 shares of Common Stock subject to
the lock-up agreements will become eligible for immediate public sale
following expiration of the lock-up period, subject to the provisions of the
Securities Act, the rules promulgated thereunder, including Rule 144, and, as
to 8,248,201 of such shares, certain conditions on sale for an additional
period of 180 days. Van Kasper & Company may, in its sole discretion, and at
any time without notice, release all or a portion of the securities subject to
the lock-up agreements. In addition, the Company has agreed that until the
expiration of the lock-up period, the Company will not, without the prior
written consent of Van Kasper & Company, offer, sell, contract to sell or
otherwise dispose of any shares of Common Stock, any options or warrants to
purchase Common Stock or any securities convertible into or exchangeable for
shares of Common Stock, except for sales of shares of Common Stock in the
Offering, the issuance of shares of Common Stock upon the exercise of
outstanding options, warrants and rights or pursuant to the conversion of all
of the outstanding shares of the Preferred Stock and of ATG Richland's Series
A and Series B Redeemable Non-Voting Preferred Stock into an aggregate of
3,983,595 shares of Common Stock, and the grant of options to purchase or the
issuance of shares of Common Stock under the Incentive Plan, the Directors'
Plan or the Purchase Plan.
The Representative has advised the Company that, pursuant to Regulation M
promulgated under the Securities Exchange Act of 1934, as amended, certain
persons participating in the Offering may engage in transactions, including
stabilizing bids, syndicate covering transactions or the imposition of penalty
bids, which may have the effect of stabilizing or maintaining the market price
of the Common Stock at a level above that which might otherwise prevail in the
open market. A "stabilizing bid" is a bid for or the purchase of the Common
Stock on behalf of the Underwriters for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A "syndicate covering transaction"
is the bid for or the purchase of the Common Stock on behalf of the
Underwriters to reduce a short position created in connection with the
Offering. The Underwriters may also cover all or a portion of such short
position by exercising the over-allotment option. A "penalty bid" is an
arrangement permitting the Representative to reclaim the selling concession
otherwise accruing to an Underwriter or syndicate member in connection with
the Offering if the Common Stock originally sold by such Underwriter or
syndicate member is purchased by the Representative in a syndicate covering
transaction and has therefore not been effectively placed by such Underwriter
or syndicate member. The Representative has advised the Company that such
transactions may be effected on the Nasdaq National Market or otherwise and,
if commenced, may be discontinued at any time.
The Representative has advised the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.
Prior to the Offering, there has been no public market for the Company's
securities. The initial public offering price of the Common Stock was
determined by negotiations between the Company and the Representative. Among
the factors considered in such negotiations were prevailing market conditions,
the results of operations of the Company in recent periods, market valuations
of publicly traded companies that the Company and the Representative believe
to be comparable to the Company, estimates of the business potential of the
Company, the present state of the Company's development, the current state of
the Company's industry and the economy as a whole, and other factors deemed
relevant by the Company and the Representative.
50
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Graham & James LLP, Los Angeles, California. Certain legal matters
with respect to the Offering will be passed upon for the Underwriters by
Heller Ehrman White & McAuliffe, Palo Alto, California.
EXPERTS
The Consolidated Financial Statements of the Company as of December 31, 1996
and 1997, and for each of the three years in the period ended December 31,
1997, included in this Prospectus, have been included herein in reliance on
the report thereon of Coopers & Lybrand L.L.P., independent accountants, given
upon the authority of that firm as experts in accounting and auditing.
In May 1996, the Board appointed Coopers & Lybrand L.L.P. as the Company's
independent certified public accountants. Prior thereto, Storek, Carlson &
Strutz ("SC&S") served as the Company's independent accountants. The change in
accountants from SC&S to Coopers & Lybrand L.L.P. was effective for fiscal
1995, was unanimously approved by the Board and was not due to any
disagreements between the Company and SC&S on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures.
ADDITIONAL INFORMATION
The Company has filed with the Commission in Washington, D.C. a Registration
Statement on Form S-1 under the Securities Act with respect to the Common
Stock being offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, and such exhibits and
schedules. A copy of the Registration Statement, and the exhibits and
schedules thereto, may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1024, Judiciary Plaza, 450
Fifth Street N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor,
New York, New York 10048, and copies of all or any part of the Registration
Statement may be obtained from such offices upon payment of the fees
prescribed by the Commission. In addition, the Registration Statement may be
accessed at the Commission's site on the World Wide Web located at
(http://www.sec.gov). Statements contained in this Prospectus as to the
contents of any contract or other document, while complete in material
respects, are nonetheless summaries and, in each instance, reference is made
to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
51
<PAGE>
GLOSSARY
The following is a glossary of certain environmental industry and Company-
specific terms used in this Prospectus:
<TABLE>
<C> <S>
AEA.............................. The U.S. Atomic Energy Act of 1954.
BDAT............................. Best Demonstrated Achievable Technology. As
identified by the EPA, the most effective
commercially available means of treating
specific types of hazardous waste. BDATs
may change with advances in treatment
technologies.
CERCLA........................... The U.S. Comprehensive Environmental
Response, Compensation and Liability Act of
1980. Also known as "Superfund."
Clean Air Act.................... The U.S. Clean Air Act of 1970.
Clean Water Act.................. The U.S. Clean Water Act of 1972.
D&D.............................. Decontamination and decommissioning of
facilities contaminated with radioactivity.
DOD.............................. The U.S. Department of Defense.
DOE.............................. The U.S. Department of Energy.
EPA.............................. The U.S. Environmental Protection Agency.
FFCA............................. The U.S. Federal Facilities Compliance Act
of 1992.
GASVIT........................... The Company's name and trademark for a
vitrification technology developed by the
Company for treatment of LLRW and LLMW
streams.
High-level radioactive waste..... Radioactive waste primarily composed of
spent nuclear fuel rods from nuclear
reactors and highly radioactive waste
generated by the processing of nuclear
materials for weapons production.
HLW.............................. High-level radioactive waste.
LLMW............................. Low-level mixed waste.
LLRW............................. Low-level radioactive waste.
Low-level mixed waste............ LLRW co-mingled with hazardous substances
regulated by RCRA and/or toxic substances
regulated by TSCA.
Low-level radioactive waste...... All radioactive waste other than HLW.
NRC.............................. The U.S. Nuclear Regulatory Commission.
PCBs............................. Polychlorinated biphenyls, a substance
regulated under TSCA.
PLASTIMELT....................... The Company's name and trademark for a
technology developed by the Company for the
macroencapsulation of LLMW.
RCRA............................. The U.S. Resource Conservation and Recovery
Act of 1976.
SAFGLAS.......................... The Company's name and trademark for a
vitrification technology developed by the
Company for treatment of LLRW streams.
</TABLE>
52
<PAGE>
GLOSSARY--(CONTINUED)
<TABLE>
<C> <S>
SARA............................. The U.S. Superfund Amendments and
Reauthorization Act of 1986.
Superfund........................ See "CERCLA."
TSCA............................. The U.S. Toxic Substances Control Act of
1976.
Vitrification.................... A non-incineration, thermal treatment
process which converts radioactive and
other waste into an environmentally stable,
leach-resistant glass product. The EPA has
identified vitrification as the BDAT for
HLW.
WDOE............................. The Washington State Department of Ecology.
</TABLE>
53
<PAGE>
ATG INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Operations...................................... F-4
Consolidated Statements of Shareholders' Equity............................ F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Consolidated Financial Statements................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
ATG Inc. and Subsidiary:
We have audited the accompanying consolidated balance sheets of ATG Inc. and
its subsidiary as of December 31, 1996 and 1997, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ATG Inc. and
its subsidiary as of December 31, 1996 and 1997 and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
San Jose, California
January 31, 1998 (except for Note 16
as to which the date is April , 1998)
- -------------------------------------------------------------------------------
To the Board of Directors and Shareholders of ATG Inc. and Subsidiary:
The consolidated financial statements and notes thereto included herein have
been adjusted to give effect to the proposed conversion of the ATG Inc. Series
A Preferred Stock, ATG Richland Series A Preferred Stock and ATG Richland
Series B Preferred Stock into 3,983,595 shares of common stock of ATG Inc.,
which is more fully described in Note 16 to the financial statements. The
above report is in the form that will be signed by Coopers & Lybrand L.L.P.
upon obtaining the approval of the preferred shareholders for the revised
conversion ratios, assuming that from January 31, 1998 to the effective date
of such conversion, no other events shall have occurred that would affect the
accompanying consolidated financial statements or notes thereto.
Coopers & Lybrand L.L.P.
San Jose, California
January 31, 1998
F-2
<PAGE>
ATG INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
--------
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1997 PRO FORMA
SHAREHOLDERS' EQUITY
1996 1997 (NOTE 2)
------- ------- --------------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 2,969 $ 2,586
Accounts receivable, net of allowance
for doubtful accounts of $46 in 1996
and $119 in 1997..................... 6,907 8,435
Prepayments and other current assets.. 1,554 1,477
------- -------
Total current assets................ 11,430 12,498
Property and equipment, net............. 15,045 22,104
Intangible and other assets, net........ 501 1,928
Deferred income taxes................... -- 697
------- -------
Total assets........................ $26,976 $37,227
======= =======
LIABILITIES
Current liabilities:
Short-term borrowings................. $ 2,836 $ 3,996
Current portion of long-term debt and
capitalized leases................... 1,053 1,380
Accounts payable...................... 2,014 3,246
Accrued liabilities................... 1,091 944
Payable to related parties............ 103 1,280
------- -------
Total current liabilities........... 7,097 10,846
Long-term debt and capitalized leases,
net.................................... 2,930 6,202
Deferred income taxes................... -- 467
------- -------
Total liabilities................... 10,027 17,515
------- -------
Commitments and contingencies (Note 10)
Mandatorily Redeemable Preferred Stock:
Series A and ATG Richland Series A and
B, no par value
Authorized: 6,000,000 shares in 1996
and 1997
Issued and outstanding: 2,750,355
shares in 1996; 3,029,291 shares in
1997; and none pro forma; stated at
liquidation value.................... 16,319 19,416
------- -------
SHAREHOLDERS' EQUITY
Common Stock, no par value:
Authorized: 20,000,000 shares in 1996
and 1997
Issued and outstanding: 7,532,301
shares in 1996 and 1997 and
11,515,896 pro forma................. 5,948 6,337 21,795
Deferred compensation................. -- (272) (272)
Accumulated deficit..................... (5,318) (5,769) (1,811)
------- ------- -------
Total common stock, deferred
compensation and accumulated
deficit............................ 630 296 $19,712
------- ------- =======
Total liabilities and shareholders'
equity............................. $26,976 $37,227
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
ATG INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
--------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenue (Note 2).......................... $ 16,070 $ 18,235 $ 19,107
Cost of revenue........................... 9,659 11,082 11,172
---------- ---------- ----------
Gross profit.......................... 6,411 7,153 7,935
Sales, general and administrative
expenses................................. 6,033 6,487 6,903
Stock-based compensation expense.......... 169 169 117
---------- ---------- ----------
Operating income...................... 209 497 915
---------- ---------- ----------
Interest income (expense):
Interest income......................... 185 142 58
Interest expense........................ (326) (129) --
---------- ---------- ----------
Interest income (expense), net........ (141) 13 58
---------- ---------- ----------
Income before income taxes................ 68 510 973
Provision (benefit) for income taxes...... 2 2 (45)
---------- ---------- ----------
Net income............................ $ 66 $ 508 $ 1,018
========== ========== ==========
Pro forma net income per share
Basic................................... $ 0.09
Diluted................................. 0.08
==========
Pro forma shares used in calculating pro
forma net income per share
Basic................................... 11,516
Diluted................................. 12,284
==========
Historic net loss per share
Basic and diluted....................... $ (0.10) $ (0.10) $ (0.06)
========== ========== ==========
Historic shares used in calculating
historic net loss per share
Basic and diluted....................... 7,439 7,532 7,532
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
ATG INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(amounts in thousands)
--------
<TABLE>
<CAPTION>
TOTAL COMMON
STOCK, DEFERRED
COMMON STOCK COMPENSATION
------------- DEFERRED ACCUMULATED AND ACCUMULATED
SHARES AMOUNT COMPENSATION DEFICIT DEFICIT
------ ------ ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, January 1,
1995................... 7,439 $5,598 $(338) $(3,768) $ 1,492
Accretion on
redeemable preferred
stock................ -- -- -- (836) (836)
Amortized deferred
compensation......... -- -- 169 -- 169
Net income............ -- -- -- 66 66
----- ------ ----- ------- -------
Balance, December 31,
1995................... 7,439 5,598 (169) (4,538) 891
Issuance of common
stock................ 93 350 -- -- 350
Accretion on
redeemable preferred
stock................ -- -- -- (1,288) (1,288)
Amortized deferred
compensation......... -- -- 169 -- 169
Net income............ -- -- -- 508 508
----- ------ ----- ------- -------
Balance, December 31,
1996................... 7,532 5,948 -- (5,318) 630
Accretion on
redeemable preferred
stock................ -- -- -- (1,469) (1,469)
Stock based
compensation......... -- 389 (389) -- --
Amortized deferred
compensation......... -- -- 117 117
Net income............ -- -- -- 1,018 1,018
----- ------ ----- ------- -------
Balance, December 31,
1997................... 7,532 $6,337 $(272) $(5,769) $ 296
===== ====== ===== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
ATG INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
--------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................... $ 66 $ 508 $ 1,018
Adjustments to reconcile net income with
cash flow from operations:
Depreciation and amortization.......... 458 671 746
Provision for doubtful accounts........ -- 6 73
Compensation expense for shares issued
and options granted................... 169 169 117
Income tax benefit..................... -- -- (45)
Change in current assets and
liabilities:
Accounts receivable.................. (3,560) 534 (1,601)
Prepayments and other current assets. (369) 230 (140)
Other assets......................... (444) 290 --
Accounts payable and accrued
liabilities......................... 255 455 1,085
Deferred income taxes................ -- -- (230)
---------- ---------- ----------
Net cash provided by (used in)
operating activities.............. (3,425) 2,863 1,023
---------- ---------- ----------
Cash flows from investing activities:
Property and equipment acquisitions...... (1,249) (4,647) (3,505)
Other assets............................. 131 (23) (1,210)
---------- ---------- ----------
Net cash used in investing activities.. (1,118) (4,670) (4,715)
---------- ---------- ----------
Cash flows from financing activities:
Loans from (payments to) related parties. -- (61) 1,177
Repayment of capital leases.............. (466) (735) (461)
Repayment of long-term debt.............. (842) (216) (196)
Bank borrowings, net of repayments....... 1,771 48 1,160
Proceeds from issuance of preferred
stock, net.............................. 3,123 5,627 1,629
---------- ---------- ----------
Net cash provided by financing
activities............................ 3,586 4,663 3,309
---------- ---------- ----------
Increase (decrease) in cash and cash
equivalents............................... (957) 2,856 (383)
Cash and cash equivalents, beginning of
year...................................... 1,070 113 2,969
---------- ---------- ----------
Cash and cash equivalents, end of year..... $ 113 $ 2,969 $ 2,586
========== ========== ==========
Supplemental Disclosures of non-cash
investing and financing activities:
Income taxes paid........................ $ 1 $ 2 $ 2
========== ========== ==========
Interest paid, net of interest
capitalized............................. $ 266 $ 622 $ --
========== ========== ==========
Acquisition of equipment with capital
lease financing......................... $ 1,407 $ -- $ 4,256
========== ========== ==========
Compensation expense for shares issued
and options granted..................... $ 169 $ 169 $ 117
========== ========== ==========
Conversion of notes payable to common
stock................................... $ -- $ 350 $ --
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(all dollar amounts in thousands, except per share data)
--------
1. FORMATION AND BUSINESS OF THE COMPANY:
The accompanying consolidated financial statements of ATG Inc. (the
"Company" or "ATG") include the accounts of its wholly-owned subsidiary, ATG
Richland Corporation ("ATG Richland"). The Company provides technical
personnel and specialized services and products primarily to the U.S.
Government and the nuclear power industry throughout the United States.
Services principally consist of compaction, reduction, decontamination,
vitrification and disposal of low-level dry active nuclear and other hazardous
waste, site remediation and fluorescent lamp recycling.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The consolidated financial statements include the accounts of ATG and its
wholly-owned subsidiary. All significant intercompany balances and
transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying disclosures. These estimates include assessing the
collectibility of accounts receivable and the recoverability of self-
constructed assets and provisions for contingencies. Actual results could
materially differ from the Company's estimates.
Revenue Recognition
Revenue includes fees for waste processing services and technology license
fees. Revenue under cost plus fixed fee and fixed unit price contracts mainly
relating to site remediation is recorded as costs are incurred or units are
completed and includes estimated fees earned according to the terms of the
contracts. Revenue from U.S. government contracts includes estimates of
reimbursable overhead and general and administrative expenses, which are
subject to final determination by the U.S. federal government upon project
completion. Revisions to costs and income resulting from contract settlements,
which are due to differences between actual and budgeted performance, are
recognized in the period in which the revisions are determined. Revenue from
waste processing is generally recognized upon the completion of the waste
treatment process. Revenue relating to contract change orders is not
recognized until acceptance of the change orders is probable. Revenue from
licensing or technology transfer agreements is recognized when received unless
there are future commitments, in which case the revenues are recognized over
the term of the agreement. Revenues of $1,975 were recognized pursuant to
technology transfer agreements in 1997. Losses on contracts are charged to
cost of revenue as soon as such losses become known.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.
Property and Equipment
Property and equipment are stated at cost and are depreciated on the
straight-line basis over the estimated useful lives of the assets, which range
from three to fifteen years. Cost includes expenditures for major
F-7
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
improvements and replacements and the net amount of interest costs related to
qualifying construction projects. Expenditures for major renewals and
betterments are capitalized and expenditures for maintenance and repair
expenses are charged to expense as incurred. The Company's policy is to
regularly review the carrying amount of specialized assets and to evaluate the
remaining life and recoverability of such equipment in light of current market
conditions.
Risks and Uncertainties
The Company operates its fixed facilities under regulations of, and permits
issued by, various state and federal agencies. The Company, typically, is in
the process of seeking new permits, renewals and/or expansion permits. There
is no assurance of the outcome of any permitting efforts. The permitting
process is subject to regulatory approval, time delays, local opposition and
potentially stricter governmental regulation. Substantial losses which would
have a material adverse effect on the Company's consolidated financial
position, could be incurred by the Company in the event a permit is not
granted, if facility construction programs are delayed or changed, or if
projects are otherwise abandoned. The Company reviews the status of permitting
projects on a periodic basis to assess realizability of related asset values.
As of December 31, 1997, management believes that assets which could currently
be affected by permitting efforts are recoverable at their recorded values.
The market for the Company's services is substantially dependent on state
and federal legislation and regulations. The availability of new contracts
depends largely on governmental authorities. In order to build or retain its
market share the Company must continue to successfully compete for new
government and private sector contracts.
Income Taxes
The Company accounts for income taxes under the liability method, whereby
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.
Concentration of Credit Risk
The majority of the Company's cash, cash equivalents and short-term
investments are held with major banks in the United States. The Company's
customers mainly consist of agencies of the U.S. government and large U.S.
companies. The Company performs ongoing credit evaluation of its customers'
financial condition. As of December 31, 1997, agencies of the U.S. government
represented 46.6% of accounts receivable and 71.3% of total revenue for the
year then ended. As of December 31, 1996, agencies of the U.S. government
represented 70.0% of accounts receivable and 76.8% of total revenue for the
year then ended. As of December 31, 1995, agencies of the U.S. government
represented 84.0% of accounts receivable and 86.3% of total revenue for the
year then ended. The Company generally does not require collateral.
Computation of Pro Forma Net Income Per Share
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128"), effective December 31,
1997. SFAS 128 requires the presentation of basic and diluted earnings per
share. Basic income per share is computed by dividing income available to
common
F-8
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
shareholders by the weighted average number of common shares outstanding for
the period. Diluted income per share is computed giving effect to all dilutive
potential common shares that were outstanding during the period. Dilutive
potential common shares consist of the incremental common shares issuable upon
the conversion of convertible preferred stock (using the "if converted"
method) and exercise of stock options for all periods. Pro forma basic net
income per share and pro forma diluted net income per share are computed using
the weighted average number of shares of Common Stock outstanding and the
incremental inclusion of 3,983,595 shares of common stock issuable upon the
conversion of preferred stock.
Unaudited Pro Forma Consolidated Balance Sheet
Upon closing of the Company's proposed initial public offering, all
outstanding shares of mandatorily redeemable preferred stock will be converted
into 3,983,595 shares of common stock. (See Note 16.) The unaudited pro forma
consolidated balance sheet as of December 31, 1997, reflects this conversion.
Accretion of $3,958 has been reclassified from pro forma mandatorily
redeemable preferred stock to pro forma accumulated deficit.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards
for the reporting and display of comprehensive income and its components in a
full set of general purpose financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a period,
resulting from transactions and other events and circumstances from nonowner
sources. The Company is reviewing the impact of adopting SFAS No. 130, which
is effective for the Company in 1998.
In June, 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information." SFAS No. 131 requires publicly-held
companies to report financial and other information about key revenue-
producing segments of the entity for which such information is available and
is utilized by the chief operating decision maker. Specific information to be
reported for individual segments includes profit or loss, certain revenue and
expense items and total assets. A reconciliation of segment financial
information to amounts reported in the financial statements would be provided.
SFAS No. 131 is effective for the Company in 1998. The Company currently
evaluates its operations as one segment.
F-9
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
3. ACCOUNTS RECEIVABLE:
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
U.S. Government:
Amounts billed................................................ $3,502 $3,142
Amounts unbilled.............................................. 1,433 845
------ ------
Total U.S. Government....................................... 4,935 3,987
Commercial customers:
Amounts billed................................................ -- 2,067
Amounts unbilled.............................................. 2,018 2,500
------ ------
Total commercial 2,018 4,567
------ ------
Total accounts receivable..................................... 6,953 8,554
Less: allowance for doubtful receivables........................ (46) (119)
------ ------
$6,907 $8,435
====== ======
</TABLE>
Recoverable costs and accrued profit on progress completed but not billed on
U.S. government contracts is based on estimates of reimbursable overhead and
general and administrative expenses calculated in accordance with
contractually determined methods of calculation. These amounts are subject to
final determination by the U.S. federal government after the contracts have
been completed. As such, the actual recoverable amounts on these contracts may
differ from these estimates. The U.S. federal government has reviewed and
approved reimbursable expenses for contracts in progress through 1995.
4. RESTRICTED INVESTMENTS:
The Company owns several certificates of deposit, Treasury Bills and Bonds,
which are collateral for performance bonds. The certificates of deposit, which
are included in intangible and other assets, have an aggregate value of $30
and $210 at December 31, 1996 and 1997, respectively, bear interest at 4.7%
per annum, and have an original maturity of twelve months. The Treasury Bills,
which are included in intangible and other assets, have an aggregate value of
$254 at December 31, 1996 and 1997, respectively, bear interest at 5.7% and
have an original maturity of twelve months. The Bonds, which are included in
prepayments and other current assets, have an aggregate value of $133 and $959
at December 31, 1996 and 1997 respectively, and have an original maturity of
between one and five years.
5. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Land.......................................................... $ 581 $ 761
Buildings..................................................... 2,864 2,848
Machinery and equipment....................................... 7,429 5,183
Office furniture and equipment................................ 662 1,427
------- -------
Property and equipment at cost................................ 11,536 10,219
Less: accumulated depreciation and amortization............... (3,060) (2,840)
------- -------
8,476 7,379
Construction-in-progress...................................... 6,569 14,725
------- -------
$15,045 $22,104
======= =======
</TABLE>
F-10
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
Depreciation and amortization expense was $417, $630 and $698 for 1995, 1996
and 1997, respectively.
Property and equipment costs include capitalized labor and overhead,
including interest costs related to the construction of buildings, building
improvements and equipment. Capitalized interest costs totaled $479, $446 and
$891 in 1995, 1996 and 1997, respectively. All property and equipment serve as
collateral to holders of the Company's Series A Preferred Stock, notes payable
agreements to a bank and other creditors.
As of December 31, 1996 and 1997, machinery and equipment included assets
acquired under capital leases with a capitalized cost of $3,000 and $7,256,
respectively. Related accumulated amortization totaled $1,945 and $2,318, in
1996 and 1997, respectively.
6. PAYABLE TO RELATED PARTIES
The Company has a payable to its Chairman and Chief Executive Officer of
$1,280 at December 31, 1997 and $103 at December 31, 1996. The amount is
repayable on demand and bears interest at 10% per annum.
The Company has a payable to a Director of $225 at December 31, 1997 and
December 31, 1996. The amount is repayable on July 1, 2000 and is non-interest
bearing. The amount is included in long term debt.
7. BANK LINE OF CREDIT:
Under a revolving credit facility with a bank, the Company may borrow up to
the lesser of 90% of eligible accounts receivable or $4,000. Borrowings under
this credit agreement were $3,996 at December 31, 1997, bear interest at prime
plus 0.50% (9.0% at December 31, 1997) and are collateralized by accounts
receivable, property and equipment and the personal guarantees of the
Company's principal shareholder. Borrowings under the credit agreement were
$2,836 as of December 31, 1996, and bore interest at prime plus 1.25% (9.5% at
December 31, 1996). The facility agreement expires June 1998.
The credit agreement requires the Company to comply with certain covenants
including capital asset acquisition limits, limits on additional debt, minimum
levels of tangible net worth and dividend payment restrictions. At December
31, 1997 and at various dates throughout the year the Company was in violation
of certain covenants. The Company has obtained waivers in respect of these
violations as of December 31, 1997.
8. LONG TERM DEBT:
Long term debt consists of mortgage debt, notes payable and equipment notes
payable. The mortgage debt bears interest at annual rates between 8.75% and
10.5%, matures between the years 2000 and 2007, and is collateralized by
certain of the Company's buildings. The notes payable bear interest at annual
rates between 8% and 10%, mature between 1998 and 2002, and are collateralized
by the Company's equipment. Equipment notes bear interest at annual rates
between 7.9% and 11.9%, mature between 1999 and 2000, and are collateralized
by specific equipment.
F-11
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
Future minimum principal payments are as follows:
<TABLE>
<CAPTION>
MORTGAGE NOTES EQUIPMENT TOTAL LONG
DEBT PAYABLE NOTES TERM DEBT
-------- ------- --------- ----------
<S> <C> <C> <C> <C>
1998...................................... $ 177 $ 11 $24 $ 212
1999...................................... 170 12 24 206
2000...................................... 139 237 17 393
2001...................................... 1,382 13 -- 1,395
2002...................................... 15 25 -- 40
Thereafter................................ 82 -- -- 82
------ ---- --- ------
1,965 298 65 2,328
Less: current portion..................... 177 11 24 212
------ ---- --- ------
$1,788 $287 $41 $2,116
====== ==== === ======
</TABLE>
9. CAPITAL LEASE OBLIGATIONS:
As of December 31, 1997, future minimum lease payments under non-cancelable
capital leases are as follows:
<TABLE>
<S> <C>
1998.................................................................... $1,667
1999.................................................................... 1,392
2000.................................................................... 1,175
2001.................................................................... 917
2002.................................................................... 746
Thereafter.............................................................. 799
------
Total minimum lease payments............................................ 6,696
Less amount representing interest....................................... 1,442
------
Present value of future minimum lease payments.......................... 5,254
Less: current portion................................................... 1,168
------
Total capital lease obligations, net of current portion................. $4,086
======
</TABLE>
10. COMMITMENTS AND CONTINGENCIES:
The Company retained the services of a former shareholder, who is also a
current director, as a technical consultant, for the ten year period beginning
August 1, 1992, for an annual fee of $60.
From time to time the Company is a party to litigation or administrative
proceedings relating to claims arising from its operations in the normal
course of business. Management of the Company, on the advice of counsel,
believes that the ultimate resolution of litigation currently pending against
the Company is unlikely, either individually or in the aggregate, to have a
material adverse effect on the Company's business, financial condition or
results of operations.
F-12
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
11. STOCK BASED COMPENSATION PLANS:
Stock Options
The Company has issued non-qualified stock options to employees and
consultants. The following option activity occurred in the three years ended
December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS GRANTED AND OUTSTANDING
-------------------------------
WEIGHTED
AVERAGE
EXERCISE
EXERCISE PRICE PER
SHARES PRICE SHARE
--------- ----------- ---------
<S> <C> <C> <C>
Balance, January 1, 1995........................ 100,000 $0.10 $0.10
Options granted................................. 295,000 $0.10-$7.50 $3.11
--------- ----------- -----
Balance, December 31, 1995...................... 395,000 $0.10-$7.50 $2.34
Options granted................................. 51,000 $0.10 $0.10
--------- ----------- -----
Balance, December 31, 1996...................... 446,000 $0.10-$7.50 $2.09
Options granted................................. 554,000 $1.00-$5.00 $2.10
--------- ----------- -----
Balance, December 31, 1997...................... 1,000,000 $0.10-$7.50 $2.09
========= =========== =====
</TABLE>
In connection with the grant of options for the purchase of 554,000 shares
of Common Stock to employees during the period from January 1, 1997 through
December 31, 1997, the Company recorded aggregate deferred compensation
expense of approximately $389 representing the difference between the deemed
fair value of the Common Stock and the option exercise price at date of grant.
Such deferred compensation will be amortized over the vesting period relating
to these options, of which $117 has been amortized during the year ended
December 31, 1997, and is included in the statement of operations within the
caption "Stock-based compensation expense".
Stock Compensation
Effective January 1, 1996 the Company has adopted the disclosure-only
provision of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS No. 123). The Company, however, applies
APB Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its stock-based compensation. Determination
of compensation cost for stock-based compensation based on the fair value of
the grant date for awards consistent with provisions of SFAS No. 123 would not
result in a significant difference from the reported net income for the
periods presented.
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Net income.................................................. $ 508 $1,018
Accretion on mandatorily redeemable preferred stock......... (1,288) (1,469)
------ ------
Net (loss) available to common shareholders................. $ (780) $ (451)
Net (loss)--FAS 123 adjusted ............................... $ (780) $ (593)
Earnings per share--as reported (Note 14)
Basic and diluted........................................... $(0.10) $(0.06)
Earnings per share--FAS 123 adjusted
Basic and diluted........................................... $(0.10) $(0.08)
</TABLE>
F-13
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
The fair value of each option grant for the Plan is estimated on the date of
the grant using the Black-Scholes option-pricing model with weighted average
risk free interest rates of 6.47% and 6.16% in 1996 and 1997, respectively,
and an expected life of 5 years, no dividends and 0% volatility in all
periods.
The following table summarizes the stock options outstanding at December 31,
1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------- -----------------------------
WEIGHTED
WEIGHTED AVERAGE
AVERAGE WEIGHTED WEIGHTED FAIR
RANGE OF REMAINING AVERAGE AVERAGE VALUE AT
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE DATE OF
PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE GRANT
-------- ----------- ----------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$0.10 316,000 -- $0.10 221,492 $0.10 $0.10
$1.00 403,500 -- $1.00 47,435 $1.00 $2.00
$5.00 180,500 -- $5.00 30,000 $5.00 $5.00
$7.50 100,000 -- $7.50 -- $7.50 $0.10
</TABLE>
Restricted Stock
During 1992, 1993 and 1994, the Company agreed to issue at no cost a total
of 1,013,475 common shares to its majority shareholder and president. The
agreement required that the shareholder/president remain employed by the
Company through December 31, 1996. Deferred compensation expense represents
the difference between the issue price of the restricted stock and the deemed
fair value of the shares for financial statement purposes. Deferred
compensation was amortized over the employment period during which the shares
were restricted. Compensation expense of $169 was recognized in both 1995 and
1996.
12. MANDATORILY REDEEMABLE PREFERRED STOCK:
ATG issued 900,000 shares of Series A Preferred Stock in 1994 at $5.00 per
share. ATG Richland issued 860,000 shares of Series A Preferred Stock in 1995
at $5.00 per share and 990,355 and 278,936 shares of Series B Preferred Stock
in 1996 and 1997, respectively, at $6.00 per share, under the following terms
and conditions:
Upon the written request of the holders of the Preferred Stock, but not
before the fifth anniversary of the issue date (third anniversary in the case
of the ATG Richland Series B Preferred Stock), the issuing corporation is
required to redeem the Preferred Stock held by holders thereof requesting such
redemption. The redemption price is $6.67 for ATG Series A Preferred Stock and
ATG Richland Series A Preferred Stock and $8.00 for ATG Richland Series B
Preferred Stock. The dividends accrete based on the effective interest method.
In the event of liquidation, dissolution or winding up of the issuing
corporation, the holders of Preferred Stock are entitled to a distribution in
preference to holders of Common Stock of the issuing corporation, equivalent
to the issue price plus a premium equal to 10% interest from the date of the
issue. If funds are insufficient for full payment of these amounts, the entire
assets and funds of the issuing corporation legally available are distributed
ratably among the holders of Preferred Stock. Certain property and equipment
has been provided as collateral for the Company's Series A Preferred Stock
issued in 1994.
Any dividends declared by the issuing corporation are to be distributed pari
passu among all holders of its Preferred Stock and all holders of its Common
Stock in proportion to the number of shares of Common Stock which would be
held by each such holder if all classes of Preferred Stock were converted into
Common Stock at the then effective conversion price.
F-14
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
Except as otherwise required by law and as to certain matters set forth in
the issuing corporation's articles of incorporation as requiring the prior
affirmative vote or written consent of the holders of not less than a majority
of the outstanding shares of Preferred Stock, the Preferred Stock is non-
voting.
The shares of each series of Preferred Stock are automatically converted
under defined circumstances into shares of the Company's Common Stock at
specified conversion ratios upon the occurrence of an initial public offering
of such Common Stock.
13. INCOME TAXES:
The components of income tax expense (benefit) are approximately as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Current
Federal.................................................... -- -- (383)
State...................................................... 2 2 158
Deferred:
Federal.................................................... -- -- 214
State...................................................... -- -- (34)
--- --- ----
Total.................................................... 2 2 (45)
--- --- ----
</TABLE>
The Company's effective tax rate differs from the U.S. federal statutory tax
rate, as follows:
<TABLE>
<CAPTION>
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Income tax provision at statutory rate.................... 34.0% 34.0% 34.0%
State taxes, net of federal tax effect.................... 0.8 0.1 1.6
Non-deductible items...................................... -- 0.5 3.2
Net operating loss benefit................................ (32.5) (29.5) (48.3)
Other..................................................... -- (4.8) 4.9
----- ----- -----
Effective tax rate........................................ 2.3% 0.3% (4.6)%
===== ===== =====
</TABLE>
Components of the deferred income tax balance are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Deferred tax assets...........................................
Net operating loss carryforwards............................ $741 $569 $308
Accrued expenses............................................ 25 34 245
Tax credits................................................. 100 100 120
Other....................................................... 14 17 24
---- ---- ----
Deferred tax assets....................................... $880 $720 $697
==== ==== ====
Deferred tax liabilities
Depreciation and amortization............................... $348 $310 $467
==== ==== ====
Valuation allowance........................................... (532) (410) --
---- ---- ----
Net deferred tax asset........................................ $-- $-- $230
==== ==== ====
</TABLE>
F-15
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
Although realization of the deferred tax assets is not assured, the Company
believes that all deferred tax assets will be realized.
As of December 31, 1997, the Company had Federal net operating loss
carryforwards (NOLs) of approximately $905,231 available to offset future
taxable income. These NOLs expire in the years 2009 through 2011. NOL's may be
limited pursuant to the limitation rules of Internal Revenue Code Section 382.
The change in valuation allowance was a net decrease of $410 for the year
ended December 31, 1997.
14. EARNINGS PER SHARE (EPS) DISCLOSURES:
In accordance with the disclosure requirements of SFAS 128, a reconciliation
of the numerator and denominator of basic and diluted EPS is provided as
follows:
<TABLE>
<CAPTION>
1997
1995 1996 1997 PRO FORMA
------ ------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Numerator--Basic and Diluted EPS
Net income............................... $ 66 $ 508 $1,018 $1,018
Accretion on mandatorily redeemable
preferred stock......................... (836) (1,288) (1,469) (1,469)
------ ------ ------ ------
Net loss available to common
shareholders............................ $ (770) $ (780) $ (451) (451)
====== ====== ======
Reversal of accretion on mandatorily
redeemable preferred stock.............. 1,469
------
Pro forma net income available to common
shareholders............................ $1,018
======
Denominator--Basic EPS
Common shares outstanding................ 7,439 7,532 7,532 7,532
Conversion of mandatorily redeemable
preferred stock......................... -- -- -- 3,984
Common equivalent shares pursuant to
Staff Accounting Bulletin No. 98........ -- -- -- --
------ ------ ------ ------
7,439 7,532 7,532 11,516
------ ------ ------ ------
Basic earnings (loss) per share............ $(0.10) $(0.10) $(0.06) $ 0.09
====== ====== ====== ======
Denominator--Diluted EPS
Denominator--Basic EPS..................... 7,439 7,532 7,532 11,516
Effect of Dilutive Securities
Common stock options..................... -- -- -- 768
------ ------ ------ ------
7,439 7,532 7,532 12,284
------ ------ ------ ------
Diluted earnings (loss) per share.......... $(0.10) $(0.10) $(0.06) $ 0.08
====== ====== ====== ======
</TABLE>
15. EMPLOYEE RETIREMENT PLAN:
The Company maintains a Qualified Retirement Plan (401(k) Plan) which covers
substantially all employees. Eligible employees may contribute up to 15% of
their annual compensation, as defined, to this plan. The Company may also make
a discretionary contribution. To date the Company has not made contributions
to the 401(k) Plan.
F-16
<PAGE>
ATG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(all dollar amounts in thousands, except per share data)
--------
16. SUBSEQUENT EVENTS:
In February 1998, the Company's Board of Directors ("the Board") authorized
the filing of a registration statement with the Securities and Exchange
Commission for the Company's initial public offering (the "Offering") of its
common stock. The Company and preferred shareholders agreed that all
outstanding shares of ATG Series A Preferred Stock and ATG Richland Series A
and Series B Preferred Stock automatically convert into 3,983,595 shares of
common stock of the Company upon completion of the Offering, assuming the
Offering gross proceeds are not less than $12,000 and the Offering is
completed on or prior to June 30, 1998. Such conversion is reflected in the
unaudited pro forma shareholders equity at December 31, 1997 in the
accompanying consolidated balance sheet. The underwriters of the public
Offering have been granted warrants, exercisable for a period of four years
beginning one year from the Offering date, to purchase up to 170,000 shares of
common stock at an exercise price per share equal to 120% of the initial
offering price to the public.
In February 1998, the Board approved the Company's Employee Stock Purchase
Plan ("the Purchase Plan") covering an aggregate of 200,000 shares of common
stock. The Purchase Plan is intended to qualify as an employee stock purchase
plan within the meaning of Section 423 of the Internal Revenue Code of 1986.
Under the Purchase Plan, the Board may authorize participation by eligible
employees of the Company, including officers, in periodic offerings following
the adoption of the Purchase Plan.
In February 1998, the Board adopted the Company's 1998 Stock Ownership
Incentive Plan (the "Incentive Plan"). The Incentive Plan authorizes the award
of stock options, shares of restricted stock and performance units (which may
be paid in cash or shares of Common Stock). The Incentive Plan reserves for
issuance an aggregate of 500,000 shares of Common Stock, no more than 250,000
shares of which may be issued in the form of shares of restricted stock. The
Incentive Plan is intended to advance the interests of the Company by
encouraging the Company's employees who contribute to the Company's long-term
success and development to acquire and retain an ownership interest in the
Company. To date, no awards have been made under the Incentive Plan.
Stock options granted pursuant to the Incentive Plan may either be incentive
stock options ("ISOs") intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended, or stock options not intended to so qualify.
In February 1998, the Board adopted the Company's 1998 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan") to provide for the
automatic grant of options to purchase shares of Common Stock to non-employee
directors of the Company. The Directors' Plan is administered by the Board. To
date, no options have been granted under the Directors' Plan.
The maximum number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 200,000. Pursuant to the terms of
the Directors' Plan, each person serving as a director of the Company who is
not an employee of the Company (a "Non-Employee Director") shall automatically
be granted an option to purchase 20,000 shares of Common Stock upon the later
of the date such person first becomes a Non-Employee Director or the date of
the effectiveness of the initial public offering of the Common Stock, with
5,000 of such shares vesting immediately and the balance vesting in three
equal installments on the three succeeding anniversaries of the grant date.
In February 1998, the revolving credit facility described in Note 7 was
amended such that the Company may borrow up to the lesser of 90% of eligible
accounts receivable or $5,000. Certain of the covenants described in Note 7
were also amended.
F-17
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS OR ANY
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JU-
RISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICI-
TATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements................................................ 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 12
Dividend Policy........................................................... 12
Dilution.................................................................. 13
Capitalization............................................................ 14
Selected Consolidated Financial Data...................................... 15
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 16
Business.................................................................. 21
Management................................................................ 36
Certain Transactions...................................................... 43
Principal Shareholders.................................................... 44
Description of Capital Stock.............................................. 45
Shares Eligible for Future Sale........................................... 48
Underwriting.............................................................. 49
Legal Matters............................................................. 51
Experts................................................................... 51
Additional Information.................................................... 51
Glossary.................................................................. 52
Index to Financial Statements............................................. F-1
</TABLE>
----------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR NOT PARTICIPATING
IN THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1,700,000 SHARES
[LOGO OF ALLIED TECHNOLOGY APPEARS HERE]
COMMON STOCK
----------------
PROSPECTUS
----------------
VAN KASPER & COMPANY
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an itemized statement of all expenses to be
incurred in connection with the issuance and distribution of the securities
that are the subject of this Registration Statement other than underwriting
discounts and commissions. All expenses incurred with respect to the
distribution will be paid by the Company, and such amounts, other than the
Securities and Exchange Commission registration fee and the NASD filing fee,
are estimates only.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 5,768
NASD filing fee.................................................. 2,455
Nasdaq National Market listing fee............................... 50,000
Printing and engraving expenses.................................. 100,000
Transfer agent and registrar fees................................ 10,000
Legal fees and expenses.......................................... 250,000
Accounting fees and expenses..................................... 150,000
"Blue sky" fees and expenses..................................... 15,000
Directors and Officers Insurance................................. 100,000
Representative's non-accountable expense allowance............... 255,000
Other expenses................................................... 61,777
----------
Total........................................................ $1,000,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation ("Articles") provide that, pursuant
to the California Corporations Code, the liability of the directors of the
Company for monetary damages shall be eliminated to the fullest extent
permissible under California law. This is intended to eliminate the personal
liability of a director for monetary damages in an action brought by, or in
the right of, the Company for breach of a director's duties to the Company or
its shareholders. This provision in the Articles does not eliminate the
directors' fiduciary duty and does not apply for certain liabilities: (i) for
acts or omissions that involve intentional misconduct or a knowing and
culpable violation of law; (ii) for acts or omissions that a director believes
to be contrary to the best interests of the Company or its shareholders or
that involve the absence of good faith on the part of the director; (iii) for
any transaction from which a director derived an improper personal benefit;
(iv) for acts or omissions that show a reckless disregard for the director's
duty to the Company or its shareholders in circumstances in which the director
was aware, or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the Company or its
shareholders; (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
Company or its shareholders; (vi) with respect to certain transactions or the
approval of transactions in which a director has a material financial
interest; and (vii) expressly imposed by statute for approval of certain
improper distributions to shareholders or certain loans or guarantees. This
provision also does not limit or eliminate the rights of the Company or any
shareholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care.
Section 317 of the California Corporations Code ("Section 317") provides
that a California corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative
(other than action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, or 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 or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was
unlawful.
II-1
<PAGE>
Section 317 also provides that a California corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect to any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court in which such action
or suit was brought shall determine that despite the adjudication of
liability, such person is fairly and reasonably entitled to be indemnified for
such expenses which the court shall deem proper.
Section 317 provides further that to the extent a director or officer of a
California corporation has been successful in the defense of any action, suit
or proceeding referred to in the previous paragraphs or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification authorized by Section 317 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 317.
The Underwriting Agreement to be filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Company and
its officers and directors for certain liabilities arising under the
Securities Act or otherwise.
The Company believes that it is the position of the Commission that insofar
as any of the foregoing provisions may be invoked to disclaim liability for
damages arising under the Securities Act, the provision is against public
policy as expressed in the Securities Act and is therefore unenforceable. Such
limitation of liability also does not affect the availability of equitable
remedies such as injunctive relief or rescission.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Except as set forth in this item, no securities of the Registrant have been
sold by the Registrant since January 1, 1994 without registration under the
Securities Act.
In February 1994, the Company sold 900,000 shares of its Series A Preferred
Stock for an aggregate purchase price of $4,500,000 to a number of Taiwanese
investors and Taiwanese expatriates in the United States. The Company employed
the services of a private placement agent to whom it paid a placement fee of
5% in connection with this transaction.
In March 1995, the Company's subsidiary, ATG Richland Corporation ("ATG
Richland"), sold 860,000 shares of its Series A Redeemable Non-Voting
Preferred Stock for an aggregate purchase price of $4,300,000 to a number of
Taiwanese investors and Taiwanese expatriates in the United States. The
Company employed the services of a private placement agent to whom it paid a
placement fee of 5% in connection with this transaction.
In June 1996, ATG Richland sold 990,355 shares of its Series B Redeemable
Non-Voting Preferred Stock for an aggregate purchase price of $5,942,130 to a
number of Taiwanese investors and Taiwanese expatriates in the United States.
The Company employed the services of a private placement agent to whom it paid
a placement fee of 5% in connection with this transaction.
In August 1997, ATG Richland sold 278,936 shares of its Series B Redeemable
Non-Voting Preferred Stock for an aggregate purchase price of $1,673,616 to a
number of Taiwanese investors and Taiwanese expatriates in the United States.
The Company employed the services of a private placement agent to whom it paid
a placement fee of 5% in connection with this transaction.
Since January 1, 1994, the Company has issued options to purchase a total of
1,000,000 shares of its Common Stock to a total of 45 officers, directors and
employees of the Company. The exercise price of the foregoing options granted
by the Company ranged from $0.10 to $7.50 per share.
II-2
<PAGE>
The Company believes that the issuances of preferred stock described above
were exempt from the registration requirements of the Securities Act, by
virtue of Section 4(2) thereof and/or Regulation S promulgated under the
Securities Act ("Regulation S"). The Company believes that the issuances of
options described above were exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) thereof or because the issuances of
such options did not involve the "sale," as such term is defined in Section
2(3) of the Securities Act, of a security.
In March 1998, the Company sought and received shareholder approval to amend
its Articles of Incorporation and those of ATG Richland to modify the terms of
the conversion rights attached to the Preferred Stock authorized to be issued
by each such entity. The Company did not pay or give, directly or indirectly,
any commission or other remuneration in connection with seeking such approval.
The Company believes that any offer and sale of Common Stock deemed to occur
in connection with the modification of such rights was exempt from the
registration requirements of the Securities Act by virtue of Section 3(a)(9)
thereof and/or Regulation S.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits, which are furnished with this Registration
Statement, are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
1.1 Form of Underwriting Agreement*
1.2 Form of Representative's Warrants*
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company*
3.3 Certificate of Amendment of Articles of Incorporation
4.1 Specimen Common Stock Certificate
5.1 Opinion and Consent of Graham & James LLP
9.1 Voting Trust Agreement*
10.1 Assumption Agreement, dated September 2, 1992, between the Company, as
transferee, Tippett-Richardson, as transferor, and Confederation Life
Insurance Company, as lender*
10.2 Deed of Trust (Non-Construction) & Assignment of Rents, dated
September 18, 1997, between the Company, as trustor, First Bancorp, as
trustee, and Sanwa Bank California, as beneficiary*
10.3 Deed of Trust, dated August 5, 1993, between the Company and ATG
Richland, collectively as trustor, Chicago Title Insurance Company, as
trustee, and West One Bank, as beneficiary*
10.4 Term Loan Agreement, dated September 18, 1997, between the Company and
Sanwa Bank California*
10.5 Letter from the Company to Steve Guerrettaz, dated December 2, 1997,
regarding terms of employment*
10.6 Letter from the Company to Fred Feizollahi, dated February 20, 1995,
regarding terms of employment*
10.7 Consultant Agreement, dated as of July 1, 1992, between the Company
and Edward Vinecour*
10.8 Non-Competition Agreement, dated as of July 1, 1992, between the
Company and Edward Vinecour*
10.9 Collective Bargaining Agreement between the Company and the
International Union of Operating Engineers No. 280*
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
10.10 Form of Stock Purchase Agreement*
10.11 Continuing Guaranty, dated as of April 19, 1996, provided by Doreen
Chiu in favor of Sanwa Bank*
10.12 Continuing Guaranty, dated as of April 19, 1996, provided by Frank
Chiu in favor of Sanwa Bank*
10.13 Continuing Guaranty, dated as of May 20, 1997, provided by Doreen Chiu
in favor of Safeco Credit Company, Inc.*
10.14 Continuing Guaranty, dated as of May 20, 1997, provided by Frank Chiu
in favor of Safeco Credit Company, Inc.*
10.15 Small Business Administration (SBA) Guaranty, dated August 6, 1993,
provided by Doreen Chiu and Frank Chiu in favor of West One Bank*
10.16 Guaranty Agreement, dated September 1, 1994, provided by Doreen Chiu
and Frank Chiu in favor of Great Western Leasing*
10.17 Guaranty, dated January 13, 1994, provided by Doreen Chiu and Frank
Chiu in favor of The CIT Group/Equipment Financing Inc.*
10.18 Guaranty of Commercial Lease Agreement, dated December 20, 1994,
provided by Doreen Chiu and Frank Chiu in favor of California Thrift &
Loan*
10.19 Contract No. MGK-SBB-A26602, dated September 5, 1997, awarded to the
Company by Waste Management Federal Services of Hanford, Inc.+
10.20 Purchase Order No. MW6-SBV-357079, dated November 3, 1995, issued to
the Company by Westinghouse Hanford Company+
10.21 Contract No. DE-AC06-95RL13129, dated January 4, 1995, among the U.S.
Department of Energy, as the procuring agency, the U.S. Small Business
Administration, as contractor, and the Company, as subcontractor+
10.22 Gasification Vitrification Chamber Purchase and License Agreement,
dated August 1997, between the Company and Integrated Environmental
Technologies, LLC+
10.23 Purchase Agreement between the Company and Integrated Environmental
Technologies, LLC+
10.24 Technology Transfer Purchase and Royalty Fee Agreement, dated
September 30, 1997, between the Company and Regent Star Ltd.+
10.25 Technology Transfer and Purchase Agreement, dated June 28, 1997,
between the Company and Pacific Trading Company+
10.26 Contract No. DACW05-98-C-0001, dated September 24, 1997, awarded to
the Company by the U.S. Army Corps of Engineers, Sacramento District+
10.27 Contract No. DAKF04-92-D-0007, dated February 8, 1991, among the Fort
Irwin Directorate of Contracting, as the procuring agency, the U.S.
Small Business Administration, as contractor, and the Company, as
subcontractor+
10.28 Promissory Note, dated December 31, 1997, provided by the Company to
Doreen M. Chiu*
10.29 1998 Stock Ownership Incentive Plan
10.30 Employee Stock Purchase Plan
10.31 1998 Non-Employee Directors Stock Option Plan
10.32 Letter of Credit Agreement, dated March 6, 1998, between the Company
and Sanwa Bank California
10.33 Continuing Guaranty, dated as of March 6, 1998, provided by Doreen M.
Chiu in favor of Sanwa Bank California
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
10.34 Continuing Guaranty, dated as of March 6, 1998, provided by Frank Y.
Chiu in favor of Sanwa Bank California
10.35 Indemnity Agreement, dated August 12, 1992, made and entered into by
Doreen M. Chiu, Frank Y. Chiu, the Company and National Safety
Consultants, Inc. in favor of ACTSTAR Insurance Company
10.36 Continuing Agreement of Indemnity--Contractors' Form, dated March 19,
1998, made and entered into by Doreen M.Chiu, Frank Y. Chiu and the
Company for the benefit of Reliance Insurance Company, United Pacific
Insurance Company, Reliance National Indemnity Company and Reliance
Surety Company
10.37 Purchase Order, dated February 10, 1996, issued by the Company to
ToxGon Corporation+
11.1 Statement regarding computation of earnings per share*
16.1 Letter regarding change in certifying accountant
21.1 List of Subsidiaries of Registrant*
23.1 Consent of Graham & James LLP (included in its opinion to be filed as
Exhibit 5.1 hereto)
23.2 Consent of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (included in signature page)*
27.1 Financial Data Schedule*
99.1 Consent of Andrew C. Kadak
99.2 Consent of Earl E. Gjelde
99.3 Consent of William M. Hewitt
99.4 Consent of Steven J. Guerrettaz
99.5 Consent of Yasushi Chikagami
</TABLE>
- ---------------------
* Previously filed with the Company's Registration Statement filed on February
11, 1998.
+ Certain portions of this agreement have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for an
order granting confidential treatment pursuant to Rule 406 of the General
Rules and Regulations under the Securities Act.
(b) The following financial statement schedule is included herein:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedule II--Valuation and Qualifying Accounts.......................... S-2
</TABLE>
II-5
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
Rule 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Fremont, State of California, on March 31, 1998.
ATG INC.
/s/ Doreen M. Chiu
By: _________________________________
Doreen M. Chiu
Chairman, Chief Executive Officer
and President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Doreen M. Chiu Chairman, Chief Executive March 31, 1998
____________________________________ Officer and President
Doreen M. Chiu (Principal Executive
Officer)
/s/ Steven J. Guerrettaz Chief Financial Officer March 31 , 1998
____________________________________ (Principal Financial and
Steven J. Guerrettaz Accounting Officer)
/s/ Frank Y. Chiu Director March 31, 1998
____________________________________
Frank Y. Chiu
/s/ Edward L. Vinecour Director March 31, 1998
____________________________________
Edward L. Vinecour
</TABLE>
II-7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
ATG Inc. and Subsidiary:
Our report on the consolidated financial statements of ATG Inc. and
subsidiary is included on page F-2 of this Form S-1. In connection with our
audits of the financial statements, we have also audited the related financial
statement schedule on page S-2.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
San Jose California
January 31, 1998
S-1
<PAGE>
ATG INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
ACCOUNT DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS END OF PERIOD
------------------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Allowance for doubtful
accounts:
Year ended December 31,
1995................... $40 $ -- $-- $ 40
Year ended December 31,
1996................... 40 6 -- 46
Year ended December 31,
1997................... 46 73 -- 119
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
1.1 Form of Underwriting Agreement*
1.2 Form of Representative's Warrants*
3.1 Articles of Incorporation of the Company*
3.2 Bylaws of the Company*
3.3 Certificate of Amendment of Articles of Incorporation
4.1 Specimen Common Stock Certificate
5.1 Opinion and Consent of Graham & James LLP
9.1 Voting Trust Agreement*
10.1 Assumption Agreement, dated September 2, 1992, between the Company, as
transferee, Tippett-Richardson, as transferor, and Confederation Life
Insurance Company, as lender*
10.2 Deed of Trust (Non-Construction) & Assignment of Rents, dated
September 18, 1997, between the Company, as trustor, First Bancorp, as
trustee, and Sanwa Bank California, as beneficiary*
10.3 Deed of Trust, dated August 5, 1993, between the Company and ATG
Richland, collectively as trustor, Chicago Title Insurance Company, as
trustee, and West One Bank, as beneficiary*
10.4 Term Loan Agreement, dated September 18, 1997, between the Company and
Sanwa Bank California*
10.5 Letter from the Company to Steve Guerrettaz, dated December 2, 1997,
regarding terms of employment*
10.6 Letter from the Company to Fred Feizollahi, dated February 20, 1995,
regarding terms of employment*
10.7 Consultant Agreement, dated as of July 1, 1992, between the Company
and Edward Vinecour*
10.8 Non-Competition Agreement, dated as of July 1, 1992, between the
Company and Edward Vinecour*
10.9 Collective Bargaining Agreement between the Company and the
International Union of Operating Engineers No. 280*
10.10 Form of Stock Purchase Agreement*
10.11 Continuing Guaranty, dated as of April 19, 1996, provided by Doreen
Chiu in favor of Sanwa Bank*
10.12 Continuing Guaranty, dated as of April 19, 1996, provided by Frank
Chiu in favor of Sanwa Bank*
10.13 Continuing Guaranty, dated as of May 20, 1997, provided by Doreen Chiu
in favor of Safeco Credit Company, Inc.*
10.14 Continuing Guaranty, dated as of May 20, 1997, provided by Frank Chiu
in favor of Safeco Credit Company, Inc.*
10.15 Small Business Administration (SBA) Guaranty, dated August 6, 1993,
provided by Doreen Chiu and Frank Chiu in favor of West One Bank*
10.16 Guaranty Agreement, dated September 1, 1994, provided by Doreen Chiu
and Frank Chiu in favor of Great Western Leasing*
10.17 Guaranty, dated January 13, 1994, provided by Doreen Chiu and Frank
Chiu in favor of The CIT Group/Equipment Financing Inc.*
10.18 Guaranty of Commercial Lease Agreement, dated December 20, 1994,
provided by Doreen Chiu and Frank Chiu in favor of California Thrift &
Loan*
10.19 Contract No. MGK-SBB-A26602, dated September 5, 1997, awarded to the
Company by Waste Management Federal Services of Hanford, Inc.+
</TABLE>
<PAGE>
EXHIBIT INDEX--(CONTINUED)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
10.20 Purchase Order No. MW6-SBV-357079, dated November 3, 1995, issued to
the Company by Westinghouse Hanford Company+
10.21 Contract No. DE-AC06-95RL13129, dated January 4, 1995, among the U.S.
Department of Energy, as the procuring agency, the U.S. Small Business
Administration, as contractor, and the Company, as subcontractor+
10.22 Gasification Vitrification Chamber Purchase and License Agreement,
dated August 1997, between the Company and Integrated Environmental
Technologies, LLC+
10.23 Purchase Agreement between the Company and Integrated Environmental
Technologies, LLC+
10.24 Technology Transfer Purchase and Royalty Fee Agreement, dated
September 30, 1997, between the Company and Regent Star Ltd.+
10.25 Technology Transfer and Purchase Agreement, dated June 28, 1997,
between the Company and Pacific Trading Company+
10.26 Contract No. DACW05-98-C-0001, dated September 24, 1997, awarded to
the Company by the U.S. Army Corps of Engineers, Sacramento District+
10.27 Contract No. DAKF04-92-D-0007, dated February 8, 1991, among the Fort
Irwin Directorate of Contracting, as the procuring agency, the U.S.
Small Business Administration, as contractor, and the Company, as
subcontractor+
10.28 Promissory Note, dated December 31, 1997, provided by the Company to
Doreen M. Chiu*
10.29 1998 Stock Ownership Incentive Plan
10.30 Employee Stock Purchase Plan
10.31 1998 Non-Employee Directors Stock Option Plan
10.32 Letter of Credit Agreement, dated March 6, 1998, between the Company
and Sanwa Bank California
10.33 Continuing Guaranty, dated as of March 6, 1998, provided by Doreen M.
Chiu in favor of Sanwa Bank California
10.34 Continuing Guaranty, dated as of March 6, 1998, provided by Frank Y.
Chiu in favor of Sanwa Bank California
10.35 Indemnity Agreement, dated August 12, 1992, made and entered into by
Doreen M. Chiu, Frank Y. Chiu, the Company and National Safety
Consultants, Inc. in favor of ACTSTAR Insurance Company
10.36 Continuing Agreement of Indemnity--Contractors' Form, dated March 19,
1998, made and entered into by Doreen M.Chiu, Frank Y. Chiu and the
Company for the benefit of Reliance Insurance Company, United Pacific
Insurance Company, Reliance National Indemnity Company and Reliance
Surety Company
10.37 Purchase Order, dated February 10, 1996, issued by the Company to
ToxGon Corporation+
11.1 Statement regarding computation of earnings per share*
16.1 Letter regarding change in certifying accountant
21.1 List of Subsidiaries of Registrant*
23.1 Consent of Graham & James LLP (included in its opinion to be filed as
Exhibit 5.1 hereto)
23.2 Consent of Coopers & Lybrand L.L.P.
</TABLE>
<PAGE>
EXHIBIT INDEX--(CONTINUED)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
<C> <S>
24.1 Power of Attorney (included in signature page)*
27.1 Financial Data Schedule*
99.1 Consent of Andrew C. Kadak
99.2 Consent of Earl E. Gjelde
99.3 Consent of William M. Hewitt
99.4 Consent of Steven J. Guerrettaz
99.5 Consent of Yasushi Chikagami
</TABLE>
- ---------------------
* Previously filed with the Company's Registration Statement filed on February
11, 1998.
+ Certain portions of this agreement have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for an
order granting confidential treatment pursuant to Rule 406 of the General
Rules and Regulations under the Securities Act.
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION
OF
ATG INC.,
a California Corporation
Doreen M. Chiu and Frank Y. Chiu certify that:
1. They are the duly elected President and Secretary, respectively, of
ATG Inc., a California corporation (the "Corporation").
2. The second paragraph of Section (b)(3)(a) of Article III of the
Amended and Restated Articles of Incorporation of the Corporation (the
"Articles") is amended to read as follows, in its entirety:
"Subject to the following sentence, each share of Series A Preferred
Stock shall be automatically converted into shares of Common Stock at
the then effective Conversion Price (i) upon the effectiveness of a
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock for the account of the
Corporation to the public at a price per share of at least $10.00 (as
adjusted for stock splits, reverse stock splits and the like effected
after the date on which the first share of Series A Preferred Stock is
issued (the "Original Issue Date")) and an aggregate offering price to
the public of not less than $15,000,000 or (ii) at the election of the
holders of a majority of the outstanding shares of Series A Preferred
Stock. Notwithstanding the preceding sentence, upon the effectiveness
of a firm commitment underwritten public offering covering the offer
and sale of Common Stock for the account of the Corporation having an
aggregate offering price to the public of not less than $12 million and
closing on or prior to June 30, 1998, each share of Series A Preferred
Stock shall be automatically converted into 1-2/3 shares of Common
Stock. In the event of the occurrence of a public offering upon the
terms and conditions set forth in either of the two preceding
sentences, the person(s) entitled to receive the Common Stock issuable
upon such conversion of Series A Preferred
<PAGE>
Stock shall not be deemed to have converted such Series A Preferred
Stock until immediately prior to the closing of such public offering."
3. The foregoing amendment of the Articles has been duly approved by
the Board of Directors of the Corporation pursuant to Section 902 of the
California Corporations Code (the "Corporations Code").
4. The foregoing amendment of the Articles has been duly approved by
the required vote of the shareholders of the Corporation pursuant to Sections
902 and 903 of the Corporations Code. The Corporation has two classes of shares,
Common Stock and Series A Preferred Stock (the "Preferred Stock"). Prior to the
approval of the foregoing amendment, the number of issued and outstanding shares
of Common Stock and Preferred Stock entitled to vote with respect to the
foregoing amendment were 7,532,301 and 900,000, respectively. The number of
shares of Common Stock voting in favor of the amendment exceeded the vote
required in that the affirmative vote of a majority of the outstanding shares of
Common Stock was required for approval of the amendment and the amendment was
approved by the affirmative vote of 90% of the outstanding shares of Common
Stock. The number of shares of Preferred Stock voting in favor of the amendment
exceeded the vote required in that the affirmative vote of a majority of the
outstanding shares of Preferred Stock was required for approval of the amendment
and the amendment was approved by the affirmative vote of 90% of the outstanding
shares of Preferred Stock.
-2-
<PAGE>
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.
DATED: March 15, 1998 /s/ Doreen M. Chiu
-------------------------------
Doreen M. Chiu, President
/s/ Frank Y. Chiu
-------------------------------
Frank Y. Chiu, Secretary
-3-
<PAGE>
COMMON STOCK COMMON STOCK
NUMBER SHARES
ATG ATG, INC.
INCORPORATED UNDER THE LAWS SEE REVERSE FOR STATEMENTS RELATING
OF THE STATE OF CALIFORNIA TO RIGHTS, PREFERENCES
PRIVILEGES AND RESTRICTIONS, IF ANY
CUSIP 00206P 10 6
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE, OF
ATG INC.
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 and registered by
the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
/s/ FRANK Y. CHIU ATG INC. /s/ DOREEN M. CHIU
---------------------- (SEAL) ----------------------
Frank Y. Chiu Doreen M. Chiu
SECRETARY PRESIDENT AND CHIEF
EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
EXHIBIT 5.1
April 1, 1998
ATG Inc.
47375 Fremont Boulevard
Fremont, California 94538
Ladies and Gentlemen:
We have acted as counsel for ATG Inc., a California corporation (the "Company"),
in connection with the preparation and filing of a registration statement on
Form S-1 (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") relating to the public offering by the Company of
1,700,000 shares of its Common Stock, no par value per share, plus an additional
255,000 shares of such Common Stock to cover over-allotments, if any
(collectively, the "Shares").
In connection with the opinions expressed herein, we have examined the following
documents: (i) the Registration Statement (including exhibits thereto); (ii) the
Articles of Incorporation of the Company, as amended; (iii) the Bylaws of the
Company, as amended; (iv) the minute books of the Company; (v) the form of
Underwriting Agreement (the "Underwriting Agreement") to be executed and
delivered by the Company and Van Kasper & Company (the "Underwriter"); (vi) the
form of Common Stock certificate of the Company; and (vii) such other documents
as we have deemed necessary or appropriate.
In our examinations, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, photostatic or facsimile copies and the
authenticity of the originals of such documents. For purposes of rendering the
opinion expressed herein, we have further expressly assumed that the
Registration Statement, as amended by Amendment No. 1 thereto filed with the
Commission on April 1, 1998, will be identical to the Registration Statement in
the form that is declared
<PAGE>
ATG Inc.
April 1, 1998
Page 2
effective by the Commission, and that the Underwriting Agreement as executed and
delivered by the Company and the Underwriter will be substantially the same as
the form of Underwriting Agreement attached as Exhibit 1.1 to the Registration
Statement, as amended by Amendment No. 1 thereto.
Based upon our examination of the foregoing documents, and expressly subject to
the assumptions set forth above, it is our opinion that, when issued and paid
for upon the effectiveness of the Registration Statement and in accordance with
the terms of the Underwriting Agreement and the final Prospectus contained in
the Registration Statement, the Shares will be validly issued, fully paid and
non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to Graham & James LLP under the caption "Legal
Matters" in the Prospectus contained within the Registration Statement.
Very truly yours,
GRAHAM & JAMES LLP
<PAGE>
EXHIBIT 10.19
CONTRACT
ALLIED TECHNOLOGY GROUP
CONTRACT NO. MGK-SBB-A26602
A-6001-696 (10/96) [LOGO] WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC
<TABLE>
<CAPTION>
Telephone 509/ 376-5998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Total Pages (Buyer Insert)
Mo/Day/Yr. Page Inquiry No. Vendor Code Contract No.
09/05/1997 1 W-A26602 79849 MGK-SBB-A26602
IMPORTANT
ALLIED TECHNOLOGY GROUP Show Contract No. on all packages, invoices, and
correspondence. Complete packaging list must accompany each
shipment. Failure to properly identify will delay receipt of
shipment and payment.
2025 BATTELLE BLVD SHIP TO:
RICHLAND WA 99352 1. Central Receiving
[1] 2355 Stevens Drive
Richland, Washington 99352
F.O.B Date Delivery Required at F.O.B. Point Buyer 2. As indicated below.
RICHLAND, WA 09/30/99 K GIER GI-69
Terms of Payment Code Ship Via
NET 30 DAYS 10 PREPAID
ITEM QUANTITY U/M DESCRIPTION UNIT PRICE TOTAL PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
Confirming Contract if Checked [_]
NO WASTE SHALL BE DELIVERED FOR TREATMENT UNDER THIS CONTRACT UNTIL
AN ENVIRONMENTAL REVIEW AND ASSESSMENT OF THE TREATMENT FACILITY HAS
BEEN CONDUCTED BY WMH AND THE CONTRACTOR HAS BEEN ADDED TO THE FLUOR
DANIEL HANFORD EVALUATED SUPPLIER LIST.
NOT-TO-EXCEED
1 PROVIDE TREATMENT OF DEBRIS & INORGANIC 200000.00 200000.00
NON-DEBRIS MIXED WASTE IN ACCORDANCE
WITH THE ATTACHED STATEMENTS OF WORK
(SOW), DATED SEPTEMBER 1, 1997
TOTAL VALUE OF THIS ORDER 200000.00
- ------------------------------------------------------------------------------------------------------------------------------------
Billing Instructions: Render invoices in duplicate to
Provisions of the terms Attention: Accounts Payable (MSIN G1-801
and conditions specifically Fluor Daniel Hanford, Inc.
included herein are made a P.O. Box 1000
part of this contract. Richland, WA 99352.
Fluor Daniel Hanford, Inc. checks will be used to pay invoices. [SIGNATURE ELIGIBLE] 9-5-97
-----------------------------
Attach original bill of lading on all collect shipments and support Signature Date
all prepaid freight charges with the original paid freight bill.
</TABLE>
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.
<PAGE>
A-6001-696 (10/96) LOGO WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC.
CONTRACT
<TABLE>
<CAPTION>
DEAN, BE Telephone 509/ 376-5998
- ------------------------------------------------------------------------------------------------------------------------------------
Total Pages (Buyer Insert)
<S> <C> <C>
Mo/Day/Yr. Page Inquiry No. Vendor Code Contract No.
09/05/1997 1 W-A26602 79849 MGK-SBB-A26602
IMPORTANT
ALLIED TECHNOLOGY GROUP Show Contract No. on all packages, invoices, and correspondence.
Complete packing list must accompany each shipment. Failure to
properly identify will delay receipt of shipment and payment.
2025 BATTELLE BLVD SHIP TO:
RICHLAND WA 99352 1. Central Receiving
[1] 2355 Stevens Drive
Richland, Washington 99352
F.O.B Date Delivery Required at F.O.B. Point Buyer 2. As indicated below.
RICHLAND, WA 09/30/99 K GIER GI-69
Terms of Payment Code Ship Via
NET 30 DAYS 10 PREPAID
ITEM QUANTITY U/M DESCRIPTION UNIT PRICE TOTAL PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
Confirming Contract if Checked [_]
NO WASTE SHALL BE DELIVERED FOR TREATMENT UNDER THIS CONTRACT UNTIL
AN ENVIRONMENTAL REVIEW AND ASSESSMENT OF THE TREATMENT FACILITY HAS
BEEN CONDUCTED BY WMH AND THE CONTRACTOR HAS BEEN ADDED TO THE FLUOR
DANIEL HANFORD EVALUATED SUPPLIER LIST.
NOT-TO-EXCEED
1 PROVIDE TREATMENT OF DEBRIS & INORGANIC 200000.00 200000.00
NON-DEBRIS MIXED WASTE IN ACCORDANCE
WITH THE ATTACHED STATEMENTS OF WORK
(SOW), DATED SEPTEMBER 1, 1997
TOTAL VALUE OF THIS ORDER 200000.00
- ------------------------------------------------------------------------------------------------------------------------------------
If requested, contractor shall acknowledge acceptance by completing the
spaces provided below and returning the signed copy to the buyer within
five (5) working days of receipt.
President, Waste
Name (print or type) Bill Hewitt Title Mgmt. Operations Date 12-1-97 [SIGNATURE ILLEGIBLE] 9-5-97
---------------- ------- ----------------------------
Signature /s/ Bill Hewitt Contractor's Reference No.__________ Signature Date
--------------------
</TABLE>
<PAGE>
Mixed Waste Debris/Non-Debris Combined Contract No. MGK-SBB-A2660
Attachment 2
CONTRACT VALUE PRICING SUMMARY SHEET
<TABLE>
<CAPTION>
<S> <C>
Firm Fixed Unit
DEBRIS - DRUMS Price, $/m/3/ Est. Qty.
1. Base Period, FY99 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 200
DEBRIS - BOXES
2. Base Period, FY99 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 260
3. Option Year 1, FY2000 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 500
NON-DEBRIS - BASE PERIOD, FY98 AND/OR FY99
4. Total FY98 and/or FY99 Billing Price [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 100
5. Subtotal Treatment Price (Excludes adjustment for 6% local area preference)
UNEVALUATED PRICED OPTIONS - ONLY FOR DETERMINING MAXIMUM CONTRACT VALUE
Firm Fixed Unit
DEBRIS - DRUMS Price, $/m/3/ Est. Qty.
6. Option Period, FY2000 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 200
DEBRIS - BOXES
7. Option Year 2, FY2001 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 500
NON-DEBRIS
8. Opt. Period FY99 and/or FY2000 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.] X 100
9. MAXIMUM CONTRACT VALUE WITH ALL OPTIONS
<CAPTION>
DEBRIS - DRUMS Extended Price
1. Base Period, FY99 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
DEBRIS - BOXES
2. Base Period, FY99 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
3. Option Year 1, FY2000 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
NON-DEBRIS - BASE PERIOD, FY98 AND/OR FY99
4. Total FY98 and/or FY99 Billing Price [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
5. Subtotal Treatment Price (Excludes adjustment for 6% local area preference) [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
UNEVALUATED PRICED OPTIONS - ONLY FOR DETERMINING MAXIMUM CONTRACT VALUE
DEBRIS - DRUMS Extended Price
6. Option Period, FY2000 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
DEBRIS - BOXES
7. Option Year 2, FY2001 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
NON-DEBRIS
8. Opt. Period FY99 and/or FY2000 Billing Rate [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
9. MAXIMUM CONTRACT VALUE WITH ALL OPTIONS [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
</TABLE>
<PAGE>
CONTRACT MGK-SBB-A26602
SECTION "A" SOLICITATION
PAGE 1
AWARD NOTIFICATION (A57X-GK)
IN ACCORDANCE WITH THIS CONTRACT AND ALL REQUIREMENTS AND CONDITIONS ATTACHED OR
INCORPORATED BY REFERENCE INCLUDED HEREIN, ALLIED TECHNOLOGY GROUP, INC. (ATG),
HEREINAFTER REFERRED TO AS THE "CONTRACTOR", IS AWARDED A FIRM-FIXED-UNIT-PRICE
CONTRACT FOR MIXED WASTE INORGANIC NON-DEBRIS AND DEBRIS TREATMENT AS SPECIFIED
IN THE ATTACHED STATEMENTS OF WORK (SOW).
TERM OF CONTRACT/ESTIMATED QUANTITY (AIX-GK)
THE FOLLOWING ESTIMATED QUANTITIES AND PERIODS OF PERFORMANCE APPLY.
NON-DEBRIS THE BASE CONTRACT PERIOD (FY 1998 AND/OR FY 1999) IS FOR
TREATMENT OF 100 CUBIC METERS OF WASTE. THE OPTION PERIOD, (FY
1999 AND/OR FY2000), IS FOR TREATMENT OF A MAXIMUM OF 100
ADDITIONAL CUBIC METERS OF WASTE.
DEBRIS (DRUMS) THE BASE CONTRACT PERIOD (FY 1999) IS FOR TREATMENT OF 200 CUBIC
METERS OF WASTE. THE OPTION PERIOD (FY 2000) IS FOR TREATMENT OF
A MAXIMUM OF 200 ADDITIONAL CUBIC METERS OF WASTE.
DEBRIS (BOXES) THE BASE CONTRACT PERIOD (FY 1999) IS FOR TREATMENT OF 260 CUBIC
METERS OF WASTE. OPTION 1 IN FY 2000 IS FOR AN ADDITIONAL 500
CUBIC METERS OF WASTE AND OPTION 2 IN FY 2001 IS FOR TREATMENT OF
A MAXIMUM OF 500 ADDITIONAL CUBIC METERS OF WASTE.
NEPA DOCUMENTATION SUBMITTAL, PERMITTING, AND LICENSING (A2X-GK)
AN ENVIRONMENTAL ASSESSMENT (EA) SHALL BE PREPARED BY THE CONTRACTOR AND
SUBMITTED TO DOE-RL IN ACCORDANCE WITH THE SOW SECTION 5.0 "NATIONAL
ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE."
IF, AS A RESULT OF COMPLETING THE EA, DOE ELEVATES THE NEPA REVIEW TO AN
ENVIRONMENTAL IMPACT STATEMENT (EIS), THE CONTRACT MAY BE TERMINATED AT THE
BUYER'S OPTION IN WHICH THE CONTRACTOR WOULD BE ENTITLED TO AN EQUITABLE
ADJUSTMENT.
PRIOR TO THE TIME THAT THE NEPA DOCUMENTATION IS APPROVED AND THE CONTRACTOR IS
AUTHORIZED IN WRITING TO PROCEED, THE BUYER'S FINANCIAL RESPONSIBILITY TO THE
CONTRACTOR IN THE EVENT THE BUYER TERMINATES THE CONTRACT, ASSUMING PERFORMANCE
IS NEITHER DEFECTIVE OR NONCONFORMING, IS LIMITED TO THE COSTS OF PREPARATION OF
NEPA DOCUMENTATION FOR SUBMITTAL AS REQUIRED IN THE SOW DATED SEPTEMBER 1, 1997
AND ANY PROJECT MANAGEMENT COSTS, ADMINISTRATIVE SETTLEMENT, AND TERMINATION
FEES (REFER TO CLAUSE I1X-GK).
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 2
SECTION "B" QUALITY ASSURANCE
QUALITY ASSURANCE PROGRAM PLAN (BIX-GK)
THE BUYER'S QUALITY ASSURANCE PROGRAM DATED DECEMBER 1995 AND LABORATORY QUALITY
ASSURANCE PLAN DATED JANUARY 29, 1997 ARE HEREBY INCORPORATED INTO, AND MADE A
PART OF THIS CONTRACT.
SECTION "C" PACKAGING AND MARKING
INBOUND SHIPMENTS OF RADIOACTIVE MATERIAL (C12)
RADIOACTIVE MATERIAL COVERED BY THIS CONTRACT SHALL BE PROPERLY PACKAGED,
MARKED, LABELED AND CERTIFIED TO THE CARRIER THAT THE SHIPMENT IS IN PROPER
CONDITION FOR THE TRANSPORTATION ACCORDING TO THE APPLICABLE REGULATIONS OF THE
DEPARTMENT OF TRANSPORTATION (DOT). THIS SHIPPING PACKAGE SHOULD BE INSPECTED
AND A DOSE RATE SURVEY MADE DURING THE 48 HOURS PRIOR TO SHIPMENT. THE BUYER
SHALL BE NOTIFIED 48 HOURS PRIOR TO SHIPMENT OF THE MOVEMENT OF THIS MATERIAL.
HAZARDOUS MATERIAL (C13)
ANY HAZARDOUS MATERIALS COVERED BY THIS CONTRACT SHALL BE PROPERLY PACKAGED,
MARKED, LABELED AND CERTIFIED BY THE CARRIER THAT THE SHIPMENT IS IN PROPER
CONDITION FOR TRANSPORTATION ACCORDING TO APPLICABLE REGULATIONS OF THE DOT (SEE
CFR TITLE 49 PARTS 171-178). UPON RECEIPT OF NOTIFICATION OF ANY MATERIAL ON
THIS CONTRACT FOUND TO BE NONCONFORMING TO THE APPLICABLE DOT REGULATIONS FOR
PACKAGING, MARKING AND LABELING, THE CONTRACTOR SHALL, WITHIN FIVE DAYS AND AT
NO EXPENSE TO THE BUYER, (ANY EXPENSES INCURRED BY THE BUYER IN BRINGING
MATERIAL INTO CONFORMITY WILL BE FOR THE ACCOUNT OF THE CONTRACTOR AND DEDUCTED
FROM ANY MONIES DUE THE CONTRACTOR):
(1) REPACKAGE, REMARK OR RELABEL THE MATERIAL TO MEET REQUIREMENT AT THE
BUYER'S FACILITY, OR,
(2) REACH AGREEMENT WITH BUYER FOR THE BUYER TO REPACKAGE, REMARK OR RELABEL
THE MATERIAL TO MEET REQUIREMENTS, OR MATERIAL SAFETY DATA SHEET (MSDS)
REQUIRED,
(3) PICK UP THE NONCONFORMING MATERIAL AT THE BUYER'S FACILITY AND REPLACE WITH
MATERIAL CONFORMING TO ALL REQUIREMENTS OF THE CONTRACT.
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 3
HAZARDOUS WASTE (C22)
THE SHIPMENT OF ANY MATERIAL DESIGNATED AS A HAZARDOUS WASTE AND SUBJECT TO THE
HAZARDOUS WASTE MANIFEST REQUIREMENT OF THE U.S. ENVIRONMENTAL PROTECTION AGENCY
(EPA), OR THE WASHINGTON STATE DEPARTMENT OF ECOLOGY, "DANGEROUS WASTE
REGULATIONS", SHALL BE PACKAGED AND SHIPPED IN ACCORDANCE WITH THE FOLLOWING
REGULATIONS:
- - 40 CFR 260 - 265, U.S. EPA REGULATIONS
- - 49 CFR 171 - 179, DOT REGULATIONS
- - WAC 173 - 303, WASHINGTON STATE DEPARTMENT OF ECOLOGY REGULATIONS
SECTION "D" TRANSPORTATION
TRANSPORTATION CHARGES - FULL PREPAID (DO6X-GK)
THE CONTRACTOR IS RESPONSIBLE FOR AND SHALL PAY ALL TRANSPORTATION CHARGES TO
AND FROM THE HANFORD SITE IN ACCORDANCE WITH THE SOW, SECTION 4.1.4, "WASTE
TRANSPORTATION", DELIVERED TO A LOCATION ON THE HANFORD SITE TO BE SPECIFIED
LATER AND SHALL NOT INVOICE DOE C/O THE BUYER FOR SUCH TRANSPORTATION CHARGES.
THE CONTRACTOR BEARS ALL RESPONSIBILITY FOR DAMAGE OR LOSS UNTIL DELIVERY IS
MADE TO THE FOB POINT SPECIFIED HEREIN.
TRANSPORTATION PLAN (DIX-GK)
A "FINAL" TRANSPORTATION PLAN SHALL BE PROVIDED TO THE BUYER FOR REVIEW AND
APPROVAL SIXTY DAYS PRIOR TO THE FIRST SHIPMENT OF WASTE. ANY CHANGES TO THE
APPROVED TRANSPORTATION PLAN SHALL BE PROPOSED IN WRITING FOR BUYER APPROVAL.
THE CONTRACTOR'S COSTS DUE TO NON-COMPLIANT TRANSPORTATION EQUIPMENT WILL NOT BE
REIMBURSABLE.
SECTION "F" DELIVERY/PERFORMANCE
NEPA DOCUMENTATION, PERMITTING, AND LICENSING (AS APPLICABLE) AND THE
CONTRACTOR'S MILESTONE SCHEDULE, REPRESENTING THE PRE-PROCESSING PHASE, WILL
BECOME MATERIAL PARTS OF PERFORMANCE UNDER THIS CONTRACT AND BE THE BASIS FOR
DETERMINING THE STATUS OF THE CONTRACTOR'S PERFORMANCE.
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 4
SECTION "G" ORDER ADMINISTRATION
ESTIMATED BILLING (G02)
CONTRACTOR SHALL FURNISH TO THE ADDRESS BELOW THE BEST ESTIMATE OF THE TOTAL
BILLABLE COST (INVOICED PLUS INVOICEABLE) FROM INCEPTION OF THIS CONTRACT
THROUGH THE CURRENT CALENDAR MONTH END. THIS INFORMATION MUST BE PROVIDED IN
WRITING (FAX ACCEPTABLE) NO LATER THAN THE 15TH OF EACH MONTH.
WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC.
C/O FLUOR DANIEL HANFORD
POST OFFICE BOX 1000
RICHLAND, WASHINGTON 99352
ATTENTION: ACCRUALS
MAIL STOP G1-80
FAX: (509) 373-6264
AUTHORIZED PERSONNEL (G03)
ONLY THE FOLLOWING NAMED INDIVIDUALS ARE AUTHORIZED TO MAKE CHANGES TO THIS
DOCUMENT: K. R. GIER, BUYER, PROCUREMENT; M. L. ESTES, MANAGER, PROCUREMENT; T.
J. PLUSH, DIRECTOR, PROCUREMENT AND CONTRACTS.
SELLER INVOICES (GO6X-GK)
THE CONTRACTOR'S INVOICES SHALL IDENTIFY (1) THE NUMBER OF CUBIC METERS OF WASTE
TREATED AND RETURNED TO THE BUYER, (2) THE DATE ON WHICH THE WORK OCCURRED AND,
(3) A BRIEF DESCRIPTION OF THE WORK PERFORMED. ANY RATE INVOICED MUST BE
AUTHORIZED BY THE CONTRACT. DEVIATIONS NOT AUTHORIZED WILL RESULT IN DISAPPROVAL
OF THE INVOICE.
TWO (2) COPIES OF THE INVOICES SHALL BE SUBMITTED TO THE FOLLOWING ADDRESS:
WASTE MANAGEMENT FEDERAL SERVICES OF HANFORD, INC.
C/O FLUOR DANIEL HANFORD
POST OFFICE BOX 1000
RICHLAND, WASHINGTON 99352
ATTENTION: ACCOUNTS PAYABLE
MAIL STOP G1-80
CLOSEOUT CERTIFICATION, FIXED PRICE ORDERS (G19)
THE CONTRACTOR SHALL PROPERLY EXECUTE AND MAIL TO THE BUYER THE ATTACHED FINAL
RELEASE FORM PMM-42-007 WITHIN FIVE WORKING DAYS FROM THE LAST DATE SERVICES ARE
PROVIDED HEREUNDER AND/OR THE DATE OF THE LAST SHIPMENT MADE HEREUNDER.
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 5
FINAL PAYMENT WILL NOT BE MADE UNTIL THIS FORM IS PROPERLY EXECUTED AND RECEIVED
BY THE BUYER.
SECTION "H" SPECIAL REQUIREMENTS
PAYMENTS UNDER FIXED PRICE ORDERS (H28X-GK)
THE BUYER SHALL PAY THE CONTRACTOR AS FOLLOWS UPON THE SUBMISSION OF INVOICES OR
VOUCHERS APPROVED BY THE BUYER:
A. WASTE PROCESSING - FIXED UNIT RATE
THE TOTAL AMOUNT SHALL BE COMPUTED BY MULTIPLYING THE APPROPRIATE UNIT RATE
BY THE NUMBER OF CUBIC METERS OF WASTE TREATED. INVOICED TREATED WASTE
VOLUMES SHALL BE BASED ON THE UNTREATED WASTE VOLUMES AS SPECIFIED IN SOW
SECTION 3.5. PAYMENT SHALL NOT BE MADE FOR A GIVEN WASTE LOT UNTIL THE
TREATED WASTE IS RETURNED AND ACCEPTED BY THE BUYER IN ACCORDANCE WITH THE
REQUIREMENTS SET FORTH IN THE SOW.
B. CEILING PRICE
ALTHOUGH THE PARTIES HAVE NEGOTIATED THE CEILING PRICE OF $3,821,122,
ASSUMING THAT THE BUYER ELECTS TO TREAT THE MAXIMUM QUANTITY IN ALL OF THE
OPTION YEARS, CURRENT FUNDING FOR THIS CONTRACT IS LIMITED AS DESCRIBED IN
CLAUSE H29X-GK. HOWEVER, THE BUYER IS NOT OBLIGATED TO PAY ANY AMOUNT IN
EXCESS OF $1,107,800 FOR THE BASE TREATMENT PERIOD QUANTITIES UNLESS SOME
OR ALL OF THE OPTIONS ARE EXERCISED BY THE BUYER.
C. AUDIT
AT ANY TIME BEFORE FINAL PAYMENT UNDER THIS CONTRACT, THE BUYER MAY REQUEST
AUDIT OF THE INVOICES OR VOUCHERS AND SUBSTANTIATING MATERIAL. EACH PAYMENT
PREVIOUSLY MADE SHALL BE SUBJECT TO REDUCTION TO THE EXTENT OF AMOUNT, ON
PRECEDING INVOICES OR VOUCHERS, THAT ARE FOUND BY THE BUYER NOT TO HAVE
BEEN PROPERLY PAYABLE AND SHALL ALSO BE SUBJECT TO REDUCTION FOR
OVERPAYMENTS OR TO INCREASE FOR UNDERPAYMENTS. UPON RECEIPT AND APPROVAL OF
THE VOUCHER OR INVOICE DESIGNATED BY THE CONTRACTOR AS THE "COMPLETION
VOUCHER" OR "COMPLETION INVOICE" AND SUBSTANTIATING MATERIAL, AND UPON
COMPLIANCE BY THE CONTRACTOR WITH ALL TERMS OF THIS CONTRACT, THE BUYER
SHALL PROMPTLY PAY ANY BALANCE DUE TO THE CONTRACTOR. THE COMPLETION
INVOICE OR VOUCHER, AND SUBSTANTIATING MATERIAL, SHALL BE SUBMITTED BY THE
CONTRACTOR AS PROMPTLY AS PRACTICABLE FOLLOWING THE COMPLETION OF THE WORK
UNDER THIS CONTRACT, BUT IN NO EVENT LATER THAN ONE (1) YEAR (OR SUCH
LONGER PERIOD AS THE BUYER MAY APPROVE IN WRITING) FROM THE DATE OF
COMPLETION.
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 6
D. REFUNDS
THE CONTRACTOR AGREES THAT ANY REFUNDS, REBATES, OR CREDITS (INCLUDING ANY
RELATED INTEREST) ACCRUING TO OR RECEIVED BY THE CONTRACTOR OR ANY
ASSIGNEE, THAT ARISE UNDER THE MATERIALS PORTION OF THIS CONTRACT AND FOR
WHICH THE CONTRACTOR HAS RECEIVED REIMBURSEMENT, SHALL BE PAID BY THE
CONTRACTOR TO THE BUYER. THE CONTRACTOR AND EACH ASSIGNEE, UNDER AN
ASSIGNMENT ENTERED INTO UNDER THIS CONTRACT AND IN EFFECT AT THE TIME OF
FINAL PAYMENT UNDER THIS CONTRACT, SHALL EXECUTE AND DELIVER, AT THE TIME
OF AND AS A CONDITION PRECEDENT TO FINAL PAYMENT UNDER THIS CONTRACT, AN
ASSIGNMENT TO THE BUYER OF SUCH REFUNDS, REBATES, OR CREDITS (INCLUDING ANY
INTEREST) IN FORM AND SUBSTANCE SATISFACTORY TO THE BUYER.
E. FINAL PAYMENT
THE CONTRACTOR, AND EACH ASSIGNEE UNDER ANY ASSIGNMENT PERMITTED UNDER THE
TERMS OF THE CONTRACT AND IN EFFECT AT THE TIME OF FINAL PAYMENT HEREUNDER,
SHALL EXECUTE AND DELIVER, AT THE TIME OF AND AS A CONDITION PRECEDENT TO
FINAL PAYMENT UNDER THIS CONTRACT, A RELEASE DISCHARGING THE BUYER, THE
GOVERNMENT AND THEIR OFFICERS, AGENTS, AND EMPLOYEES OF AND FROM ALL
LIABILITIES, OBLIGATIONS, AND CLAIMS ARISING OUT OF OR UNDER THIS CONTRACT.
LIMITATION OF FUNDS (H29X-GK)
1) ALTHOUGH THE PARTIES HERETO HAVE NEGOTIATED THE CEILING PRICE OF A NOT-TO-
EXCEED AMOUNT OF $3,821,122 FOR THIS CONTRACT, THE PARTIES UNDERSTAND THAT
SUFFICIENT FUNDS FOR THE FULL SCOPE OF WORK ARE NOT AVAILABLE. IT IS
ANTICIPATED THAT FROM TIME TO TIME, ADDITIONAL FUNDS WILL BE OBLIGATED TO
THIS CONTRACT UNTIL THE TOTAL ESTIMATED PRICE OF SAID CONTRACT IS
OBLIGATED.
2) THE CONTRACT SPECIFIES THE AMOUNT THAT WILL BE AVAILABLE FOR PAYMENT IN
FY97 & FY98, AND ALLOTTED TO THIS CONTRACT IN FY97, SHALL NOT EXCEED A
TOTAL OF $200,000, THE MAXIMUM TERMINATION CHARGES (REFER TO CLAUSE I1X-
GK).
3) THE CONTRACTOR SHALL NOTIFY THE BUYER IN WRITING, WHENEVER IT HAS REASON TO
BELIEVE THAT THE COSTS EXPECTED TO INCUR IN THE NEXT 30 DAYS, WHEN ADDED TO
ALL COSTS PREVIOUSLY INCURRED, WILL EXCEED 85 PERCENT OF THE TOTAL AMOUNT
ALLOTTED TO THE CONTRACT. THE NOTICE SHALL STATE THE ESTIMATED AMOUNT OF
ADDITIONAL FUNDS REQUIRED TO CONTINUE PERFORMANCE FOR THE PERIOD SPECIFIED
IN THE SCHEDULE. IF AFTER SUCH NOTIFICATION, ADDITIONAL FUNDS ARE NOT
OBLIGATED BY THE END OF ESTIMATED REACH DATE OR BY AN ANOTHER AGREED DATE,
THE BUYER SHALL, UPON THE CONTRACTOR'S WRITTEN REQUEST, TERMINATE THE
CONTRACT ON THE PERFORMANCE END DATE OR THE DATE SET FORTH IN THE REQUEST,
WHICHEVER IS LATER, PURSUANT TO THE PROVISIONS OF THE TERMINATION CLAUSE OF
THIS CONTRACT.
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 7
4) EXCEPT AS PROVIDED BY OTHER PROVISIONS OF THE CONTRACT, SPECIFICALLY CITING
AND STATED TO BE AN EXCEPTION TO THIS CLAUSE:
A) THE BUYER IS NOT OBLIGATED TO REIMBURSE THE CONTRACTOR FOR COSTS
INCURRED IN EXCESS OF THE TOTAL AMOUNT ALLOTTED TO THIS CONTRACT; AND,
B) THE CONTRACTOR IS NOT OBLIGATED TO CONTINUE PERFORMANCE UNDER THIS
CONTRACT (INCLUDING ACTIONS UNDER THE TERMINATION CLAUSE) OR OTHERWISE
INCUR COSTS IN EXCESS OF THE ALLOTTED AMOUNT OF THE CONTRACT, UNTIL
THE BUYER NOTIFIES THE CONTRACTOR IN WRITING THAT THE ALLOTTED AMOUNT
HAS BEEN INCREASED AND SPECIFIES THE REVISED TOTAL ALLOTTED AMOUNT.
5) NO NOTICE, COMMUNICATION, OR REPRESENTATION IN ANY FORM OR BY ANYONE OTHER
THAN THAT SPECIFIED IN SUBPARAGRAPH 4(B) ABOVE, SHALL EFFECT THE ALLOTTED
AMOUNT OF THE CONTRACT. IN THE ABSENCE OF THE CONTRACTOR'S NOTIFICATION
(PARAGRAPH 3 ABOVE), THE BUYER IS NOT OBLIGATED TO REIMBURSE THE CONTRACTOR
FOR ANY COSTS IN EXCESS OF THE TOTAL AMOUNT ALLOTTED TO THE CONTRACT,
WHETHER INCURRED DURING THE COURSE OF PERFORMANCE PERIOD, A TERMINATION, OR
RESULT OF AN AUDIT.
6) WHEN, AND TO THE EXTENT THAT THE AMOUNT ALLOTTED BY THE BUYER IS INCREASED,
ANY EXCESS COSTS THE CONTRACTOR INCURRED BEFORE THIS MODIFICATION SHALL BE
ALLOWABLE TO THE SAME EXTENT AS IF INCURRED AFTERWARD, UNLESS THE CONTRACT
WAS TERMINATED.
7) CHANGE CONTRACTS SHALL NOT BE CONSIDERED AN AUTHORIZATION TO EXCEED THE
ALLOTTED AMOUNT SPECIFIED IN THE SCHEDULE, UNLESS THEY IDENTIFY THE
INCREASED ALLOTTED AMOUNT.
DESIGNATION OF TECHNICAL REPRESENTATIVE (H38)
THE BUYER HEREBY DESIGNATES THE FOLLOWING AS THE BUYER'S TECHNICAL
REPRESENTATIVE, (BTR), FOR THIS CONTRACT: DEAN NESTER, (509) 373-4155, M/S H6-
06.
THE BTR IS RESPONSIBLE FOR MONITORING AND PROVIDING TECHNICAL GUIDANCE FOR THIS
CONTRACT AND SHOULD BE CONTACTED REGARDING QUESTIONS OR PROBLEMS OF A TECHNICAL
NATURE. IN NO EVENT, HOWEVER, WILL AN UNDERSTANDING OR AGREEMENT, MODIFICATION,
CHANGE ORDER, OR ANY DEVIATION FROM THE TERMS OF THE CONTRACT BE EFFECTIVE OR
BINDING UPON THE BUYER UNLESS FORMALIZED BY THE PROPER CONTRACT DOCUMENTS
EXECUTED BY THE BUYER PRIOR TO COMPLETION OF THIS CONTRACT. ON ALL MATTERS THAT
PERTAIN TO CONTRACT TERMS, THE CONTRACTOR SHALL CONTACT THE BUYER SPECIFIED
WITHIN THE CONTRACT. WHEN IN THE OPINION OF THE CONTRACTOR, THE BTR REQUESTS OR
DIRECTS EFFORTS OUTSIDE THE EXISTING SCOPE OF THE CONTRACT, THE
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 8
CONTRACTOR SHALL PROMPTLY NOTIFY THE BUYER IN WRITING. NO ACTION SHALL BE TAKEN
UNTIL AN APPROPRIATE MODIFICATION TO THE CONTRACT HAS BEEN ISSUED BY THE BUYER.
THE BTR SHALL BE RESPONSIBLE FOR APPROPRIATE SURVEILLANCE OF THE CONTRACTOR'S
REPRESENTATIVE WHILE ON SITE.
OPTIONS (H54X-GK)
THE BUYER MAY EXERCISE ITS OPTION TO EXTEND THE TERM OF THIS CONTRACT PRIOR TO
THE EXPIRATION OF THE EXISTING TERM. THE ACTUAL EXERCISE OF THE OPTION SHALL BE
VIA A CONTRACT MODIFICATION ONLY. THE CONTRACTOR SHALL PROVIDE THE SERVICES AT
THE FIXED UNIT PRICES INCLUDED IN THE CONTRACT WHICH ARE FIRM OVER THE COMPLETE
PERIOD OF PERFORMANCE. THE QUANTITIES TO BE TREATED DURING AN OPTION PERIOD
SHALL BE DETERMINED BY THE BUYER UP TO THE MAXIMUM QUANTITY SPECIFIED HEREIN.
SERVICE CONTRACT ACT OF 1965 (H73X-GK)
THIS CONTRACT IS SUBJECT TO THE SERVICE CONTRACT ACT OF 1965. THE DEPARTMENT OF
LABOR (DOL) WAGE DETERMINATION WILL BE SUBMITTED FOR JOB CLASSIFICATIONS AND
WORK LOCATIONS PROPOSED BY THE CONTRACTOR. THE FIXED UNIT PRICE TREATMENT RATES
SHALL BE CONSIDERED INCLUSIVE OF ALL LABOR COSTS SET FORTH BY THE DOL AND
DETERMINED TO BE PAYABLE TO EMPLOYEES COVERED BY THIS ACT. ALL SUCH COSTS,
INCLUDING LABOR RATES, APPLICABLE PAYROLL TAXES AND VARIOUS OTHER BUSINESS TAXES
(I.E. WASHINGTON STATE B&O, FICA, ETC.) SHALL BE THE EXCLUSIVE RESPONSIBILITY OF
THE CONTRACTOR.
SECTION "I" TERMS AND CONDITIONS
APPLICABLE PROVISIONS (I12)
THE PROVISIONS, FORMS AND DOCUMENTS IDENTIFIED BELOW ARE HEREBY INCORPORATED
INTO AND MADE A PART OF THIS CONTRACT. THEY SHALL HAVE THE SAME FORCE AND EFFECT
AS IF WRITTEN INTO THE BODY OF THE CONTRACT.
FORM
NUMBER TITLE
GP GENERAL PROVISIONS, FOUNDATION FOR TERMS AND CONDITIONS WHICH MAY
APPLY TO CONTRACTS REQUIRING USE OF GOVERNMENT PROVISIONS FOUND
IN THE FEDERAL ACQUISITION REGULATION (FAR) OR THE DOE
ACQUISITION REGULATION (DEAR)
SP-1 SPECIAL PROVISIONS - FEDERAL ACQUISITION CLAUSES
SP-5 SPECIAL PROVISIONS - ON-SITE SERVICES
<PAGE>
CONTRACT MGK-SBB-A26602
PAGE 9
SP-6 SPECIAL PROVISIONS - SERVICE CONTRACT ACT OF 1965
SP-14 SPECIAL PROVISIONS - HAZARDOUS WASTE TRANSPORTATION AND DISPOSAL
SP-16 REPRESENTATIONS AND CERTIFICATIONS
TERMINATION FOR CONVENIENCE (I1X-GK)
IN THE EVENT THE BUYER SHOULD TERMINATE THE CONTRACT FOR CONVENIENCE, THE
FOLLOWING MAXIMUM TERMINATION CHARGES SHALL APPLY.
FOR THE COMBINED PROCUREMENT, THE MAXIMUM TERMINATION CHARGES THROUGH SEPTEMBER
30, 1998 WILL NOT EXCEED $200,000. THIS INCLUDES THE $123,000 NON-RECURRING
COSTS ASSOCIATED STRICTLY WITH THE PERFORMANCE OF THE SOW AND ANY PROJECT
MANAGEMENT COSTS, ADMINISTRATIVE SETTLEMENT, AND TERMINATION FEES.
TERMINATION CHARGES FOR ONLY THE DEBRIS PORTION OF THE COMBINED PROCUREMENT
----
SHALL NOT EXCEED THE FOLLOWING:
IF TERMINATED BY MAXIMUM TERMINATION CHARGES
---------------- ---------------------------
1ST QUARTER, DECEMBER 31, 1997 $ 10,000
2ND QUARTER, MARCH 31, 1998 $ 40,000
3RD QUARTER, JUNE 30, 1998 $ 75,000
4TH QUARTER, SEPTEMBER 30, 1998 $125,000
SECTION "J" LIST OF ATTACHMENTS
LIST OF ATTACHMENTS (J02)
THE FOLLOWING ATTACHMENTS ARE PROVIDED WITH THIS RFP AND SHALL HAVE THE SAME
EFFECT AS IF SET FORTH IN THE BODY OF THE RFP.
1) ATTACHMENT 1 - STATEMENTS OF WORK, "MIXED WASTE INORGANIC NON-DEBRIS
TREATMENT" DATED SEPTEMBER 1, 1997 AND "MIXED WASTE DEBRIS TREATMENT" DATED
SEPTEMBER 1, 1997
2) ATTACHMENT 2 - CONTRACT VALUE PRICING SUMMARY SHEET
3) ATTACHMENT 3 - FINAL RELEASE, FIXED PRICE CONTRACTS - PMM-42-007
4) ATTACHMENT 4 - CONTRACTOR'S MILESTONE SCHEDULE DATED AUGUST 27, 1997
<PAGE>
ATTACHMENT 1
P.O. MGK-SBB-A26602 ITEM-1
MIXED WASTE "INORGANIC NON-DEBRIS" TREATMENT
STATEMENT OF WORK
SEPTEMBER 1, 1997
PAGE 1
1.0 GENERAL
1.1 Waste Management Federal Services of Hanford, Inc. (WMH) is the Waste
Management Projects subcontractor at the Department of Energy Richland
Operations Office (DOE-RL), Hanford Site, located in Richland, Washington. The
Hanford Site is managed by the Project Hanford Management Contractor (PHMC),
Fluor Daniel Hanford Inc. (FDH), which is directly contracted by DOE-RL. WMH is
acting on behalf of FDH as the Buyer for this procurement activity.
1.2 Prior to September 1991, the Hanford Site was tasked with a mission for
the production of special nuclear materials to support the Department of Defense
(DOD) weapons programs. Since that date, the Hanford Site has been tasked with a
mission to cleanup the Site. The new mission reinforces waste management
activities at the Hanford Site, and focuses on resolving legacy waste issues.
Waste management initiatives include, but are not limited to; waste
characterization, segregation, storage, processing, treatment, minimization and
permanent disposal.
1.3 A segment of the waste management task is to provide the means to safely,
effectively, expeditiously and economically treat for disposal, legacy mixed
waste (MW) currently being managed at the Hanford Site. MW results from the
combination of dangerous waste as designated by the Washington Administrative
Code, Dangerous Waste Regulations (WAC 173-303) with radioactive materials as
defined by the Atomic Energy Act (AEA, 1954). MW has been generated by Hanford
Site facilities and some approved Offsite facilities since 1987, and additional
MW is forecasted to be generated throughout Hanford's cleanup mission life-
cycle. Subject waste resides in Resource Conservation and Recovery Act (RCRA)
compliant storage at the Central Waste Complex (CWC) located in the 200 West
Area of the Hanford Site.
2.0 OBJECTIVES
2.1 The primary objective of this work activity is to acquire a commercial
treatment services vendor (referred to as the Contractor here forth) to perform
treatment on a specific volume of MW with similar treatment requirements (i.e.,
regulative and technology), thus rendering the waste acceptable for land
disposal at the Hanford Site. In all circumstances, the Contractor's waste
treatment capability(ies) shall be sufficiently robust to appropriately treat
the waste specified in Section 3.0.
<PAGE>
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SOW, PAGE 2 OF 12
3.0 WASTE SPECIFICATION
3.1 The waste to be treated under this SOW is designated as Contact Handled -
Low Level Mixed Waste (CH-LLMW) as determined by the Hanford Site Solid Waste
Acceptance Criteria (HSSWAC) (WHC, 1994). Approximately 125m/3/ of waste
constitutes the waste treatment lot (see Appendix-A for waste package listing).
The minimum contracted waste volume for treatment will be for 100m/3/ of drummed
and boxed waste.
3.2 The waste treatment lot contains greater waste volume than that specified
as the contracted volume. Upon mutual agreement between the Buyer and
Contractor, waste packages from the treatment lot will be selected for actual
treatment. Waste that has similar physical, chemical and radiological
characteristics to the waste specified in the waste treatment lot may be
substituted. This allows the Buyer and the Contractor some flexibility in what
waste will actually be treated, and it allows for waste substitution in the case
non-acceptable waste is encountered at the treatment facility.
3.3 To minimize impacts to the Buyers Onsite interfaces; (shipping/receiving
facilities, waste acceptance personnel.. etc.) and budget distributions; the
Contractor shall receive waste, ship treated waste, and invoice on a regular
basis to the greatest extent possible. The Buyer and Contractor shall mutually
agree on the shipping/receiving intervals and volume associated with each
shipment. In the case a mutual agreement cannot be obtained for Sections 3.2 and
3.3, the Buyer ultimately reserves the right to select the waste to be treated
and the shipping/receiving schedule.
3.4 The treatment Base Contract will be for a duration of two (2) years plus
one (1) additional year at the option of the Buyer. The Buyer requires that the
treatment Contractor complete waste treatment and ship all treated waste back to
the Buyer by the end of the specified contracting periods.
3.5 For this Contract, waste volumes to be treated will be based on the
internal volumes of the primary waste containers at the time waste
responsibility is transferred to the treatment Contractor. Volumes will be
specified on the applicable shipping papers. Overpack containers used solely to
meet shipping requirements are not considered to be the primary container. See
the following examples for typical container waste volumes (not all inclusive):
55-GAL DRUM:.............0.208 CUBIC METERS
85-GAL DRUM:.............0.322 CUBIC METERS
4'x4'x8' METAL BOX:......3.40 CUBIC METERS
B-25 BOX:................2.55 CUBIC METERS
3.6 The Buyer will review and verify the characterization of each waste
package prior to releasing the waste to the Contractor. Waste characterization
needed to meet Department of Transportation (DOT), RCRA, and/or Washington State
Hazardous Waste Management Act (HWMA) regulations (as applicable) for waste
shipment will be performed by the Buyer.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 3 OF 12
Any additional waste characterization to satisfy the Contractor's waste
acceptance criteria which are above and beyond DOT, RCRA, and/or HWMA
regulations for shipment, shall be the responsibility of the Contractor. The
waste's general physical, chemical and radiological characteristics are denoted
below.
3.6.1 Waste is packaged per the HSSWAC. Packages are mostly 208-liter (55-
gal) drums, some 322-liter (85-gal) drums, and various sized boxes up to
1.83m(h) x 1.83m(w) x 3.05m(1) (6ft x 6ft x 10ft). Some of the waste will be
overpacked due to primary waste container integrity issues or DOT regulation
issues.
3.6.2 The waste's physical characteristics are generally comprised of
inorganic particulates, soils, sludges, and/or non-bulk liquids. The majority
of the waste packages contain some debris type items (i.e., paper, plastic,
metal.. etc.); however, all packages will contain greater than 50 volume
percent non-debris material based on visual and/or real-time radiography
inspection.
3.6.3 The hazardous constituents in the waste are regulated by the HWMA
(Chapter 70.105 Revised Code of Washington [RCW]), RCRA (42 USC 6901 et seq.)
and the HWMA and RCRA implementing regulations contained in WAC (Chapter
173-303, Dangerous Waste Regulations) and Title 40 Code of Federal
Regulations (CFR) respectively.
3.6.3.1 The waste has been determined to either require stabilization
treatment by means of a specified Technology-Based Standard, or
stabilization is the Best Demonstrated Available Technology (BDAT)
treatment for the waste. Other treatment technologies could be utilized
provided the treatment is acceptable/approved by WDOE and/or EPA Region 10
regulators. The Contractor may choose to treat the debris and non-debris
components together or separately. If the Contractor chooses to treat them
separately, then the Contractor assumes the added responsibility of
meeting applicable treatment requirements specified in 40CFR268.45
(treatment performance standards).
3.6.3.2 The waste may contain any of numerous different waste
constituents: characteristic waste constituents (D00l through D0ll),
listed waste constituents (F001 through F005, "P"s and "U"s), and
Washington State dangerous waste constituents (WT0l/2, WP01/2, WSC2, and
W00l). See Appendix-A for container specific waste constituents.
3.6.3.3 For waste that is designated with EPA hazardous waste numbers
that require the identification of underlying hazardous constituents
(UHC), the Buyer will specify the UHCs that are reasonably expected to be
in the waste. Identification of the UHCs will be on the LDR treatment
notification to be sent to the treatment Contractor at the time of waste
shipment.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 4 OF 12
3.6.4 The radioactive constituents in the waste are governed by the AEA.
Some or all of the radiological constituents tabulated in the HSSWAC (Table
3-1) can be expected in the waste, including alpha emitting radionuclides.
3.6.4.1 The activity concentration in individual waste packages will not
exceed Category 3 or Class C limits as defined in the HSSWAC (WHC 1994).
3.6.4.2 Transuranic radionuclides in the waste matrix will not exceed 100
nCi/g (i.e., no "TRU" waste in the scope of this SOW) as defined in the
HSSWAC (WHC 1994).
3.6.4.3 All waste packages to be treated under the terms of this SOW will
be Contact Handled (CH), meaning the dose rate on the container's outer
surface will not exceed 200 mrem/hr. Waste packages will not be shielded
to reduce the outer surface does rate; however, it is anticipated that
some of the actual waste may exceed 200 mrem/hr limit after removing it
from the packages. The Contractor shall have the provisions to handle
waste that exceeds 200 mrem/hr. If waste in a container is suspected of
exceeding 200 mrem/hr, the Buyer will flag the container (denote on
traveler papers and container package) and notify the Contractor prior to
the waste being signed over to the Contractor for treatment.
4.0 WORK REQUIREMENTS
4.1 OFFSITE WASTE TREATMENT OPTION
4.1.1 The Contractor shall provide all treatment services to treat the waste
specified in Section 3.0. The treatment shall produce a treated waste meeting
land disposal requirements at the Hanford Site as specified in this SOW.
Along with the treatment equipment and facility; the Contractor shall provide
the technical expertise needed to successfully perform stabilization
treatment. This includes, but is not limited to; treatability testing,
stabilizing agent formulations, sampling protocols and process control
parameters.
4.1.2 The Contractor's treatment services shall be in accordance with all
applicable local, state, and federal laws and regulations. Furthermore, the
Contractor shall have all permits and licenses necessary for waste
transportation and treatment under this Contract. The Buyer will be provided
a copy of all permits and licenses at least 60 days prior to commencing the
first shipment of waste.
4.1.3 Treatment Technology:
4.1.3.1 The Contractor shall utilize treatment technologies meeting BDAT
applicable to RCRA Land Disposal Restrictions (LDR), WAC Dangerous Waste
Regulations and the HSSWAC. The Buyer believes the relevant BDAT treatment
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 5 OF 12
technology for treating subject waste is stabilization with the following
reagents; portland cement and/or lime/pozzolans with enhancing reagents
such as silicates. Other treatment technologies can be utilized provided
such technologies satisfy treatment requirements set-forth in this SOW,
and the technology is accepted by the Washington Department of Ecology
(WDOE) and/or EPA Region 10 for disposing of at the Hanford Site.
4.1.3.2 Waste treatment techniques such as sorting, shredding,
delumping, and compaction shall be implemented as necessary to meet
treatment requirements as stated in this SOW. No pre-treatment activities
will be performed by the Buyer.
4.1.3.3 The Contractor shall provide process flow diagrams and describe
unit operations for each treatment unit employed to treat the waste
described in Section 3.0.
4.1.4 Waste Transportation:
4.1.4.1 The Contractor shall provide and be responsible for all waste
transportation from Hanford's waste shipping facilities to the
Contractor's treatment unit, and returning treated waste back to the
appropriate Hanford TSD facility.
4.1.4.2 Transportation shall be in full compliance with DOT regulations
in 49 CFR 171-180; Nuclear Regulatory Commission (NRC) regulations in 10
CFR 71, and other applicable federal, state and local laws and
regulations.
4.1.4.3 The Buyer will manifest each waste shipment to the Contractor's
treatment facility, and the Contractor shall manifest (as applicable) all
treated waste shipments to the Buyer.
4.1.4.4 Waste shipment responsibilities:
(a) On waste shipments originating from the Buyer's facilities, the
Buyer is responsible for loading the Contractor's transportation
vehicles. This includes providing the necessary loading equipment and
personnel. The Contractor will be responsible for securing the load,
adhering to all applicable requirements, and transporting the waste to
their treatment facilities. Prior to leaving the Buyer's loading
facilities; the Buyer's Transportation and Packaging Department will
inspect the Contractor's loaded transportation vehicle to verify
compliance with all applicable requirements, and radiation monitoring
will be performed by the Buyer before vehicle release.
(b) On shipments originating from the Contractor's facilities, the
Contractor is responsible for loading their transportation vehicles.
This includes providing the necessary loading equipment and personnel.
The Contractor will be responsible for securing the load, adhering to
all applicable transportation, requirements, performing radiation
monitoring, and transporting the treated
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 6 OF 12
waste to the Hanford Site. The Contractor's transportation vehicles
shall be available for inspection by the Buyer's Transportation and
Packaging Department to verify compliance with all applicable
requirements prior to entering the Hanford Site. Inspections can take
place at either the Buyer's inspection facility located in Richland,
WA; or at the Contractor's loading facilities. The actual inspection
location shall be defined in the Contractor's Transportation Plan.
Radiation monitoring will be performed on the Contractor's vehicles by
the Buyer at his discretion during the above noted inspection. The
Buyer requires a minimum 24-hour notice to schedule Transportation and
Packaging personnel to inspect the Contractor's vehicles.
4.1.4.5 Hanford's TSD facilities are operated primarily on dayshift
(7:30am - 4:00pm) during weekdays (M-F). The Contractor may make
arrangements with the Buyer to pickup or drop off waste shipments at
other times provided the Contractor provides a minimum 48-hour notice to
the Buyer.
4.1.5 Radionuclide Inventory:
4.1.5.1 The Contractor shall maintain the integrity of the Hanford Site's
radionuclide inventory during all phases of waste shipment, storage,
treatment; analysis, and treated waste return. At a minimum, the
Contractor shall segregate subject waste from other clients waste,
decontaminate treatment equipment prior to and after treating subject
waste, and return or incorporation all secondary waste (including system
HEPA filters) generated from the treatment of subject waste.
4.1.5.2 Since the waste inventory contains radioactive elements including
transuranic constituents, if treatment could result in a concentration of
radioactive elements, the Contractor shall administratively control the
waste feed so that no TRU, Greater Than Category 3, or Greater Than Class
C waste (as defined in the HSSWAC) is generated.
4.1.6 Waste Acceptance Criteria:
4.1.6.1 The Contractor shall have a waste acceptance criteria established
to cover all the waste specified in Section 3.0. The waste acceptance
criteria shall address all pertinent waste attributes including;
radioisotope quantities/concentrations, criticality safety limits,
external radiation and heat generation, restrictions on types of waste,
container acceptance...etc.
4.1.6.2 Treated waste from the Contractor shall be returned to the Buyer
meeting the storage and disposal requirements of the Hanford Site. This
acceptance is administered in the HSSWAC. Since the treated waste may
reside in storage on the Hanford Site until the disposal site begins
operation, the Contractor will be required to meet both the storage and
disposal criteria. The only exception to this requirement is for waste
that after treatment results in non-RCRA or Washington State regulated
waste (i.e., treated characteristic only waste that can be disposed of
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 7 OF 12
in Hanford's low-level burial grounds); for this case, the waste can be
packaged meeting the disposal requirements only. Treated waste packages
shall be of size, shape and weight that can be readily/safely lifted and
moved by means of conventional forklift type vehicles. The maximum package
should not exceed 5ft x 5ft x 9ft in size and 16,000 pounds in weight. The
Contractor can utilize other treated waste packages not meeting the above
criteria if the Contractor provides the means to deliver and place the
packages in the Buyer's disposal/storage unit.
4.1.6.3 The Contractor shall have a documented methodology for meeting
the applicable treatment requirements specified in this SOW. Included in
with this methodology is acknowledgement from the WDOE and/or the EPA
Region 10 that the Contractor's treatment approach meets the intended
treatment and performance objectives. A Waste Certification Summary (WCS)
shall be used to convey this treatment methodology (ref: HSSWAC, Section
2.1.2). The WCS shall be submitted to the Buyer at least 60 days prior to
treatment commencement.
4.1.6.4 The Contractor shall notify the Buyer immediately if upon receipt
inspection the Contractor discovers any significant discrepancies between
quantity or type of dangerous waste designated on the manifest or shipping
papers and the quantity or type of dangerous waste the Contractor actually
receives. The Contractor and Buyer must attempt to reconcile the
discrepancy within ten (10) calendar days after receiving the waste. If
the discrepancy cannot be resolved within this period, the Contractor
shall return the waste without delay back to the Hanford Site (the
Contractor will be reimbursed actual transportation costs for the returned
noncompliant waste.).
4.1.6.5 Once the Contractor accepts the waste for treatment, the
Contractor shall provide a final treated waste meeting the requirements of
this SOW. Treated waste that analysis indicates do not conform with the
requirements of this SOW will be controlled, documented, evaluated for the
proper corrective action, and treated to conform at no additional cost to
the Buyer.
4.1.7 Laboratory Analysis
4.1.7.1 The treated waste shall be characterized with sufficient accuracy
to permit proper handling, storage, and disposal at the Buyer's site. This
characterization shall ensure that, upon generation of the treated waste,
the actual physical and chemical characteristics and major radionuclide
content are recorded and known during all stages of the waste management
process.
4.1.7.2 The Contractor shall establish a "chain of custody" procedure for
laboratory analysis samples in accordance with SW 846 methods. Sample
analysis reports shall be clearly traceable back to specific waste
shipments and manifests. Reports documenting laboratory analyses must be
signed and certified by an authorized representative of the Contractor.
All laboratory analysis work must be performed in compliance with 40 CFR
260-271. 40 CFR 260-271 requires, in
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 8 OF 12
some cases, compliance with test methods defined in EPA SW 846, Test
----
Methods for the Evaluation of Solid Waste, Physical/Chemical Methods, most
--------------------------------------------------------------------
recent edition, (SW 846). The Contractor shall conduct laboratory analysis
on the treated waste sufficient to certify the treated waste meets WDOE,
federal regulations, and the HSSWAC requirements. The laboratory(ies)
utilized for treated waste testing shall be approved by the Buyer prior to
initiating waste treatment.
4.1.7.3 The Contractor shall specify the sampling methodology and
frequency utilized in certifying the waste meets disposal criteria. The
sampling criteria shall be based on statistical analysis techniques and
confidence levels documented in the Contractor's Waste Analysis Plan
(WAP). At a minimum, treated waste sampling shall be conducted on at least
every 10th container.
4.1.7.4 The Contractor shall provide additional samples (i.e., split
samples) of the treated waste to the Buyer, on a per-request basis, to
verify that the treated waste meets the requirements of this SOW. The
Buyer reserves the right to be present during all sampling and analysis
activities.
4.1.7.5. The Contractor's subcontracted laboratories performing analysis
on the Buyer's waste shall return excess waste sample material and/or
sample residues back to the Contractor. The Contractor in turn shall treat
the excess sample material and/or sample residues in accordance with the
requirements of this SOW, and return treated material to the Buyer.
4.1.8 Safety
4.1.8.1 The Contractor shall have developed, implemented, and maintained
a written Health and Safety Program which complies with 29 CFR Part
1910.120, Hazardous Waste Operations and Emergency Response.
4.1.8.2 The Contractor shall submit their Health and Safety Program to
the Buyer at least 60 days before the first shipment of waste is scheduled
to be received by the Contractor.
4.1.9 Quality Assurance
4.1.9.1 The Contractor shall have developed, implemented, and maintained
a written Quality Assurance Program (QAP) which complies with 10 CFR Part
830, Nuclear Safety Management, Subpart A, General Provisions, Section
830.120, Quality Assurance Requirements; or the Contractor may have a QAP
based on another nationally recognized quality assurance standard that
meets the intent of 10 CFR830.120 (e.g., NQA-l).
4.1.9.2 The Contractor shall submit their QAP to the Buyer with their
proposal, and the Contractor must have a fully implemented Quality
Assurance Program Plan (QAPP) based on their QAP at least 30 days before
the first shipment of waste is
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 9 OF 12
scheduled to be received by the Contractor (subject to verification by the
Buyer's QA organization).
4.1.9.3 Laboratories utilized by the Contractor for waste sample analysis
under this Contract shall have documented and implemented a QAPP as
specified under the requirements of SW 846. At least 30 days before the
first waste shipment, the Contractor shall submit written confirmation to
the Buyer that the quality assurance documentation concerning selected
analytical laboratory(ies) comply with SW 846 requirements.
4.1.10 Records and Reports
4.1.10.1 All records associated with the Buyer's wastes (including but
not limited to Contractor's sample analysis results) shall be maintained
by the Contractor using a method compliant with the requirements specified
in WAC 173-303 and 40 CFR 260-271, and all other applicable federal,
state, or local regulations. All documents, procedures, and applicable
requirements for record keeping are subject to audit by the Buyer.
4.1.10.2 The Contractor shall develop and maintain a record keeping
system that records the following:
(a) A historical record of waste received, generated, treated, stored, and
shipped at the facilities under its cognizance. The data maintained shall
include all data necessary to show that the waste was properly classified,
treated, stored, and shipped. The data maintained in the system shall be
based on the data recorded on waste manifests. At a minimum, the following
data will be included for each container of waste:
(l) Waste physical and chemical characteristics;
(2) Weight of the waste (total of waste and any solidification or
absorbent media);
(3) Volume of the waste (total of waste and any treatment reagents or
absorbent media);
(4) Other data necessary to demonstrate compliance with waste
acceptance criteria;
(5) Major radionuclides and their concentrations;
(6) Packaging date, package weight, and external volume;
(7) All analytical and test data needed to verify treated waste
performance for certification and disposal.
(b) Waste manifest records shall be maintained by the Contractor for waste
received by the Contractor, and the Contractor shall manifest the treated
waste back to the Buyer. The manifest shall contain data necessary to
document the proper classification, and verify proper treatment, storage,
and disposal of the waste. Waste manifests will be kept as permanent
records by the Contractor.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 10 OF 12
(c) The Contractor shall maintain the following records related to proper
plant and equipment operation:
(1) All process data needed to verify equipment operation within
specific parameters during production in order to certify that
the treated waste (entire container contents) meets established
acceptance/performance criteria;
(2) Process analytical and test data to verify that the entire
container contents meet established waste acceptance criteria;
(3) Data pertinent to tracking container contents entering the
treatment facility to the exiting treated waste containers for
waste category verification purposes as required by regulations.
NOTE: The concentration of a radionuclide may be determined by
direct methods or by indirect methods such as use of scaling
factors which relate the inferred concentration of one
radionuclide to another that is measured, or radionuclide
material accountability, if there is reasonable assurance that
the indirect methods can be correlated with actual measurements.
4.1.11 Documentation
4.1.11.1 Final Treated Waste Certification: Each batch or lot of treated
waste shall be certified by the Contractor for meeting the requirements
set-forth in this SOW. A treated waste certification portfolio shall be
submitted for each treated waste shipment (ref: HASSWAC Section 2.1.4). At
a minimum, the portfolio shall include the Contents Inventory Record,
Solid Waste Storage/Disposal Record, LDR Notification/Certification,
laboratory analytical data or process knowledge information, and WDOE
"State-Only" LDR certification statement (as applicable). The Buyer will
accept or reject the certification portfolio within fifteen (15) working
days from the time the package was received by the Buyer.
4.1.11.2 Non-Conformance Reports: Non-Conformance Reports shall detail
the control, evaluation, and corrective action for treated waste that is
found to not meet the requirements of this SOW after initial treatment. A
non-conformance report is required to be generated by the Contractor
within fifteen (15) working days for each container, lot or batch that is
determined to not comply with those requirements. Methods to disposition
the non-conforming material and prevention of repeated incidents of non-
conformance will be detailed, in this report. A copy of the non-
conformance reports, and the results of the follow-up actions, will be
transmitted to the Buyer within five (5) working days of the completion of
the report. Concurrence with non-conforming material disposition by the
Buyer is required prior to shipment of the treated waste to the Buyer.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 11 OF 12
4.1.12 The Buyer reserves the right to inspect the Contractor's and/or
its sub-Contractor's facilities for which the Buyer's waste comes into
contact with. Inspection will be for verifying compliance with the
Contract requirements.
4.2 ONSITE WASTE TREATMENT OPTION (N/A)
5.0 NATIONAL ENVIRONMENTAL POLICY ACT COMPLIANCE
5.1 DOE-RL is required to comply with the National Environmental Policy Act
(NEPA) of, 1969 (10 CFR 1021), and DOE-RL is responsible for determining the
level of NEPA for this activity. NEPA services are typically outsourced by DOE-
RL to the Site's operating contractor or other subcontractors. In the case for
this treatment activity, NEPA services will be provided by the Contractor.
5.2 The Contractor shall provide NEPA documentation to the level of an
Environmental Assessment (EA). The EA shall be complete in form and format in
accordance with the guidance requirements for the preparation of NEPA
documentation (ref: NEPA). The Contractor is to submit the EA to DOE-RL for
their review and approval. In addition, the Contractor shall provide additional
data, explanation, clarification, etc. as required to obtain DOE approval.
6.0 OPTIONAL WASTE ORIGINATING FROM FFCA OBLIGATED OFFSITE GENERATORS
6.1 To comply with treatment obligations originating from the Federal Facility
Compliance Act (FFCA), the Buyer retains the option to allow up to 10 cubic
meters of waste generated from other DOE/DOD Sites to be shipped directly to the
Contractor's facility for treatment.
6.2 The Buyer will represent all Offsite DOE/DOD generators with respect to
waste shipment scheduling, transportation and billing arrangements. Only the
FFCA waste that is amenable to the treatment technology being employed by the
Contractor will be considered for treatment. The Buyer will provide the
Contractor with the characterization information for the applicable FFCA waste.
The waste will meet the general parameters specified in Section 3.0 of this
SOW.
6.3 The cost and terms for treating this FFCA waste will be negotiated on a
case-by-case basis.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW, PAGE 12 OF 12
7.0 REFERENCES
10 CFR 835, U.S. Nuclear Regulatory Commission, Standards for Protection Against
Radiation.
10 CFR 61, U.S. Nuclear Regulatory Commission, Licensing Requirements for Land
Disposal of Radioactive Waste.
10 CFR 71, U.S. Nuclear Regulatory Commission, Packaging and Transportation of
Radioactive Material.
10 CFR 830.120, Nuclear Safety Management, Subpart A, General Provisions,
Section 830.120, Quality Assurance Requirements (for recent changes see
59FR15843).
10 CFR 1021 Department of Energy, National Environmental Policy Act Implementing
Procedures.
40 CFR, U.S. Environmental Protection Agency Regulations.
49 CFR Subchapter C, Sections 171-180, U.S. Department of Transportation,
Hazardous Materials Regulation.
AEA, Atomic Energy Act of 1954, as amended, 42 USC 2011, et seq.
EPA, SW-846 Test Methods for the Evaluation of Solid Waste, Physical/Chemical
Methods, U.S. Environmental Protection Agency, Most Current Version.
NEPA, Recommendations for the Preparation of Environmental Assessments and
Environmental Impact Statements, Office of NEPA Oversight, U.S. Department of
Energy, May 1993.
RCRA, Resource Conservation and Recovery Act of 1976, 42 USC 6901 et seq.
WAC 173-303, State of Washington Administrative Code "Dangerous Waste
Regulations," as amended.
WHC-EP-0063-4 Page Change 5, Hanford Site Solid Waste Acceptance Criteria,
Westinghouse Hanford Company, Richland, Washington, May 1996 or most recent
revision (available from Document Control Services-Public Requests; 509-376-
1418, 509-372-2420 or Internet [email protected]).
<PAGE>
APPENDIX-A
STATEMENT- OF-WORK
P.O. MGK-SBB-A26602 ITEM-1
MIXED WASTE "NON-DEBRIS"
TREATMENT WASTE LOT
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW APPENDIX-A
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
"INORGANIC NON-DEBRIS" TREATMENT WASTE LOT
- -----------------------------------------------------------------------------------------
Container
Package ID# Volume Container WSRds Generator Dangerous Waste Codes
(m 3) Size (ft.in)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
100N-95-0465 3.16 7.1"5.2"5.9 501 00 ERC D007 D008
- -----------------------------------------------------------------------------------------
100N-95-0466 3.16 7.1"5.2"5.9 501 00 ERC D007 D008
- -----------------------------------------------------------------------------------------
100N-95-0467 3.16 7.1"5.2"5.9 501 00 ERC D007 D008
- -----------------------------------------------------------------------------------------
9302-06-0001 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-06-0002 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-06-0003 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-06-0004 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-06-0005 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-06-0006 2.922 4"4.3"6 ALI PSNS D007 WCO2 WTO2
- -----------------------------------------------------------------------------------------
9302-07-0001 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-07-0002 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-07-0003 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-07-0004 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-07-0005 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-07-0006 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-08-0001 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-08-0002 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-08-0003 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-08-0004 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-08-0005 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-08-0006 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-09-0001 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-09-0002 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-09-0003 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-09-0004 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-09-0005 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-09-0006 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-10-0001 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-10-0002 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-10-0003 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-10-0004 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-10-0005 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-10-0006 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-11-0001 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-11-0002 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-11-0003 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
9302-11-0004 2.922 4"4.3"6 ALI PSNS D007 WC02 WT02
- -----------------------------------------------------------------------------------------
PNL-88004 0.328 85 GALLON PAI 1234 D001 WT02
- -----------------------------------------------------------------------------------------
PNL-88031 0.328 85 GALLON PAI 1234 D001 D007 D011 DWC02 WT02
- -----------------------------------------------------------------------------------------
PNL-88003 0.328 85 GALLON PAI 1234 D005 D007 D011 DWC02 WT02
- -----------------------------------------------------------------------------------------
9508155 0.3218 85 GALLON 501 00 ERC D007 D008
- -----------------------------------------------------------------------------------------
9508156 0.3218 85 GALLON 501 00 ERC D007 D008
- -----------------------------------------------------------------------------------------
9500535 0.3218 85 GALLON 501 01 ERC D007 D008
- -----------------------------------------------------------------------------------------
9500564 0.3218 85 GALLON 501 01 ERC D007 D008
- -----------------------------------------------------------------------------------------
950100027 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
950100028 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
950100029 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
950100030 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
950100031 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
950100032 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
950100033 0.3218 85 GALLON ALI GASD D006 WT02
- -----------------------------------------------------------------------------------------
9518054 0.3218 85 GALLON ALI 202A D001 D002
- -----------------------------------------------------------------------------------------
202A-92-002370 0.3218 85 GALLON PAI 202A D007 WP02
- -----------------------------------------------------------------------------------------
202A-92-002371 0.3218 85 GALLON PAI 202A D007 WP02
- -----------------------------------------------------------------------------------------
HRO-92-000225 0.3218 85 GALLON PAI 200W D007 WC02 WT02
- -----------------------------------------------------------------------------------------
HRO-92-000226 0.3218 85 GALLON PAI 200W D007 WC02 WT02
- -----------------------------------------------------------------------------------------
100C-96-0068 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------------
100C-96-0072 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------------
100C-96-0073 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------------
9400102 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------------
9400138 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------------
9513541 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------------
</TABLE>
Page 1
<PAGE>
P.O. MGK-SBB-A26602 ITEM-1
SOW APPENDIX-A
<TABLE>
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
9513593 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------
9513594 0.26 55 GALLON 501 01 ERC D008 D009
- -----------------------------------------------------------------------------------
9513540 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9513578 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522281 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522284 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522285 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522333 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522356 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522358 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
9522371 0.26 55 GALLON 701 00 ERC D008 D009
- -----------------------------------------------------------------------------------
WHC-3-89-0064 0.21 55 GALLON ALI 333 D002 D007 WT01
- -----------------------------------------------------------------------------------
WHC-A-90-849 0.21 55 GALLON ALI 202A D001 D002
- -----------------------------------------------------------------------------------
WHC-A-91-802 0.21 55 GALLON ALI 202A D007
- -----------------------------------------------------------------------------------
WHC-A-91-803 0.21 55 GALLON ALI 202A D007
- -----------------------------------------------------------------------------------
WHC-A-91-804 0.21 55 GALLON ALI 202A D007
- -----------------------------------------------------------------------------------
105N-90-000331 0.21 55 GALLON PAI 1310P D002 D007 WT02
- -----------------------------------------------------------------------------------
9203-01-0001 0.21 55 GALLON PAI NALAB D001
- -----------------------------------------------------------------------------------
RHZ-211-A20984 0.21 55 GALLON PAI 2345Z D007 D008 WC01 WP01 WT01
- -----------------------------------------------------------------------------------
RHZ-212-A19951 0.21 55 GALLON PAI 2345Z D007 D008 WC01 WP01
- -----------------------------------------------------------------------------------
RHZ-219-A21581 0.21 55 GALLON PAI 2345Z D007 D008 WC01 WP01 WT01
- -----------------------------------------------------------------------------------
WHC-3-89-0053 0.21 55 GALLON PAI 333 D001 WT02
- -----------------------------------------------------------------------------------
WHC-A-89-825 0.21 55 GALLON PAI 202A D001 D002 WT02
- -----------------------------------------------------------------------------------
WHC-A-89-826 0.21 55 GALLON PAI 202A D001 D002 WT02
- -----------------------------------------------------------------------------------
100C-95-0014 0.2082 55 GALLON 501 00 ERC D008
- -----------------------------------------------------------------------------------
202A-95-001555 0.2082 55 GALLON 501 01 PUREX D008
- -----------------------------------------------------------------------------------
9403727 0.2082 55 GALLON 502 00 WSCF D008 WT02
- -----------------------------------------------------------------------------------
9403731 0.2082 55 GALLON 502 00 WSCF WT02
- -----------------------------------------------------------------------------------
9521578 0.2082 55 GALLON 503 01 TANKFARM D002 D008
- -----------------------------------------------------------------------------------
9601773 0.2082 55 GALLON 504 00 PUREX WT02 WSC2
- -----------------------------------------------------------------------------------
9513367 0.2082 55 GALLON 505 00 PUREXLAB WP02 WT01 WT02
- -----------------------------------------------------------------------------------
9517513 0.2082 55 GALLON 903 00 PUREX D002 WT02
- -----------------------------------------------------------------------------------
9305-03-0002 0.2082 55 GALLON ALI BAPL D010
- -----------------------------------------------------------------------------------
9305-03-0003 0.2082 55 GALLON ALI BAPL D010
- -----------------------------------------------------------------------------------
RHZ-219-930412 0.2082 55 GALLON ALI 2345Z D001 D003
- -----------------------------------------------------------------------------------
224U-93-000063 0.2082 55 GALLON PAI 224U D007
- -----------------------------------------------------------------------------------
950100088 0.2082 55 GALLON PAI GASD D006 D008 WT02
- -----------------------------------------------------------------------------------
RHZ-219-091491 0.2 55 GALLON ALI 2345Z D001 WC02
- -----------------------------------------------------------------------------------
222S-92-000323 0.2 55 GALLON PAI 222S D002 D005
- -----------------------------------------------------------------------------------
EFSG-92-000819 0.2 55 GALLON PAI 399-3-1 D005 D007 WT01
- -----------------------------------------------------------------------------------
RHZ-219-091443 0.2 55 GALLON PAI 2345Z D007 D008 WC01
- -----------------------------------------------------------------------------------
3314-90-001 0.11 30 GALLON PAI 2EBG D006
- -----------------------------------------------------------------------------------
RHZ-219-091321 0.03 8 GALLON ALI 2345Z D001 WT02
- -----------------------------------------------------------------------------------
CHARACTERIZATION PROGRAM ADDITIONS
- -----------------------------------------------------------------------------------
271B-90-0098 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
271B-90-0099 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
271B-90-0105 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
271B-90-0106 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
271B-90-0430 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-610 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-611 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-612 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-614 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-652 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-653 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
BPLANT-89-654 0.21 55 GALLON PAI 271B D007 D008 WC01 WP02 WT01
- -----------------------------------------------------------------------------------
TOTAL VOLUME = 128
- -----------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE>
ATTACHMENT 1
P.O. MGK-SBB-A26602 ITEM-2
MIXED WASTE "DEBRIS" TREATMENT
STATEMENT OF WORK
SEPTEMBER 1, 1997
PAGE 1
1.0 GENERAL
1.1 Waste Management Federal Services of Hanford, Inc. (WMH) Is the Waste
Management Projects subcontractor at the Department of Energy Richland
Operations Office (DOE-RL), Hanford Site, located in Richland, Washington. The
Hanford Site is managed by the Project Hanford Management Contractor (PHMC),
Fluor Daniel Hanford Inc. (FDH), which is directly contracted by DOE-RL. WMH is
acting on behalf of FDH as the Buyer for this procurement activity.
1.2 Prior to September 1991, the Hanford Site was tasked with a mission for the
production of special nuclear materials to support the Department of Defense
(DOD) weapons programs. Since that date, the Hanford Site has been tasked with a
mission to cleanup the Site. The new mission reinforces waste management
activities at the Hanford Site, and focuses on resolving legacy waste issues.
Waste management initiatives include, but are not limited to; waste
characterization, segregation, storage, processing, treatment, minimization and
permanent disposal.
1.3 A segment of the waste management task is to provide the means to safely,
effectively, expeditiously and economically treat for disposal, legacy mixed
waste (MW) currently being managed at the Hanford Site. MW results from the
combination of dangerous waste as designated by the Washington Administrative
Code, Dangerous Waste Regulations (WAC 173-303) with radioactive materials as
defined by the Atomic Energy Act (AEA, 1954). MW has been generated by Hanford
Site facilities and some approved Offsite facilities since 1987, and additional
MW is forecasted to be generated throughout Hanford's cleanup mission life-
cycle. Subject waste resides in Resource Conservation and Recovery Act (RCRA)
compliant storage at the Central Waste Complex (CWC) located in the 200 West
Area of the Hanford Site.
2.0 OBJECTIVES
2.1 The primary objective of this work activity is to acquire a commercial
treatment services vendor (referred to as the Contractor here forth) to perform
treatment on a specific volume of MW with similar treatment requirements (i.e.,
regulative and technology), thus rendering
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 2 OF 13
the waste acceptable for land disposal at the Hanford Site. In all
circumstances, the Contractor's waste treatment capability(ies) shall be
sufficiently robust to appropriately treat the waste specified in Section 3.0.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 3 OF 13
3.0 WASTE SPECIFICATION
3.1 The waste to be treated under this SOW is designated as Contact Handled -
Low Level Mixed Waste (CH-LLMW) as determined by the Hanford Site Solid Waste
Acceptance Criteria (HSSWAC) (WHC, 1994). Approximately, 2,300m/3/ of waste
constitutes the waste treatment lot. The waste treatment lot is divided into two
sub-lots; debris waste contained in drums (Appendix-A, approximately 500m/3/),
and debris waste contained in boxes (Appendix-B, approximately 1,800m/3/). The
Buyer has selected to awarded both sub-lots together.
3.2 The FY1999 Base Contract will be for a period of one (1) year with the
waste volumes to be treated as specified in Table-1. The Buyer may authorize
additional waste to be treated during FY2000 and FY2001 utilizing Contract
extension options. Contract extension options will be for a period of one (1)
year and will be for treatment of up to the maximum waste volumes specified in
Table-1. The Buyer requires that the treatment Contractor(s) be ready to accept
and treat waste by January 1, 1999; and all treated waste shall be shipped back
to the Buyer by September 30 of the specific contracting period. By mutual
agreement between the Buyer and the Contractor(s), treatment may begin earlier
then specified for the Base period or any option period.
TABLE-1
<TABLE>
<CAPTION>
=============================================================================
WASTE SUB-LOT FY1999 (Base FY2000 (optional) FY200l (optional)
Contract)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
DRUMS 200m/3/ 200m/3/ (maximum) n/a
- -----------------------------------------------------------------------------
BOXES 260m/3/ 500m/3/ (maximum) 500m/3/ (minimum)
=============================================================================
</TABLE>
3.3 The waste sub-lots contain greater waste volume than that specified as the
minimum contracted volumes. Upon mutual agreement between the Buyer and
Contractor(s), waste packages from the sub-lots will be selected for actual
treatment. Waste that has similar physical, chemical and radiological
characteristics to the waste specified in the sub-lots may be substituted. This
allows the Buyer and the Contractor(s) some flexibility in what waste will
actually be treated, and it allows for waste substitution in the case non-
acceptable waste is encountered at the treatment facility.
3.4 To minimize impacts to the Buyer's Onsite interfaces (shipping/receiving
facilities, waste acceptance personnel... etc.) and budget distributions; the
Contractor(s) shall receive waste, ship treated waste, and invoice on a regular
basis to the greatest extent possible. The Buyer and Contractor(s) shall
mutually agree on the shipping/receiving intervals and volume associated with
each shipment. In the case a mutual agreement cannot be obtained for Sections
3.3 and 3.4, the Buyer ultimately reserves the right to select the waste to be
treated and the shipping/receiving schedule.
3.5 For this Contract, waste volumes to be treated will be based on the
internal volumes of the primary waste containers at the time waste
responsibility is transferred to the treatment
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 4 OF 13
Contractor. Volumes will be specified on the applicable shipping papers.
Overpack containers used solely to meet shipping requirements are not considered
to be the primary container. See the following examples for typical container
waste volumes (not all inclusive):
55-GAL DRUM:............. 0.208 CUBIC METERS
85-GAL DRUM:............. 0.322 CUBIC METERS
4'x 4'x 8' METAL BOX:.... 3.40 CUBIC METERS
B-25 BOX:................ 2.55 CUBIC METERS
3.6 The Buyer will review and verify the characterization of each waste
package prior to releasing the waste to the Contractor. Waste characterization
needed to meet Department of Transportation (DOT), RCRA, and/or Washington State
Hazardous Waste Management Act (HWMA) regulations (as applicable) for waste
shipment will be performed by the Buyer. Any additional waste characterization
to satisfy the Contractor's waste acceptance criteria which are above and beyond
DOT, RCRA, and/or HWMA regulations for shipment, shall be the responsibility of
the Contractor. The waste's general physical, chemical and radiological
characteristics are denoted below.
3.6.1 Waste is packaged per the HSSWAC. Drummed waste packages are mostly
208-liter (55-gal) with some 322-liter (85-gal) packages. Boxes range up to
1.83m(h) x 1.83m(w) x 3.05m(1) (6ft x 6ft x 10ft). Some of the waste will be
overpacked due to primary waste container integrity issues or DOT regulation
issues.
3.6.2 The waste's physical characteristics are generally comprised of
organic, inorganic and/or metallic debris type material meeting RCRA's debris
definition depicted in 40 CFR268.2(g). Some of the waste packages contain
some non-debris material (i.e., soil, particulate, sludge..etc.); however,
all packages will contain greater than 50 volume percent debris material
based on visual and/or real-time radiography inspection.
3.6.3 The hazardous constituents in the waste are regulated by HWMA (Chapter
70.105 Revised Code of Washington [RCW]), RCRA (42 USC 6901 et seq.) and the
HWMA and RCRA implementing regulations contained in WAC (Chapter 173-303,
Dangerous Waste Regulations) and Title 40 Code of Federal Regulations (CFR)
respectively.
3.6.3.1 The waste is most amenable to the alternative treatment standards
for hazardous debris as specified in 40 CFR268.45; however, other
applicable treatment standards specified in 40 CFR268.40 can be utilized.
The Contractor may choose to treat the debris and non-debris components
together or separately. If the Contractor chooses to treat them
separately, then the Contractor assumes the added responsibility of
meeting applicable treatment requirements specified in 40CFR268.40 (UHCs,
sampling & analysis...etc.). The Buyer will not be providing waste
characterization information for UHCs, the Contractor would need to assume
all UHCs would apply.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 5 OF 13
3.6.3.2 The waste will contain many different waste constituents:
characteristic waste constituents, listed waste constituents and
Washington State dangerous waste constituents. See Appendix-A and B for
container specific waste constituents.
3.6.3.3 A significant percentage of the debris waste under this contract
contains "organic/carbonaceous waste" as defined in WAC 173-303-140(3)(c).
WMH is pursuing an exemption from the associated State-only
organic/carbonaceous LDR (ref: WAC 173-303-140(4)(d)). WMH assumes that
they will obtain subject exemption prior to treatment commencement, thus
the treatment Contractor does not need to treat for this LDR.
3.6.4 The radioactive constituents in the waste are governed by the AEA.
Some or all of the radiological constituents tabulated in the HSSWAC (Table
3-1) can be expected in the waste, including alpha emitting radionuclides.
3.6.4.1 The activity concentration in individual waste packages will not
exceed Category 3 or Class C limits as defined in the HSSWAC (WHC 1994).
3.6.4.2 Transuranic radionuclides in the waste matrix will not exceed 100
nCi/g (i.e., no "TRU" waste in the scope of this SOW) as defined in the
HSSWAC (WHC 1994).
3.6.4.3 All waste packages to be treated under the terms of this SOW will
be Contact Handled (CH), meaning the dose rate on the container's outer
surface will not exceed 200 mrem/hr. Waste packages will not be shielded
to reduce the outer surface does rate; however, it is anticipated that
some of the actual waste may exceed 200 mrem/hr limit after removing it
from the packages. The Contractor shall have the provisions to handle
waste that exceeds 200 mrem/hr. If waste in a container is suspected of
exceeding 200 mrem/hr, the Buyer will flag the container (denote on
traveler papers and container package) and notify the Contractor prior to
the waste being signed over to the Contractor for treatment.
4.0 WORK REQUIREMENTS
4.1 OFFSITE WASTE TREATMENT OPTION
4.1.1 The Contractor shall provide all treatment services to treat the waste
specified in Section 3.0. The treatment shall produce a treated waste meeting
land disposal requirements at the Hanford Site as specified in this SOW.
Along with the treatment equipment and facility, the Contractor shall provide
the technical expertise needed to successfully perform waste treatment. This
includes, but is not limited to; treated waste form testing, immobilization
agent formulations (as applicable), sampling protocols and process control
parameters.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 6 of 13
4.1.2 The Contractor's treatment services shall be in accordance with all
applicable local, state, and federal laws and regulations. Furthermore, the
Contractor shall have all permits and licenses necessary for waste
transportation and treatment under this Contract. The Buyer will be provided
a copy of all permits and licenses at least 60 days prior to commencing the
first shipment of waste.
4.1.3 TREATMENT TECHNOLOGY:
4.1.3.1 The Contractor shall utilize treatment technologies meeting Best
Demonstrated Available Technology (BDAT) applicable to RCRA Land Disposal
Restrictions (LDR), WAC Dangerous Waste Regulations and the HSSWAC. The
Buyer believes the most relevant BDAT treatment technology for treating
subject waste is the immobilization technologies specified in 40
CFR268.45. Other treatment technologies can be utilized provided such
technologies satisfy treatment requirements set-forth in this SOW, and the
technology is accepted by the Washington Department of Ecology (WDOE)
and/or EPA Region 10 for disposing of at the Hanford Site.
4.1.3.2 Waste treatment techniques such as sorting, shredding, cutting,
and compaction shall be implemented as necessary to meet treatment
requirements as stated in this SOW. No pre-treatment activities will be
performed by the Buyer.
4.1.3.3 The Contractor shall provide process flow diagrams and describe
unit operations for each treatment unit employed to treat the waste
described in Section 3.0.
4.1.4 Waste Transportation:
4.1.4.1 The Contractor shall provide and be responsible for all waste
transportation from Hanford's waste shipping facilities to the
Contractor's treatment unit, and returning treated waste back to the
appropriate Hanford TSD facility.
4.1.4.2 Transportation shall be in full compliance with DOT regulations
in 49 CFR 171-180; Nuclear Regulatory Commission (NRC) regulations in 10
CFR 71, and other applicable federal, state and local laws and
regulations.
4.1.4.3 The Buyer will manifest each waste shipment to the Contractor's
treatment facility, and the Contractor shall manifest (as applicable) all
treated waste shipments to the Buyer.
4.1.4.4 Waste shipment responsibilities:
(a) On waste shipments originating from the Buyer's facilities, the
Buyer is responsible for loading the Contractor's transportation
vehicles. This includes providing the necessary loading equipment and
personnel. The Contractor will be responsible for securing the load,
adhering to all applicable requirements,
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 7 OF 13
and transporting the waste to their treatment facilities. Prior to
leaving the Buyer's loading facilities; the Buyer's Transportation and
Packaging Department will inspect the Contractor's loaded
transportation vehicle to verify compliance with all applicable
requirements, and radiation monitoring will be performed by the Buyer
before vehicle release.
(b) On shipments originating from the Contractor's facilities, the
Contractor is responsible for loading their transportation vehicles.
This includes providing the necessary loading equipment and personnel.
The Contractor will be responsible for securing the load, adhering to
all applicable transportation requirements, performing radiation
monitoring, and transporting the treated waste to the Hanford Site.
The Contractor's transportation vehicles shall be available for
inspection by the Buyer's Transportation and Packaging Department to
verify compliance with all applicable requirements prior to entering
the Hanford Site. Inspections can take place at either the Buyer's
inspection facility located in Richland, WA; or at the Contractor's
loading facilities. The actual inspection location shall be defined in
the Contractor's Transportation Plan. Radiation monitoring will be
performed on the Contractor's vehicles by the Buyer at his discretion
during the above noted inspection. The Buyer requires a minimum 24-
hour notice to schedule Transportation and Packaging personnel to
inspect the Contractor's vehicles.
4.1.4.5 Hanford's TSD facilities are operated primarily on dayshift
(7:30am - 4:00pm) during weekdays (M-F). The Contractor may make
arrangements with the Buyer to pick-up or drop-off waste shipments at
other times provided the Contractor provides a minimum 48-hour notice to
the Buyer.
4.1.5 Radionuclide Inventory:
4.1.5.1 The Contractor shall maintain the integrity of the Hanford Site's
radionuclide inventory during all phases of waste shipment, storage,
treatment, analysis, and treated waste return. At a minimum, the
Contractor shall segregate subject waste from other clients waste,
decontaminate treatment equipment prior to and after treating subject
waste, and return or incorporation all secondary waste (including system
HEPA filters) generated from the treatment of subject waste.
4.1.5.2 Since the waste inventory contains radioactive elements including
transuranic constituents, if treatment could result in a concentration of
radioactive elements, the Contractor shall administratively control the
waste feed so that no TRU Greater Than Category 3, or Greater Than Class
--
C waste (as defined in the HSSWAC) is generated.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 8 OF 13
4.1.6 Waste Acceptance Criteria:
4.1.6.1 The Contractor shall have a waste acceptance criteria established
to cover all the waste specified in Section 3.0. The waste acceptance
criteria shall address all pertinent waste attributes including:
radioisotope quantities/concentrations, criticality safety limits,
external radiation and heat generation, restrictions on types of waste,
container acceptance etc.
4.1.6.2 Treated waste from the Contractor shall be returned to the Buyer
meeting the storage and disposal requirements of the Hanford Site. This
--------------------
acceptance is administered in the HSSWAC. Since the treated waste may
reside in storage on the Hanford Site until the disposal site begins
operation, the Contractor will be required to meet both the storage and
disposal criteria. The only exception to this requirement is for waste
that after treatment results in non-RCRA or Washington State regulated
waste (i.e., treated characteristic only waste that can be disposed of in
Hanford's low-level burial grounds); for this case, the waste can be
packaged meeting the disposal requirements only. Treated waste packages
shall be of size, shape and weight that can be readily/safely lifted and
moved by means of conventional forklift type vehicles. The maximum package
should not exceed 5ft x 5ft x 9ft in size and 16,000 pounds in weight. The
Contractor can utilize other treated waste packages not meeting the above
criteria if the Contractor provides the means to deliver and place the
packages in the Buyer's disposal/storage unit.
4.1.6.3 The Contractor shall notify the Buyer immediately if upon receipt
inspection the Contractor discovers any significant discrepancies between
quantity or type of dangerous waste designated on the manifest or shipping
papers and the quantity or type of dangerous waste the Contractor actually
receives. The Contractor and Buyer must attempt to reconcile the
discrepancy within ten (10) calendar days after receiving the waste. If
the discrepancy cannot be resolved within this period, the Contractor
shall return the waste without delay back to the Hanford Site (the
Contractor will be reimbursed actual transportation costs for the returned
noncompliant waste.).
4.1.6.4 Once the Contractor accepts the waste for treatment, the
Contractor shall provide a final treated waste meeting the requirements of
this SOW. Treated waste that does not conform with the requirements of
this SOW will be controlled, documented, evaluated for the proper
corrective action, and treated to conform at no additional cost to the
Buyer.
4.1.7 Treated Waste Requirements
4.1.7.1 The treated waste shall be characterized with sufficient accuracy
to permit proper handling, storage, and disposal at the Buyer's site. This
characterization shall ensure that, upon generation of the treated waste,
the actual physical and chemical characteristics and major radionuclide
content are recorded and known during all stages of the waste management
process.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 9 of 13
4.1.7.2 The Contractor shall have a documented methodology for meeting
the applicable treatment requirements specified in this SOW. Included in
with this methodology is acknowledgement from the WDOE and/or the EPA
Region 10 that the Contractor's treatment approach meets the intended
treatment and performance objectives. A Waste Certification Summary (WCS)
shall be used to convey this treatment methodology (ref: HSSWAC, Section
2.1.2). The WCS shall be submitted to the Buyer at least 60 days prior to
treatment commencement.
4.1.7.3 If sampling is utilized for verifying the treated waste form
(i.e., 40 CFR268.40 treatment in lieu of 40 CFR268.45), the Contractor
shall specify the sampling methodology and frequency utilized in
certifying the waste meets disposal criteria. The sampling criteria shall
be based on statistical analysis techniques and confidence levels
documented in the Contractor's Waste Analysis Plan (WAP). At a minimum,
the Contractor shall plan on sampling 10 percent of the outgoing treated
waste packages.
4.1.7.4 As applicable, the Contractor shall establish a "chain of
custody" procedure for laboratory analysis samples in accordance with SW
846 methods. Sample analysis reports shall be clearly traceable back to
specific waste shipments and manifests. Reports documenting laboratory
analyses must be signed and certified by an authorized representative of
the Contractor. All laboratory analysis work must be performed in
compliance with 40 CFR 260-271. 40 CFR 260-271 requires, in some cases,
compliance with test methods defined in EPA SW 846, Test Methods for the
--------------------
Evaluation of Solid Waste, Physical/Chemical Methods, most recent edition,
----------------------------------------------------
(SW 846). The Contractor shall conduct laboratory analysis on the treated
waste sufficient to certify the treated waste meets WDOE, federal
regulations, and the HSSWAC requirements. The laboratory(ies) utilized for
treated waste testing shall be approved by the Buyer prior to initiating
waste treatment.
4.1.7.5 The Contractor shall provide additional samples (i.e., split
samples) of the treated waste to the Buyer, on a per-request basis, to
verify that the treated waste meets the requirements of this SOW. The
Buyer reserves the right to be present during all sampling and analysis
activities.
4.1.7.6 The Contractor's subcontracted laboratories performing analysis
on the Buyer's waste shall return excess waste sample material and/or
sample residues back to the Contractor. The Contractor in turn shall treat
the excess sample material and/or sample residues in accordance with the
requirements of this SOW, and return treated material to the Buyer.
4.1.8 Safety
4.1.8.1 The Contractor shall have developed, implemented, and maintained
a written Health and Safety Program which complies with 29 CFR Part
1910.120, Hazardous Waste Operations and Emergency Response.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 10 of 13
4.1.8.2 The Contractor shall submit their Health and Safety Program to
the Buyer at least 60 days before the first shipment of waste is scheduled
to be received by the Contractor.
4.1.9 Quality Assurance
4.1.9.1 The Contractor shall have developed, implemented, and maintained
a written Quality Assurance Program (QAP) which complies with 10 CFR Part
830, Nuclear Safety Management, Subpart A, General Provisions, Section
830.120, Quality Assurance Requirements; or the Contractor may have a QAP
based on another nationally recognized quality assurance standard that
meets the intent of 10 CFR830.120 (e.g., NQA-l).
4.1.9.2 The Contractor shall submit their QAP to the Buyer with their
proposal, and the Contractor must have a fully implemented Quality
Assurance Program Plan (QAPP) based on their QAP at least 30 days before
the first shipment of waste is scheduled to be received by the Contractor
(subject to verification by the Buyer's QA organization).
4.1.9.3 Laboratories utilized by the Contractor for waste sample analysis
under this Contract shall have documented and implemented a QAPP as
specified under the requirements of SW 846. At least 30 days before the
first waste shipment, the Contractor shall submit written confirmation to
the Buyer that the quality assurance documentation concerning selected
analytical laboratory(ies) comply with SW 846 requirements.
4.1.10 Records and Reports
4.1.10.1 All records associated with the Buyer's wastes (including but
not limited to Contractor's sample analysis results) shall be maintained
by the Contractor using a method compliant with the requirements specified
in WAC 173-303 and 40 CFR 260-271, and all other applicable federal,
state, or local regulations. All documents, procedures, and applicable
requirements for record keeping are subject to audit by the Buyer.
4.1.10.2 The Contractor shall develop and maintain a record keeping
system that records the following:
(a) A historical record of waste received, generated, treated, stored,
and shipped at the facilities under its cognizance. The data maintained
shall include all data necessary to show that the waste was properly
classified, treated, stored, and shipped. The data maintained in the
system shall be based on the data recorded on waste manifests. At a
minimum, the following data will be included for each container of waste:
(l) Waste physical and chemical characteristics;
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 11 OF 13
(2) Weight of the waste (total of waste and any solidification or
absorbent media);
(3) Volume of the waste (total of waste and any solidification or
absorbent media);
(4) Other data necessary to demonstrate compliance with waste
acceptance criteria;
(5) Major radionuclides and their concentrations;
(6) Packaging date, package weight, and external volume;
(7) All analytical and test data needed to verify treated waste
performance for certification and disposal.
(b) Waste manifest records shall be maintained by the Contractor for waste
received by the Contractor, and the Contractor shall manifest the treated
waste back to the Buyer. The manifest shall contain data necessary to
document the proper classification, and verify proper treatment, storage,
and disposal of the waste. Waste manifests shall be kept as permanent
records by the Contractor.
(c) The Contractor shall maintain the following records related to proper
plant and equipment operation:
(1) All process data needed to verify equipment operation within
specific parameters during production in order to certify that
the treated waste (entire container contents) meets established
acceptance/performance criteria;
(2) Process analytical and test data to verify that the entire
container contents meet established waste acceptance criteria;
(3) Data pertinent to tracking container contents entering the
treatment facility to the exiting treated waste containers for
waste category verification purposes as required by regulations.
NOTE: The concentration of a radionuclide may be determined by
direct methods or by indirect methods such as use of scaling
factors which relate the inferred concentration of one
radionuclide to another that is measured, or radionuclide
material accountability, if there is reasonable assurance that
the indirect methods can be correlated with actual measurements.
4.1.11 Documentation
4.1.11.1 Final Treated Waste Certification: Each batch or lot of treated
waste shall be certified by the Contractor for meeting the requirements
set-forth in this SOW. A treated waste certification portfolio shall be
submitted for each treated waste shipment (ref: HASSWAC Section 2.1.4). At
a minimum, the portfolio shall include the Contents Inventory Record,
Solid Waste Storage/Disposal Record, LDR Notification/Certification,
laboratory analytical data or process knowledge information, and WDOE
"State-Only" LDR certification (as applicable). The
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 12 OF 13
Buyer will accept or reject the certification portfolio within fifteen
(15) working days from the time the package was received by the Buyer.
4.1.11.2 Non-Conformance Reports: Non-Conformance Reports shall detail
the control, evaluation, and corrective action for treated waste that is
found to not meet the requirements of this SOW after initial treatment. A
non-conformance report is required to be generated by the Contractor
within fifteen (15) working days for each container, lot or batch that is
determined to not comply with those requirements. Methods to disposition
the non-conforming material and prevention of repeated incidents of non-
conformance will be detailed, in this report. A copy of the non-
conformance reports, and the results of the follow-up actions, will be
transmitted to the Buyer within five (5) working days of the completion of
the report. Concurrence with non-conforming material disposition by the
Buyer is required prior to shipment of the treated waste to the Buyer.
4.1.12 The Buyer reserves the right to inspect the Contractor's and/or its
sub-Contractor's facilities for which the Buyer's waste comes into contact
with. Inspection will be for verifying compliance with the Contract
requirements.
4.2 ON SITE OPTION (N/A)
5.0 NATIONAL ENVIRONMENTAL POLICY ACT COMPLIANCE
5.1 DOE-RL is required to comply with the National Environmental Policy Act
(NEPA) of 1969 (10 CFR 1021), and DOE-RL is responsible for determining the
level of NEPA for this activity. NEPA services are typically outsourced by DOE-
RL to the Site's operating contractor or other subcontractors. In the case for
this treatment activity, NEPA services will be provided by the Contractor.
5.2 The Contractor shall provide NEPA documentation to the level of an
Environmental Assessment (EA). The EA shall be complete in form and format in
accordance with the guidance requirements for the preparation of NEPA
documentation (ref: NEPA). The Contractor is to submit the EA to DOE-RL for
their review and approval. In addition, the Contractor shall provide additional
data, explanation, clarification, etc. as required to obtain DOE approval.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 13 of 13
6.0 OPTIONAL WASTE ORIGINATING FROM FFCA OBLIGATED OFFSITE GENERATORS
(Applicable to both Offsite and Onsite Options)
6.1 To comply with treatment obligations originating from the Federal Facility
Compliance Act (FFCA), the Buyer retains the option to allow up to 20 cubic
meters (assume 50/50 mix of drums and boxes) of waste generated from other
DOE/DOD Sites to be shipped directly to the Contractor's facility for treatment.
6.2 The Buyer will represent all Offsite DOE/DOD generators with respect to
waste shipment scheduling, transportation and billing arrangements. Only the
FFCA waste that is amenable to the treatment technology being employed by the
Contractor will be considered for treatment. The Buyer will provide the
Contractor with the characterization information for the applicable FFCA waste.
The waste will meet the general parameters specified in Section 3.0 of this
SOW.
6.3 The cost and terms for treating this FFCA waste will be negotiated on a
case-by-case basis.
7.0 REFERENCES
10 CFR 835, U.S. Nuclear Regulatory Commission, Standards for Protection Against
Radiation.
10 CFR 61, U.S. Nuclear Regulatory Commission, Licensing Requirements for Land
Disposal of Radioactive Waste.
10 CFR 71, U.S. Nuclear Regulatory Commission, Packaging and Transportation of
Radioactive Material.
10 CFR 830.120, Nuclear Safety Management, Subpart A, General Provisions,
Section 830.120, Quality Assurance Requirements (for recent changes see
59FR15843).
10 CFR 1021 Department of Energy, National Environmental Policy Act Implementing
Procedures.
40 CFR, U.S. Environmental Protection Agency Regulations.
49 CFR Subchapter C, Sections 171-180, U.S. Department of Transportation,
Hazardous Materials Regulation.
AEA, Atomic Energy Act of 1954, as amended, 42 USC 2011, et seq.
EPA, SW-846 Test Methods for the Evaluation of Solid Waste, Physical/Chemical
Methods, U.S. Environmental Protection Agency, Most Current Version.
<PAGE>
P.O. MGK-SBB-A26602 ITEM-2
SOW, PAGE 14 OF 13
NEPA, Recommendations for the Preparation of Environmental Assessments and
Environmental Impact Statements, Office of NEPA Oversight, U.S. Department of
Energy, May 1993.
RCRA, Resource Conservation and Recovery Act of 1976, 42 USC 6901 et seq.
WAC 173-303, State of Washington Administrative Code "Dangerous Waste
Regulations," as amended.
WHC-EP-0063-4 Page Change 5, Hanford Site Solid Waste Acceptance Criteria,
Westinghouse Hanford Company, Richland, Washington, May 1996 or most recent
revision (available from Document Control Services-Public Requests; 509-376-
1418, 509-372-2420 or Internet [email protected]).
<PAGE>
EXHIBIT 10.20
[LETTERHEAD OF WESTINGHOUSE HANFORD COMPANY APPEARS HERE]
PURCHASE ORDER
<TABLE>
<CAPTION>
THOMPSON. A Telephone 509/376-1801
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Contract No. DE-A-CO6-87RL10930 Total Pages (Buyer Insert) 22
<S> <C> <C> <C>
Mo./Day/Yr. Page Inquiry No. This order is Certified Under D.P.A.S Vendor Code Order No.
priority rated Reg. (15CFR350) 63338 MW6-SBV-357079
11/03/1995 1 W-357079 DOE-E 2
IMPORTANT
ALLIED TECHNOLOGY GROUP INC Show Order No. on all packages, invoices, and correspondence.
Complete packing list must accompany each shipment. Failure
to properly identify will delay receipt of shipment and
payment.
47375 FREMONT BLVD SHIP TO: 1. The Department of Energy
FREMONT CA 94538 c/o Westinghouse Hanford Company
[ 1 ] Central Receiving
2355 Stevens Drive
Richard, Washington 99352
F.O.B Date Delivery Required at F.O.B. Point Buyer 2. As indicated below.
RICHLAND, WA 09/30/05 M L ESTES G1-55
Terms of Payment Code Ship Via
NET 30 DAYS 10 SELLER
</TABLE>
<TABLE>
<CAPTION>
ITEM QUANTITY U/M DESCRIPTION UNIT PRICE TOTAL PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Confirming Order if Checked [ ]
NOT-TO EXCEED
1 PROVIDE THERMAL TREATMENT SERVICES FOR 15985915.00 15985915.00
UP TO 3.585 CUBIC METERS OF LOW LEVEL
MIXED WASTE AS SPECIFIED IN THE
ATTACHED STATEMENT OF WORK, REVISION
3A, AND MEMORANDUM OF UNDERSTANDING
DATED AUGUST 16, 1995. PAYMENT SHALL
BE PER THE PRICING SCHEDULE DATED
NOVEMBER 2, 1995, ATTACHED. AWARD
VALUE DOES NOT INCLUDE FIVE ANNUAL
OPTION PERIODS THAT MAY BE EXERCISED AT
THE DISCRETION OF WHC.
TOTAL VALUE OF THIS ORDER 15985915.00
- ------------------------------------------------------------------------------------------------------------------------------------
If this section exceeds $10,000 or otherwise specifically requested, Westinghouse Hanford Company
seller shall acknowledge acceptance by completing the spaces provided
below and returning the signed copy to the buyer within five (5) working
days of receipt.
Name (print of type) /s/ Doreen Chiu Title President Date 11/9/1995 [SIGNATURE ILLEGIBLE] 11/3/98
----------------- ------------- ----------- ----------------------------------
Signature Date
Signature /s/ Doreen Chiu Seller's Reference No. _________________
----------------------
</TABLE>
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.
<PAGE>
PURCHASE ORDER Westinghouse Hanford Company
A subsidiary of Westinghouse Electric
Westinghouse Corporation
[LOGO] Hanford Company P.O. Box 1970 Richland, Wa. 99352
THOMPSON, A Telephone 509/376-1801
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Contract No. DE-AC06-87RL10930 Total Pages (Buyer Insert) 22
<S> <C> <C> <C> <C> <C> <C>
Mo./Day/Yr. Page Inquiry No. This order is Certified Under D.P.A.S. Vendor Code Order No.
priority rated Reg. (15CFR350)
11/03/1995 1 W-357079 DOE-E 2 63338 MW6-SBV-357079
<CAPTION>
ALLIED TECHNOLOGY GROUP INC. Show Order No. on all packages, invoices, and correspondence.
Complete packing list must accompany each shipment. Failure
47375 FREMONT BLVD to properly identify will delay receipt of shipment and payment.
FREMONT CA 94538
SHIP TO: 1. The Department of Energy
c/o Westinghouse Hanford Company
Central Receiving
2355 Stevens Drive
[ 1 ] Richland, Washington 99352
F.O.B. Date Delivery Required at F.O.B. Point Buyer 2. As indicated below.
<S> <C> <C> <C> <C>
RICHLAND, WA 09/30/05 M L ESTES G1-55
Terms of Payment Code Ship Via
NET 30 DAYS 10 SELLER
<CAPTION>
ITEM QUANTITY U/M DESCRIPTION UNIT PRICE TOTAL PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
Confirming Order if Checked [_]
NOT-TO-EXCEED
<S> <C> <C> <C> <C>
1 PROVIDE THERMAL TREATMENT SERVICES FOR 15985915.00 15985915.00
UP TO 3.585 CUBIC METERS OF LOW LEVEL
MIXED WASTE AS SPECIFIED IN THE
ATTACHED STATEMENT OF WORK. REVISION
3A, AND MEMORANDUM OF UNDERSTANDING
DATED AUGUST 16, 1995. PAYMENT SHALL
BE PER THE PRICING SCHEDULE DATED
NOVEMBER 2, 1995, ATTACHED. AWARD
VALUE DOES NOT INCLUDE FIVE ANNUAL
OPTION PERIODS THAT MAYBE EXERCISED AT
THE DISCRETION OF WHC.
TOTAL VALUE OF THIS ORDER 15985915.00
- ------------------------------------------------------------------------------------------------------------------------------------
Provisions of the terms Billing Instructions: Render invoices in triplicate to Westinghouse Hanford Company
and conditions specifically Attention: Accounts Payable (MSIN G1-80)
included herein by WHC
are made a part of this Do not include Washington State Sales Tax or compensating tax in /s/ M L Estes 11/3/95
order. the price of this order. (Washington State Registration Number --------------------------
C-60-018-786). Attach original bill of lading with the original Signature Date
paid freight bill.
</TABLE>
<PAGE>
1
WHC PURCHASE ORDER NO. TW6-SBV-357079
Section "A" Award
-----------------
Award Notification (A57X)
The Seller is hereby notified that effective the date of this document, the
Seller is awarded a Firm Fixed Unit Price / Indefinite Quantity / Indefinite
Delivery Purchase Order for the delivery/performance of the item(s) above in
accordance with all the requirements and conditions set forth or by reference
attached herein. Pricing shall be in accordance with Attachment 3 to this order.
The Purchase Order is for five (5) years of "service", with five (5) one (1)
year options. Service shall start in sixty (60) months or sooner from the date
of the Purchase Order, contingent upon the NEPA requirements being approved
within three (3) years. Funding for the order will be provided incrementally on
an annual basis.
Order of Precedence
For the purposes of resolving any inconsistencies between the requirements set
forth within this order, the inconsistencies shall be resolved by giving
precedence in the following order:
1. Memorandum of Understanding (Attachment 2)
2. Statement of Work (Attachment 1)
3. General Provisions, Terms and Conditions
4. Other provisions where incorporated and/or referenced
Milestone Schedule
The Seller's Milestone for the Pre-processing Phase (Attachment 4), is
incorporated herein by reference and is of the essence in performance of this
order. The Seller shall adhere to the schedule shown therein and provide written
reports on a quarterly basis which describes the progress in performance.
Failure of the Seller to meet or exceed the milestone schedule may be judged a
material deficiency.
Nepa Documentation Submittal, Permitting, and Licensing
The U.S. Department of Energy (DOE) has determined the initial level of NEPA
Documentation for this activity is an Environmental Assessment. Unless otherwise
notified, an Environmental Assessment shall be submitted in accordance with the
Statement of Work, Revision 3a, dated March 24, 1995, Section 8.0 "National
Environmental Policy Act Compliance.".
<PAGE>
2
If DOE determines that an Environmental Assessment is not adequate to support
the proposed action and elevates the NEPA review to an Environmental Impact
Statement, the Seller shall be entitled to an equitable adjustment in price and
schedule in accordance with Article S0-8 Changes, Extras and Substitution of the
WHC Service Provisions ) PMM-44-007 which are incorporated into the Purchase
Order.
NEPA documentation, permitting, and licensing are material parts of performance.
WHC reserves the right to cancel the order at no cost to WHC if the NEPA
submittal is determined by DOE to be defective or nonconforming, the Seller
fails to provide documentation which meets the Statement of Work requirements,
and/or the Seller fails to obtain required permits and licenses. This
reservation does not limit WHC's right to terminate the order in accordance with
SERVICE PROVISIONS clauses S0-39, S0-40, and any other provisions herein.
- ------------------
Prior to the time that the NEPA documentation is approved and the Seller is
authorized in writing to proceed, the Buyer's financial responsibility to the
Seller, assuming performance is neither defective of nonconforming, is limited
to the costs of preparation of NEPA documentation for submittal as required in
the Statement of Work, Revision 3A, dated March 24, 1995, Section 8.0.
Section "B" Workscope/Description
---------------------------------
Specification
Seller's performance shall be in accordance with LOW LEVEL MIXED WASTE THERMAL
TREATMENT, Statement of Work, Revision 3A, dated March 24, 1995, (Attachment 1)
which is incorporated and made a part hereof.
Incorporation of Documents
Documents referenced in the Statement of Work and/or attached to this order are
incorporated and made a part hereof.
Rejection of Waste Product Materials
Prior to acceptance, Seller may reject waste which it has determined by visual
inspection or testing to be nonconforming. Seller shall give Buyer notice of the
waste rejected and the reason for such rejection.
Section "C" Packaging and Marking
---------------------------------
Inbound Shipments of Radioactive Material (C12)
Radioactive Material covered by this Purchase Order shall be properly packaged,
<PAGE>
3
marked, labeled and certified to the carrier that the shipment is in proper
condition for transportation according to the applicable regulations of the
Department of Transportation.
The shipping package should be inspected and a dose rate survey made during the
48 hours prior to shipment. The Buyer shall be notified 48 hours prior to
shipment of the movement of this material.
Hazardous Material (C13)
Any Hazardous Materials covered by this Purchase Order shall be properly
packaged, marked, labeled and certified to the carrier that the shipment is in
proper condition for transportation according to applicable regulations of the
Department of Transportation, (See CFR Title 49 Parts 171-178). Upon receipt of
notification of any material on this order found to be nonconforming to the
applicable Department of Transportation regulations for packaging, marking and
labeling, the Seller shall within 5 days and at no expense to the Buyer, (any
expenses incurred by the Buyer in bringing material into conformity will be for
the account of the Seller and deducted from any monies due the Seller):
1. Repackage, remark or relabel the material to meet requirement at
Westinghouse Hanford Company's (WHC) facility, or,
2. Reach agreement with Buyer for WHC to repackage, remark or relabel the
material to meet requirements, or Material Safety Data Sheet (MSDS)
required.
3. Pick up the nonconforming material at the Buyer's facility and replace
with material conforming to all requirements of the order.
Hazardous Waste (C22)
The shipment of any material designated as a Hazardous Waste and subject to the
Hazardous Waste Manifest Requirement of the U.S. Environmental Protection
Agency, (EPA), or the Washington State Department of Ecology, "Dangerous Waste
Regulations", shall be packaged and shipped in accordance with the following
applicable regulations:
- 40 CFR 260 - 265, U.S. EPA Regulations
- 49 CFR 171 - 179, Department of Transportation (DOT) Regulations
- WAC 173 -303, Washington State Department of Ecology Regulations
Section "D" Transportation Instructions
---------------------------------------
Transportation Charges - Full Prepaid (D06)
The Seller is responsible for and shall pay all transportation charges from and
to the Hanford Site in accordance with the Statement of Work, Section 7.0,
<PAGE>
4
delivered to a location on the Hanford Site to be specified later and shall not
invoice the Department of Energy c/o Westinghouse Hanford Company for such
transportation charges. The Seller bears all responsibility for damage or loss
until delivery is made to the FOB point specified herein.
Transportation Plan
The seller shall meet all requirements for transporting the low level mixed
waste. The Seller's transportation plan shall summarize all steps required for
meeting the regulatory and permitting requirements for transporting waste of
this type. The transportation plan shall include the intended route(s) to be
used for transporting the waste, the qualifications of the carrier, and the
carrier's experience.
A "final" transportation plan shall be provided to the Buyer for review and
approval ninety (90) days prior to the first shipment of waste. Any changes to
the approved transportation plan shall be proposed in writing for Buyer
approval.
Section "E" Quality Assurance and Inspection
--------------------------------------------
Quality Assurance Program and Plan
Quality Assurance documents shall be provided for Buyer approval in accordance
with the Statement of Work, Section 6.0, within sixty (60) days after award of
the order. The Quality Assurance Program must be approved by the Buyer prior to
any shipment of waste to the Seller.
Section "F" Delivery/Performance
--------------------------------
Performance
NEPA documentation, permitting, licensing and the Sellers Milestone Schedule for
the Pre-Processing Phase are material parts of performance under this contract.
The Pre-Processing Phase shall not exceed sixty (60) months and is not included
in the ten (10) year period for Thermal Treatment performance of this contract.
The period for Thermal Treatment performance shall commence no later than sixty
(60) months from the date of award and thermal treatment shall not exceed ten
(10) years including the option years.
Buyer option(s) for five (5) one (1) year extensions shall be available to WHC
if necessary after the base five (5) years of treatment services.
<PAGE>
5
Section "G" Order Administration
--------------------------------
Document Transmittals (G01)
The Seller shall utilize a document transmittal system for the exchange of data
and information during the performance of work under this order. The transmittal
shall contain (1) a unique identification number, (2) a brief identification of
the document(s) including revisions, (3) the date of the transmittal, (4)
purpose of the transmittal, including required action (if any) (5) signature of
supplier representative, and (6) means or provisions for receipt acknowledgement
by the Buyer.
Authorized Personnel (G03)
Only the following named individuals are authorized to make changes to this
document: M.L. Estes\Buyer, Procurement; D. Van Wormer\Section Manager,
Procurement; R.M. Hadley\Group Manager, Procurement; R.J. Meyer\ Director,
Procurement and Materials Management.
Administrative Requirements (G08)
The administrative requirements set forth in PMM-42-077, are hereby incorporated
into this order.
Closeout Certification, Fixed Price Orders (G19)
Seller shall properly execute and mail to the Buyer, the attached final release
(Form PMM-42-007), within five working days from the last date services are
provided hereunder and/or the date of the last shipment made hereunder. Final
payment will not be made until this form is properly executed and received by
Westinghouse Hanford Company Purchasing.
Section "H" Special Requirements
--------------------------------
Asbestos & PCB Certification
Seller shall identify returned containers in accordance with the Statement of
Work and referenced documents with special attention to those that contain
asbestos and PCB's.
Nuclear Hazards Indemnity Agreement (H08)
A. Authority.
<PAGE>
6
This clause is incorporated into this subcontract pursuant to the authority
contained in the U.S. Department of Energy (the DOE) Prime Contract No. DE-
AC06-87RL10930 with Westinghouse Hanford Company (WHC) and subsection 170D.
of the Atomic Energy Act of 1954, as amended (hereinafter called The Act).
B. Definitions.
The definitions set out in the Act shall apply to this clause.
C. Financial Protection.
Except as hereafter permitted or required in writing by the DOE or WHC, the
subcontractor will not be required to provide or maintain, and will not
provide or maintain at government expense, any form of financial protection
to cover public liability, as described in paragraph D.2 below.
Westinghouse Hanford Company or the DOE may, however, at any time require
in writing that the subcontractor provide and maintain financial protection
of such a type and in such amount as WHC or the DOE shall determine to be
appropriate to cover such public liability, provided that the costs of such
financial protection are reimbursed to the subcontractor by WHC or DOE.
D. Indemnification.
1. To the extent that the subcontractor and other persons indemnified are
not compensated by any financial protection permitted or required by
WHC or the DOE, the DOE will indemnify the subcontractor and other
persons indemnified against (1) claims for public liability as
described in paragraph D.2 of this clause; and (2) such legal costs of
the subcontractor and other persons indemnified as are approved by
DOE, provided that DOE's liability, including such legal costs, shall
not exceed the amount set forth in section 170E(1)(B) of The Act in
the aggregate for each nuclear incident or precautionary evacuation
occurring within the United States or $100 million in the aggregate
for each nuclear incident occurring outside the United States,
irrespective of the number of persons indemnified in connection with
this contract.
2. The public liability referred to in subparagraph D.1 of this clause is
public liability as defined in The Act which (1) arises out of or in
connection with the activities under this contract, including
transportation; and (2) arises out of or results from a nuclear
incident or precautionary evacuation, as those terms are defined in
the Act.
E. Waiver of Defenses.
1. In the event of a Nuclear Incident, as defined in the Act, arising out
of nuclear waste activities, as defined in the Act, the subcontractor,
on behalf of itself and other persons indemnified, agrees to waive any
issue or defense as to charitable or
<PAGE>
7
Governmental Immunity.
2. In the event of an extraordinary nuclear occurrence which:
A. Arises out of, results from, or occurs in the course of the
construction, possession, or operation of a production or
utilization facility; or
B. Arises out of, results from, or occurs in the course of
transportation of source material, by-product material, or
special nuclear material to or from a production or
utilization facility; or
C. Arises out of or results from the possession, operation, or
use by the subcontractor or a lower-tier subcontractor of a
device utilizing special nuclear material or by-product
material, during the course of the contract activity; or
D. Arises out of, results from, or occurs in the course of
nuclear waste activities, the subcontractor, on behalf of
itself and other persons indemnified, agrees to waive:
(1) Any issue or defense as to the conduct of the claimant
(including the conduct of persons through whom the
claimant derives its cause of action) or fault of
persons indemnified, including, but not limited to:
. Negligence;
. Contributory negligence;
. Assumption of risk; or
. Unforeseeable intervening causes, whether
involving the conduct of a third person or an act
of god;
(2) Any issue or defense as to charitable or governmental
immunity; and
(3) Any issue or defense based on any statute of
limitations, if suit is instituted within three (3)
years from the date on which the claimant first knew,
or reasonably could have known, of his injury or change
and the cause thereof. The waiver of any such issue or
defense shall be effective regardless of whether such
issue or defense may otherwise be deemed jurisdictional
or relating to an element in the cause of action. The
waiver shall be judicially enforceable in accordance
with its terms by the claimant against the person
indemnified.
<PAGE>
8
E. The term "Extraordinary Nuclear Occurrence" means an event
which the DOE has determined to be an extraordinary nuclear
occurrence as defined in the Act. A determination of whether
or not there has been an extraordinary nuclear occurrence
will be made in accordance with the procedures in 10 Code of
Federal Regulation (CFR) 123 part 840.
F. For the purposes of that determination, "Offsite" as that
term is used in 10 CFR 123 part 840 means away from "the
contract location" which phrase means any DOE facility,
installation, or site at which contractual activity under
this contract is being carried on, and any subcontractor-
owned or controlled facility, installation, or site at which
the subcontractor is engaged in the performance of
contractual activity under this contract.
3. The waivers set forth above:
A. Shall be effective regardless of whether such issue or defense
may otherwise be deemed jurisdictional or relating to an element
in the cause of action;
B. Shall be judicially enforceable in accordance with its terms by
the claimant against the person indemnified;
C. Shall not preclude a defense based upon a failure to take
reasonable steps to mitigate damages;
D. Shall not apply to injury or damage to a claimant or to a
claimant's property which is intentionally sustained by the
claimant or which results from a nuclear incident intentionally
and wrongfully caused by the claimant;
E. Shall not apply to injury to a claimant who is employed at the
site of and in connection with the activity where the
extraordinary nuclear occurrence takes place, if benefits
therefor are either payable or required to be provided under any
workmen's compensation or occupational disease law;
D. Shall not apply to any claim resulting from a nuclear incident
occurring outside the United States;
E. Shall be effective only with respect to those obligations set
forth in this clause and in insurance policies, contracts, or
other proof of financial protection; and
F. Shall not apply to, or prejudice the prosection or defense of,
any claim or portion of claim which is not within the protection
afforded under (1) the limit of liability provisions under
subsection 170E. Of the Act, and (2) the
<PAGE>
9
terms of this agreement and the terms of insurance policies,
contracts, or other proof of financial protection.
F. Notification and Litigation of Claims.
The subcontractor shall give immediate written notice to WHC and the
DOE contracting officer of any known action or claim filed or made
against the subcontractor or other person indemnified for public
liability as defined in paragraph D.2. Except as otherwise directed by
WHC and DOE, the subcontractor shall furnish promptly to WHC and DOE,
copies of all pertinent papers received by the subcontractor or filed
with respect to such actions or claims. Westinghouse Hanford Company
and the DOE shall have the right to, and may collaborate with, the
subcontractor and any other person indemnified in the settlement or
defense of any action or claim and shall have the right to (1) require
the prior approval of the DOE for the payment of any claim that the
DOE may be required to indemnify hereunder; and (2) appear through the
Attorney General on behalf of the subcontractor or other person
indemnified in any action brought upon any claim that the DOE may be
required to indemnify hereunder; take charge of such action, and
settle or defend any such action. If the settlement or defense of any
such action or claim is undertaken by DOE, the subcontractor or other
person indemnified shall furnish all reasonable assistance in
effecting a settlement or asserting a defense.
G. Continuity of U.S. Department of Energy Obligations.
The obligations of the DOE under this clause shall not be affected by
any failure on the part of the subcontractor to fulfill its obligation
under this contract and shall be unaffected by the death, disability,
or termination of existence of the subcontractor, or by the
completion, termination, or expiration of this contract.
H. Effect of Other Clauses.
The provisions of this clause shall not be limited in any way by, and
shall be interpreted without reference to, any other clause of the
contract, including the clause entitled Contract Disputes, provided,
however, that this clause shall be subject to the clauses entitled
Covenant Against Contingent Fees, Officials not to Benefit, and
Examination of Records by the Comptroller General, and any provisions
that are later added to this contract as required by applicable
Federal law, including statutes, executive orders, and regulations, to
be included in nuclear hazards indemnity agreements.
I. Civil Penalties.
The subcontractor and its subcontractors and suppliers who are
indemnified under the provisions of this clause are subject to civil
penalties, pursuant to 234A of the Act, for violations of applicable
DOE Nuclear-Safety related rules, regulations, or orders.
<PAGE>
10
J. Criminal Penalties.
Any individual director, officer, or employee of the subcontractor or
of its subcontractors and suppliers who are indemnified under the
provisions of this clause are subject to criminal penalties, pursuant
to 223(C) of the Act, for knowing and willful violation of the Atomic
Energy Act of 1954, as amended, and applicable DOE nuclear safety-
related rules, regulations or, orders which violation results in, or,
if undetected, would have resulted in a Nuclear Incident.
K. Inclusion in Subcontracts.
The subcontractor shall insert this clause in any subcontract which
may involve the risk of public liability, as that term is defined in
the Act and further described in paragraph D.2 above. However, this
clause shall not be included in subcontracts in which the
subcontractor is subject to Nuclear Regulatory Commission (NRC)
financial protection requirements under section 170B. of The Act or
NRC agreements of indemnification under section 170C. or K. of the Act
for the activities under the subcontract.
L. Indemnification of Westinghouse Hanford Company
To the extent permitted by law, the subcontractor assumes full
responsibility and shall indemnify, save harmless, and defend WHC; its
principal subcontractors, ICF Kaiser Hanford Company and Boeing
Computer Services Richland, Inc.; Their agents; officers; employees;
and directors from any civil or criminal liability under sections 234A
or 223(C) of the Act or the implementing regulations at 10 CFR 223
820, et seq., arising out of the activities of the subcontractor, its
lower-tier subcontractors, suppliers, agents, employees, officers, or
directors. The subcontractor's obligation to indemnify and hold
harmless shall expressly include attorneys fees and other reasonable
costs of defending any action or proceeding instituted under sections
234A or 223(C) of the Act or the implementing regulations at 10 CFR
123 820, et seq.
A copy of the implementing regulations at 10 CFR 123 820, et seq.,
Will be made available to the subcontractor upon request.
Indefinite Quantity
1. This is an indefinite quantity contract for the services specified and
effective for the period stated in the Special Instructions for the
Preparation for Proposals and attachments thereto. The actual quantities
provided for treatment will be dependent on funding availability and/or the
amount of product that becomes available for treatment. The quantities
included on Attachment 3 are for pricing purposes only. As noted in
paragraph 119, the minimum guarantee or commitment was removed from the
contractual arrangement by the agreement of October 19, 1995.
<PAGE>
11
2. The Seller shall furnish to WHC, when and if requested, the services
specified in the Pricing Schedule (Attachment 3) up to and including the
quantity designated as the Total Baseline Plus Options, which is 5,120
cubic meters of product.
3. Requirements issued during the effective period of this contract and not
completed within that period shall be completed by the Seller. The
contract shall govern the Seller's and WHC's rights and obligations with
respect to that requirement to the same extent as if the requirement were
completed during the contract's effective period.
Proprietary Data Submittal (H31)
If Seller submits any data as part of this order which is considered by the
Seller to be "Proprietary Data", the document transmitting the data or which
contains the data, shall be boldly marked indicating that the data Included is
considered to be proprietary.
In the event any data is designated as "Proprietary Data", such designation
shall be in accordance with special provision (PMM-44-009) Article SC-7 entitled
"Rights in Technical Data".
LIMITATIONS OF FUNDS (H29X)
1. Although the parties hereto have negotiated the ceiling price of
$15,985,915 for this Purchase Order (hereafter referred to as the Order),
not including the five annual option periods, they understand that
sufficient funds for the full scope of work are not yet available and that
presently there is obligated only the sum of $1,015,207, which equates to
the maximum termination cost for Year 1 per the Termination Liability
Schedule (Attachment 5) based on a 5 year permitting/licensing project
duration. It is anticipated that from time to time additional funds will be
obligated to this order by Westinghouse Hanford Company (WHC).
2. Seller agrees to perform, or have performed, work up to the point at which,
in the event of termination of this Order pursuant to the clause entitled
"Termination", the total amount payable by WHC, including amounts payable
with respect to subcontracts and settlement costs, and pursuant to
paragraph 5 hereof, (hereafter called the "Termination Amount", would in
the exercise of reasonable judgment by the Seller approximate the total
amount then obligated to the Order. WHC shall not be obligated in any event
to pay or reimburse the Seller in excess of the amount then currently
obligated to the Order notwithstanding any other provision of this Order.
3. It is contemplated that funds presently obligated to this Order will cover
the work to be performed during the first year following award. In the
event Seller considers the funds obligated Seller to be inadequate to cover
the work to be performed until such time, or an agreed date in substitution
thereof, the Seller shall notify WHC in writing when within
<PAGE>
12
the next thirty (30) days, the work will reach a point at which the
termination amount approximates 85 percent of the total amount then
obligated to the Order. The notice shall state the estimated date when such
termination amount will be reached and the estimated amount of additional
funds required to continue performance to the above or an agreed
substituted date. If after such notification, additional funds are not
obligated by such date or by an agreed date in substitution thereof, WHC
shall upon Seller's written request, terminate this Order on such date or
the date set forth in the request, whichever is later, pursuant to the
provisions of the "Termination" clause of this Order.
4. When additional funds are obligated from time to time for continued
performance of the work under this Order, the parties shall agree on the
applicable period of Order performance which shall be covered by such
funds. The provisions of paragraphs 2 and 3 above shall apply to such
additional obligated funds and substituted date and the Order amended
accordingly.
5. If the Seller incurs additional cost, or is delayed in the performance of
the work under this Order, solely by reason of the failure of WHC to
obligate additional funds in amounts sufficient for the timely performance
of this Order, and if additional funds are obligated, an equitable
adjustment shall be made in the price or prices, (including appropriate
target, billing, and ceiling prices where applicable), of said item or in
the time of delivery, or both.
6. WHC may at any time prior to termination, obligate additional funds for
this Order.
7. Modification of this Order under the "Changes" article shall not constitute
a change in the amount obligated under this clause.
8. Nothing in this clause shall affect the right of WHC to terminate this
Order pursuant to the termination provisions of the Order.
Designation of Technical Representative (H38)
The Buyer hereby designates the following as the Buyer's Technical
Representative (BTR) for this order:
Barry G. Place, (509) 372-1372, Mail Stop T4-03.
The BTR is responsible for monitoring and providing technical guidance for this
order and should be contacted regarding questions or problems of a technical
nature. In no event, however, will an understanding or agreement, modification,
change order, or any deviation from the terms of this order be effective or
binding upon WHC unless formalized by proper order documents executed by the
Buyer prior to completion of this order. On all matters that pertain to order
terms, the Seller shall contact the Buyer specified within this order. When in
the opinion of the Seller, the BTR requests or directs efforts outside the
existing scope of the order, the Seller shall promptly notify the Buyer in
writing. No action shall be taken until an appropriate modification to the order
<PAGE>
13
has been issued by the Buyer. The BTR shall be responsible for appropriate
surveillance of the Sellers representative while on site.
Options
Westinghouse Hanford Company (WHC) may exercise its option to extend the terms
of this contract up to 30 days prior to the expiration of the existing service
term. The actual exercise of the options shall be via a Purchase Order
modification only. Seller shall ensure that the fixed unit prices quoted for
optional periods of performance are firm over this time period. This contract
contains five (5) one (1) year option periods that may be exercised individually
at the option of WHC. Annual option pricing is as identified in the Pricing
Schedule (Attachment 3).
On-Site Services (H44)
The requirements set forth within PMM-37-0O1 entitled "On-Site Services" shall
apply to this order.
Lower Tier Quality Assurance Information (H50)
Form-PMM 15.1-006, lower tier supplier quality assurance information is
incorporated herein and attached hereto. Any additions or changes from the
approved form will require Buyer approval. (Attachment to PMM-15.1-008)
Service Contract Act of 1965 (H27X)
This Purchase Order is subject to the service contract act of 1965. The
Department of Labor request for wage determination will be submitted for job
classifications and work locations proposed by the Seller. The fixed unit price
treatment rates shall be considered inclusive of all labor costs set forth by
the Department of Labor and determined to be payable to employees covered by
this act. All such costs, including labor rates, applicable payroll taxes and
various other business taxes (i.e. Washington State B&O, FICA, etc.) shall be
the exclusive responsibility of the Seller.
Representations and Certifications - P0 (H74X)
Seller has completed Representations and Certifications, form PMM-15.1-007,
which is on file with the Buyer.
Sellers Warranties
The Seller warrants and represents to the Buyer that:
a. Seller understands the currently known hazards and risks which are
presented to human beings, property and the environment in the
handling, transportation, storage, treatment, processing and disposal
of the waste; and,
<PAGE>
14
b. Seller is engaged in the business of transportation, storage and
disposal of industrial and other wastes, and has developed the
requisite expertise for the handling, transportation, storage,
treatment, processing, and disposal of such; and,
c. Seller will handle, transport, store, treat, process, analyze, and
stabilize waste and waste product(s) in a safe and workmanlike manner
and in full compliance with all valid and applicable statues,
ordinances, orders, rules and regulations of the federal, state and
local governments in whose jurisdictions such activities are performed
under this purchase order; and,
d. Any and all vehicles and vessels, waste product(s) containers and
personnel to be provided by Seller in performance of this purchase
order have obtained or will obtain all permits, licenses, certificates
or approvals required to comply with valid and applicable statues,
ordinances, orders, rules and regulations of the federal, state and
local governments; and,
e. The Seller's Waste Treatment Facility (or Facilities) shall have
obtained prior to receiving the waste, all permits, licenses,
certificates or approvals required by valid and applicable statutes,
ordinances, orders, rules and regulations of the federal, state, and
local governments in which such Facility is located, necessary to
allow such Facility to accept, store, treat, and process Waste
Product(s). In addition, if required by federal, state or local law,
regulation or ordinance, Seller shall have filed with the appropriate
governmental agency a notification of hazardous and radioactive waste
activity and/or an application to operate a hazardous and radioactive
waste storage, treatment or disposal facility if the facility has
achieved "interim status" as defined by federal and applicable state
law and regulations. Seller shall provide Buyer with reasonable
advance notice if any such permit license, certificate or approval is
to expire and not to be renewed during the term of the purchase order,
or become the subject of judicial or administrative action seeking
revocation or suspension. Such notice shall also be provided if Seller
determines not to seek any necessary permit, license, certificate or
approval which becomes required after execution of the purchase order.
If during the term of this purchase order, Seller determines not to
renew any existing permit, license, certificate or approval, or not
seek any necessary permit, license, certificate or approval which
becomes required after execution of the purchase order, Buyer shall
retain all the rights and remedies it may have at law or equity.
Environment, Safety and Health (Government Owned or Leased)
(a) It is understood that it is the goal of both the Contractor and DOE to
conduct a responsible and comprehensive program to assure that the
Hanford Site is an environmentally acceptable installation and
<PAGE>
15
is operated in a safe and healthy manner. It is DOE policy to use its
best efforts to provide the funds or other resources necessary to
achieve this purpose and to continue cooperating, along with the
Contractor, with Federal and State agencies having interest in
environmental matters to accomplish this purpose, and to maintain good
relations with such agencies.
(b) Performance of work under this contract shall be conducted in a manner
that is protective of the environment and the health and safety of
employees and the public. The Contractor shall comply with all
applicable environmental, safety, and health requirements (including
applicable permitting and reporting requirements) including federal,
state, and local laws and regulations and DOE requirements.
(1) The Contracting Officer shall notify the Contractor, in writing,
of any noncompliance with applicable requirements. After receipt
of such notice, the Contractor shall immediately take corrective
action, consistent with the clause of this contract entitled
"Work Control System/Technical Direction" and availability of
funds. In the event that the Contractor fails to take corrective
action, the Contracting Officer may for cause, without prejudice
to any other legal or contractual rights of DOE, issue an order
stopping all or any part of the work; thereafter, a start order
for resumption of the work may be issued at the discretion of the
Contracting Officer. The Contractor shall not be entitled to an
extension of time or additional fee or damages by reason of, or
in connection with, any work stoppage that was appropriately
ordered in accordance with this clause.
(2) If at any time during performance of the contract work, the
Contractor's act or failure to act causes substantial harm or an
imminent danger to the health or safety of individuals or the
environment, the Contracting Officer may, without prejudice to
any other legal or contractual rights of DOE, issue an order
stopping all or any part of the work; thereafter, a start order
for resumption of the work may be issued at the discretion of the
Contracting Officer. The Contractor shall not be entitled to an
extension of time or additional fee or damages by reason of, or
in connection with, any work stoppage that was appropriately
ordered in accordance with this clause.
(c) The Contractor shall submit, within 30 days after the date of award of
this contract modification, an environmental, safety, and health
program management and implementation plan to the Contracting Officer
for review and approval. The plan shall describe the management
systems to be employed to ensure that environmental, safety and health
requirements are appropriately considered in all phases of contract
activities. The plan shall also include provisions for an internal
environmental, safety and health
<PAGE>
16
performance evaluation and corrective action system to provide
management with a continuing assessment of the adequacy and
implementation of the environmental, safety and health programs and
assurance that deficiencies are corrected. The results of such
evaluations shall be made available to DOE.
(d) The Contractor shall include in all of its subcontracts, involving
performance of work at the site, the provisions requiring
subcontractors to comply with the Contractor's environmental, safety
and health requirements. However, such provisions in the subcontracts
shall not relieve the Contractor of its obligations to assure
compliance with the provisions of this clause for all aspects of the
work.
(e) The Contractor shall submit for approval to the DOE, through the
Contracting Officer, its policies, procedures and provisions for
including appropriate environment, safety and health requirements,
including reporting requirements, in subcontracts, with respect to
work to be performed on-site at a DOE-owned or leased facility. These
environmental safety and health requirements shall be in accordance
with applicable DOE regulations, directives, and other DOE
requirements. The subcontract provisions shall provide that no claim
shall be made for adjustment in the subcontract amount or the
performance schedule, or for damages, by reason of a stop work order
issued for failure to comply with environmental, safety and health
regulations or requirements of DOE. The approved subcontract
provisions shall be included in subcontracts as appropriate.
Whistleblower Protection for Contractor Employees (January, 1993)
(a) The Contractor shall comply with the requirements of the "DOE
Contractor Employee Protection Program" at 10 CFR Part 708.
(b) The Contractor shall insert or have inserted the substance of this
clause, including this paragraph (b), in subcontracts, at all tiers,
with respect to work performed onsite at a DOE-owned or leased
facility, as provided for at 10 CFR Part 708.
<PAGE>
17
SECTION "I" TERMS AND CONDITIONS
--------------------------------
SPECIAL PROVISIONS (I16)
The provisions specifically identified below as contained in PMM-44-009,
entitled "Special Provisions", shall supplement and are in addition to any other
provisions set forth or referenced in the body of this document. Provision; SC-
4, SC-5, SC-6, SC-7, SC-8, and SC-11
SERVICE PROVISIONS (I19)
This Purchase Order is subject to the provisions set forth in PMM-44-007,
entitled "Service Provisions", in addition to any other provisions set forth or
referenced in the body of this document. Clause 50-29, Walsh-Healey Public
Contract Act, and Clause 50-41, Termination For Default, shall not apply to this
order.
The "Service Provisions" are hereby supplemented with the following special
provisions.
A. Termination For Nonperformance
---------------------------------
Westinghouse Hanford Company may, by written notice of nonperformance to
the Seller, terminate this order in whole or in part, if Seller fails to:
A. Deliver the supplies or perform the services within the time specified
in this order or any extension;
B. Make progress, so as to endanger performance of this order; or
C. Perform any other provisions of this order.
WHC's right to terminate this order under A.1 or A.2 above may be exercised
if Seller does not cure such failure within ten (10) days (or more if
authorized in writing by the Buyer) after receipt of a written notice
specifying the failure. A termination for nonperformance will be effected
as a no cost cancellation without any further right of recourse on the part
of either party.
B. Unilateral Right To Cancel
-----------------------------
Either WHC or the Seller may cancel this subcontract if, at the completion
of permitting, or at any time during the construction and installation
phase, a determination is made that funding will not be available for
treating at least 600 cubic meters of waste. The parties hereto have
elected to utilize the 600 cubic meters exclusively as a quantity for bench
marking the prospects for the estimated amount of funding which may be
available. The 600 cubic meters guarantee is deleted from the prospective
award by agreement of WHC and ATG dated October 19, 1995. If the
subcontract is cancelled in accordance with this paragraph, such
cancellation shall not result in any cost to the Government additional to
<PAGE>
18
the $2.5 million maximum termination liability as shown in the Termination
Liability Schedule, Attachment 5.
C. Notification Of Funding Determination
----------------------------------------
WHC recognizes the considerable investment required by the Seller beyond
the $2.5 million maximum termination liability and the need to minimize any
unnecessary expenditure through timely communication of any intent not to
continue with the Thermal Treatment services program. WHC will
immediately, within 72 hours, notify the Seller should WHC make a decision
not to continue with the procurement.
CLEAN AIR AND WATER (I28)
The Seller agrees:
1. To comply with all the requirements of section 114 of the Clean Air
Act (42 USC 7414) and section 308 of the Clean Water Act (33 USC 1318)
relating to inspection, monitoring, entry, reports and information as
well as other requirements specified in section 114 and section 308 of
the Air Act and the Water Act, and all regulations and guidelines
issued to implement those acts up to the date of the award of this
order.
2. That no portion of the work required by this order will be performed
in a facility listed on the Environmental Protection Agency list of
violating facilities on the date when this order is awarded unless and
until the EPA eliminates the name for the facility from the listing.
3. To use best efforts to comply with clean air standards and clean water
standards at the facility in which this order will be performed.
4. To insert the substance of this Clause into any sub-tier subcontract
which may be performed in facilities which were previously found to be
in violation of the Clean Air and Clean Water Acts or potentially may
exceed $100,000.
HAZARDOUS MATERIAL RIGHTS (I29)
The Seller shall submit a Material Safety Data Sheet, (Department of Labor Form
OSHA-20), as prescribed in Federal Standard No. 313A, for all Hazardous Material
in accordance with the delivery schedule requirements set forth within this
document. This obligation applies to all materials or items containing Hazardous
Materials. Hazardous Material is defined in Federal Standard No. 313A in effect
on the date of this order.
The Seller shall comply with all applicable federal, state, and local laws,
<PAGE>
19
codes, ordinances and regulations, including the obtaining of licenses and
permits), in connection with Hazardous Material. Neither the requirements of
this article, nor any act or failure to act by Westinghouse Hanford Company
(WHC) shall relieve the Seller of any responsibility or liability for the safety
of WHC, Government, Seller or sub-tier subcontractor personnel or property.
Westinghouse Hanford Company shall have the right to use, duplicate and disclose
any data to which this Clause is applicable. The purpose of this right is to: 1)
Apprise personnel of the hazards to which they may be exposed; 2) Obtain medical
treatment for those affected by the material; and 3) Have others use, duplicate
and disclose the data for Government use in connection with these same purposes.
The Seller shall insert the same Clause in any sub-tier subcontract which may
contain Hazardous Material.
WORKMANS COMPENSATION INDEMNIFICATION (I34)
Seller, by their signature hereon, acknowledges that they have read and
specifically agree to the provisions of the Clause entitled "Work on WHC or
Government Premises". (See Service Provisions, PMM-44-007, #S0-1O)
HAZARDOUS WASTE TRANSPORTATION AND DISPOSAL PROVISIONS (PCB'S) (I50)
This Purchase Order is subject to the provisions set forth in PMM-44-014,
entitled "Hazardous Waste Transportation and Disposal Provisions (PCB's)", in
addition to any other provisions set forth or referenced in this document.
<PAGE>
20
SECTION "J" LIST OF ATTACHMENTS
-------------------------------
LIST OF ATTACHMENTS (J03)
The following attachments are provided with this Purchase Order (PO), and
shall have the same effect as if set forth in the body of the PO:
<TABLE>
<CAPTION>
Attachment Title Date
- ---------- ----- ----
<S> <C> <C>
* 1. Statement of Work, Low Level Mixed Waste Thermal 3/24/95
Treatment, Revision 3A, with Attachment A,
Management of Low Level Waste
2. Memorandum of Understanding 8/16/95
3. Pricing Schedule 11/2/95
4. Seller's Milestone Schedule 8/07/95
5. Termination Liability Schedule (5 year) 10/20/95
* 6. Purchase Order Administrative Requirements 03/94
PMM-42-077
* 7. Close Out Certification - Fixed Price Orders 03/94
PMM-42-007
* 8. On Site Services 01/95
PMM-37-001
* 9. Representations and Certifications 06/94
PMM-15.1-007
* 10. Special Provisions 10/94
PMM-44-009
* 11. Service Provisions 03/94
PMM-44-007
* 12. Hazardous Waste Transportation & Disposal Provisions 03/94
PMM-44-014
* 13. WHC 1993, WHC-EP-0063-4
Hanford Site Solid Waste Acceptance Criteria
* 14. Characterization of Waste LLMW Inventory
* 15. Recommendations for the Preparation of Environmental
Assessment and Environmental Impact Statement
</TABLE>
ATTACHMENTS INCORPORATED BY REFERENCE (J04)
The attachments noted above with an "*" have been previously provided by
Westinghouse Hanford Company as part of a past solicitation or order and are
still in effect for this document as if actually provided therein. In the event
that an additional copy is required, contact the Buyer identified herein and an
copy will be furnished for your use.
<PAGE>
21
SECTION "K" SIGNATURES
----------------------
SELLER ACKNOWLEDGEMENT (K03)
Seller shall acknowledge this document as provided herein regardless of
dollar value by signing and returning the enclosed Seller acknowledgement
copy of this document.
<PAGE>
ATTACHMENT 1
RFP W-357079
WESTINGHOUSE HANFORD COMPANY
LOW LEVEL MIXED WASTE THERMAL TREATMENT
STATEMENT OF WORK
REVISION 3A
DATED MARCH 24, 1995
1.0 INTRODUCTION
------------
Westinghouse Hanford Company is authorized on behalf of the U.S. Department of
Energy, Richland Operations Office (RL) to provide waste management services for
the Hanford Site.
Low-Level Mixed Waste (LLMW) that is thermally treatable is generated by Hanford
Site waste generating facilities and other facilities that ship waste to the
Hanford Site. This procurement is seeking an organization(s) (referred to as
"the Seller" in this document) to transport and thermally treat Hanford Site
LLMW.
2.0 SERVICES - GENERAL
------------------
Seller shall provide a service for the thermal treatment of LLMW and return the
ash/residue accompanied by the results of laboratory analysis. The Seller shall
provide the transportation for the waste to and from the Hanford Site. The
thermal treatment service shall be in accordance with all applicable local,
state, and federal laws and regulations, and Hanford Site requirements as stated
in this Statement of Work (SOW).
3.0 WASTE
-----
The waste is classified by Hanford Site Solid Waste Acceptance Criteria (HSSWAC)
(WHC 1993) as LLMW and is containerized in drums and boxes and may require size
reduction prior to thermal treatment. Size reduction would be performed by the
Seller, if required.
The waste to be treated contains less than 100 nCi/gm of transuranic (TRU)
radioactive elements. Container surface radiation dose rate is less than 100
mrem/hr. Detailed information describing the existing subject waste inventory is
provided in the document titled: Characterization of Waste LLMW Inventory. This
information is derived from process knowledge or analysis of the waste.
Documents describing regulatory requirements are given in the reference list.
The projected quantity of waste that is a candidate for treatment is as follows:
<PAGE>
Projected Waste Quantity
Year (cubic meters)
---- ----------------
1995 810*
1995 280
1997 325
1998 330
1999 310
2000 310
2001 300
2002 300
2003 310
2004 310
2005 310
2006 310
2007 305
2008 305
2009 305
----
Total 5120
* includes current inventory
Hanford site waste generators are required to characterize radioactive mixed
waste (RMW) for storage in the Central Waste Complex. The Buyer shall review
this characterization of each container prior to shipment of waste to sellers
facility. Any additional characterization required to meet Department of
Transportation, Resource Conservation and Recovery Act (RCRA), Toxic Substances
Control Act (TSCA), and Washington State Hazardous Waste Management Act (WSHWMA)
regulations for shipment will be performed by Westinghouse Hanford Company.
It is possible that some waste may require additional characterization before it
can be accepted or treated by the Seller. Any additional characterization of the
waste to satisfy waste acceptance criteria which are above and beyond DOT, RCRA,
TSCA and WSHWMA regulations for shipment, shall be performed by the Seller.
4.0 TREATMENT
---------
The radioactive constituents in the waste are regulated by those portions of DOE
Order 5820.2A, Radioactive Waste Management, (DOE 1988) that pertain to the
management of low-level waste and include the requirements in Attachment
A. The radioactive constituents in the waste are also regulated by the Hanford
Site-specific performance assessment criteria discussed in Section 5.0 of this
SOW. The hazardous components in the waste are regulated by the Washington State
Hazardous Waste Management Act (WSHWNA) (Chapter 70.105 Revised Code of
Washington [RCW]), Resource Conservation and Recovery Act (RCRA) (42 USC 6901 et
seq.) and the Toxic Substances Control Act (TSCA) (15 U.S.C. 2601 et seq.) and
the WSHWMA, RCRA and TSCA implementing regulations contained in Chapter 173-303
Washington Administrative Code (WAC) Dangerous Waste Regulations and Title 40
Code of Federal Regulations (CFR) respectively.
2
<PAGE>
The treatment criteria specified in WAC 173-303-140 "Land Disposal
Restrictions", Title 40 CFR Part 268, "Land Disposal Restrictions" and Title 40
CFR, Part 761.70, "Incineration of PCBs and PCB Items" must be achieved.
The Seller will be required to maintain the integrity of the radionuclide
inventory during all phases waste shipment, waste treatment, and ash return.
This may require that the Seller treat the waste in dedicated campaigns. The
laboratory analyses required on the waste and the ash/residue shall provide
evidence that the integrity of the radionuclide inventory has been maintained.
The Buyer may inspect at any time any portion of the Seller's and the Seller's
subcontractor's facilities which may come in contact with the waste to be
treated.
The Seller shall be responsible for all permits and licenses for the
transportation and waste treatment of this waste. The Buyer will be provided, a
copy of all permits and licenses sixty (60) days prior to commencing the first
shipment of waste.
5.0 ASH/RESIDUE AND WASTE CONTAINERS
--------------------------------
The treatment process shall generate a stabilized, solid ash/residue final waste
form. All ash/residue resulting from thermal treatment of the waste shall be
packaged and returned to the Hanford Site for disposal in accordance with HSSWAC
(WHC 1993) and Department of Transportation Regulations (49 CFR 171-179). Unless
prohibited by the characteristics of the ash/residue, fifty-five (55) gallon
drums will be used to return the ash/residue. The HSSWAC (WHC. 1993) contains
information on transportation and container requirements as well as the Hanford
Site process for accepting waste for disposal.
The waste inventory contains radioactive elements including transuranic
constituents. The concentration effect associated with volume reduction by
thermal treatment can increase the concentration of radioactive constituents in
the final waste form. The Offeror shall administratively control the waste feed
so that no TRU waste (as defined by the HSSWAC (WHC 1993)) and no Greater Than
Class C waste (in accordance with 10 CFR 61.55) is generated.
The Seller shall certify that the treated ash/residue, waste container, surface
contamination, and surface dose rates satisfy all applicable requirements for
disposal at the Buyer's LLMW disposal facility. For applicable waste codes, the
Seller shall certify treatment to Land Disposal Restriction standards.
Applicable requirements include the following: the land disposal restriction
standards as specified in Chapter 40, Code of Federal Regulations, Part 268;
Chapter 40 CFR 264 and 265, Subpart "N" "Landfills"; Washington State
Administrative Code (WAC) "Dangerous Waste Regulations" (WAC 173-303); and the
HSSWAC (WHC 1993).
In addition to the requirements specified in the above regulations, the returned
ash/residue must meet the following Hanford Site-specific performance assessment
criteria:
3
<PAGE>
1. The ash/residue final waste form shall be a stabilized solid, or the
treatment process shall produce a stabilized, solid waste form such as a
glass or a slag. The stabilized, solid waste form shall exhibit a
compressive strength greater than 50 psi.
2. The stabilized, solid waste form shall be packaged in containers having
a void volume percentage of less than 10 percent.
3. If the ash/residue contains any of the five radionuclides, Tc99, Se79,
I129, C14, or uranium and has a total activity concentration for these
radionuclides greater than or equal to 0.0001 Ci/m/3/ and less than or
equal to 0.001 Ci/m3/3/ the stabilized waste form shall exhibit a diffusion
coefficient less than or equal to 10-10 cm/2//sec (Leachability Index
greater than or equal to 10.0) when subjected to leach testing in
accordance with American Nuclear Society Procedure 16.1 (ANSI 1986).
4. If the ash/residue contains any of the five radionuclides, Tc/99/, Se/79/,
I/129/, C/14/, or uranium and has a total activity concentration for these
radionuclides greater than or equal to 0.0001 Ci/m/3/ and less than or
equal to 0.001 Ci/m/33/ the stabilized waste form shall exhibit a diffusion
coefficient less than or equal to 10/-12/ cm/2//sec (Leachability Index
greater than or equal to 12.0) when subjected to leach testing in
accordance with American Nuclear Society Procedure 16.1 (ANSI 1986).
5. If the ash/residue contains uranium in activity concentrations greater than
0.01 Ci/m/3/ the ash/residue must be encapsulated in a Portland cement-
based grout matrix. Any treatment process that produces a glass or a slag
final waste form will require administrative controls of the feed
composition on an individual container basis to avoid this requirement.
Analysis of the waste inventory suggests that only a few containers will
require such administrative controls.
Seller shall provide analytical characterization data on the ash/residue
sufficient to meet the requirements of all state and federal regulations, the
HSSWAC (WHC 1993), and the above Hanford Site-specific performance assessment
criteria. Each ash/residue container shall be assigned a Hanford Site-specific
package identification number (PIN). This PIN shall be referenced on all data,
documentation, and correspondence relating to the waste container. The container
itself shall be physically identified with that number in accordance with the
specifications described in the HSSWAC (WHC 1993).
6.0 LABORATORY ANALYSIS AND QUALITY ASSURANCE
-----------------------------------------
All records associated with the Buyer's wastes (including but not limited to
Seller's sample analysis results) shall be maintained by the Seller using a
method compliant with the requirements specified in WAC 173-303 and 40 CFR 260-
271, and other applicable federal, state, or local regulations. All documents,
procedures, and applicable requirements are subject to audit by the Buyer.
The Seller shall establish a "chain of custody" procedure for laboratory
analysis samples. Test reports shall be clearly traceable back to specific
4
<PAGE>
waste shipments and manifests. Reports documenting laboratory analyses must be
signed and certified by an authorized representative of the Seller. All
laboratory analysis work must be performed in compliance with the test methods
defined in 40 CFR 261 and SW 846, Test Methods for the Evaluation of Solid
Waste, Physical/Chemical Methods (most recent edition). Waste analytical work
performed by the Seller shall be adequate to properly verify the waste for
acceptance/disposal at the Buyer's facility in accordance with the Hanford Site
Waste Acceptance Criteria.
Any laboratory utilized for waste sample verification analysis under this order
must have a documented and implemented Quality Assurance Program Plan as
specified under the requirements of SW 846. The laboratory's quality assurance
program plan will be subject to approval by the Buyer. The Seller will submit
quality assurance documentation concerning selected analytical laboratory(ies)
to the Buyer 60 days prior to receipt of the first shipment of waste and 60 days
prior to a new analytical laboratory receiving a sample of Hanford Site waste or
the residue/ash from the thermal treatment of Hanford Site waste.
All waste sample analytical services performed by the Seller shall be performed
exclusively for the purposes of characterization for waste treatment and
disposal.
The Seller shall notify the Buyer immediately if analytical results do not agree
with the characterization of the waste provided by the Buyer to the extent that
treatment methods or expected results are affected. The Buyer will direct
disposition of non-compliant waste. Should return of the untreated waste be
necessary, return will be at the Buyer's expense.
Laboratory analysis shall be conducted on the returned ash/residue by the Seller
sufficient to characterize the ash/residue as required by state and federal
regulations, the HSSWAC (WHC 1993), and the Hanford Site-specific performance
assessment requirements discussed in Section 5.0 of this SOW.
The Seller's Quality Assurance Program (QAP) shall satisfy requirements
necessary for obtaining related permits and licenses to operate. Specific
requirements and responsibilities for quality and analytical record transmittal,
distribution, retention, and maintenance shall also be included in the program.
Within 60 days after award, the Seller (selected Offeror) will submit for
approval by the Buyer, a QAP. This QAP must be approved by the Buyer prior to
any shipment of waste to the Seller. The Seller's QAP shall include, as a
minimum, the following:
1. Program: The Seller shall develop, implement, and maintain a written QAP.
-------
The QAP shall describe the organizational structure, functional
responsibilities, levels of authority, and interfaces for those managing,
performing, and assessing adequacy of work. The QAP shall describe the
management system, including planning, scheduling, and cost control
considerations.
5
<PAGE>
2. Personnel Training and Qualification: Personnel shall be trained and
------------------------------------
qualified to ensure they are capable of performing their assigned work.
Personnel shall be provided continuing training to ensure that job
proficiency is maintained.
3. Quality Improvement: The organization shall establish and implement
-------------------
processes to detect and prevent quality problems and to ensure quality
improvement. Items and processes that do not meet established requirements
shall be identified, controlled, and corrected. Correction shall include
identifying the causes of problems and preventing recurrence. Item
reliability, process implementation, and other quality-related information
shall be reviewed and the data analyzed to identify items and processes
needing improvement.
4. Documents and Records: Documents shall be prepared, reviewed, approved,
---------------------
issued, used, and revised to prescribe processes, specify requirements, or
establish design. Records shall be specified, prepared, reviewed, approved,
and maintained.
5. Work Processes: Work shall be performed to established technical standards
--------------
and administrative controls. Work shall be performed under controlled
conditions using approved instructions, procedures, or other appropriate
means. Items shall be identified and controlled to ensure their proper use.
Items shall be maintained to prevent their damage, loss, or deterioration.
Equipment used for process monitoring or data collection shall be
calibrated and maintained.
6. Inspection and Acceptance Testing: Inspection and acceptance testing of
---------------------------------
specified items and processes shall be conducted using established
acceptance and performance criteria. Equipment used for inspections and
tests shall be calibrated and maintained.
7. Management Assessment: Management at all levels shall periodically assess
---------------------
the integrated quality assurance program and its performance. Problems that
hinder the organization from achieving its objectives shall be identified
and corrected.
8. Independent Assessment: Planned and periodic independent assessments shall
----------------------
be conducted to measure item quality and process effectiveness and to
promote improvement. The organization performing independent assessments
shall have sufficient authority and freedom from the line organization to
carry out its responsibilities. Persons conducting independent assessments
shall be technically qualified and knowledgeable in the areas assessed.
The QAP shall be in compliance with 10 CFR Part 830, Nuclear Safety Management,
Subpart A, General Provisions, Section 830.120, Quality Assurance Requirements.
The Seller shall provide copies of "Certificates of Insurance" for
transportation and environmental policies.
6
<PAGE>
7.0 WASTE TRANSPORTATION
--------------------
Waste transportation shall be provided by transportation services arranged and
paid for by the Seller. The Seller shall ensure transportation of the waste is
performed in compliance with Department of Transportation (DOT) regulations in
49 CFR 171-179; Nuclear Regulatory Commission regulations in 10 CFR Part 71, and
all other applicable state, federal and local laws and regulations. The Buyer
shall provide proper documentation for all waste shipments to the thermal
treatment facility. The Seller shall provide proper documentation for shipments
of ash/residue returned to the Buyer.
Transportation equipment that does not comply with applicable federal, state or
local laws or regulations will not be loaded, and the transportation equipment
will be returned to the Seller at no expense to the Buyer.
Transport vehicle drivers shall be trained in proper waste handling procedures,
personal protection procedures, regulatory compliance, and spill emergency
response procedures. Transport vehicles shall carry spill kits, spill prevention
and counter measure control plans, and emergency response guidebooks. The Seller
shall obtain all applicable transportation permits prior to taking possession of
the waste. Risks to the waste obtained under this procurement shall pass to the
Seller when it is placed onto the Seller's vehicle at the direction of the
Seller's representatives. Remedial actions on any spills that may occur during
the transport of waste shall be the responsibility of the Seller.
All shipments will require inspection for compliance with DOT regulations prior
to entering and leaving the Hanford Site. Radiation monitoring will be performed
by the Buyer on all waste shipments entering and leaving the Hanford Site. The
Buyer's Transportation and Packaging Department located at 2355 Stevens Drive,
Richland, Washington, will inspect and validate all waste shipments and co-sign
the Uniform Hazardous Waste Manifest.
8.0 NATIONAL ENVIRONMENTAL POLICY ACT COMPLIANCE
--------------------------------------------
The U.S. Department, of Energy (USDOE), as a federal agency, is required to
comply with the National Environmental Policy Act (NEPA) of 1969. Westinghouse
Hanford Company, as the Management and Operating Contractor for the Hanford Site
is tasked with assisting the DOE with NEPA compliance.
The Seller shall submit to the Buyer a NEPA document the level of which is to be
determined by the USDOE, complete in form and format in accordance with the
guidance requirements for the preparation of NEPA documentation. This guidance
document, "RECOMMENDATIONS for the PREPARATION of ENVIRONMENTAL ASSESSMENTS and
ENVIRONMENTAL IMPACT STATEMENTS," dated May 1993 from the U.S. Department of
Energy's Office of NEPA Oversight is included (Attachment 3).
The submitted documentation may include but is not limited to pertinent
environmental data and analyses by the Seller relative to their RCRA Treatment,
Storage, and Disposal permit. The pertinent information shall include, but not
be limited to, NRC license status; federal, state, local, and
7
<PAGE>
Tribal environmental permit status; existing federal and/or state
environmental documents; federal, state and self or in house environmental
assessments, including audit findings and corresponding corrective actions;
plant processing capability within guidelines of operating permit; and
discussions of potential environmental effects from the order addressing direct
and indirect effects, long and short term effects, proposed mitigation measures,
adverse effects that can not be avoided, and any areas where environmental
information is incomplete or unavailable.
The Seller is responsible for providing this NEPA Document for approval by the
USDOE. In addition, the Seller shall provide additional data, explanation,
clarification, etc. as required to obtain DOE approval of the NEPA document.
9.0 REFERENCES
----------
10 CFR 1021 NEPA Implementation Procedures and Guidelines
10 CFR 830, Nuclear Safety Management
10 CFR 71, U.S. Nuclear Regulatory Commission
40 CFR, U.S. Environmental Protection Agency Regulations
49 CFR, U.S. Department of Transportation Regulations
(ANSI 1986), "Measurement of the Leachability of Solidified Low Level
Radioactive Waste by a Short Term Test Procedure", ANS 16.1, American
Nuclear Society, La Grange Park, Illinois, 1986.
DOE Order 5820.2A, Radioactive Waste Management, U.S. Department of Energy,
Washington, D.C.
EPA, SW 846 Test Methods for the Evaluation of Solid Waste,
Physical/Chemical Methods, U.S. Environmental Protection Agency, Most
Current Version.
RCRA, Resource Conservation and Recovery Act of 1976, 42 USC 6901 et seq.
TSCA, Toxic Substance Control Act of 1976, 15 U.S.C. 2601 et seq.
WAC 173-303 State of Washington Administrative Code "Dangerous Waste
Regulations," as amended.
WHC 1993, Hanford Site Solid Waste Acceptance Criteria, WHC-EP-0063-4,
Westinghouse Hanford Company, Richland, Washington.
NEPA, Recommendations for the Preparation of Environmental Assessments and
Environmental Impact Statements, Office of NEPA Oversite,
U.S. Department of Energy, May 1993.
8
<PAGE>
LOW LEVEL MIXED WASTE THERMAL TREATMENT
STATEMENT OF WORK
OPTION 1: RECYCLE / REUSE
The Seller may salvage, reuse, or recycle the waste only on a case-by-case basis
approved by the Buyer and the U.S. Department of Energy. The option to salvage,
reuse, or recycle the waste shall be discussed in detail in the Seller's
proposal. The Seller's cost proposal should identify the effects on cost if
salvage, reuse, or recycle is accepted or is not accepted.
Waste containers may be salvaged by the Seller only for the purposes of
containerizing the returned ash/residue. Waste containers not used for return of
the ash/residue are to be either destructively thermally treated or are to be
compacted and containerized and returned to the Buyer for disposal as part of
the ash/residue inventory. Other proposals for salvage/recycle/reuse shall be
treated in accordance with the above paragraph.
9
<PAGE>
NO. W-357079 PAGE 1 TO 3 Page 1 to 3
ATTACHMENT A
TO STATEMENT OF WORK
MANAGEMENT OF LOW-LEVEL WASTE
WASTE CHARACTERIZATION.
(1) Low-level waste shall be characterized with sufficient accuracy to permit
proper segregation, treatment storage, and disposal. This characterization
shall ensure that, upon generation and after processing, the actual
physical and chemical characteristics and major radionuclide content are
recorded and known during all stages of the waste management process.
(2) Waste characterization data shall be recorded on a waste manifest and shall
include:
(a) The physical and chemical characteristics of the waste.
(b) Volume of the waste (total of waste and any solidification
or absorbent media).
(c) Weight of the waste (total of waste and any solidification
or absorbent media).
(d) Major radionuclides and their concentrations.
(e) Packaging date, package weight, and external volume.
(3) The concentration of a radionuclide may be determined by direct methods or
by indirect methods such as use of scaling factors which relate the
inferred concentration of one radionuclide to another that is measured, or
radionuclide material accountability, if there is reasonable assurance that
the indirect methods can be correlated with actual measurements.
WASTE ACCEPTANCE CRITERIA.
(1) Waste acceptance criteria shall be established for each waste treatment,
storage, and disposal facility, and submitted.
(2) The waste acceptance criteria for treatment, storage, or disposal
facilities shall address the following issues:
(a) Allowable quantities/concentrations of specific
radioisotopes to be handled, processed, stored or disposed
of;
(b) Criticality safety requirements (waste forms and
geometries);
10
<PAGE>
(c) Restrictions regarding low-level waste classified for
security reasons;
(d) External radiation and internal heat generation;
(e) Restrictions on the generation of harmful gases, vapors, or
liquids in waste;
(f) Chemical and structural stability of waste packages,
radiation effects, microbial activity, chemical reactions, and
moisture;
(g) Restrictions for chelating and complexing agents having the
potential for mobilizing radionuclides; and
(h) Quantity of free liquids.
WASTE TREATMENT.
(1) Waste shall be treated by appropriate methods so that the disposal site can
meet performance objectives.
(2) Waste treatment techniques such as incineration, shredding, and compaction
to reduce volume and provide more stable waste forms shall be implemented
as necessary to meet performance requirements. Use of waste treatment
techniques to increase the life of the disposal facility and improve long-
term facility performance, by improved site stability and reduction of
infiltrating water, is required to the extent it is cost effective.
(3) The development of large scale waste treatment facilities shall be
supported by the appropriate National Environmental Policy Act.
(4) Operation of waste treatment facilities shall be supported by adequate
documentation including the following:
(a) Operation and maintenance procedures;
(b) Personnel training and qualification procedures;
(c) Monitoring and emergency response plans; and
(d) Records shall be maintained for each package of waste that
enters and leaves the treatment facility.
RECORDS AND REPORTS.
(1) The Seller shall develop and maintain a record keeping system that records
the following: a historical record of waste generated, treated,
11
<PAGE>
stored, and shipped at the facilities under its cognizance. The data
maintained shall include all data necessary to show that the waste was
properly classified, treated, stored, and shipped. The data maintained in
the system shall be based on the data recorded on waste manifests.
(2) Waste Manifest. Records shall be kept and accompany each waste package from
generator through final disposal. The manifest shall contain data necessary
to document the proper classification, and assist in determining proper
treatment, storage, and disposal of the waste. Waste manifests will be kept
as permanent records. At a minimum, the following data will be included:
(a) Waste physical and chemical characteristics,
(b) Quantity of each major radionuclide present;
(c) Weight of the waste (total of waste and any solidification
or absorbent media),
(d) Volume of the waste (total of waste and any solidification
or absorbent media), and
(e) Other data necessary to demonstrate compliance with waste
acceptance criteria.
12
<PAGE>
ATTACHMENT 2
8/16/95
Revision 2 (10/20/95)
MEMORANDUM OF UNDERSTANDING
Low Level Mixed Waste Thermal Treatment Services
WHC Purchase Order MW6-SBV-357079
This Memorandum of Understanding provides clarification to key points that are
crucial to the order. This document does not replace the Statement of Work.
1. ATG will treat all waste categories for which thermal treatment and/or
gasification/immobilization is specified as applicable treatment.
2. ATG proposes to vitrify all wastes except some of the secondary waste from
the air pollution control system and waste that can be classified as
debris.
3. ATG agrees to meet the void space requirement in the SOW and the Hanford
Site Solid Waste Acceptance Criteria.
4. ATG shall provide analytical capabilities (Hazardous and Radiological) to
adequately verify all incoming waste streams, monitor in process, and
characterize product waste streams that meet all regulatory and WHC
requirements referenced in the SOW.
5. ATG's sampling and analysis plan will be provided to WHC when ATG's RCRA
Permit is submitted to the State of Washington for approval.
6. The ATG onsite laboratory must be State of Washington accredited to satisfy
Hanford testing requirements.
7. In the event that the sampling frequency proposed by ATG is deemed
insufficient during the permitting process by a state or federal agency of
jurisdiction, the increased costs due to increased sampling frequency shall
be the sole responsibility of ATG.
8. With respect to ATG's response to WHC question 7 dated June 6, 1995, WHC
and ATG have discussed and agree to be bound by SOW section 3.0. The mixed
waste containers were characterized to standards in effect at the time of
storage. Additional characterization prior to waste shipment will be
performed by WHC only for the purpose of establishing treatability
certification requirements and to meet DOT shipping container requirements.
Upon receipt of the waste from WHC, for its own purposes, or at the request
of regulators, ATG may be required to perform additional waste
characterization. ATG acknowledges that if additional characterization is
required prior to treatment, such effort and cost shall be the
responsibility of ATG.
9. ATG shall anticipate a very broad mix of organic compounds and
radionuclides when preparing permit applications. ATG shall anticipate
having to treat TCSA regulated PCB waste and most RCRA listed and
characteristic wastes, with the exception of those having technology
1
<PAGE>
based standards other than incineration. WHC will provide updated lists of
inventoried materials as they are approved for public release.
10. ATG has been provided WHC-SD-W242-002 and WHC-SD-W242-003 for future
reference. ATG has been provided the current Hanford Site Solid Waste
Acceptance Criteria.
As more current data becomes available on waste related to this contract,
that data will be provided to ATG in electronic format to assist with their
design and permitting tasks.
11. ATG shall accept containers having any or all dimensions up to and
including 8' by 8' by 11'. Waste item size acceptance criteria is limited
to what will fit into the containers.
12. Containers may contain non-metal objects such as concrete and brick larger
than 1 foot by 1 foot by 1 foot.
13. Waste that is to be treated will have been accepted by the Hanford Site
Central Waste Complex, the waste acceptance criteria for which are
identified in WHC-EP-0063-4. ATG shall be required to treat all such waste
unless specifically excluded by mutual agreement with WHC.
14. ATG shall conduct additional waste-specific testing as may be required for
the PEAT process.
15. ATG will be required to be certified as a waste generator by WHC Solid
Waste Disposal Division.
16. Shredding and compaction of HEPA filters is not acceptable to WHC if the
filters are mixed waste.
17. The minimum estimated quantity is one hundred and twenty (120) cubic meters
of waste per year over the first five (5) year period of processing.
18. Maximum Start Date for waste processing is five years from the date of
award. The waste processing's period of performance will entail a five (5)
year baseline period plus five (5) one year options.
19. Contract Type: Indefinite Quantity/Fixed Unit Rate
20. The first one hundred and twenty (120) cubic meters of waste processed each
year during the first five years of processing will be paid for at the 1 to
600 cubic meter unit prices. Quantities in excess of 120 cubic meters per
year during the first five years of processing will be paid for at the 601
to 3,585 cubic meter unit prices. Payment will be made after waste has been
processed compliant with the terms of the purchase order.
21. The loading and unloading of ATG's waste transport vehicles will be
completed by WHC at Hanford only.
2
<PAGE>
22. WHC will provide containers which meet all Department of Transportation
regulations for any waste manifested at the Buyer's facility.
23. WHC will characterize the waste as needed to meet DOT and EPA requirements
as the shipper. Additional characterization needed to treat the waste is
the responsibility of ATG.
24. The waste will be staged at central location(s) at the Buyer's facility.
25. Laboratory Analysis: satisfying the requirements of all environmental
regulations for treatment of the waste and providing a product which is
ready for disposal is ATG's responsibility. If the sample analyses
completed in support of ATG's process are not compliant with regulatory
requirements, it is ATG's responsibility to implement the appropriate
corrective action. There will be no post award price adjustment for
compliance with regulatory requirements unless ATG can cite specific
regulatory changes and substantiate the basis for the associated cost
impact.
26. The mix (contents) of projected waste to be processed as listed on the
"Characterization of Waste - LLMW Inventory Sheets" which were previously
provided under separate cover, shall be the basis for determining the types
of waste to be processed under any resultant order.
The containers listed in Table 1 are excluded from the inventory of
existing waste because they are considered to be beyond the regulatory
scope of the statement of work due to the presence of asbestos or due to
high concentrations of mercury waste.
Table 1 - Containers Removed From the Inventory of Existing Waste
PIN COMPONENT
222S-92-000494 ASBESTOS
222S2W-91-0470 ASBESTOS
325-89-032 ASBESTOS
325-89-034 ASBESTOS
325-89-038 ASBESTOS
ETF-241-900068 ASBESTOS
ETF-241-900107 ASBESTOS
ETF-241-900132 ASBESTOS
ETF-241-900133 ASBESTOS
ETF-241-900134 ASBESTOS
ETF-241-900143 ASBESTOS
ETF-241-900878 ASBESTOS
ETF-91-037-02 ASBESTOS
WTF-91-115-07 ASBESTOS
WTF-9l-148-06 ASBESTOS
WTF-91-157-02 ASBESTOS
WTF-91-259-04 ASBESTOS
ETF-241-901020 MERCURY
3
<PAGE>
The "Solid Waste Information and Tracking System" data for containers
222S92-000293 and 222S-92-000166 are attached. The information on
222S-92-000293 includes a correction in Pu-238 weight. Review of both of
these containers reveals that neither meets the definition of transuranic
(TRU) waste and bath are classified as low level mixed waste. Section 3 of
the Statement of Work defines the waste to be treated. Only waste specified
there will be made available for treatment.
Some TSCA materials of greater than 5000 ppm PCB are included with this
order and shall be treated by the Seller. Waste containing asbestos will
not be included with this order and those listed on the inventory sheets
previously provided are removed.
27. The completion of NEPA, permitting, and licensing requirements is the
responsibility of the Seller. The proposed pricing and estimated start date
for waste processing shall assume the appropriate length of time to
accommodate the environmental regulations and laws (e.g., Environmental
Assessment with a Finding of No Significant Impact) commensurate with the
proposed technology.
26. The proposed pricing by ATG shall accommodate all provisions of the Service
Contract Act.
29. No Recycle or Reuse considerations (credit) is included in ATG's pricing.
Recycle or Reuse has not been authorized at this time by the Department of
Energy.
30. The average density of the waste to be processed may be assumed to be the
same as the waste listed on the "Characterization of Waste - LLMW Inventory
Sheets" that ware previously provided. Should the average density of waste
treated be different than the average density of the waste identified on
the inventory sheets, ATG may request an equitable adjustment that is
substantiated by valid and factual supporting documentation. WHC reserves
the right to seek consideration if the average density of the waste allows
a ATG to realize efficiencies not considered in the unit pricing during the
baseline and option year(s) processing.
31. Waste Selection: It is recognized that ATG must be able to provide the
proper waste feed mixture in order to efficiently operate a thermal
treatment facility. To accommodate this requirement, WHC will provide a
list of containers available for treatment by ATG. From that list, ATG
shall select which containers will be placed on each shipment. The list
will be updated as new containers are made available for shipment by WHC.
ATG is responsible for treatment of all waste identified on the inventory
lists. Toward the end of the order, ideal waste mixture for optimum
facility operation may not be available and ATG shall still be responsible
for processing all waste provided by WHC.
4
<PAGE>
32. Transportation (Shipment Size): It is recognized that ATG must be able to
estimate shipment size in order to provide an accurate proposal. ATG shall
assume all shipments of waste will contain the quantity and mix of
containers of waste selected by ATG (number and size). Restated: all
shipments will be of the size desired by ATG based upon the inventory
availability.
Hanford Site rules do not preclude loading two layers of containers on a
truck within the limits specified by the Department of Transportation and
Nuclear Regulatory Commission for the type of waste to be treated. The
Hanford Site will load vehicles as directed by ATG. The vehicle axle
weight limits will not be exceeded and ATG will provide all necessary
materials to secure the containers.
33. Ash/Residue as described in the Statement of Work refers to all products of
thermal treatment including glass or slag. The Hanford Site Specific
Performance Requirements specified in the Statement of Work,. Section 5.0,
Leach Testing Requirements references the American Nuclear Society
Procedure 16.1. The standard 90 day test shall be used to meet this
requirement.
34. Generation of TRU and GTCC ash/residue: The waste inventory contains
radioactive elements, including transuranic constituents. The
concentration effect associated with volume reduction by thermal treatment
can increase the concentration of radioactive constituents in the final
waste form. ATG shall administratively control the waste feed so that no
TRU waste (as defined by the HSSWAC (WHC 1993) and no greater than Class C
waste (in accordance with 10 CFR 61.55) is generated.
35. ATG agrees to purchase and ready a Graphite Furnace Atomic Absorption
Spectrometer in addition to the analytical equipment previously identified
by ATG to be utilized in performing this work.
36. WHC may not have funding to pay for processing earlier than 5 years
following award. Processing before 5 years following award will require
written authorization from WHC.
AUTHORIZING SIGNATURES:
- ----------------------
Westinghouse Hanford Company Allied Technology Group
/s/ Michael L. Estes 11/2/95 /s/ Frank Chiu 11/9/95
- ------------------------------ -------------------------------
Michael L. Estes, C.P.M. Date Frank Chiu Date
Advanced Procurement Specialist Vice President
PSS Procurement - Services
5
<PAGE>
TW6-SBV-357079
11/2/1995
PRICING SCHEDULE
<TABLE>
<S> <C>
BASELINE AWARD (5 YEARS)
1. First 600 Cubic Meters
CUBIC METERS EXTENDED
ITEM WASTE TYPE QUANTITY UNIT PRICE PRICE
1 Non Alpha 390 [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
2 Alpha 210 SECURITIES AND EXCHANGE COMMISSION.]
Note: The 600 cubic meters pricing represents 120 cubic meters per year for the
first five years of processing. To the extent that it is practical, the annual
allocation shall be 78 cubic meters of non-alpha waste and 42 cubic meters of
alpha waste, which is the same waste type ratio as the 600 cubic meter
quantities.
II. Baseline (Units 601- 3,585)
3 Non Alpha 1,940 [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE
4 Alpha 1,045 SECURITIES AND EXCHANGE COMMISSION.]
TOTAL BASELINE: 3,585
--------
ANNUAL OPTION PRICING
5 Annual Option #1 Non Alpha 202 [CONFIDENTIAL INFORMATION OMITTED
6 Annual Option #1 Alpha 108 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
7 Annual Option #2 Non Alpha 202 [CONFIDENTIAL INFORMATION OMITTED
8 Annual Option #2 Alpha 108 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
9 Annual Option #3 Non Alpha 198 [CONFIDENTIAL INFORMATION OMITTED
10 Annual Option #3 Alpha 107 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
11 Annual Option #4 Non Alpha 198 [CONFIDENTIAL INFORMATION OMITTED
12 Annual Option #4 Alpha 107 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
13 Annual Option #5 Non Alpha 198 [CONFIDENTIAL INFORMATION OMITTED
14 Annual Option #5 Alpha 107 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
TOTAL OPTION PRICING: 1,535 [CONFIDENTIAL INFORMATION OMITTED
--------- AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
TOTAL BASELINE PLUS OPTIONS: 5,120 $23,925,687
---------
</TABLE>
<PAGE>
WHC P.O. TW6-SBV-357079
ATTACHMENT 4
PAGE 3
<TABLE>
<CAPTION>
ACTIVITY EARLY EARLY ORIG
ID START FINISH DUR
- -------- ------ ------ ---- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
PROGRAM MANAGEMENT
I-1 1SEP95 1NOV95 62 PM - QA PLAN
I-2 1SEP95 2OCT95 32 PM - ISSUE SUBCONTRACT P.O.
I-5 1SEP95 1NOV95 62 DETAILED MILESTONES FOR LICENSING AND PERMITTING
I-3 1DEC95 31AUG00 1736
I-4 1SEP96 1MAR97 182 PROVIDE SAMPLING AND ANLYSIS SUPPORT TO WHC
- ------------------------------------------------------------------------------------------------------------------------------------
NEPA
II-1 15SEP95 1DEC95 78 NEPA - PREPARE FACILITY DESIGN FOR EA
II-2 15SEP95 1DEC95 78 NEPA - PREP EQUIP DESIGN & ANALYSIS DATA FOR EA
11-3 15SEP95 1DEC95 78 NEPA - PREP LICENSING & PERMITTING DAA FOR EA
II-4 1DEC95 1MAY96 153 NEPA - ENVIRONMENTAL ASSESSMENT
II-5 1MAY96 1MAR97 305 NEPA - OBTAIN DOE APPROVAL OF EA
- ------------------------------------------------------------------------------------------------------------------------------------
LICENSING & PERMITTING
III-1A 15SEP95 1SEP96 353 LP-PREP FACILITY DESIGN DATA FOR PERMIT APPLICTN
III-1B 15SEP95 1SEP96 353 LP-PREP EQUIP DESIGN DATA FOR PERMIT APPLICATION
III-1C 1DEC95 1SEP96 276 LP-PERFORM BENCH & PROTOTYPE TEST DATA
III-2A 1SEP96 1MAR97 182 LP-PREPARE/SUBMIT RCRA PART 2/B APPLICATION
III-3A 1SEP96 1MAR97 182 LP-PREPARE/SUBMIT TCSA APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
III-2B 1MAR97 1SEP99 915 LP-REVIEW APPLICATION/FINAL FACILITY PERMIT APPVL
III-3B 1MAR97 1SEP99 915 LP-REVIEW & APPROVE TSCA PERMIT APPLICATION
III-4A 1SEP97 1MAR98 182 LP-PREP/SUBMIT NOTICE OF CONSTRUCTION APPLICAT'N
III-5A 1SEP97 1MAR98 182 LP-PREP/SUBMIT NOTICE OF CONSTRUCTION APPLICAT'N
III-4B 1MAR98 1SEP99 550 LP-REVIEW AND ISSUE ORDER OF APPROVAL
- ------------------------------------------------------------------------------------------------------------------------------------
III-5B 1SEP98 1SEP99 366 LP-BEGIN TESTING AS NEEDED TO OBTAIN RCRA PERMIT
III-2C 1APR00 1JUL00 92 LP-BEGIN TESTING AS NEEDED TO OBTAIN RCRA PERMIT
III-2D 1APR00 1JUL00 92 LP-OBTAIN RCRA OPERATION PERMIT
III-3C 1APR00 1JUL00 92 LP-BEGIN TSTING AS NEEDED TO OBTAIN TSCA PERMIT
III-3D 1APR00 1JUL00 92 LP-OBTAIN TSCA OPERATING PERMIT
- ------------------------------------------------------------------------------------------------------------------------------------
III-4C 1APR00 1JUL00 92 LP-BEGIN TESTING AS NEEDED TO OBTAIN CAA PERMIT
III-4D 1APR00 1JUL00 92 LP-OBTAIN CAA OPERATING PERMIT
III-5C 1APR00 1JUL00 92 LP-RECEIVE AIR OPERAT'G PERMIT & WA STATE LICENS
III-6A 1JUL00 0 LP-SUBMIT ALL PERMITS TO WHC
- ------------------------------------------------------------------------------------------------------------------------------------
FACILTY DESIGN
IV-1 1JAN99 1SEP99 244 FD-FACILITY FINAL DESIGN
IV-2 1JAN99 1SEP99 244 FD-EQUIPMENT FINAL DESIGN
- ------------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION
V-1 1SEP99 1APR00 214 CON-EQUIPMENT FABRICATION
V-2 1SEP99 1APR00 214 CON-FACILITY CONSTRUCTION
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
VI-2 1JAN00 1JUL00 183 O&M-CERTIFICATE OF INSURANCE SUBMITTED TO SHC
VI-3 1JAN00 1JUL00 183 O&M-APPROVAL OF HANFORD SITE GENERATOR LAW HSSWAC
VI-4 1JAN00 1AUG00 214 O&M-LABORATORY ACCREDITED BY WASHINGTON STATE
VI-1 1APR00 1JUL00 92 O&M-TRANSPORTATION PLAN SUBMNITTED TO WHC
VI-5 1AUG00 0 O&M-WASTE PROCESSING
- ------------------------------------------------------------------------------------------------------------------------------------
VI-6 1SEP00 1SEP00 1 O&M-FIRST SHIPMENT OF WASTE RETURNED TO HANFORD
- ------------------------------------------------------------------------------------------------------------------------------------
First Date 7AUG95 ATG INC.
Data Date 1SEP95 HANFORD LLMW THERMAL
Project Start 31JUL95 TREATMENT CONTRACT
Project Finish 1SEP00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.21
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
AWARD/CONTRACT 1. THIS CONTRACT IS A RATED ORDER UNDER RATING PAGE OF PAGES
DPAS (15 CFR 350) 1 42
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. CONTRACT (Froc. Inst. Ident.) NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQUEST/PROJECT NO.
DE-AC06-95RL13129 01/04/95 95RL13129.000
- ------------------------------------------------------------------------------------------------------------------------------------
5A. ISSUED BY CODE 6. ADMINISTERED BY (If other than item 5) CODE
---------------------- ------------------
U.S. Department of Energy ATG, INC.
Richland Operations Office 47375 Fremont Blvd.
P.O. Box 550, A7-80 Fremont, CA 94538
Richland, WA 99352
- ------------------------------------------------------------------------------------------------------------------------------------
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, county, state and zip code) 8. DELIVERY
U.S. Small Business Administration
San Francisco Reginal Office [_] F.O.B. ORIGIN [X] OTHER (See below)
211 Main St., 4th Floor
---------------------------------------------
San Francisco, CA 94105 9. DISCOUNT FOR PROMPT PAYMENT
NET (Block 8. Destination)
---------------------------------------------
10. SUBMIT INVOICES ITEM
(4 copies unless otherwise
specified) TO THE ADDRESS G2
- ---------------------------------------------------------------------------------------
CODE FACILITY CODE SHOWN IN:
- ------------------------------------------------------------------------------------------------------------------------------------
11. SHIP TO/MARK FOR CODE 12. PAYMENT WILL BE MADE BY CODE
---------------------- -------------------
SEE SECTION F SAME AS BLOCK 5
(FINANCIAL MANAGEMENT DIVISION)
- ------------------------------------------------------------------------------------------------------------------------------------
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION: 14. ACCOUNTING AND APPROPRIATION DATA
[_] 10 U.S.C. 2304 (c) ( ) [X] 41 U.S.C. 235 (c) ( 5 ) EW2010301 89X0242.91
- ------------------------------------------------------------------------------------------------------------------------------------
15A. ITEM NO. 15B. SUPPLIES/SERVICES 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
SEE SECTION H FOR 8(A) -
SPECIAL CONDITIONS
SEE SECTION B
- ------------------------------------------------------------------------------------------------------------------------------------
15G. TOTAL AMOUNT OF CONTRACT 8
- ------------------------------------------------------------------------------------------------------------------------------------
15. TABLE OF CONTENTS
- ------------------------------------------------------------------------------------------------------------------------------------
(X) SEC. DESCRIPTION PAGE(S) (X) SEC. DESCRIPTION PAGE(S)
- ------------------------------------------------------------------------------------------------------------------------------------
PART I - THE SCHEDULE PART II - CONTRACT CLAUSES
- ------------------------------------------------------------------------------------------------------------------------------------
X A SOLICITATION/CONTRACT FORM 2 X I CONTRACT CLAUSES 6
- ------------------------------------------------------------------------------------------------------------------------------------
X B SUPPLIES OR SERVICES AND PRICES/COSTS 3 PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
- ------------------------------------------------------------------------------------------------------------------------------------
X C DESCRIPTION/SPECS./WORK STATEMENT 11 X J LIST OF ATTACHMENTS 3
- ------------------------------------------------------------------------------------------------------------------------------------
X D PACKAGING AND MARKING 2 PART IV - REPRESENTATIONS AND INSTRUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
X E INSPECTION AND ACCEPTANCE 2 REPRESENTATIONS, CERTIFICATIONS AND OTHER
- ------------------------------------------------------------ K STATEMENTS OF OFFERORS
X F DELIVERIES OR PERFORMANCE 3
- ------------------------------------------------------------------------------------------------------------------------------------
X G CONTRACT ADMINISTRATION DATA 4 L INSTRS CONDS., AND NOTICES TO OFFERORS
- ------------------------------------------------------------------------------------------------------------------------------------
X H SPECIAL CONTRACT REQUIREMENTS 6 M EVALUATION FACTORS FOR AWARD
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------------------
17.[X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor 18.[_] AWARD (Contractor is not required to sign this document.) Your
is required to sign this document and return ________ offer on Solicitation Number ______________________________________,
copies to issuing office.) Contractor agrees to furnish including the additions or changes made by you which additions or
and deliver all items or perform all the services set changes are set forth in full above, is hereby accepted as to the
forth or otherwise identified above and on any continuation items listed above and on any continuation sheets. This award
sheets for the consideration stated herein. The rights and consummates the contract which consists of the following documents:
obligations of the parties to this award/contract, (b) (a) the Government's solicitation and your offer, and (b) this
the solicitation, if any, and (c) such provisions, award/contract. No further contractual document is necessary.
representations, certifications, and specifications, as are
attached or incorporated by reference herein. (Attachments
are listed herein.)
- ------------------------------------------------------------------------------------------------------------------------------------
19A. NAME AND TITLE OF SIGNER (Type or print) 20A. NAME OF CONTRACTING OFFICER
SEE ATTACHED SHEET SEE ATTACHED SHEET
- ------------------------------------------------------------------------------------------------------------------------------------
19B. NAME OF CONTRACTOR 19C. DATE SIGNED 20B. UNITED STATES OF AMERICA 20C. DATE SIGNED
BY _____________________________________________ BY ________________________________________
(Signature of person authoruzed to sign) (Signature of Contracting Officer)
- ------------------------------------------------------------------------------------------------------------------------------------
NSN 7540-01-152-8069 26-107 *STANDARD FORM 26 (REV. 4-85)
PREVIOUS EDITION NOT USABLE Prescribed by GSA
FAR (48 CFR) 53.214(a)
</TABLE>
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.
<PAGE>
SBA SUBCONTRACTOR Page 2
- ----------------- ------
NAME: ATG. Inc. PRIME CONTRACT NO.: DE-AC06-95RL13129
-------------------- -----------------
____________________
ADDRESS: 47375 Fremont Blvd. SUBCONTRACT NO.: 0912-95-2-01066
-------------------- ---------------
Fremont, CA 94530 CONTRACT MODIFICATION NO.:. __________
--------------------
TEL. NO.: (510) 490-3008
--------------------
SBA SUBCONTRACTOR
-----------------
NAME AND TITLE OF SIGNER Michael L. Wilson
-------------------------------
(TYPE OR PRINT)
Director of Marketing.
-------------------------------
SIGNATURE OF PERSON AUTHORIZED TO SIGN /s/ Michael L. Wilson
-------------------------------
DATE:. 12/29/94
-------------------------
PRIME CONTRACTOR
----------------
NAME AND TITLE OF CONTRACTING OFFICER Patricia Spikener
-------------------------------
Contracting Officer
-------------------------------
SIGNATURE OF PERSON AUTHORIZED TO SIGN _______________________________
DATE: JAN 03 1995
-------------------------
PROCURING OR ADMINISTRATIVE OFFICE
----------------------------------
NAME AND TITLE OF CONTRACTING OFFICER B. L. Ayers
-------------------------------
Contracting Officer
-------------------------------
SIGNATURE OF PERSON AUTHORIZED TO SIGN [SIGNATURE ILLEGIBLE]
-------------------------------
DATE: 12/28/94
------------------------
1
<PAGE>
CONTRACTING OFFICER CERTIFICATE OF PROCUREMENT INTEGRITY
1.) I, Patricia Spikener, hereby certify that, to the best of my knowledge and
-----------------
belief, with the exception of any information described in this certificate,
have no information concerning a violation of subsection (a), (b), (d) or (f) of
Section 27 of the Office of Federal Procurement Policy Act* (41 U.S.C. (S) 423),
as implemented in the FAR, occurring during the conduct of this procurement
contract: DE-AC06-95RL13129 and 0912-95-2-01066
2.) Violations or possible violations:
(Continue on plain bond paper if necessary, and label Contracting Officer
Certificate of Procurement Integrity (Continuation Sheet))
(ENTER "NONE" IF NONE EXISTS.)
NONE.
- --------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
/s/ Patricia Spikener Date: JAN 03, 1995
- -------------------------------- ---------------------------
Contracting Officer
*Section 27, as amended, became effective on December 1, 1990. THIS
CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE
UNITED STATES AND THE MAKING OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION
MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.
<PAGE>
<TABLE>
<S> <C> <C>
OMB NO.
DE-AC06-95LI 29 5000
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: This form is used in contract actions if submission of cost or pricing cost is required (See FAR 15.664-610))
- ------------------------------------------------------------------------------------------------------------------------------------
2. NAME AND ADDRESS OF OFFEROR (Include Zip Code) 3.A NAME AND TITLE OF OFFEROR'S POINT 3.B TELEPHONE
OF CONTRACT
ALLIED TECHNOLOGY GROUP, INC. MICHEAL L. WILSON
47375 FREMONT BLVD. DIRECTOR OF MARKETING (510) 45
-------------------------------------------------------------------
FREMONT, CA 94538 4. TYPE OF CONTRACT ACTION (Check)
-------------------------------------------------------------------
[X] A. NEW CONTRACT D. LETTER CONTRACT
-------------------------------------------------------------------
B. CHANGE ORDER E. UNPRICED ORDER
-------------------------------------------------------------------
C. PRICE REVISION/ F. OTHER (Specify)
REDETERMINATION
- ------------------------------------------------------------------------------------------------------------------------------------
5. TYPE OF CONTRACT (Check) 6. PROPOSED COST (A-B-C)
-------------------------------------------------------------------
[_] FFP [_] CPFF [_] CPIF [_] CPAF A. COST B. PROFIT/FEE C. TOTAL
[_] FPI [X] OTHER (Specify) FIXED UNIT PRICE
[CONFIDENTIAL [CONFIDENTIAL $316,800.00
INFORMATION INFORMATION
OMITTED AND FILED OMITTED AND FILED
SEPARATELY WITH THE SEPARATELY WITH THE
SECURITIES AND SECURITIES AND
EXCHANGE EXCHANGE
COMMISSION.] COMMISSION.]
- ------------------------------------------------------------------------------------------------------------------------------------
7. PLACE(S) AND PERIOD(S) OF PERFORMANCE
U.S. DEPARTMENT OF ENERGY, HANFORD RESERVATION
- ------------------------------------------------------------------------------------------------------------------------------------
B. List and reference the indentification, quantity and total price proposed for each contract line item. A line item cost
breakdown supporting this required unless otherwise specified by the Contracting Officer. (Continue on reverse, and then on
plain paper, if necessary. Use same headings.)
- ------------------------------------------------------------------------------------------------------------------------------------
A. LINE ITEM NO. B. IDENTIFICATION C. QUANTITY D. TOTAL PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
1 [CONFIDENTIAL INFORMATION OMITTED AND FILED 1 LOT $316,800.00
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.] ESTIMATED POUNDS X $[CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.]
- ------------------------------------------------------------------------------------------------------------------------------------
B. PROVIDE NAME, ADDRESS, AND TELEPHONE NUMBER FOR THE FOLLOWING (If available)
- ------------------------------------------------------------------------------------------------------------------------------------
A. CONTRACT ADMINISTRATION OFFICE B. AUDIT OFFICE
US DEPARTMENT OF ENERGY DEFENCE CONTRACT AUDIT AGENCY
RICHLAND OPERATIONS OFFICE 39510 PASEO PADRE PARKWAY
P.O. BOX 550 FREMONT, CA 94538
RICHLAND, WA 99352
- ------------------------------------------------------------------------------------------------------------------------------------
10. WILL YOU REQUIRE THE USE OF ANY 11.A DO YOU REQUIRE GOVERNMENT 11.B TYPE OF FINANCING:
GOVERNMENT PROPERTY IN THE CONTRACT FINANCING TO [_] ADVANCE PAYMENTS [X] PROGRAM PAYMENTS
PERFORMANCE OF THIS WORK: PERFORM THIS PROPOSED [_] GUARANTEED LOANS
(If "Yes" identify) CONTRACT: (If "Yes,"
complete Item 11B)
[_] YES [X] NO [X] YES [_] NO
- ------------------------------------------------------------------------------------------------------------------------------------
12. HAVE YOU BEEN AWARDED ANY 13. IS THIS PROPOSAL CONSISTENT WITH YOUR ESTABLISHED ESTIMATING AND ACCOUNTING
CONTRACTS OR SUBCONTRACTS PRACTICES AND PROCEDURES AND FAR PART 31 COST PRINCIPLES: (If "No" explain)
FOR THE SAME OR SIMILAR
ITEMS WITHIN THE PAST
3 YEARS:
(If "Yes," identify item(s),
customer(s), and contract number(s)),
[_] YES [X] NO [_] YES [X] NO
- ------------------------------------------------------------------------------------------------------------------------------------
14. COST ACCOUNTING STANDARDS BOARD (CASB) DATA (Public Low 91.379 as amended and FAR PART 30)
- ------------------------------------------------------------------------------------------------------------------------------------
A. WILL THIS CONTRACT ACTION BE SUBJECT B. HAVE YOU SUBMITTED A CASE DISCLOSURE STATEMENT
TO CASE REGULATIONS: (If "No," explain in proposal) (CASB DS. 1 OR 2)? (If "Yes," specify in proposal the
office to which submitted and if determined to be
adequate)
[_] YES [X] NO SMALL BUSINESS EXEMPTION [_] YES [X] NO
- ------------------------------------------------------------------------------------------------------------------------------------
C. HAVE YOU BEEN NOTIFIED THAT YOU ARE OR MAY BE D. IS ANY ASPECT OF THIS PROPOSAL INCONSISTENT WITH
IN NONCOMPLIANCE WITH YOUR DISCLOSURE STATEMENT OR YOUR DISCLOSED PRACTICES OR APPLICABLE COST
COST ACCOUNTING STANDARDS? (If "Yes," explain in proposal) ACCOUNTING STANDARDS?
(If "Yes," explain in proposal)
[_] YES [X] NO [_] YES [X] NO
- ------------------------------------------------------------------------------------------------------------------------------------
This proposal is submitted in response to the R.F.P. contract, modification, etc, in item 1 and reflects our best
estimates [illegible] costs as of this date and conforms with the instructions in FAR 1S.804.6(b) (2). Table 15.2. By
submitting this proposal, the offeror if selected for negotiation, grants the contracting officer or an authorized
representative the right to examine, at any time before award, those books records, documents and other types of factual
information, regardless of form or whether such supporting information is specifically referenced or included in the
proposal as the basis for pricing, that will permit and adequate evaluation of the proposed price.
- ------------------------------------------------------------------------------------------------------------------------------------
15. NAME AND TITLE (Type) 16. NAME OF FIRM
MICHAL L. WILSON, DIRECTOR OF MARKETING ALLIED TECHNOLOGY GROUP, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
17. SIGNATURE 18. DATE OF SUBMISSION
/s/ Michael L. Wilson 12-29-94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SPECIAL CLAUSES FOR 8(A) TRIPARTITE CONTRACTS
Section 8(a) Award
Reference FAR 52.219-17
SECTION 8(a) AWARD (FEB 1990)
(a) By execution of a contract, the Small Business Administration (SBA) agrees
to the following:
(1) To furnish the supplies or services set forth in the contract
according to the specifications and the terms and conditions by
subcontracting with the Offeror who has been determined an eligible
concern pursuant to the provisions of Section 8(a) of the Small
Business Act, as amended (15 USC 637[a]).
(2) Except for novation agreements and advance payments, delegates to the
U.S. Dept. of Energy, Richland, WA the responsibility for
administering the contract with complete authority to take any action
on behalf of the Government under the terms and conditions of the
contract; provided, however, that the contracting agency shall give
advance notice to the SBA before it issues a final notice terminating
the right of the subcontractor to proceed with further performance,
either in whole or in part, under the contract.
(3) That payments to be made under the contract will be made directly to
the subcontractor by the contracting activity.
(4) To notify the U.S. Dept. of Energy, Richland, WA Contracting Officer
immediately upon notification by the subcontractor that the owner or
owners upon whom 8(a) eligibility was based plan to relinquish
ownership or control of the concern.
(b) The offeror/subcontractor agrees and acknowledges that it will, for and on
behalf of the SBA, fulfill and perform all of the requirements of the
contract.
(End of Clause)
CONTRACT SPECIFIC CLAUSES
Since FAR 52.219-17 omits two important clauses that would be contained in
52.219-12 if there were a separate subcontract, SBA requests that the following
clauses be included in the contract as Contract Specific Clauses:
A. "That Allied Technology Group, Inc. will not subcontract the performance of
any of the requirements of the subcontract to any lower tier subcontractor
without the prior written approval of the SBA and the Designated
Contracting Officer of the U.S. Dept. of Energy, Richland, WA."
B. "That Allied Technology Group, Inc., awarded a subcontract hereunder,
shall have the right of appeal from decisions of the Contracting Officer
cognizable under the "Disputes" clause of said contract."
"A copy of the acceptance document and a copy of the final payment document
will be provided to SBA."
<PAGE>
Prime Contract No. DE-AC06-95RL13129
Subcontract No. 0912-95-2-01066
Reference FAR 52.219-14
LIMITATIONS ON SUBCONTRACTING (JAN 1991)
(a) This clause does not apply to the unrestricted portion of a partial set-
aside.
(b) By submission of an offer and execution of a contract, the
Offeror/Contractor agrees that in performance of the contract in the case
of a contract for --
(1) Services (except construction). At least 50 percent of the cost of
contract performance incurred for personnel shall be expended for
employees of the concern.
(2) Supplies (other than procurement from a regular dealer in such
supplies). The concern shall perform work for at least 50 percent of
the cost of manufacturing the supplies, not including the cost of
materials.
(3) General Construction. The concern will perform at least 15 percent of
the cost of the contract, not including the cost of materials, with
its own employees.
(4) Construction by special trade contractors. The concern will perform
at least 25 percent of the cost of the contract, not including the
cost of materials, with its own employees.
(End of clause)
<PAGE>
52.219-22 SIC CODE AND SMALL BUSINESS SIZE STANDARD.
As prescribed in 19.304(d), insert the following provision:
SIC CODE AND SMALL BUSINESS SIZE STANDARD
(JAN 1991)
(a) The standard industrial classification (SIC) code for this acquisition
is 8744.
(b) (1) The small business size standard is 500 employees.
(2) The small business size standard for a concern which submits an
offer in its own name, other than on a construction or service contract,
but which proposes to furnish a product which it did not itself manufacture
is 500 employees.
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RLI3129
SECTION C
PART I - THE SCHEDULE
SECTION C
STATEMENT OF WORK
TABLE OF CONTENTS
Subsection Title
- ---------- -----
C-1 Statement of Work
5
<PAGE>
CONTRACT NO.
DE-ACO6-95RLI3129
STATEMENT OF WORK
SECTION C
STATEMENT OF WORK
FOR
LOW-LEVEL RADIOACTIVE WASTE
VOLUME REDUCTION SERVICES
Introduction
- ------------
The U. S. Department of Energy, Richland Operations Office (RL) (hereafter
referred to as the Government in this document) is seeking the services of a
vendor to volume reduce low level waste and transport it for disposal at the
Hanford Site. Normal operations, as well as site cleanup activities at Hanford
and other Government sites, result in the generation of large volumes of low-
level radioactive waste. The Government is responsible for characterizing,
managing, and disposing of all low-level waste generated at the facility. Most
of the low level waste is currently being disposed of in shallow land burial
trenches. In this regard, the Government has a two-fold objective: to improve
the efficiency of low level waste disposal, and to preserve the valuable land
resource by employing techniques to reduce the volume of the low-level waste
before it is placed in the disposal trench.
The Government is seeking the services of vendors (hereafter referred to as the
"Contractor" in this document) with the capability to receive low-level
radioactive waste, significantly reduce the volume of the low level waste by
sorting and compacting the waste, and transport it for disposal at the Hanford
low level waste facilities.
Low level waste streams whose reduction can be enhanced using technologies not
available on the Hanford Site shall be considered for this contract; upon
development and initiation of any future reduction capabilities at Hanford, low
level waste streams which can utilize those capabilities shall be processed at
Hanford.
As appropriate, the Contractor will supply procedures, requirements, containers,
transportation, and volume reduction processing for low-level waste. After
reducing the low level waste volume, the Contractor will transport the low level
waste to Hanford. The Contractor will be required to certify:
. the amount of volume reduction achieved,
. that all low level waste received from the Government has been
returned, and
6
<PAGE>
CONTRACT NO.
DE-AC06-95RLI3129
STATEMENT OF WORK
SECTION C
. that the returned low level waste meets the Hanford Waste Acceptance
Criteria for disposal.
The Contractor has the option to subcontract work which can not be performed at
Contractor's facility to other vendors. The Contractor's subcontractors (if any)
must be accomplished in accordance with Section H, H-3, FAR 52. 219-14
--------------
LIMITATION ON SUBCONTRACTING (JAN 1991) and authorized by the Contracting
- ---------------------------------------
Officer. The Government will ship only to the Contractor's one designated
receiving facility, unless, the Contractor can not accept the low level waste at
his designated facility due to a regulatory restriction.
Regulations and Requirements
- ----------------------------
Regulations and requirements applicable to low level waste packaging,
transportation, and disposal at the Hanford Reservation are included in this
document. The Contractor/s is responsible to know of the regulations and
requirements applicable to these same elements at its own facility.
Description of the Low Level Waste Materials
- --------------------------------------------
The low level wastes to be processed are dry materials, contaminated by
radioactive isotopes in concentrations less than or equal to those specified for
Category 1 waste in the Hanford Site Solid Waste Acceptance Criteria (WHC-EP-
0063, latest revision). The low level waste consists of paper, plastic, wood,
metal, glass, and general debris (such as concrete and steel) from the
decontamination and decommissioning of existing nuclear facilities.
The Government anticipates approximately 36,000 cubic feet (288,00 lbs. ) of low
level waste will require volume reduction processing for fiscal year 1995. In
accordance with Hanford requirements, the Government must describe the isotopes
present in the low level waste and certify that they do not exceed the Hanford
Site Solid Waste Acceptance Criteria prior to shipping low level wastes from the
place where they are generated. Low-level radioactive waste is generated
throughout the Hanford Reservation.
Services
- --------
The volume reduction services provided by the Contractor will include at least
the following:
1. Pick-up of low level waste materials at the generator's normal
load-out locations.
7
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
5. Submit to the Government, for approval, requirements and instructions
for characterizing, segregating and packaging low level waste to be
shipped by the Contractor to the Contractor's facilities.
6. Within twenty days of award, submit to the Government, for approval, a
quality Assurance program in accordance with the Quality Assurance
section of this Statement of Work (SOW).
7. Within twenty days of award, submit to the Government, for approval,
all program plans, instructions, procedures, etc. , required for
compliance with the Hanford Site Solid Waste Acceptance Criteria.
8. Maintain a tracking system for showing the relationship between the
material received and the material treated and/or shipped. This
tracking system shall be maintained for a minimum of one year after
contract end-date.
9. Maintain documentation on the characterization of the waste being
shipped from their facility to the Government.
10. Maintain the capability to identify and safe keep any potential
radioactive mixed waste (RMW) that might be discovered. Upon
discovery, the Contractor will notify the Government. The RMW will be
characterized as per WAC 173-303 by the Contractor, unless otherwise
directed by the Government. When the contractor has determined that
RMW has been received by contract, the Government shall remove the RMW
within 30 days. The contractor will sign as the generator on the
uniform hazardous waste manifest. All costs associated with
characterization of the RMW will be reimbursed in accordance with
Section B, Attachment A, Price Schedule. Supply/Services, Clin 0002.
11. Government's containers shall be reused, compacted or returned to the
government at the government's option.
12. Assist Government when verifying container contents prior to shipment
of waste to Government.
13. Affix a Government specified bar code to all containers being returned
for disposal.
14. Segregate Government waste from all other waste. Cross-contamination
is prohibited unless written pre-approval is obtained from the
Government.
9
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
15. Return to the Government all radionuclides from waste sent to the
Contractor under this program. Containers and waste shall be complaint
with the requirements in the Hanford Site Solid Waste Acceptance
Criteria, WHC-EP-0063.
16. Submit a draft disposal record in accordance with WHC-EP-0063 for each
container of processed waste and residues being returned to the
Government within 15 working days prior to shipment. This record shall
include characterization information. Also include with the record
inventory sheets of contents for each processed waste container
returned to the Government.
17. Correct deficiency of container returned by the Government to the
Contractor due to nonconformance with receipt criteria or the Hanford
Site Solid Waste Acceptance Criteria.
18. Segregate waste of different Government waste generators. from each
other unless written approval is provided by the Government.
Incidental cross contamination between generators is permissible.
The Contractor shall accept and transport all radioactive waste (when
accompanied with the appropriate documentation) on an "as needed" schedule to be
determined by the Government's Technical Representative or Westinghouse Hanford
Technical Monitor. The Contractor shall review and approve the shipping
documents and other supporting documents prepared by the Government prior to the
low level waste leaving the generator site.
Low level waste shall be transported by the Contractor to their facility where
the labor, materials, and equipment shall be provided for proper low level waste
management in accordance with applicable federal, state, and local requirements.
Contractor shall certify and warrant its compliance with all federal, state, and
local requirements and regulations.
All facilities (other than the one designated receiving facility) used during
the management of the Government's low level waste will be considered a
subcontractor to the Contractor (even if it is a subdivision of the primary
contractor). The Contractor is responsible for ensuring that subcontractors meet
all requirements of the SOW. The Contractor shall be responsible for
transporting the low level waste to the Government's facilities. The Contractor
shall sign as the transporter on the new (return) shipping documents. The
Government will only accept return shipments from the Contractor (not the
subcontractors). Subcontractors utilized under the performance of this SOW must
meet all the applicable terms and conditions and the limitations of this
Contract and SOW.
10
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
The Contractor shall notify the Government in writing immediately upon
cancellation of transportation and/or environmental insurance policies. The
Contractor shall notify the Government 30 calendar days in advance of any
material changes or reduction in coverage under transportation and environmental
insurance policies. The Government will notify Contractor of low level waste
materials ready for pick-up 30 days in advance of required pick-up. The
Government will designate a Point-Of-Contact (POC) or alternate for all low
level waste transactions, including scheduling and location of low level waste
for pick-up and low level waste identification.
The Contractor shall have documented and implemented procedures (or an
equivalent documentation system) for onsite and transportation emergencies.
Contractor's Facility Audits and Inspections
- --------------------------------------------
The Government reserves the right to inspect/audit Contractor's facility for
information purposes before and after award. Contractor shall allow Government's
contractor personnel to access their facility. The Government's inspection/audit
team may include non-RL personnel. The audit report may be shared with other
Government sites and their contractors. After award of the contract, the
Contractor shall allow the Government to inspect/audit their facility for
compliance to applicable requirements at any time during the performance
interval (normally on a quarterly basis, if deemed necessary).
Prior to award of the contract, the Contractor shall notify the Government if
any of the following conditions exist:
. Contractor's Corporate Officers working under assumed names for
other businesses.
. Contractor's Company operating in other locations or areas of jurisdiction
under different names.
. Outstanding violations, citations, or pending actions promulgated against
the Contractor's Company or Subcontractors by a regulatory agency.
During the contract's period of performance, the Contractor shall immediately
notify the Government in writing of any changes to the above conditions occur
and including, but not limited to:
. Violations, citations or pending actions promulgated against the
Contractors Company or subcontractors by a regulatory agency.
11
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
. Significant changes to the operations or organization of the Contractor's
Company.
The Contractor, or it's subcontractors, shall perform corrective actions on
items disclosed during the Government's inspections/audits. If the Contractor,
or it's subcontractors, refuse or are unable to perform such corrective action
in a timely manner, the Government reserves the right to terminate this
contract, in whole or in part, for convenience or default pursuant to the
Termination provisions in the contract.
Low Level Waste Inspection/Verification
- ---------------------------------------
The Government will inspect and verify low level waste shipments performed by
the Contractor to the Hanford Site on an "as needed" basis. The inspections will
be performed to ensure that:
. The low level waste being shipped by the Contractor conforms with the
conditions of this SOW and the Hanford Site Solid Waste Acceptance
Criteria, and;
. That the volume reductions specified by the Contractor on the pricing
schedule have been achieved.
If the amounts of volume reduction specified on the price schedule are not being
achieved by the Contractor, the Government reserves the right to terminate the
contract or to renegotiate pricing, in accordance with the terms and conditions
of this Contract and SOW.
The Government will periodically assess the Contractor's performance to the
reduction volumes specified by the Contractor in the Pricing Schedule and/or
Work Plan. The Contractor shall meet their specified volume reduction
commitments at the densities specified in the pricing schedule and/or the
Contractor Work Plan. If the Contractor does not meet their volume reduction
commitments, the Government shall assess the Contractor for the extra volume at
the current/actual Hanford Site low level waste burial rates.
Low Level Waste Transport
- -------------------------
The Government will properly package, mark, and label all low level wastes
covered by the SOW prior to low level waste pick-up by the Contractor. U.S.
Department of Transportation compliance is rigidly enforced.
12
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
All low level waste transportation shall be performed in compliance with U.S.
Department of Transport regulations (49 CFR). The Contractor shall transport
Hanford's low level waste in vehicles dedicated solely to radioactive waste
hauling. Transportation equipment which is not appropriate for the Government's
low level waste will not be loaded and will be returned to the Contractor at no
expense to the Government.
Contractor's drivers shall be trained in proper low level waste handling
procedures, personal protection, regulatory compliance, and spill emergency
response. Contractor's vehicles shall carry spill kits, Spill Prevention Control
and Countermeasures plans, and emergency response guidebooks. The Contractor
shall be responsible for properly securing and transporting the low level waste
in accordance with all state and federal transportation regulations. The
Contractor shall obtain all applicable transportation permits prior to taking
possession of the low level waste. Title and risks to the low level waste
obtained under this SOW shall pass to the Contractor when it is placed onto the
Contractor's vehicle at the direction of Contractor's representatives.
Remedial actions on any spills which may occur during the transport of low level
waste shall be the responsibility of the Contractor. After receiving the low
level waste, the Contractor shall sign and return the "original" copy of the
radioactive shipment record within 30 calendar days of the shipment date.
All shipments will require inspection for compliance with U.S. Department of
Transportation regulations prior to entering and leaving the Hanford site.
Radiation monitoring will be performed on all low level waste shipments leaving
the Hanford site. The Government's transportation department located at 2355
Stevens Drive, Richland, Washington, will inspect and validate all low level
waste shipments and co-sign the Government's Offsite Radioactive Shipment
Record.
The Contractor shall strictly comply with all Government safety requirements and
Onsite Services Provisions when operating at the Government's facility. The
Government and the Contractor shall both have the authority to "stop work"
whenever a safety concern is identified.
The Government will provide support operators (Health Physics, crafts, etc. ) to
assist the Contractor in transferring the low level waste onto the Contractor's
vehicle at no cost to the Contractor. The Contractor shall be responsible for
properly loading, securing, and transporting the low level waste in accordance
with all local, State, and Federal transportation regulations. The Contractor
shall obtain all applicable permits prior to taking possession of the low level
waste. The Government will also provide security escorts as required onsite.
13
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
Quality Assurance
- -----------------
The Contractor shall have in place a Quality Assurance program that incorporates
the following criteria:
1. Management
A. Program. Organizations shall develop, implement, and
maintain a written Quality Assurance Program (QAP). The QAP
shall describe the organizational structure, functional
responsibilities, levels of authority, and interfaces for those
managing, performing, and assessing adequacy of work. The QAP
shall describe the management system, including planning,
scheduling, and cost control considerations.
B. Personnel Training and Qualification. Personnel shall be
trained and qualified to ensure they are capable of performing
their assigned work. Personnel shall be provided continuous
training to ensure that job proficiency is maintained.
C. Quality Improvement. The organization shall establish and
implement processes to detect and prevent quality problems and to
ensure quality improvement. Items and processes that do not meet
established requirements shall be identified, controlled, and
corrected. Correction shall include identifying the causes of
problems and preventing recurrence. Item reliability, process
implementation, and other quality related information shall be
reviewed and the data analyzed to identify items and processes
needing improvement.
D. Documents and Records. Documents shall be prepared, reviewed,
approved, issued, used, and revised to prescribe processes, and
specify requirements, or establish design. Records shall be
specified, prepared, reviewed, approved, and maintained.
2. Performance
A. Work Processes. Work shall be performed to established
technical standards and administrative controls. Work shall be
performed under controlled conditions using approved
instructions, procedures, or other appropriate means. Items shall
be identified and controlled to ensure their proper use. Items
shall be maintained to prevent their damage, loss, or
deterioration. Equipment used for process monitoring or data
collection shall be calibrated and maintained.
14
<PAGE>
CONTRACT NO.
DE-AC06-95RL13129
STATEMENT OF WORK
SECTION C
B. Procurement. The organization shall ensure that procured
items and services meet established requirements and perform as
specified. Prospective suppliers shall be evaluated and selected
on the basis of specified criteria. The organization shall ensure
that approved suppliers can continue to provide acceptable items
and services.
C. Inspection an Acceptance Testing. Inspection and acceptance
testing of specified items and processes shall be conducted using
established acceptance and performance criteria. Equipment used
for inspections and tests shall be calibrated and maintained.
3. Assessment
A. Management Assessment. Management at all levels shall
periodically assess the integrated quality assurance program and
its performance. Problems that hinder the organization from
achieving its objectives shall be identified and corrected.
B. Independent Assessment. Planned and periodic independent
assessments shall be conducted to measure item quality and
process effectiveness and to promote improvement. The
organization performing independent assessments shall have
sufficient authorization and freedom from the line organization
to carry out its responsibilities. Persons conducting independent
assessments shall be technically qualified and knowledgeable in
the areas assessed.
15
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION D
PART I - THE SCHEDULE
SECTION D
PACKAGING AND MARKING
TABLE OF CONTENTS
Subsection Title
- ---------- -----
D-1 Packaging
D-2 Marking
D-3 Packing List
16
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION D
SECTION D
PACKAGING AND MARKING
D-1 PACKAGING
---------
Preservation, packaging, and packing for shipment or mailing of all work
delivered hereunder shall be in accordance with good commercial practice
and adequate to insure acceptance by common carrier and safe transportation
at the most economical rate(s).
Reports and deliverables under this contract shall be mailed by first-class
mail unless the urgency of the deliverable sufficiently justifies the use
of registered mail or private parcel delivery services.
D-2 MARKING
-------
Each package, report, or other deliverable shall be accompanied by a letter
or other document which:
1. Identifies the contract under which the item is being delivered.
2. Identifies the deliverable item number or report requirement which
requires the delivered item(s).
3. Indicates whether the Contractor considers the delivered item to be
partially or totally in compliance with the reporting requirement.
D-3 PACKING LIST
------------
A packing list or other suitable shipping document shall accompany each
shipment and shall show the (a) name and address of consignor, (b) the name
and address of consignee, (c) Government contract number (and delivery
order number, if used), (d) Government bill of lading number covering the
shipment, if any, and (e) description of the material shipped, including
item number, quantity, number of containers, and package number, if any.
17
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION D
PART I - THE SCHEDULE
SECTION E
INSPECTION AND ACCEPTANCE
TABLE OF CONTENTS
Subsection Title
E-1 Inspection
E-2 Acceptance
Note: See Section "I" titled Contract Clauses, form set DOE List 301S,
clause number 60, FAR 52. 246-4 "Inspection of Services-Fixed Price"
(FEB 1992).
18
<PAGE>
CONTRACT NUMBER
DE-AMO6-95RL13129
SECTION E
SECTION E
INSPECTION AND ACCEPTANCE
E-1 INSPECTION
----------
Inspection of all services under this contract shall be accomplished by the DOE
project manager or any other duly authorized Government representative.
E-2 ACCEPTANCE
----------
Acceptance of all services under this contract (including Reporting
Requirements, if any) shall be accomplished by the contracting officer or his
designated representatives.
19
<PAGE>
CONTRACT NUMBER
DE-AMO6-95RL13129
SECTION E
PART I - THE SCHEDULE
SECTION F
DELIVERIES OR PERFORMANCE
TABLE OF CONTENTS
Subsection Title
---------- -----
F-1 Period of Performance
F-2 Principal Place of Performance
and Delivery
F-3 Stop-Work Order
20
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION F
SECTION F
DELIVERIES OR PERFORMANCE
F-1 PERIOD OR PERFORMANCE
---------------------
The period of performance for the contract will be for a period of one year
with four (4) one (1) year term extension options, unless sooner
terminated.
F-2 PRINCIPAL PLACE OF PERFORMANCE AND DELIVERY
-------------------------------------------
The principal place of performance of the contract shall be at the Hanford
Site, Richland, Washington, and areas approved by the Contracting Officer.
F-3 52.212-13 STOP-WORK ORDER (AUG 1989) - ALTERNATE I (APR 1984)
-------------------------------------------------------------
(a) The Contracting Officer may, at any time, by written order to the
Contractor, require the Contractor to stop all, or any part, of the
work called for by this contract for a period of 90 days after the
order is delivered to the Contractor, and for any further period to
which the parties may agree. The order shall be specifically
identified as a stop-work order issued under this clause. Upon receipt
of the order, the Contractor shall immediately comply with its terms
and take all reasonable steps to minimize the incurrence of costs
allocable to the work covered by the order during the period of work
stoppage. Within a period of 90 days after a stop-work order is
delivered to the Contractor, or within any extension of that periods
to which the parties shall have agreed, the Contracting Officer shall
either -
(1) Cancel the stop-work order; or
(2) Terminate the work covered by the order as provided in the
Termination clause of this contract.
(b) If a stop-work order issued under this clause is canceled or the
period of the order or any extension thereof expires, the Contractor
shall resume work. The Contracting Officer shall make an equitable
adjustment in the delivery schedule, the estimated cost, the fee, or a
combination thereof, and in any other terms of the contract that may
be affected, and the contract shall be modified, in writing,
accordingly, if -
21
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION F
(1) The stop-work order results in an increase in the time required
for, or in the Contractor's cost properly allocable to, the
performance of any part of this contract; and
(2) The Contractor asserts its right to the adjustment within 30 days
after the end of the period of work stoppage; provided, that, if
the Contracting Officer decides the facts justify the action, the
Contracting Officer may receive and act upon a proposal submitted
at any time before final payment under this contract.
(c) If a stop-work order is not canceled and the work covered by the order
is terminated for the convenience of the Government, the Contracting
Officer shall allow reasonable costs resulting from the stop-work
order in arriving at the termination settlement.
(D) If a stop-work order is not canceled and the work covered by the order
is terminated for default, the Contracting Officer shall allow, by
equitable adjustment or otherwise, reasonable costs resulting from the
stop-work order.
22
<PAGE>
CONTRACT NUMBER
DE-AMO6-95RL13129
SECTION G
PART I - THE SCHEDULE
SECTION G
CONTRACT ADMINISTRATION DATA
TABLE OF CONTENTS
Subsection Title
- ---------- -----
G-1 Representations and Certifications
G-2 Correspondence Procedures
G-3 Contract Administration
G-4 Invoice Requirements
G-5 Invoice Submission
G-6 FAR 52.232-28 Electronic Funds Transfer Payment
Methods. (APR 1989)
(See Section I, Clause 53)
23
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION G
SECTION G
CONTRACT ADMINISTRATION
G-1 REPRESENTATIONS AND CERTIFICATIONS
----------------------------------
The attached Representations and Certifications are hereby incorporated
into this contract.
G-2 CORRESPONDENCE PROCEDURES
-------------------------
The promote timely and effective administration, correspondence submitted
under this contract shall be subject to the following procedures:
(a) Technical Correspondence
------------------------
Technical correspondence (as used herein, excludes correspondence
which proposes or otherwise involves waivers, deviations, or
modifications to the requirements, terms, or conditions of this
contract) shall be addressed to the Contracting Officer's
Representative (COR), with copies to the DOE Richland Field Officer
staff as directed by the Contracting Officer (CO).
(b) Other Correspondence
--------------------
All correspondence, other than technical correspondence, shall be
addressed to the DOE Contracting Officer with information copies of
correspondence to the COR. All correspondence shall reference the
contract number.
(c) Invoices
--------
Invoices shall be directed to the DOE Contracting Officer at the
address stated in Section G-3. Invoices shall be paid in accordance
with the Prompt Payment clause (52.323-25) in Section I of this
contract.
24
<PAGE>
CONTRACT NUMBER
DE-AM06-95RL13129
SECTION G
G-3 CONTRACT ADMINISTRATION
-----------------------
The Contractor shall use one of the following Government contacts, as
applicable, as the focal point for all matters regarding this contract,
except technical matters.
(a) Doe Contracting Officer
-----------------------
The Contracting Officer identified below shall be the focal point of
contact under this contract for all contractual matters, except
technical matters:
U. S. Department of Energy
Procurement Division
Attn: Bernard L. Ayers
Contracting Officer
MS A7-80
P. O. Box 550
Richland, WA 99352
Telephone No. (509) 376-8601
(b) Doe Contract Administrator
--------------------------
DOE Contract Administrator for the contract is the focal point of
contact for contract administration and is located at the address
above and is as follows:
Contract Administrator: Jimm Jarrett Jr
Telephone: (509) 372-2074
(c) Contracting Officer's Representative
------------------------------------
The DOE Contracting Officer's Representative (COR) is the point of
contact on technical matters (see Section G-2 (a) above for
definition), subject to the restrictions in Section H-1 entitled
"Technical Direction." The COR's address is as follows:
COR: Dennis W. Claussen
MS S7-55
Telephone: (509) 372-0938
25
<PAGE>
CONTRACT NUMBER
DE-AMO6-95RL13129
SECTION E
G-4 INVOICE REQUIREMENTS
--------------------
(a) Invoices shall be submitted in an original and three (3) copies to the
Government office designated in this contract. To constitute a proper
invoice, the invoice must include sufficient information in which to
effect payment.
G-5 INVOICE SUBMISSION
------------------
Invoices shall be submitted to the following address:
See Subsection G-3(a) of Section G.
G-6 ELECTRONIC FUNDS TRANSFER PAYMENT METHODS(FAR 52.232-28)(APR 1989)
------------------------------------------------------------------
See Section I, Clause 53, Page 22.
26
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION H
PART I - SCHEDULE
SECTION H
SPECIAL CONTRACT REQUIREMENTS
TABLE OF CONTENTS
Subsection Title
- ---------- -----
H-1 Technical Direction - Contracting
Officer's Representative/
Technical Monitor
H-2 Modification Authority
H-3 FAR 52.219-14 Limitations on Subcontracting (Jan 1991)
H-4 FAR 52.219-17 Section 8(a) Award
H-5 DEAR 953.212-72 Uniform Reporting System
H-6 SUBCONTRACTING - THE GOVERNMENT'S RIGHT OF ACCESS
27
<PAGE>
CONTACT NUMBER
DE-AC06-95RL13129
SECTION H
SECTION H
SPECIAL CONTRACT REQUIREMENTS
H-1 TECHNICAL DIRECTIONS - CONTRACTING OFFICER'S REPRESENTATIVE (COR)\TECHNICAL
---------------------------------------------------------------------------
MONITOR (TM)
------------
(a) Performance of the work under this contract shall be subject to the
technical direction of the "Contracting Officer's Representative (COR)
and/or "Technical Monitor (TM)" who will be designated in writing by
the Contracting Officer. The Contracting Officer may from time to time
designate others, in writing, to be the COR and/or TM by letter
without formal contract modification. The term "technical direction"
is defined to include, without limitation:
(1) Directions to the Contractor which redirect the contract effort,
shift work emphasis between work areas or tasks, require pursuit
of certain lines of inquiry, fill in details or otherwise serve
to accomplish the contractual "Statement of Work."
(2) Provision of written information to the Contractor which assists
in the interpretation of portions of the work description.
(3) Review and, where required by the contract, approval of reports
and information to be delivered by the Contractor to the
Government under this contract.
(4) Performance of other duties in connection with technical
administration of the contract and monitoring of the Contractor's
performance, as specifically designated by the Contracting
Officer in writing.
(b) Technical direction must be within the scope of work stated in this
contract. The COR nor TM has the authority to, and may not, issue any
technical direction which:
(1) Constitutes an assignment of additional work outside the
Statement of Work.
(2) Constitutes a change, as defined in the Contract Clause entitled
"Changes - Cost-Reimbursement - Alternate 1."
28
<PAGE>
CONTRACT NUMBER
DE-AC06-95RL13129
SECTION H
(3) In any manner causes an increase or decrease in the final price
or the time required for contract performance.
(4) Changes any of the express terms, conditions, or specifications
of this contract.
(5) Interferes with the Contractor's right to perform under the terms
and conditions of this contract.
(c) All technical directions shall be issued in writing by the COR or TM.
(d) The Contractor shall proceed promptly in accordance with technical
directions duly issued by the COR or TM in the manner prescribed and
within his authority under the provisions of this Subsection.
If, in the opinion of the Contractor, any instruction or direction by
the COR or TM is within one of the categories defined in paragraphs b.
1 through 5 above, the Contractor shall not proceed but shall notify
the Contracting Officer immediately and confirm such notification in
writing within five (5) working days after receipt of any such
instruction or direction and shall request the Contracting Officer to
modify the contract accordingly. Upon receiving such notification from
the Contractor, the Contracting Officer shall:
(1) Advise the Contractor in writing within thirty (30) days after
receipt of the Contractor's letter that the direction is
technical direction as defined above and does not constitute a
change under the "Changes - Cost-Reimbursement - Alternate 1"
clause of this contract; or
(2) Inform the Contractor in writing within thirty (30) days after
receipt of the Contractor's letter not to perform the direction
and to cancel the direction; or
(3) Advise the Contractor within a reasonable time that the
Government will issue a written change order/modification.
(e) The Contractor shall comply with the Contracting Officer's decision,
but may pursue its remedies under the contract clause entitled
"Disputes-Alternate I." If the Contractor follows an instruction or
direction which he believes is within one of the categories in b.1
through 5 above, without following the procedure described in (d)
above, the Contractor does so at his own risk.
29
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION H
H-2 MODIFICATION AUTHORITY
----------------------
Notwithstanding any of the other provisions of this contract, a Contracting
Officer shall be the only individual on behalf of the Government authorized
to:
(a) Accept nonconforming work;
(b) Waive any requirement of this contract; or
(c) Modify any term or condition of this contract.
H-3 FAR 52. 219-14 LIMITATIONS ON SUBCONTRACTING. (JAN 1991)
--------------------------------------------------------
(a) This clause does not apply to the unrestricted portion of a partial
set-aside.
(b) By submission of an offer and execution of a contract, the
Offeror/Contractor agrees that in performance of the contract in the
case of a contract for--
(1) Services (except construction). At least 50 percent of the cost
of contract performance incurred for personnel shall be expended
for employees of the concern.
(2) Supplies (other than procurement from a regular dealer in such
supplies). The concern shall perform work for a least 50 percent
of the cost of manufacturing the supplies, not including the cost
of materials.
(3) General construction. The concern will perform at least 15
percent of the cost of the contract, not including the cost of
materials, with its own employees.
(4) Construction by special trade contractors. The concern will
perform at least 25 percent of the cost of the contract, not
including the cost of materials, with its own employees.
30
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION H
H-4 FAR 52.219-17. SECTION 8(A) AWARD. (FEB 1990)
---------------------------------------------
(a) By execution of a contract, the Small Business Administration (SBA)
agrees to the following:
(1) To furnish the supplies or services set forth in the contract
according to the specifications and the terms and conditions by
subcontracting with the Offeror who has been determined an
eligible concern pursuant to the provisions of section 8(a) of
the Small Business Act, as amended (15 U.S.C. 637(a)).
(2) Except for novation agreements and advance payments, delegates to
the U.S. Department of Energy, Richland Operations Office, the
responsibility for administering the contract with complete
authority to take any action on behalf of the Government under
the terms and conditions of the contract; provided, however that
the contracting agency shall give advance notice to the SBA
before it issues a final notice terminating the right of the
subcontractor to proceed with further performance, either in
whole or in part, under the contract.
(3) That payments to be made under the contract will be made directly
to the subcontractor by the contracting activity.
(4) To notify the U.S. Department of Energy, Richland Operations
Office, Contracting Officer immediately upon notification by the
subcontractor that the owner or owners upon whom 8(a) eligibility
was based plan to relinquish ownership or control of the concern.
(b) The offeror/subcontractor agrees and acknowledges that it will, for
and on behalf of the SBA, fulfill and perform all of the requirements
of the contract.
Supplemental Provision: The contractor shall not subcontract the
----------------------
performance of any of the requirements of the contract to any lower tier
subcontractor without the prior written approval of the SBA and the
designated Contracting Officer of the Department of Energy.
The contractor awarded a subcontract hereunder shall have the right of
appeal from decisions of the "Contracting Officer" cognizable under the
"Disputes" clause of said subcontract.
31
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION H
H-5 FAR 952.212-72 UNIFORM REPORTING SYSTEM (MAY 1987)
--------------------------------------------------
Contractor shall prepare and submit (postage prepaid) the plans and reports
indicated on the DOE Form 1332.1, Reporting Requirements Checklist or
amendments to this checklist included in Part III, Section J, Attachment 2
of this contract, to the addresses and in the specified number of copies as
designated in the attachment to the checklist. The Contractor shall prepare
the specified plans and reports in accordance with the formats and
structure set forth in DOE Order 1332.1A, or any later version in effect
on the effective date of the contract. The Contractor shall be responsible
for levying appropriate reporting requirements on any subcontractors in
such a manner to ensure that data submitted by the subcontractor to the
contractor is timely and compatible with the data elements that the
Contractor is responsible for submitting to DOE. Plans and reports
submitted in compliance with this clause are in addition to any other
reporting requirements of this contract.
H-6 SUBCONTRACTING - THE GOVERNMENT'S RIGHT OF ACCESS
-------------------------------------------------
The Government's right of access applies to all tiers of the procurement.
The Contractor shall provide the Government with a list of its
subcontractors which may be utilized during the transportation and/or
disposal phases of the Government's low level wastes. All subcontractors
utilized by the Contractor shall be fully permitted (if required) for the
activities to be performed. The Government's, designated representative,
and/or the Government's environmental personnel may (if deemed necessary)
inspect/audit all subcontractors. This is applicable before and after
award of the contract. The Contractor shall notify Government in writing of
any changes made to the subcontractor list during this contract period of
performance. The Contractor is encouraged to participate in the
subcontractor audits. The Government reserves the right to reject a
proposed subcontractor.
32
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION H
Part II - Contract Clauses
Section I
Contract Clauses
Table of Contents
SUBSECTION TITLE
- ---------- -----
I-1 thru I-76 Contract Clauses (DOE 301S) Fixed Price Service
Contracts (FAC 90-20)(Revised)
Per FAR 52.252-2, as prescribed in FAR 52.107(b):
This contract incorporates one or more clauses by
reference, with the same force and effect as if they
were given in full text. Upon request, the
Contracting Officer will make their full text
available.
I-77 FAR 52.209-7 Organizational Conflicts of Interest
Certificate- Marketing Consultants (Nov 1991)
I-78 FAR 52.215-39 Reversion of Adjustment of Plans for
Post Retirement Benefits Other than Pensions (PRB)
(Jul 1991)
I-79 FAR 52-242-13 Bankruptcy. (Apr 1991)
33
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION I
SECTION I
CONTRACT CLAUSES (CONTINUED)
I-77 FAR 52.209-7 ORGANIZATIONAL CONFLICTS OF INTEREST CERTIFICATE--MARKETING
------------------------------------------------------------------------
CONSULTANTS. (NOV 1991)
-----------------------
(a) Definitions.
(1) Marketing consultant means any independent contractor who furnishes
advice, information, direction, or assistance to an offeror or any
other contractor in support of the preparation or submission of an
offer for a government contract by that offeror. An independent
Contractor is not a marketing consultant when rendering--
(i) Services excluded in FAR 37.204;
(ii) Routine engineering and technical services (such as
installation, operation, or maintenance of systems, equipment,
software, components, or facilities);
(iii) Routine legal, actuarial, auditing, and accounting services;
or
(iv) Training services.
(2) Organizational conflict of interest means that because of other
activities or relationships with other persons, a person is unable or
potentially unable to render impartial assistance or advice to the
Government, or the person's objectivity in performing the contract
work is or might be otherwise impaired, or a person has an unfair
competitive advantage.
(b) An individual or firm that employs, retains, or engages contractually one
or more marketing consultants in connection with a contract, shall submit
to the contracting officer, with respect to each marketing consultant, the
certificates described below, if the individual or firm is notified that it
is the apparent successful offeror.
40
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION I
(c) The certificate must contain the following:
(1) The name of the agency and the number of the solicitation in question.
(2) The name, address, telephone number, and federal taxpayer
identification number of the marketing consultant.
(3) The name, address, and telephone number of a responsible officer or
employee of the marketing consultant who has personal knowledge of the
marketing consultants involvement in the contract.
(4) A description of the nature of the services rendered by or to be
rendered by the marketing consultant.
(5) The name, address, and telephone number of the client or clients, and
the name of a responsible officer or employee of the marketing
consultant who is knowledgeable about the services provided to such
client(s), and a description of the nature of the services rendered to
such client(s), if, based on information provided to the Contractor by
the marketing consultant, any marketing consultant is rendering or, in
the 12* months preceding the date of the certificate, has rendered
services respecting the same subject matter of the instant
solicitation, or directly relating to such subject matter, to the
Government or any other client (including any foreign government or
person).
(6) A statement that the person who signs the certificate for the prime
Contractor has informed the marketing consultant of the existence of
Subpart 9.5 and Office of Federal Procurement Policy Letter 89-1.
(7) The signature, name, title, employer's name, address, and telephone
number of the persons who signed the certificates for both the
apparent successful offeror and the marketing consultant.
(d) In addition, the apparent successful offeror shall forward to the
Contracting Officer a certificate signed by the marketing consultant that
the marketing consultant has been told of the existence of Subpart 9.5 and
Office of Federal Procurement Policy Letter 89-1, and the marketing
consultant has made inquiry, and to the best of the consultant's knowledge
and belief, the consultant has provided no unfair competitive advantage to
the prime Contractor with respect to the services rendered or to be
rendered in connection with the solicitation,
41
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION I
or that any unfair competitive advantage that, to the best of the
consultant's knowledge and belief, does or may exist, has been disclosed to
the offeror.
(e) Failure of the offeror to provide the required certifications may result in
the offeror being determined ineligible for award. Misrepresentation of any
fact may result in the assessment of penalties associated with false
certifications or such other provisions provided for by law or regulation.
I-78 FAR 52.215-39 REVERSION OR ADJUSTMENT OF PLANS FOR POST-RETIREMENT
------------------------------------------------------------------
BENEFITS OTHER THAN PENSIONS (PRB). (JUL 1991)
----------------------------------------------
The Contractor shall promptly notify the Contracting Officer in writing
when it determines that it will terminate or reduce a PRB plan. If the PRB
fund assets revert, or inure, to the Contractor or are constructively
received by it under a plan termination or otherwise, the Contractor shall
make a refund or give a credit to the Government for its equitable share as
required by FAR 31.205-6(0)(5). The Contractor shall include the substance
of this clause in all subcontracts under this contract which meet the
applicability requirements of FAR 15.804-8(f). The resulting adjustment to
prior years PRB costs will be determined and applied in accordance with FAR
31.205-6(0).
I-79 FAR 52.242-13 BANKRUPTCY. (APR 1991)
------------------------------------
In the event the Contractor enters into proceedings relating to bankruptcy,
whether voluntary or involuntary, the Contractor agrees to furnish, by
certified mail, written notification of the bankruptcy to the Contracting
Officer responsible for administering the contract. This notification shall
be furnished within five days of the initiation of the proceedings relating
to bankruptcy filing. This notification shall include the date on which the
bankruptcy petition was filed, the identity of the court in which the
bankruptcy petition was filed, and a listing of Government contract numbers
and contracting offices for all Government contracts against which final
payment has not been made. This obligation remains in effect until final
payment under this contract.
42
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
PART III
LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS
SECTION J
LIST OF ATTACHMENTS
Attachment Title
- ---------- -----
Attachment I Reporting Requirements Checklist (DOE F1332. 1)
43
<PAGE>
CONTRACT NUMBER
DE-ACO6-95RL13129
SECTION J
ATTACHMENT 1
REPORTING REQUIREMENTS CHECKLIST (DOE F1332.1)
2
<PAGE>
U.S. DEPARTMENT OF ENERGY
REPORTING REQUIREMENTS CHECKLIST
- --------------------------------------------------------------------------------
1. PROGRAM/PROJECT TITLE 2. IDENTIFICATION NUMBER
DE-AC06-95RL13129
- --------------------------------------------------------------------------------
3. PARTICIPANT NAME AND ADDRESS ATG Corp.
47375 Fremont Blvd.
Fremont, CA 94538
- --------------------------------------------------------------------------------
A. PLANNING AND REPORTING REQUIREMENTS
---------
FREQUENCY
---------
General Management
[_] Management Plan
[X] Status Report Q
[_] Summary Report
B. Schedule/Labor/Cost
[_] Milestone Schedule/Plan
[_] Labor Plan
[_] Facilities Capital Cost of Money Factors
Computations
[_] Contract Facilities Capital and Cost of Money
[_] Cost Plan
[_] Milestone Schedule/Status
[_] Labor Management Report
[_] Cost Management Report
C. ????? Reports
[X] Conference Record A
[X] Hot Line Report A
D. Performance Measurement
[_] Management Control System Description
[_] WBS Dictionary
[_] Index
[_] Element Definition
[_] Cost Performance Reports
[_] Format 1 - WBS
[_] Format 2 - Function
[_] Format 3 - Baseline
E. Financial Incentives
[_] Statement of Income and Expense
[_] Balance Sheet
[_] Cash Flow Statement
[_] Statement of Changes in Financial
Position
[_] Loan Drawdown Report
[_] Operating Budget
[_] Supplementary Information
F. Technical
[_] Notice of Energy RD&D Project
(Required with any of the following)
[_] Technical Progress Report
[_] Draft for Review
[_] Final for Approval
[_] Topical Report
[_] Final Technical Report
[_] Draft for Review
[_] Final for Approval
[_] Software
[X] Other (Specify)
TO BE INCLUDE IN THE QUARTERLY
STATUS REPORT IS THE AMOUNT OF
WASTE RECEIVED AND ASSOCIATED
COST.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
5. FREQUENCY CODES
A - As Required M - Monthly S - Semi-Annually
C - Change to Contractual Agreement O - Once After Award X - With Proposal/Bid/Application or with Significant Changes
F - Final (end of ????) Q - Quarterly Y - Yearly or Upon Renewal of Contractual Agreement
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. SPECIAL INSTRUCTIONS [ATTACHMENTS]
[_] Report Distribution List/Addresses [_] Analysis Thresholds
[_] Reporting Elements [_] Work Breakdown Structure
[_] Due Dates [_] Other
- --------------------------------------------------------------------------------
7. PREPARED BY 8. REVIEWED BY
(SIGNATURE AND DATE) (SIGNATURE AND DATE)
/s/ [SIGNATURE ILLEGIBLE] 12/20/94
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.22
GASIFICATION VITRIFICATIN CHAMBER
PURCHASE AND LICENSE AGREEMENT
WITH
INTEGRATED ENVIRONMENTAL
TECHNOLOGIES LLC (IET)
CONTENT:
1. EXHIBIT A: COMMERCIAL TERMS AND CONDITIONS
2. EXHIBIT B: TECHNICAL SPECIFICATION
3. EXHIBIT C: Westinghouse Hanford Company Contract
MW6-SBV-35707
4. EXHIBIT D: Low-Level Mixed Waste Thermal Treatment Technical Basis
Report WHC - SD - W242 - ES -003
ATG INC.
1025 BATTLLE BOULEVARD
RICHLAND, WASHINGTON 99352
AUGUST 1997
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.
<PAGE>
LET PURCHASE AND LICENSE AGREEMENT
EXHIBIT A
COMMERCIAL TERMS AND CONDITIONS
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
EXHIBIT A
PURCHASE AND LICENSE AGREEMENT
FOR
FURNISHING A GASIFICATION/VITRIFICATION (GASVIT) SYSTEM
This agreement executed between ATG Inc., a California Corporation ("ATG"),
and integrated Environmental Technologies, LLC, a New York Limited Liability
Company ("IET"), covers the design fabrication, testing and delivery of a plasma
energy gasification/vitrifaction (GASVIT) thermal treatment system by IET. IET
agrees to furnish a GASVIT system and deliver it to ATG's facility in Richland,
Washington, in accordance with the terms and conditions described below.
- --------------------------------------------------------------------------------
1. SCOPE
- --------------------------------------------------------------------------------
1.1 APPLICABLE DOCUMENTS. The following attachments are provided with this
agreement, and shall have the same effect as if set forth in the body of
Agreement.
1. Exhibit B: Technical Specification for GASVIT System. Revision B
(hereinafter referred to as "the System")
2. Exhibit C: Westinghouse Hanford Company Contract MW6-SBV-35707
3. Exhibit D: Low-Level Mixed Waste Thermal Treatment Technical Basis
Report-WHC-SD-W242-ES-003.
Exhibit C is for IET's reference only. For the purpose of resolving any
inconsistencies between the requirements set forth within this Agreement
and the attachments, the inconsistencies shall be resolved by first giving
precedence to the language of this Agreement, and then to the Exhibits
noted above in the above order.
1.2 SCOPE OF WORK AND SYSTEM BOUNDARIES. IET shall design,fabricate, assemble,
test, ship and support installation of a system conforming to the
specification set forth herein and in Exhibit B (the "System") for
application to mixed wastes as described in the attached Exhibits. The
System, when fabricated and shop-tested will be assembled together with
other subsystems and installed in building at ATG's facility in Richland,
________________________________________________________________________________
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
Page 1 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
Washington. ATG will design and construct the building including all of the
necessary interfaces and balance of plant equipment to meet IET's
requirements for installation and operations of the System. The overall
System boundaries and scope of work shall be delineated in the technical
specifications provided in Exhibit B.
1.3 PERFORMANCE. IET shall use its reasonable best effort to deliver a System
that meets required performance included herein, Exhibit B.
1.4 PERMITS. ATG shall be responsible for all permits for construction and
operation of System.
1.5 INSTALLATION. After IET designs, procures, fabricates, and pre-assembles,
where possible, the system components, it shall ship System to ATG for
ATG's installation. IET shall provide support for the installation by ATG
but the actual work of installation shall be ATG's responsibility.
1.6 APPLICABLE CODES AND REGULATIONS. The System will be designed based on the
existing CPG commercial scale design and the design specifications in
Exhibit B.
- --------------------------------------------------------------------------------
2. INTELLECTUAL PROPERTY; PROPROETARY INFORMATION
- --------------------------------------------------------------------------------
2.1 SYSTEM DEFINITION. For protection of intellectual property and proprietary
information purposes System shall mean a collection of the below listed
subsystems. As used herein, "IET Intellectual Property and Proprietary
Information shall consist of any inventions (whether or not patentable or
patented), developments or other information developed by IET.
The parties shall agree upon a Final Design of the System before IET begins
work under this Agreement. The Final Design shall include detail of system
features acceptable to the parties for both Part 1 and Part 11 below.
This procurement is divided into two primary parts,: Part 1 includes the
main GASVIT process chamber with associated feeding, product removal and
controls (comprising primarily IET Intellectual Property and Proprietary
Information), and Part 11 includes the Air Pollution Control (APC) or off-
gas treatment systems and specialized nuclear grade
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
Page 2 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
equipment components (comprising primarily ATG Intellectual Property and
Proprietary INformation, but potentially IET Intellectual Property and
Proprietary Information also) that may be required. This purchase
agreement covers these two parts separately.
PART I. Controlled Plasma Glassification (CPG) System will be supplied and
include the following components and subsystems. The CPG System is
defined as part of IET's Intellectual Property covered in pending patent
applications and other proprietary information developed by IET.
SUBSYSTEM GV-02-WASTE FEED
. BATCH FEEDER. Feeder for bulk (12" x 12" x 12") material.
. LIQUID FEDER. Feeder for liquid, slurry and sludge material.
. FLUX FEEDER. Melting process flux/chemical feeder unit.
SUBSYSTEM GV-03-PROCESS CHAMBER
. PROCESS CHAMBER. This item includes a refractory lined high
temperature melter.
. PLASMA ARC HEATING SYSTEM. This item includes the process chamber
heating system plus electric transformers, controllers, panels
and special cooling devices.
. PROCESS CHAMBER PRE-HEATER. Pre-heater device to heat-up the
process chamber during the start-up, ramp-up, and idle period.
. FREEZE VALVE. Devices that control the discharges of molten
residue from process chamber.
SUBSYSTEM GV-04-RESIDUE HANDLING
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
Page 3 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
. DISCHARGE MOLD. Containers that receive molten residue discharged
from the process chamber (six sets to be supplied).
. DISCHARGE ENCLOSURE. Environmentally controlled chamber to house
containers and devices that receive, cool and handle molten
material discharged from the process chamber. (note: specialized
nuclear grade filtration systems are not included, but will be
provided under part II of this procurement.
SUBSYSTEM GV-10-GASVIT INSTRUMENTATION AND CONTROLS
. INSTRUMENTATION. All measuring and monitoring instrumentation
including temperature, pressure, weight, density sensing
elements, indicators and controlled devices.
. LOCAL PANELS. All local panels used for the operation of the
system.
Note: OFF-GAS SYSTEM COMPONENTS AND ALL ASSOCIATED
INSTRUMENTATION AND CONTROLS FOR THOSE COMPONENTS AS DESCRIBED IN
PART II OF THIS PROCUREMENT ARE NOT INCLUDED IN THE FIXED PRICE
PROCUREMENT OF PART I.
Part II. All Air pollution Control (APC) and special off-gas treatment
components are not included in IET's base price set forth in Section 3.1.2.
Due to the special considerations and possible changes in the off-gas
system design through the permitting phase of this project, IET will
provide all APC components either on a fixed price or on a cost plus basis
as defined in section 3.1.3 of this agreement. The parties contemplate that
the design of the APC components of Part II will be provided by ATG.
However, IET will be responsible for reviewing and approving the design of
the APC to ensure that it does not unduly impact the performance warrantees
provided by IET for Part I subsystems.
________________________________________________________________________________
PURCHASE AGREEMENT GASIFICATION/VITTIFICATION SYSTEM
Page 4 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
ATG is obligated to make any reasonable changes in the APC design as
requested by IET. IET shall complete a review of ATG's APC design within 15
days after submittal.
SUBSYSTEM GV-02-WASTE FEED
. CONTINUOUS SOLIDS FEEDER. Item includes lock hoppers and loading
flanges for sized material. Feeder system shall be capable of
shredding, including airlock hoppers, loading flanges for un-
shredded material. Dust control and negative ventilation
equipment, which will protect worker health, will be part of the
feeder airlock subsystem.
SUBSYSTEM GV-05-FIRST STAGE SYNGAS PROCESSING UNIT
. This item includes one set of high temperature filters
. Jet pulse feed tanks and controls
. Particulate discharge devices and nitrogen pulsing devices
________________________________________________________________________________
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
Page 5 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- -------------------------------------------------------------------------------
SUBSYSTEM GV-06-SECOND STAGE SYNGAS PROCESSING UNIT
. Second Stage quench tank and pumps
. Acid gas and volatile metal scrubber
. Scrubber recirculation tanks
. Scrubber recirculation pump
SUBSYSTEM GV-07-THIRD STAGE SYNGAS PROCESSING UNIT
. Redundant induction draft (I.D.) fans
. Syngas converter based on a non-flame oxidizer
. Third stage quench tank and quench water spray nozzles and
redundant pumps
SUBSYSTEM GV-08-SAMPLING AND ANALYSIS
. SYNGAS AUTOMATIC SAMPLING AND ANALYZER. Complete instrumentation
including a gas analyzer for CO, CO2, O2, H2 and CH4
. OTHER SAMPLING POINTS. Other gas and residue sampling points in
the System as needed for complete operation, control and
monitoring of the GASVIT process.
SUBSYSTEM GV-09-GAS PURGING
. Suction fans
. Filters and ducting required for collection and treatment of
fugitive emissions, syngas purging and flushing, and process
inserting function.
________________________________________________________________________________
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
Page 6 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
2.2 OWNERSHIP OF SYSTEM DESIGN. IET has the exclusive right, title and
interest in, and to, all IET Intellectual Property, including all
patents, copyrights, know-how, drawings, specifications, operations
manuals, design manuals, instruction materials, and other proprietary and
technical information owned, developed or furnished by IET to ATG in
connection with this project. ATG has the exclusive right, title and
interest in and to all ATG Intellectual Property, which consists of the
designs, copyrights, know-how, drawings, specifications, operations
manuals, design manuals, instruction materials and other proprietary and
technical information developed or furnished by ATG and related to off-
gas system and feed subsystems to be incorporated into the overall System
for treating mixed wastes, excluding those components and subsystems
which are based on the public knowledge and off-the shelf material. ATG
and IET agree not to use each other's Intellectual Property on other
projects without the prior written consent from the other party for such
use except as defined in this agreement. (As defined in Sections 2.4 and
2.6)
2.3 IET'S GRANT OF SYSTEM LICENSE. IET hereby grants to ATG a non-exclusive
right and license ("license") to use its CPG system and IET Intellectual
Property provided hereunder, solely in connection with the operation of a
single System provided hereunder for processing of mixed wastes at ATG's
Richland, Washington facility. Mixed waste shall mean waste contaminated
with radionuclides and with RCRA and TSCA compounds as defined in Exhibit
C. The System license shall continue until such time as ATG shall
discontinue its operation of System.
2.4 ATG'S GRANT OF SYSTEM RIGHTS. ATG hereby grants to IET a nonexclusive
royalty free right to make, use and sell its ATG Intellectual Property
solely in connection with the design, sale and operation of systems for
all applications other than where mixed waste (as defined in 2.3 above)
is the system feedstock. In the case of mixed waste paragraph 2.6 of this
document covers future activities.
2.5 PROPRIETARY AND CONFIDENTIAL INFORMATION. The receiving party agrees to
maintain any Proprietary Information disclosed by the other party
(disclosing party) in confidence and not disclose such information to
third parties or use such information for any purpose other than that
purpose contemplated herein, without the written consent of the
disclosing party. ATG shall have the right to include IET Proprietary
Information in facility permitting documents without written consent of
IET provided that ATG takes all available steps to protect the
confidentiality of such information. Each party agrees to mark all
documents containing proprietary information with a legend clearly
stating that such document contains
________________________________________________________________________________
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
08/12/97 1:54 PM Page 7 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
"IET (or ATG) Proprietary Information". In the event such disclosures are
made orally or visually, the disclosing party will follow such disclosure
with a written statement clearly setting forth the content of such
disclosure. Acknowledgment of receipt shall be sent within 10 days. The
obligations of confidentiality and non-use shall not apply to any
information which: (a) was already known to the receiving party on or
before the execution date of this agreement, or subsequently becomes
known to the receiving party from a third party not in violation of non-
disclosure obligation of the confidential information; (b) becomes
publicly available through no fault of the receiving party; (c) is
independently created by the receiving party, as evidenced by
contemporaneous written documentary evidence.
The obligations of confidentiality and nonuse shall survive termination
or expiration of this agreement.
2.6 RIGHT OF FIRST REFUSAL. (i) For a period of five (5) years, each party
herein grants to the other party for the first right to participate with
the other party as the technology provider in any instance where the
parties intend to either bid on the sale of or install for their own use
a gasification/vitrification system for the treatment of low level mixed
wastes. If a joint bid is prepared as a technology provider each party
agrees to provide its technology at a reasonable cost. Prior to
submitting a bid or a response to a RFP for such system, the initiating
party shall notify the other party of the particulars of such bid, and
the other party shall have thirty (30) days to provide written
notification to the initiating party that it wishes to participate in
supplying technology for such bid. If the other party does not so notify
the initiating party, the initiating party may team with any third party
to supply such technology. (ii) No license under IET's intellectual
property is granted hereby. However, if ATG does not notify IET that it
wishes to team with IET in a bid initiated by IET under paragraph (i)
above, then IET shall have the right to provide a System using ATG
Intellectual Property under such bid. Such right to use ATG Intellectual
Property shall be solely for the particular bid in which ATG declines to
participate. If a joint bid is issued to a customer and the customer
chooses not to accept either IET's or ATG's portion of the bid, either
IET or ATG, which ever party is accepted, can proceed independent of the
customer rejected party so long as the rejected party's technology is not
used in a re-issued bid.
This section 2.6 shall survive termination of the Agreement under section
7.1 for the term described herein.
________________________________________________________________________________
PURCHASE AGREMENT GASIFICATION/VITRIFICATION SYSTEM
08/12/97 1:54 PM
Page 8 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
3. PURCHASE PRICE, LICENSE FEE, AND PAYMENT TERMS
3.1 PURCHASE PRICE FOR WORK ITEMS AND PAYMENT TERMS. ATG shall pay IET for
IET's costs for equivalency tests, design, assembly, and support of
installation of the System as agreed below. Upon signing this agreement,
IET is authorized to proceed only with tasks identified in Work Item I
below, including system design, purchase of necessary materials for
equivalency testing. IET shall coordinate with ATG and allow ATG to
review the design of the prototype system to insure that the prototype
system is identical to the GASVIT system to the extent possible. Both IET
agree, that the following items, which are a part of the GASVIT system
will be incorporated in the prototype system by IET. 1) High temperature
filters, 2) continuous feeder and 3) syngas converter. The design of the
above mentioned items will be jointly done by ATG and IET at no
additional cost to ATG. Once the design is complete ATG will procure and
deliver these components to IET'S Richland, WA facility. IET will use
these items during the test and disassemble and return to ATG when tests
are complete. Contracting with third party contractors for analytical
services in connection with equivalency testing, and performance of
equivalency tests will be directed by ATG. IET shall receive written
authorization before proceeding with tasks identified in Work Items 2 and
3, as set forth in greater detail in Exhibit B. ATG has the sole option
of exercising its rights to purchase and authorize the start of work
described under Work Items 2, and 3 below within three and half years
after execution of this Agreement. Should ATG not exercise its option
within the period of three and a half years from the date of this
agreement, IET shall be under no obligation to perform further under this
Agreement.
3.1.1. WORK ITEM 1-EQUIVALENCY DEMONSTRATION TESTS.
Payment terms for work item I is as follows: All work performed by IET
staff for the equivalency testing and support to ATG for testing support
will be provided as specified below:
<TABLE>
<S> <C>
Materials & Outside Services Cost Plus [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] %
Engineering: $[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] per hour
Technician: $[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] per hour
</TABLE>
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
Page 9 of 19
<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
The total for Work Item 1 will not exceed [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION].
3.1.2. WORK ITEM 2, PART I - CPG SYSTEM SUPPLY. AS CONSIDERATION FOR PROVIDING
THE CPG SYSTEM SET FORTH IN SECTION 2.1 PART I ABOVE, ATG agrees to pay
IET a fixed price sum of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] plus applicable
taxes, subject to any changes per provisions of Sec. 1.3. This sum
includes delivery F.O.B. ATG site at Richland, WA.
IET agrees to finance the acquisition and construction of the CPG System
of Section 2.1 Part I, under the following payment terms.
Those components of the CPG System as specified in section 2.1 Part I
will be IET financed with the following terms and conditions. A down
payment of $ [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] from ATG will be due at
commencement of equipment fabrication and a second payment of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] from ATG will be due 30 days after
System delivery and acceptance. The balance of the procurement will be
financed by IET for a period of 60 months at 2% above the "prime rate" as
published in the Money Rated column in the Wall Street Journal upon date
of delivery. IET's commitment to provide financing shall be subject to
IET approval of ATG's credit rating four (4) months prior to delivery.
ATG is to make 60 equal monthly payments based upon the interest rate as
defined above beginning one month after system delivery and acceptance.
Note: System procurement and fabrication shall proceed only after ATG
review and approval of design and fabrication drawings and specs are
completed.
3.1.3. WORK ITEM 3, PART II APC SYSTEM SUPPLY. The APC system of Section 2.1
Part II will be provided by IET at a cost to ATG as provided in Section
3.1.1 IET will invoice ATG monthly for such costs, and ATG agrees to pay
such invoices net 30 days.
When a detailed design is finalized, IET will provide ATG with a fixed
price bid as an alternative to the cost plus basis.
3.2 LICENSE FEES. No license fee, royalties or other costs shall be paid to
IET for ATG's purchase or use of the System.
PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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3.3 INTEREST DUE ON OVERDUE PAYMENTS. Any payment not actually received by IET
on or before its due date shall be considered overdue. If any payment
required of ATG under this agreement is overdue, ATG shall pay IET, in
addition to the overdue amount, interest on such amount from the date it
became overdue until paid, at an annual rate equal to the highest
applicable rate allowed by law.
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4. CHANGE ORDERS
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4.1 IET INITIATED CHANGES TO IMPROVE SYSTEM'S DESIGN PERFORMANCE. If IET
determines that substantial changes or modifications are required to the
Final Design to improve the throughput capacity or otherwise improve the
performances of System, and such changes are not otherwise required as a
consequence of a change in applicable laws and regulations or concealed or
unforeseen conditions, IET shall notify ATG of the proposed changes or
modifications to System and shall be authorized to make such changes unless
ATG objects in writing to the proposed changes or modifications within 10
days after delivery of IET's change notice. This section places no duty or
obligation on IET to make changes but merely permits IET to initiate such
changes as it deems appropriate.
4.2 ATG REQUESTED CHANGES. Following approval of the Final Design, if ATG
desires any changes in the System, the waste to be processed or the
services to be performed by IET, ATG shall notify IET by submitting to IET
a change order request ( a "Change Order Request"). IET shall have 30 days
after receipt of ATG's Change Order Request to accept or reject the
proposed changes and modifications. If IET accepts the changes or
modifications requested by ATG, IET shall within the 30 day period
specified above submit to ATG a proposal for implementation of the changes,
which proposal shall reflect any necessary revisions to the Project
Schedule and price of the System, and shall submit such proposal for ATG's
approval (a change order). The proposal shall state the basis for any
revisions in the Project Schedule and the basis for compensation, which
shall include cost impacts due to schedule changes with sufficient detail
to permit ATG to make a thorough analysis. ATG and IET shall in good faith
negotiate acceptable compensations to be paid to IET regarding the proposed
changes and modifications. IET shall proceed with
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
- --------------------------------------------------------------------------------
implementing the Change Order Request if the change order is approved in
writing by ATG.
4.3 CHANGES IN LAWS OR REGULATIONS. If IET determines that any change or
modification to any applicable laws and regulations, which is enacted or
revised subsequent to November 10, 1995, requires a change to the Final
Design, ATG shall be notified of the proposed changes or modifications to
the System necessitated by such change in the law. Such notice shall set
forth the change in the applicable law or regulation and a description of
the changes to the final design that is needed in order that the System may
comply with the newly enacted or amended law. The Purchase Price shall be
adjusted to provide IET additional compensation.
4.4 VALIDITY. Any such changes made pursuant to this section shall not
invalidate any agreement between the parties. If the changes result in an
increase or decrease in the time required for completion of the work, IET
shall revise the Project Schedule to reflect the increase or decrease, and
submit such revised Project Schedule to ATG for approval.
4.5 ACCEPTANCE. Upon completion of System fabrication and delivery to ATG's
site, IET shall certify to ATG that the System conforms in all material
respects to the Final Design as agreed to by the parties pursuant to this
Agreement and as in effect on the date of delivery. If, at the end of
forty-five (45) days from delivery and receipt of such certification ATG
shall not have formally rejected the System, the System shall be deemed
accepted ("Acceptance") and ATG shall be subject to all of the continuing
payment obligations in Article 3 hereof Formal rejection must be in writing
and may only be based on Failure of the System to be in material conformity
with the Final Design ("Formal Rejection"). Prior to a Formal rejection,
ATG must notify IET in writing of the specific nature of the claimed
failure or failures of the System to materially conform to the Final
Design. IET shall have a period of forty-five (45) days to remediate or
agree with ATG to a schedule for remediation or achieving conformity, which
agreement will not be unreasonably withheld by ATG. If after twenty (20)
days of recertification of the System by IET, ATG shall not have issued a
Formal Rejection, the System shall be deemed Accepted. If the System is
Formally Rejected, ATG shall cause the System to be delivered to IET at its
premises and ATG shall have no further rights with respect to the System
except for its Intellectual Property rights set out in Article 2 hereof.
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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5. ADDITIONAL CONVENANTS
---------------------------------------------------------------------------
5.1 DEMONSTRATION OF SYSTEM. ATG shall permit IET to conduct tours of the
System for the purpose of demonstrating the System and operation to other
potential customers of IET and grant access to ATG's premises for such
purpose; provided that such tours are conducted only upon reasonable
advance notice to ATG and that efforts are made to ensure such tours do not
interrupt or interfere with ATG's normal business and operations.
5.2 OTHER CONTRACTORS OF ATG. If any portion or aspect of IET'S work depends
upon proper execution or the results of work performed by any other party
engaged or employed by ATG, IET shall inspect and promptly report to ATG
any apparent discrepancies or defects in such work that may render it
unsuitable for proper execution and results.
---------------------------------------------------------------------------
6. WARRANTIES; DISCLAIMERS.
---------------------------------------------------------------------------
6.1 WARRANTIES.
6.1.1 IET hereby represents and warrants to ATG as follows: the equipment
that constitutes non-consumable component parts of System will be
free from defects in workmanship and material, for a period of one
year following the date of first commercial operation of System.
This shall be the sole warranty offered by IET covering the System.
6.1.2 ATG agrees to defend and hold harmless IET for any loss, damage or
expenses incurred by IET if such loss, damage or expenses results
from ATG's use of the system provided hereunder.
6.2 REMEDIES. For a breach of the warranty set forth in Section 6.1.1, IET
shall repair or replace any non-consumable component part as hereinafter
defined that fails due to defects in materials or workmanship within one
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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year after commercial operation (commercial operation is defined as the
date in which actual customer mixed waste is first processed in GASVIT
process). IET shall use its best efforts to repair or replace the defective
part within a reasonable period of time after notification of failure of
the component part. The costs of labor or engineering support for
installation of any repaired or replaced part shall be borne by ATG. Non-
consumable component parts shall not include (i) consumable parts such as
electrodes, and other like items. (ii) replacement parts such as filters,
belts, oils, and like items, and (iii) items damaged due to use not in
accordance with operating manuals. This shall be the sole remedy for breach
of the warranty set forth in Section 6.1 above.
6.3 SURVIVAL AND LIMITATION OF WARRANTIES. The warranty expressly stated in
section 6.1.1 shall run only to ATG, and may not be assigned.
Notwithstanding anything herein to the contrary, IET's obligation under
6.1.1 for breach of the warranty set forth herein shall not exceed
$1,000,000 in the aggregate. In no event shall IET be liable to any person
for any consequential, special, or incidental damages resulting from any
breach of the warranties related to the System. THE REMEDY SET FORTH IN
THIS SECTION 6.1.1 SHALL REPRESENT IET'S SOLE LIABILITY AND ATG'S EXCLUSIVE
REMEDY FOR BREACH OF ANY WARRANTIES RELATED TO THE SYSTEMS.
6.4 DISCLAIMERS. EXCEPT AS SET FORTH IN THIS SECTION 6, IET MAKES NO OTHER
REPRESENTATIONS OR WARRANTIES REGARDING THE CAPABILITIES OR SPECIFICATIONS
OF THE SYSTEMS AND IET HEREBY EXPRESSLY DISCLAIMS ALL OTHER IMPLIED OR
EXPRESS WARRANTIES INCLUDING ALL WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
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7. DEFAULT AND TERMINATION
---------------------------------------------------------------------------
7.1 TERMINATION FOR CONVENIENCE.
7.1.1 Subject to the provisions of Section 2.6, ATG may terminate the
performance of Work Items described in Section 3, in whole or in
part, if ATG determines it is in its interest to do so. ATG shall
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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terminate by delivering a Notice of Termination specifying the
extent and the date of termination.
7.1.2 After the receipt of a Notice Of Termination, IET shall stop all
work as quickly as practical and place no further subcontracts to
the extent they relate to the canceled portion of the work, transfer
titles to ATG and deliver to ATG fabricated or unfabricated parts,
work in progress, completed work, supplies and other material
produced or acquired for the terminated work.
7.1.3 IET shall submit a final termination settlement invoice to ATG no
later than 4 weeks after the date of termination, and ATG shall pay
such invoice within thirty (30) days after receipt. Such invoice
shall set forth all unreimbursed costs to date, and all costs of
termination, if any, including cost of equipment or supplies, staff
time, and the like.
Termination cost schedule shall be as follows:
Not to exceed 75K before Oct. 1997.
Not to exceed 250K before permit is granted.
7.2 DEFAULT IET shall be in default if this Agreement if IET
7.2.1 Becomes insolvent or makes a general assignment for the benefit of
creditors or files a petition in bankruptcy, or has such a petition
filed against it and consents to it;
7.2.2 Is adjudicated bankrupt, or has a bill in equity or other proceeding
for the appointment of a receiver of IET or other custodian for
IET's business or assets filed against it and consents to it, or has
a receiver or other custodian (permanent or temporary) of IET's
assets or property, or any part thereof, appointed by any court of
competent jurisdiction, or institutes or has instituted against it a
proceeding for a composition with creditors under any state or
federal law; or
7.2.3 Ceases to perform under the terms of this Agreement;
7.2.4 Closes the business and ceases to exist as a firm and entity which
is signatory to this contract unless an entity qualified to perform
under this contract succeeds to the business of IET and assumes all
the obligations of IET hereunder (for example IET goes public).
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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7.3 ATG shall be in default of this Agreement if it fails to pay any
amount due within the time period set forth herein, or if it fails to
provide information reasonably necessary for IET to perform its
obligations hereunder.
7.4 OBLIGATIONS UPON DEFAULT. If either party is in default, the other
party shall give notice to the defaulting party describing the reason
for default. The defaulting party shall have 15 days to cure the
default or develop and present a reasonable plan for curing the
default. If the defaulting party does not cure or present a reasonable
plan to cure the default, then the non-defaulting party shall have the
right to terminate this Agreement and all rights granted thereunder.
7.4.1 Upon termination by ATG by reason of an uncured default by
IET, IET agrees to immediately deliver to ATG:
7.4.1(a) All System drawings, specifications, manuals, instructions
and documents completed and in progress as of the date of
termination.
7.4.1(b) Transfer of title to ATG and delivery to ATG's facility in
Richland, Washington, all items including fabricated or
unfabricated parts, work in progress, completed work,
supplies and other material produced or acquired for the
Work Items covered under Agreement and which have been paid
for by ATG (ATG to pay shipping costs); and,
7.4.1(c) A non-exclusive royalty free license to use System in the
intended application solely for the individual unit
delivered or partially delivered to ATG hereunder.
7.4.2 Upon termination by IET by reason of an uncured default by ATG,
ATG agrees to:
7.4.2(a) Immediately deliver to IET: all System drawings,
specifications, manuals, instructions and documents
previously provided to ATG, and all equipment completed by
IET and delivered to ATG.
7.4.2(b) Immediately pay to IET all unpaid invoices and all
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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cost of termination.
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8. MISCELLANEOUS PROVISIONS
- --------------------------------------------------------------------------------
8.1 RELATIONSHIP OF THE PARTIES. IET'S status is that of an independent
contractor and neither IET nor any employees of IET, nor any of its
subcontractors or employees of subcontractors, are employees of ATG.
8.2 NOTICES. All notices, requests, demands, and other communications
required or permitted to be given or made shall be in writing and
shall be deemed delivered (a) on the date of personal delivery or
transmission by telegram, cable, telex, or facsimile provided an
acknowledgment is received by sender via facsimile, or (b) on the date
after the date of (1) deposit in the United States mail, postage
prepaid, by registered or certified mail, returned receipt requested,
or (2) delivery to a nationally recognized overnight courier service,
in each case, address as follows, or to such other address, persons or
entity as either party shall designate by notice to the other in
accordance herewith:
If to IET: Integrated Environmental Technologies, LLC (IET):
1935 Butler Loop
Richland, Washington 99352
Attention: Jeff Surma
FAX (509) 946-18l9
If to ATG: Allied Technology Group Inc. (ATG)
47375 Fremont Boulevard
Fremont, California 94538
Attention: Fred Feizollahi
FAX:(510)651-3731
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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8.3 EXHIBITS AND TERMS. These Terms and Conditions and the attached
Exhibits A, B, C, & D embody the entire understanding of the parties
hereto regarding its subject matter and supersedes all prior
agreements, correspondence, proposals, arrangements, and
understandings relating to the subject matter hereof. No
representation, promise, inducement, or statement of intention has
been made by any party which has not been embodied in these Terms and
Conditions.
8.4 FORCE MAJEURE. IET shall not be liable for delays in performances due
to strike, lockouts, casualties, acts of god, war, governmental
regulations or control, or other causes beyond its reasonable control,
and in any event any time period for the performance of an obligation
hereunder shall be extended by the amount of time of the delay.
8.5 ALTERNATIVE DISPUTE RESOLUTION-MEDIATION. If any dispute arises out of
or relates to agreements between the parties, or the breach therefore,
and if said dispute cannot be settled through negotiation, the parties
agree first to try in good faith to settle the dispute by mediation
under the Rules of the American Arbitration Association.
8.6 GOVERNING LAW; PERSONAL JURISDICTION; CHOICE OF FORUM.
8.6.1 This agreement between the parties shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of
Washington, in that regard to the choice of law provisions thereof.
8.6.2 Each of the parties hereby irrevocably consents and submits, generally
and unconditionally, to the jurisdiction of the courts of the State of
Washington or the United States District court for the Eastern
District of Washington, in any action or proceeding arising out of or
related to this agreement and each of the further agrees that it may
be served in any such action with process by certified or registered
United State mail, return receipt requested at the address set forth
herein.
8.6.3 Each of the agrees that the forum for any action sought to be brought
by either party to any extent not resolved by alternative dispute
resolution, shall be in a court of competent jurisdiction in Benton
County or the United States District Court for the Eastern District of
Washington, and each party hereby irrevocably waives
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT A IET/ATG CONFIDENTIAL
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all questions of personal jurisdiction or venue for the purposes of
carrying out this provision.
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9. SIGNATURES
- --------------------------------------------------------------------------------
ATG and IET representatives affix their signatures below and duly
acknowledge their respective firm's concurrence with the terms and
conditions and other requirements stipulated in the Agreement.
ATG Inc. (ATG), a California Corporation ("ATG")
By: Frank Chiu
Title: Executive Vice President
Signature: /s/ Frank Chiu Date: September 5, 1997
Integrated Environmental Technologies, LLC, a New York Company ("IET")
By: Daniel R. Cohn
Title: President
Signature: /s/ Daniel R. Cohn Date: August 13, 1997
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PURCHASE AGREEMENT GASIFICATION/VITRIFICATION SYSTEM
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<PAGE>
EXHIBIT 10.23
PURCHASE AGREEMENT ATG/IET Proprietary and Confidential
PURCHASE AGREEMENT
BETWEEN
ATG INC.
2025 BATTLLE BOULEVARD
RICHLAND, WASHINGTON 99352
AND
INTEGRATED ENVIRONMENTAL TECHNOLOGY, LLC
1935 BUTLER LOOP
RICHLAND WASHINGTON 99352
FOR SUPPLYING A
PEM(TM) - GASIFICATION/VITRIFICATION SYSTEM
NOTE
THIS DOCUMENT CONTAINS PROPRIETARY AND CONFIDENTIAL DATA THAT
SETS FORTH TECHNICAL KNOWHOW AND TRADE SECRETS OF ATG INC. AND
INTEGRATED ENVIRONMENTAL TECHNOLOGY LLC. THIS DOCUMENT MAY
NOT BE REPRODUCED, OR SHOWN, TO ANY THIRD PARTY WITHOUT THE
EXPRESS PRIOR WRITTEN PERMISSION OF ATG.
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.
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12/8/97 GASIFICATION/VITRITICATION SYSTEM
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<PAGE>
PURCHASE AGREEMENT ATG/IET Proprietary and Confidential
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TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
SECTION TITLE
------- -----
<S> <C>
1 COMMERCIAL TERMS AND CONDITIONS
2 SCOPE AND GENERAL REQUIREMENTS
3 FUNCTIONAL AND OPERATIONAL REQUIREMENTS
4 FEEDSTOCK SPECIFICATION
5 INDEMNIFICATION
6 SIGNATURES
</TABLE>
LIST OF TABLES
--------------
TABLE 4-1. Composition and run time to be used for performance test.
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12/8/97 GASIFICATION/VITRITICATION SYSTEM
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<PAGE>
PURCHASE AGREEMENT ATG/IET Proprietary and Confidential
1. COMMERCIAL TERMS AND CONDITIONS
This agreement between ATG Inc., d.b.a. Allied Technology Group (ATG), referred
to as "Buyer" with offices in 47375 Fremont Blvd., Fremont, CA 94538, a
corporation duly registered in the State of California and Environmental
Technology, LLC (IET), referred to as "Seller" with offices in 1935 Butler Loop,
Richland, Washington, a New York Limited Liability Company duly registered in
the State of Washington, covers commercial terms and conditions and technical
specifications and requirements for a skid mounted gasification/vitrification
system to be supplied by IET.
1.1 PRICE:
SYSTEM HARDWARE, DOCUMENTATION AND TESTS. IET agrees to provide a skid mounted
Plasma Enhanced Melter (PEM(TM)) gasification/vitrification system (the
"system") including all documentation, shop tests, and performance tests
specified in this purchase agreement, FOB ATG Richland site, at a fixed price
cost of $470,000.
1.1.1 PAYMENT TERMS. ATG will pay IET $[CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] upon execution of
this agreement. The balance of the $470,000 sale price plus
applicable taxes will be due at system delivery.
1.1.2 ONE YEAR SERVICE CONTRACT. ATG will pay IET $[CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] for a
fixed price cost for one-year service contract as specified in this purchase
agreement. Payable semiannually with first payment due upon system delivery.
1.2 PERFORMANCE WARRANTY
IET warrants that the System will perform in all material respects in accordance
with specifications in accordance with specifications set forth for a period of
one year after delivery to ATG's facility provided that ATG agrees to a one year
service contract as stipulated below.
Labor required for installing parts will be provided by ATG.
1.3 LICENSE AND RIGHT OF FIRST REFUSAL
This License and Right of First Refusal agreement pertains to Low Level
Waste as defined in 10 CFR 61 and only includes wastes termed Class A,
Class B, or Class C as defined in 10 CFR 61 for all territories covered
herein.
1.3.1 LICENSE. With respect to all future sales of PEM systems, to ATG, for use
by ATG, ATG agrees to pay to IET ongoing royalties on gross revenues
generated from processing waste in the IET PEM(TM) system as set forth in
a Purchase Agreement for each such system, which royalties shall be
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]%. Such royalties shall be payable
within 30 days of receipt of revenues by ATG.
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PURCHASE AGREEMENT ATG/IET Proprietary and Confidential
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1.3.2 RIGHT OF FIRST REFUSAL. For all PEM systems for gasification/vitrification
of LLW for delivery prior to January 1, 2001, ATG shall have a right of
first refusal to provide PEM LLW systems (except as described in section
1.3.3) in the United States, Taiwan or mainland China. Any contract for
sale of a PEM system for gasification/vitrification of LLW shall be
approved by IET. All PEM systems sold by ATG shall be designed and
fabricated by IET. If ATG chooses to provide another technology for the
treatment of LLW, IET has the right to offer the PEM technology
independent of ATG.
1.3.3 Low-Level Waste (LLW) or Low-Activity Waste derived from High-Level Waste
(HLW) (e.g. Hanford Tank Waste) or High-Activity waste is exempt from the
right of the first refusal agreement.
2. SCOPE AND GENERAL REQUIREMENTS
2.1 SYSTEM HARDWARE SCOPE
Work shall include delivery of a gasification/vitrification system and
accessories, fully skid mounted, assembled, and wired ready for operation at
ATG's facility after minimal field assembly and installation. The entire
gasification/vitrification system begins at the batch and liquid feeder inlet
and ends at the ID. fan outlet. The unit shall be shipped F.O.B. Richland,
Washington. The vendor's scope of supply shall include:
1. Feed subsystem encompassing a batch feeder and an auger - liquid/sludge
feeder.
2. Process chamber subsystem encompassing the electrical heating elements.
3. Molten material drain subsystem encompassing metal and glass drains and
collection devices.
4. Off-gas subsystem encompassing scrubbers, high efficiency mist
eliminators, ID fans and discharge piping. ATG plans to connects the
offgas subsystem ID fan outlet to the SAFGLAS process chamber to allow
oxidation of the syngas produced during processing of organic material.
The system shall include all instrumentation, flame arrestors and other
devices needed for safe delivery of the syngas to the SAFGLAS system.
5. Electrical subsystem encompassing transformers, main breakers,
starters, AC and DC power controllers (main power supply transformers
to be by ATG).
6. Main control subsystem encompassing Seimens 505/545 PLCs, computer and
Supervisory Control Data Acquisition 64 Tag/ID Wonderware man/machine
interface software.
7. Utilities including cooling water subsystem(s), steam supply
subsystems, and nitrogen purge subsystem.
2.2 SHOP TESTING SCOPE.
After shop assembly, the unit shall be shop tested to the extent practical.
After shop assembly,
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the unit shall be shop tested to the extent practical. All pressurized systems
shall undergo a hydrotest at a minimum of 1.5 times the normal operating
pressure with no visible leakage and less than 1% pressure loss during 30
minutes. Certified test reports shall be submitted after each test. ATG Quality
Assurance shall be allowed to witness all of the tests. Calibration
certification of crucial instrumentation provided by IET to ATG. This should be
a Q&A issue. Certified test reports shall be submitted after each test.
2.3 SYSTEM TEST SCOPE
System testing shall be conducted after the unit is installed at ATG's facility.
Work shall consist of: 1) start-up of the system at ATG facilities, trouble
shooting the system hardware and software to ensure operation according to the
established procedures, and 2) demonstrating system performance with surrogate
materials (see section 3). This "performance test" shall be in accordance with a
Test Plan/System Acceptance criteria which shall be submitted for review by ATG,
at least three weeks before the test period. Acceptance criteria shall
demonstrate the following general areas.
1. The system can operate at the rated capacity of 50-100 lb/hr based on a
144 hour continuous operation.
2. The particulate carry-over will be approximately 1% to 5% of the mass
feed rate and that the high turbulence in the process chamber (due to a
highly compact size of the chamber) will not generate high particulate
entrainment.
3. The glass draining mechanisms will produce a free flowing glass
material and will operate safely without plugging and failure.
4. Metal draining mechanism will drain metals accumulated in the bottom of
the melter and that the device will operate safely.
IET's scope shall include provision of all labor, tools and test
instrumentation. Surrogate material required during the system tests will be
provided by ATG. IET shall fix or replace any part of the system that
malfunctions or found to be unacceptable during the tests. Tests shall be
witnessed by ATG representatives. Test results shall be documented in a test
report, certified and submitted for ATG for approval. After acceptance and
approval of the test results by ATG, the unit shall be disassembled and shipped
to ATG's site.
2.4 DELIVERABLES DOCUMENTS
The following documentation shall be provided by IET.
1. PERMIT SUPPORT DESIGN PACKAGE. Work shall include preparation of a
design document as needed for ATG to obtain permit from Benton County
Air authority and the
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Washington State Department of Health.
2. AS-BUILT DRAWINGS. The design drawings including PFDs and P&IDs,
mechanical/assembly, wiring diagrams, and equipment and instrument
data sheets shall be updated to incorporate as-built conditions of the
system and shall be submitted two weeks before shipment of the system
to ATG. All drawings must be sealed by a Washington State licensed
professional engineer.
3. OPERATING AND MAINTENANCE PROCEDURES/INSTRUCTIONS. Two copies of an
O&M manual, including parts list for the entire system, shall be
submitted one week before delivery of the unit. Spare parts lists
shall provide adequate information and specifications to allow
ordering of spare parts by a purchasing agent. Parts which are to
manufacturer part designation and description so that ATG may
competitively bid and acquire standard spare parts. All parts which
are considered as proprietary and can only be purchased from IET shall
be listed along with a price and standard delivery charge if not a
stock item. The spare parts list shall be specify the expected life
and recommended stocking level.
2.5 EXCLUDED FROM SELLER'S SCOPE OF SUPPLY:
The following items will be provided by others.
1. PERMITS. Permit application and permit approval documentation.
2. SCRUBBER WASTE TREATMENT SUBSYSTEM. Offgas scrubber liquor shall be
pumped to a container which will be provided by ATG.
3. REAGENT STORAGE AND FEED. ATG will purchase this unit according to
specifications provided by IET.
4. INSTRUMENT/SERVICE AIR. Service and instrument air will be provided by
ATG according to the specifications supplied by IET.
5. NITROGEN SUPPLY. Nitrogen supply tanks and evaporators will be
provided by ATG according to the specifications supplied by IET.
6. PROCESS (POTABLE) WATER SUPPLY. Potable water supply will be provided
by ATG according to the specifications supplied by IET.
7. BUILDING CONFINEMENT HEPA/VENTILATION). Building HEPA ventilation
system will be provided by ATG.
8. ELECTRICAL SUPPLY. ATG will wire the main electrical power supply line
to the main
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breaker for the system. The main breaker or a switched disconnect
shall be provided by IET. Provisions for 25% capacity expansion will
be provided.
9. SKID INTERCONNECTION WIRING. Interconnection wiring between the system
skids will be performed by ATG according to wiring diagram provided by
IET.
10. INTERCONNECTION PIPING. The system shall be skid mounted and piped to
the maximum extent possible. ATG will provide labor and material to
set and anchor the skids and other subsystems, interconnect the piping
and wiring between the skids and other subsystems and connect to the
skid and other subsystems to the utilities supplied by ATG. Piping
from the system offgas outlet to the SAFGLAS process chamber will also
be by ATG.
11. BUILDING AND STRUCTURES. Structures to house the system will be
provided by ATG
12. SURROGATE FEED MATERIALS. Surrogate feed materials to be provided by
ATG for performance test.
2.6 MAINTENANCE SERVICE CONTRACT
IET agrees to provide engineering and technical support needed for the operation
and maintenance of the system during the first year of operation. Services
provided under this item includes:
1. ENGINEERING/TECHNICAL: Engineering and technical support needed for
the fine tuning, re-design, re-work and/or repair of the system as a
whole and/or individual system components including instrumentation
and control devices and logics/computer programming.
2. GLASS CHEMISTRY SUPPORT. All engineering and technical support
including guidance on sampling and analysis needed for the design and
control of glass chemistry versus the feedstock that ATG processes
through the unit. (This does not include the cost of sample analysis)
3. REWORK LABOR: Any labor required for fabrication and/or testing of new
parts required to replace failed or inadequate components outside of
ATG's facility.
4. REPLACEMENT PARTS. All replacements parts and components that are
required to replace failed components where failure was the result of
IET engineering error. Additional components such as new hearths
required for testing a different waste type are not covered under
replacement parts.
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2.7 FABRICATION CODES AND STANDARDS
The System shall be designed and fabricated according to acceptable industry
standards. Requirements of ANSI/ANS 40.35-1991, "Volume Reduction of Low-Level
Radioactive or Mixed Waste" may be used as a guideline. All motors and
electrical devices used in and near the pipes and devices handling syngas must
conform to applicable codes. The system shall be designed, fabricated and
installed in accordance with applicable local, state, and federal requirements
and codes. All electrical panels and devices shall be UL listed as required by
the state of Washington.
2.8 QUALITY ASSURANCE
Work covered by this purchase order is subject to quality assurance requirements
under DOE's 10 CFR 830.120 regulations.
2.9 SCHEDULE
2.9.1 Within twenty (20) days after the date of this agreement, IET shall
develop and submit for ATG's approval a conceptual system design,
fabrication assembly, pre-test and delivery schedule. The parties agree
to reach approval of such matters within twenty (20) days after such
submission by IET, and any delay beyond twenty (20) days shall be added
to IET's period of performance in paragraph 2.9.2 below.
2.9.2 IET shall use it's best efforts to deliver the PEM(TM)
gasification/virtrification system within twenty (20) weeks after the
date hereof. This delivery date shall be extended by a period of time
equal to the amount of delay IET experiences in the delivery of any part
ordered from its vendors. IET shall timely inform ATG of any such delay.
Upon notice to ATG, IET may extend the delivery date for a reasonable
period necessary to incorporate improved features which result from the
operation of IET's existing PEM furnace, if such PEM system conforms to
the functional and operational requirements of Article 3.
2.10 TERMINATION. If ATG terminates this Agreement prior to final payment and
delivery of the PEM system, IET shall stop all work under this Agreement
and shall submit an invoice to ATG within thirty (30) days of such
termination. Such invoice shall include all financial obligations
undertaken by IET hereunder, including materials delivered or ordered;
labor and overhead incurred prior to termination; close-out and other
costs incident to the termination; and unrealized profit based upon a
pro-rata portion of IET's performance under this Agreement. ATG shall pay
such invoice within thirty (30) days of receipt, and upon payment, IET
shall deliver to ATG all materials purchased under this Agreement, but
such delivery shall not constitute a license or other permission to
operate a PEM system under any patent of other intellectual property
right of IET.
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3. FUNCTIONAL AND OPERATIONAL REQUIREMENTS
3.1 GENERAL REQUIREMENTS
1. The function of the system shall be to provide thermal treatment of the
feedstock specified in this document. The system shall receive low-level
radioactive wastes, gasify the organic material using air or steam as a
source of oxygen, remove impurities in the resulting gas, oxidize any
residual organic material via the SAFGLAS thermal destruction unit, and
convert the inorganic material into a leach resistant vitrified form. The
system shall also recover secondary residues from the scrubber systems for
treatment and stabilization.
2. The system shall be able to process solids, liquids and sludges at the
specified feed rates.
3. Liquids/sludges shall be pumped by a metering feed pump/tank assembly. Feed
rate shall be controlled and monitored from control panel. Solids shall
either be placed inside an approximately 6- inch O.D. by 7-inch cylindrical
cardboard canister and fed to the unit through a batch feeder or fed using
the auger feeder.
4. The process shall convert the inorganic and mineral residues remaining in
the process chamber into a glass waste form that meets the leachability
criteria established in the RCRA Land Disposal Regulations.
5. Radionuclides contained in the residues must also meet the Hanford site
waste disposal leachability criteria. The synthesis gas produced by the
plasma arc shall be first cleaned by a two step polishing process and then
released to SAFGLAS for oxidation. To this end, the syngas from the process
chamber, which is expected to contain 25 to 60 percent hydrogen, 10 to 40
percent carbon monoxide, 1 to 5 percent methane, and 1 to 5 percent acids,
shall be quenched, scrubbed and filtered to remove particulates. Halogen
gases, such as chlorine and acid gases, such as HCI, and acid gas
precursors, such as sulfates, shall be removed by the caustic water in the
scrubber.
3.2 WASTE FEED
The following general steps define the feed system operation:
1. Bulk solid material shall be fed via a batch feeder
2. The batch feeder shall be complete with controls, purging system and feed
conveyor and shall be integrated such as that the feed conveyor places a
six inch by seven inch ( 6" by 7") cylindrical canister made from cardboard
material into the feeder at a pre-selected feed rate. Design of the
canisters shall also be by IET.
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3. Liquid wastes shall be fed via separate liquid feeder.
4. The liquid/sludge feeder shall be designed to interface with ATG's
container unloading pump. ATG will use portable pumps to unload wastes from
the incoming containers which will be fed to the IET supplied feed tank.
5. The feed tank shall have a working capacity of 200 gallons and shall be air
tight suitable for nitrogen inerting.
3.3 PROCESS CHAMBER
Process chamber including its accessories shall operate as follows:
1. The unit shall be able to handle a mixture of solid, sludge and liquid
inorganic and organic feedstock.
2. In the presence of heat and steam the organic material in the chamber shall
be converted into syngas. The temperatures in the process chamber shall be
high enough to allow destruction of organic material.
3. A steam generator shall feed controlled amounts of steam to the process
chamber as demanded by the steam reformation process.
4. After gasification, the remaining inert material including metals and
minerals, referred to as residues, shall be heated to a molten state in the
process chamber.
5. The gas discharge line shall be equipped with a pressure relief device
based on a water seal tank concept.
6. The molten material shall retain radioactive and non-radioactive metals
(except those having low vapor pressure at the operating temperature).
7. Fluxes and other additives shall be introduced in the process chamber to
improve the handling and quality of the residues. The residues shall meet
the EPA leachability tests as defined by TCLP test protocols. The residues
shall also meet the performance requirements of the Hanford site Solid
Waste Acceptance Criteria.
8. A pre-heater device is provided to control process chamber temperature
during the initial start-up as well as shut-down and idle periods.
9. The process chamber refractory lining shall be of modular design to allow
ease of refractory replacement or other wise have provisions for change
out.
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3.4 RESIDUE HANDLING
Residue handling unit and its accessories shall operate as follow:
1. Upon demand, discharge mechanisms shall facilitate the flow of the molten
residues from the top and bottom of the process chamber and pour the molten
material into a mold.
2. An air tight enclosure shall be provided and located under the molten
residues discharge ports such that to provide safe operating conditions and
to capture any fugitive emissions generated during the discharge operations
(see gas purging subsystem).
3. During the residue discharge operations, the enclosure shall be flushed
with an inert gas to prevent the reaction of gases released from the
chamber with air. The exhaust from purging the enclosure is routed to the
syngas ID fan outlet.
4. Residues discharged from the process chamber shall be poured into either a
short drum (1/2 55 or 30 - gallon).
3.5 OFFGAS TREATMENT
Gases leaving the process chamber contains particulates which shall be removed
in the offgas processing unit as follows.
1. The exhaust from the process chamber shall be first cooled to a temperature
which is specified by the scrubber manufacturer. After quenching, the gases
shall be wet scrubbed to remove particulates and acid gases. The scrubber
is to provide 98% removal of HCI, 90% of H2S and 90% removal of
particulate, assuming greater than 50 wt% particulate less than 2 microns.
2. Reagents shall be added to the scrubber to remove metals and acid gases.
3. The concentrated quench and scrubber bottom liquids containing salts shall
be pumped to a drum filling flange which shall be provided by IET. The drum
fill flange shall be equipped with a level indicator.
4. A pH element shall be provided to measure the pH of the liquids in the
scrubber. Access to be provided for pH monitor and replacement. Reagent
metering pump and tank shall be
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provided by IET and reagents shall be automatically introduced into the
scrubber sump when the pH is out of the control range. PH and feed
controller to be monitored from control panel.
5. A density measurement device shall be provided to monitor the dissolved
solids concentration in the sump. When the dissolved solids concentration
reaches the set point, a pre-determined quantify of the sump contents shall
be pumped out of the sump and into the secondary waste treatment system.
6. The quench tank/scrubber shall be equipped with devices (e.g., rupture
disc) to minimize the impact of an unlikely deflagration/detonation event
caused by a mixture of syngas and air in the presence on a spark (see gas
purging subsystem).
7. An induced draft (ID) fan shall be included to provide the motive force for
suction of the syngas through the following upstream components including
the process chamber and offgas subsystem. The ID fan shall have sufficient
motive force to create a vacuum pressure of approximately minus 10 inches
(-10" W.C.) of water column in the process chamber.
8. A detonation flame arrestor and a drum water seal shall be installed at the
ID fan discharge line to prevent propagation of flame from the syngas
oxidation device (SAFGLAS process chamber) back into the offgas system.
3.6 SAMPLING AND ANALYSIS
Gas sampling features shall include the following:
1. System operation shall be controlled by an automatic gas sampling and
analytical unit installed at an appropriate location in the syngas
processing line. The unit shall measure the concentration of CO, and C02,
gases in the syngas line. The measured concentration of the gases shall be
used for controlling process parameters such as: 1) the feed-rates for the
various waste mixtures; 2) steam injection rate; 2) temperature; and, 4)
pressure settings.
2. Oxygen sampling units shall be provided in strategic locations throughout
the syngas line to ensure process safety.
3. CO monitors shall be provided around the process units to detect potential
leakage's in the system.
4. Other manual gas sample points with a proper sample connectors shall be
included in the system.
3.7 GAS PURGING
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1. Purging capabilities shall be provided for safe handling of the noxious,
explosive and poisonous gases (e.g., hydrogen and carbon monoxide) that may
exist at the various inlet and outlet interfaces of the system. This
includes providing inert gas supply points to vent, purge and flush various
enclosures at the system interface points.
2. The exhaust gases from purging operations shall be sent to the main offgas
outlet.
3.8 INSTRUMENTATION AND CONTROLS
1. The system shall be supplied with all of the instrumentation needed for the
complete operation of the system.
2. The system controls and instrumentation shall be designed for minimum
operator attendance. Minimum operator attendance is defined as 1 operator
during feed processing.
3. The liquid and batch feeders shall be designed for automatic operation
requiring only initial settings of conveyors, pumps, etc. The feed units
shall not require operator attendance other than placing wastes in the
feeder inlets.
4. Remote actuators shall be provided for all routinely operated valves.
5. The main control panel shall be based on a programmable logic controller
(PLC) unit which shall be connected to a computerized control system
located near the system. The software used for the controls shall be
Wonderware.
6. The PLC and the computerized control units shall be Seimens product and
shall be provided by the IET.
7. System's main process controls shall be designed for operation both from
the IET supplied computer and from a second computer located at the SAFGLAS
control room.
8. Key instrumentation requiring the attention of the floor operators shall
have duplicate local indication near the area where the floor operator are
working.
9. All PID controllers shall be mounted in a central control panel. (Preferred
PID model powers controllers - model No.535-2)
10. A gas analyzer unit shall monitor the concentration of key process
parameter (e.g., CO, CO2, and O2) in the syngas line. Output from this
analyzer shall be used for controlling the system feed rate for various
types of feedstock. SCADA interface to be provided.
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11. The system shall have an automatic waste feed cut-off system that stops the
feed to the process chamber and brings the overall system into a safe shut-
down mode in the event of a critical process malfunction or equipment
failure.
12. The system controls shall be designed to operate in an "idle" mode for long
periods of time without requiring operator attendance. Idle mode means when
the process chamber is kept at or near the operating temperatures without
processing feedstock. Instrumentation shall be provided to detect and alarm
failures and emergency conditions during the idle mode. All alarms will be
monitored at the SAFGLAS control room for action by the SAFGLAS operating
crew.
3.9 SYSTEM PRESSURE BOUNDARIES
The system pressure boundaries shall operate on a negative pressure with respect
to the atmosphere (controlled by the induced draft fan units) pressure.
3.10 REDUNDANCY OF CRITICAL COMPONENTS
Redundancy and/or manual bypass systems shall be included for the subsystem
whenever needed for safety, availability and efficiency of the system and for
the safe and orderly shutdown of equipment while protecting the worker safety.
3.11 SKID MOUNTED EQUIPMENT
The system components shall be skid mounted to the extent possible. Skids shall
have secondary containment. All skid mounted equipment shall be assembled and
wired requiring only interconnection of the wiring and piping. Whenever
possible, quick disconnects and bolts shall be used for ease of disassembly and
maintenance. Major subsystems such as the feed system shall be mounted on tracks
with wheels for ease of disassembly. Adequate space shall be provided for access
to the equipment by the maintenance personnel and for the special provisions
required for handling equipment contaminated with radiological active wastes.
3.12 EQUIPMENT LOCATION
The equipment will be installed indoors either at ATG's SAFGLAS building or
inside a sea-van (land-sea container) enclosure, whichever is most suitable as
indicated by ATG. The height of the system shall be minimized as much as
possible to allow flexibility during installation and operation.
3.13 DESIGN FOR HANDLING FLAMMABLE/EXPLOSIVE AND POISONOUS GASES
The system shall be designed for safe handling of explosive and poisonous gases
(e.g., hydrogen and carbon monoxide) generated in the process chamber gaseous
effluent. This includes
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provision of purging and flushing systems so that the untreated waste can be
safely admitted and treated residues can be safely discharged from the process
chamber. Where necessary, rupture disks or other devices shall be included in
the vessels to relieve high pressure shocks that may be created from a violent
reaction of air with hydrogen.
3.14 SYSTEM THROUGHPUT
The system shall be designed with an objective of processing up to 100 pound of
input waste per hour (100 lb./hr) under conditions specified in this document.
However, the minimum capacity of the system under all conditions specified
herein, shall exceed a rate of 50 lb./hr. The feed rate shall be demonstrated on
a 144 hours continuous operation basis. This does not include glass forming
additives that must be introduced in the process chamber to produce a highly
leach resistant residue.
3.15 SYSTEM AVAILABILITY
The system shall be designed to operate a minimum of 6000 hours per year based
on a minimum of 250 days per year on a triple shift basis.
3.16 HALOGINATED MATERIAL FEED RATE
The proposed scrubber and associated blowdown and evaporation rate shall be
based on removing 10 lb./hr of HCI from a 50 lb./hr. waste feed containing 90%
organic content.
3.17 CARBON CONVERSION
Automated steam injection services shall be included to minimize carbon black in
the offgas. The process chamber carbon destruction efficiency shall be greater
than 90 percent conversion.
4 FEEDSTOCK SPECIFICATION
The system input waste feed material will have a combination of physical,
chemical and radiological properties described below
4.1 PHYSICAL AND CHEMICAL DESCRIPTION
1. LIQUIDS
. PWR secondary side decon solutions containing EDTA solvents with
high concentration of iron.
. Phosphate/ester based fire retarding hydraulic fluids (Fyre-
Quil).
. PWR boric acid concentrates.
. Haloginated solvents.
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. Tri-butyle phosphate.
. Petroleum based oils and greases
2. SLUDGE
. Mixed ion-exchange organic resins (dewatered and/or slurry form).
. Inorganic ion-exchange resins (zeoplites, etc.)
. Granulated activated carbon filter.
3. SOLIDS
. Pathogenic and biological waste bags.
. Paper, cardboard, wood, cloth and plastics and up to 10% tramp
metals (S.S., copper, zinc, iron, etc.)
. Absorbent material such as diatomaceous earth (DE), solca-floc,
and vandermiculite
. Haloginated plastics (PVC, Teflon, etc.).
4.2 RADIOACTIVITY
During the first year of operation, the surface dose rate of the input waste
drums will be less that 1 mR/hr. This level will be increased that time up to 10
mR/hr
4.3 SYSTEM TEST SURROGATE WASTE
System shall be tested for three 48 hour continuous test runs. The 3 runs shall
be conducted immediately one after another. The composition of the test
feedstock and run times are shown in Table 4-1.
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TABLE 4-1. Composition and run time to be used for performance test
<TABLE>
<CAPTION>
==========================================================
RUN 1 RUN 2 RUN 3
48 HOURS 48 HOURS 48 HOURS
==========================================================
=============================================================================================
SIMULATED FEEDSTOCK FOR FEED RUN FEED RUN FEED RUN
PERFORMANCE TESTS CONc. TIME CONc. TIME CONc. TIME
(%) (HRS) (%) (HRS) (%) (HRS)
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
LIQUIDS
- ---------------------------------------------------------------------------------------------
PWR secondary side decon 100% 12
solutions containing EDTA
solvents with high
concentration of iron
- ---------------------------------------------------------------------------------------------
Phosphate/ester based fire 100% 12
retarding hydraulic fluids
(Fire-Quil)
- ---------------------------------------------------------------------------------------------
PWR boric acid concentrates 100% 12
- ---------------------------------------------------------------------------------------------
Haloginated solvents 100% 12
- ---------------------------------------------------------------------------------------------
Tri-butyle phosphate
=============================================================================================
SLUDGE
- ---------------------------------------------------------------------------------------------
Mixed ion-exchange organic resins 10 36
(dewatered and/or slurry form).
- ---------------------------------------------------------------------------------------------
Inorganic ion-exchange
resins(zeolites, etc.)
- ---------------------------------------------------------------------------------------------
Granulated activated carbon filter. 100 12
=============================================================================================
SOLIDS
- ---------------------------------------------------------------------------------------------
Pathogenic and biological
waste bags.
- ---------------------------------------------------------------------------------------------
Paper, cardboard, wood, cloth 100 12
and plastics with 10% by
weight metals including 5%
S.S. and 5% copper.
- ---------------------------------------------------------------------------------------------
Absorbent Material - DE, solca- 100 12
floc and vermiculite
- ---------------------------------------------------------------------------------------------
Haloginated plastics (PVC, 100 24
Teflon, etc).
=============================================================================================
TOTAL 48 48 48
=============================================================================================
</TABLE>
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6.0 INDEMNIFICATION
ATG agrees to indemnify, defend and hold IET harmless in the event of any loss,
damage, award, judgement, expense or the like (including attorney's fees and
expenses) resulting from ATG's operation of the system delivered hereunder, if
such loss, damage, award expense or judgement results from ATG's negligence or
operation of the system outside of specifications provided by IET.
7. SIGNATURES
ATG and IET representatives affix their signatures below and duly
acknowledge their respective firm's concurrence with the terms and
conditions and other requirements stipulated in the Agreement.
ATG Inc. (ATG), a California Corporation ("ATG")
By: Frank Chiu
Title: Executive Vice President
Signature: ______________________ Date:___________
Integrated Environmental Technologies, LLC, a New York Company ("IET")
By: Daniel R Cohn
Title: President
Signature: ______________________ Date:___________
By: Jeffrey E. Surma
Title: Executive Vice President
Signature: /s/ Jeffrey E. Surma Date: 12-8-97
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12/8/97 GASIFICATION/VITRIFICATION SYSTEM
Page 18 of 18
<PAGE>
EXHIBIT 10.24
TECHNOLOGY TRANSFER PURCHASE AND ROYALTY FEE AGREEMENT
THIS AGREEMENT, entered into this 30th day of September, 1997 by and
between Allied Technology Group, Incorporated, hereinafter refer to as "ATG",
with office at 47375 Fremont Boulevard, Fremont, California 94538 and Regent
Star Ltd, hereinafter refer to as "Purchaser", with office at 239 Wing Lok
Street, 19/F, Hong Kong.
WITNESSETH
WHEREAS, the parties have entered into a Non-Disclosure Agreement, and
hereby reaffirm the content and affect of the same as part of this Agreement;
and
WHEREAS, ATG has acquired, developed, permitted and constructed a
"vitrification" system, hereinafter referred to as the "SafGlas system", which
is used to volume reduce selected materials, and to volume reduce and stabilize
certain hazardous, mixed and low-level nuclear materials. ATG also applies other
non-vitrification, non-thermal, waste treatment and recycling systems and
processes in its business; and
WHEREAS, ATG has been operating a permitted facility in the city of
Richland, Washington since 1989, for the processing and treatment of low level
nuclear material, and another permitted facility in the city of Fremont,
California since 1995, for the recycling of spent fluorescent lamps. ATG has
designed, permitted, constructed and operated all such equipments and processes
at its facilities. The glassmelter in Richland, the mercury retort unit in
Fremont, various commercial grade equipment and components are purchased from
industry vendors and suppliers, and therefore are not subject to the technology
transfer agreement. "Technology" is defined as: (1) the SafGlas system except
the glassmelter and other commercial grade equipments, (2) ATG Supercompaction
system, (3) ATG Fluorescent Lamp recycling system, (4) ATG waste processing
know-how, operating and safety procedures, and licensing expertise, and (5)
process design and technical drawings, with the exception of commercial grade
equipment and instruments and (6) Technology is intended for commercial and
industrial use only, and does not include any application for military and
defense use; and
WHEREAS, Purchaser is in the business of international trading and has
experience in both manufacturing and trading with mainland China and Taiwan.
Purchaser also has technical knowledge and experiences in managing construction
and operation of manufacturing and processing plants in Asia. Purchaser is
interested to form a business venture with ATG to promote ATG technology and
business in mainland China and Taiwan.
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.
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<PAGE>
WHEREAS, Purchaser desires to acquire ATG's treatment processes and
technology on an exclusive basis in Taiwan, Hong Kong, Macau and mainland China.
"Exclusive Territory" is therefore defined as Taiwan, Hong Kong, Macau and the
Peoples Republic of China. Purchaser desires to sell ATG product and services
and to apply such ATG treatment processes and technology within the Exclusive
Territory. Any other territories outside of the Exclusive Territory is not
included in the Agreement, any marketing and/or use of the technology by the
Purchaser, its associate companies, or its teaming partners, are therefore
specifically prohibited;
WHEREAS, the parties hereto desire to associate themselves with each other
for the purpose of marketing and/or use of the Technology in the Exclusive
Territory. The Purchaser may include other individuals or companies in the
Exclusive Territory from time to time. Any teaming partner Purchaser wishes to
add to its team requires ATG's prior written approval and acceptance. Purchaser
shall not sublicense or transfer any ATG technology to any third party;
WHEREAS, the parties acknowledge that this Agreement supersedes any and all
other negotiation or agreements.
NOW THEREFORE, in consideration of the promises, mutual agreements and
covenants hereinabove and hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
is hereby agreed by and between the parties hereto as follows:
1. Purchaser hereby purchases the Technology from ATG which includes the
design, engineering data and drawing, calculations, license
application, operating procedures. In consideration of the receipt of
such Technology, Purchaser shall pay ATG as follows:
<TABLE>
<CAPTION>
<S> <C>
SafGlas Waste Processes: $ [*]
Fluorescent Lamp Recycling System: [*]
Operating Procedures: [*]
Total Amount: $1,000,000
</TABLE>
2. ATG Asia Ltd shall be solely responsible for providing all initial
marketing expenses, office space and other related administrative
costs. ATG will be responsible for all costs, including travel cost,
relating to engineering support and technical presentations in the
initial marketing of ATG Technology in the Exclusive Territory.
[*] CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
3. A new business entity, ATG Asia Ltd., shall be formed in Hong Kong as
soon as all documents are executed. Purchaser shall be responsible for
all marketing and ATG shall provide technical support to Purchaser.
ATG shall have no capital ownership of the newly form entity. However,
ATG shall be paid [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] percent
([CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]%) of any profit generated by ATG
Asia Ltd. Such amount shall be paid annually, ATG shall have the right
to audit and inspect the books and record of ATG Asia Ltd. In
addition, Purchaser shall provide ATG Asia Ltd's quarterly financial
statements to ATG within forty five (45) days from the end of the
quarter. This Agreement will cover new contracts within the Exclusive
Territory, regardless the location where waste material may be
processed. Purchaser will conduct all business related to ATG
Technology, products and services under ATG Asia Ltd only, and will
not conduct any related business under any other business entity or
trade names.
4. In consideration of the Technology and know-how provided by ATG, ATG
Asia Ltd will pay a royalty of [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] percent
([CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] to ATG, of any sales relating to
vitrification system & products. This royalty fee of [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] percent shall not put ATG products
noncompetitive in the Exclusive Territory, or shall be renegotiated in
good faith.
5. ATG may terminate the Agreement if total sales in the Exclusive
Territory is less than $[CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] in the first
24 months. Upon receipt of the termination notice, Purchaser shall
immediately return all technical data and all other documents related
to ATG Technology in Purchaser's possession, and shall not use any of
the ATG Technology anywhere after termination. Upon termination, ATG
Asia Ltd shall be dissolved, any outstanding profits due ATG shall be
distributed upon dissolution.
6. Purchaser shall buy all of its products and services from ATG on an
exclusive basis whenever ATG price is competitive. ATG shall sell its
products and services to the Purchaser at the same commercial price
ATG offers its clients in the United States, from either the ATG
commercial catalog price list or from government approved rates,
wherein applicable.
7. ATG Asia Ltd shall arrange all construction financing, and shall also
arrange letter of credits in U.S. dollars to cover all ATG products.
Such letter of credits shall be acceptable to ATG' 5 commercial bank
and/or major material suppliers. Depending on the size of the
contract, normal commercial volume discount shall be available to ATG
Asia Ltd
8. A TG Asia Ltd may reference and disclose ATG' 5 track record and
experience in the marketing of ATG products and services, only
according to materials provided by ATG. All announcements for the
general public require ATG's prior written approval.
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<PAGE>
9. ATG shall be solely responsible for its facility-specific permitting
as necessary to support any R&D, or process demonstration required to
be conducted in the U.S.
10. During normal office hour, and upon reasonable prior notice to ATG,
Purchaser and its clients may tour ATG's facilities. Foreign nationals
may be subject to certain applicable rules and regulations, certain
property, area, equipment or documents may or may not be available for
inspection.
11. The parties agree that the exclusive agreement and its exclusive
arrangements are applicable to both parties. As such, Purchaser and
its teaming partners will not represent, market or use other competing
technology, product and services offered by ATG's competitors in the
Exclusive Territory. ATG will not sell or provide any ATG products or
services to any party other than the Purchaser or ATG Asia.
12. All technical and engineering personnel shall be provided or appointed
by ATG. Purchaser shall assist ATG in the recruitment of local
subcontractors. Purchaser shall not modify, change or disassemble any
ATG equipment or processes without ATG's prior approval. All
replacement parts must be approved by ATG technical personnel.
13. The parties agree that Purchaser shall focus its marketing efforts in
the commercial power industry, nuclear or non-nuclear, chemical
plants, oil and gas industry for the ATG products and services.
Purchaser agrees that should it choose not to pursue a business
opportunity when offered, then ATG may pursue such business
opportunity(s) so declined by Purchaser. Should ATG choose not to
pursue a business when offered, Purchaser may pursue such opportunity
so so declined by ATG. All business opportunity offer or decline must
be in writing within thirty days from receipt of proposal.
14. ATG warrants that the SafGlas vitrification system provided hereunder
will process low-level, nuclear, and/or hazardous wastes at a rate of
not less than 330 lbs per hour. Notwithstanding the foregoing, ATG
does not represent nor warrant that the process can accept every kind
of low level radioactive, or hazardous material. On the other hand,
ATG only warrants those materials listed on ATG's existing licenses as
acceptable material suitable for treatment.
15. ATG Asia agrees to hold ATG harmless and to protect, defend and
indemnify ATG against losses and damages due to ATG Asia's negligence.
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<PAGE>
16. ATG agrees to hold Purchaser harmless and to indemnify Purchaser for
losses and damages due to ATG's negligence.
17. Under this Agreement, ATG warrants that it has full authority and
rights to all of its technology and processes, know-how, operating and
safety procedures being operated presently at its facilities. ATG
further warrants that it has full authority and rights to sell its
technology, processes, designs, know-how and procedures to Purchaser.
Commercial grade equipments from suppliers and vendors are not part of
the technology transfer. ATG reserves the right to replace any
commercial supplier and/or vendor in the future with comparable or
better quality products.
18. Neither party hereto shall sell, assign or in any manner transfer its
interest, or any part thereof, in this Agreement without first
obtaining the written consent of the other party or parties hereto.
Such consent shall not be unreasonably withheld. ATG hereby
acknowledges that from time to time a teaming partner is necessary in
the local area to be brought in as part of the team, however, ATG must
approve in writing such teaming partner/s of Purchaser.
19. In the event of bankruptcy, dissolution or death of any parties
hereto, this agreement shall immediately upon the occurrence thereof,
cease and terminate with respect to the party thus affected. The
successors, receivers, trustees or other legal representatives of the
party thus affected shall cease to have any interest whatsoever in
this agreement. In any such event the remaining party or parties shall
have the right to carry out and complete the purpose of this
Agreement.
20. This agreement shall remain in effect unless terminated by ATG
provided for in Section 5. The term of this agreement is five (5)
years with an automatic extension of another five years at the end of
the fifth year unless either party gives written notice of intention
to terminate this agreement after the fifth year, in which event this
agreement shall terminate thirty days from the date of mailing of such
notice by either party.
21. Should ATG or Purchaser materially default on any of its obligations
under this agreement, in addition to legal remedies which may be
available to it, the non defaulting party may at its sole option send
to the defaulting party written notice of its intention to terminate
this agreement. Upon such termination of the term of this agreement,
all rights, duties and obligations of the parties hereunder shall
terminate, except for those which may be prescribed by law through
legal remedies which may be available to the non-defaulting party and
as otherwise
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<PAGE>
provided for herein and with the exception of any and all obligations
of the parties which have heretofore accrued.
22. In all activities hereunder, each party is an independent contractor
and shall be solely responsible for all expenses incurred, including,
without limitation, operation of its offices, sales and service staffs
and activities, other than as herein provided.
23. Upon the execution of this Agreement, any prior Agreement with any
other party or person giving such entity or person any portion within
the Exclusive Territory shall be terminated, so that Purchaser, under
the name of ATG Asia Ltd., is the only authorized exclusive
representative for ATG in the Exclusive Territory.
24. This agreement shall be constructed and interpreted in accordance with
the laws of the State of California.
25. The terms and conditions set forth herein constitute the entire
agreement between the parties and supersedes all prior agreements or
arrangements, written or oral, between ATG and Purchaser. This
agreement shall not be amended or changed or modified except by an
instrument in writing referencing this agreement and executed by
authorized agents of both parties.
26. The parties hereto agree to work together to market the use of the ATG
technology and systems for uses as outlined herein. If either party
requests marketing support from the other, the parties agree to
provide such support within reason and at their own expense. As part
of said marketing support to be provided by ATG to Purchaser, ATG
acknowledges and agrees that Purchaser shall have reasonable access to
ATG premises. Such access will be permitted only during normal
business hours and days of operation. An advance notice of at least
five days will be required.
27. Regent Star Ltd and ATG Asia Ltd, shall not compete with ATG outside
of the Exclusive Territory, in the same business ATG presently offers.
ATG shall not compete with Regent Star Ltd and ATG Asia Ltd within
the Exclusive Territory in the same business ATG presently offers.
6
<PAGE>
IN WITNESS WHEREOF, the parties herein have caused this Agreement to be executed
by duly authorized representatives of both parties to be effective on the day
and year first above written.
REGENT STAR LLC ATG, INC.
/s/ Francois Shih /s/ Doreen Chiu
- -------------------------------- ---------------------------------
Francois Shih, President Doreen Chiu, President
ATG Asia, Ltd
/s/ Francois Shih
- --------------------------------
Francois Shih, President
7
<PAGE>
ADDENDUM #1
TECHNOLOGY AND ROYALTY AGREEMENT
This Agreement is made this 29th day of January 1998 to cover the marketing of
the copper tubing procurement from the Taiwan Power Company.
WHEREAS ATG has been working on this project since 1996. Regent Star and A TG
Asia Ltd believe that they have technical and marketing know-how and can improve
the success of the winning of the contract.
NOW THEREFORE, both parties agree to allow Regent Star and A TG Asia Ltd to
represent ATG in Taiwan for the marketing of such project. ATG will pay ATG Asia
Ltd a fee in the amount of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]% of its gross
processing revenue, after deducting shipping and transportation costs. Such fee
will be paid within five days upon the receipt of processing costs from Taiwan
Power Company.
Both parties herein agree to the above terms and conditions of the copper tubing
project for Taiwan Power Company.
______________________________
Francois Shih, President
Regent Star LLC
______________________________ ______________________________
Francois Shih, President Doreen Chiu, President
ATG Asia, Ltd ATG Inc
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<PAGE>
NONDISCLOSURE AND CONFIDENTIALITY AGREEMENT
1. Parties. This nondisclosure Agreement, the "Agreement", is made and entered
into as of this 30th day of September l997, between ATG, Inc., the
"Disclosing Party", and Regent Star, the "Receiving Party".
2. Purpose of Agreement. The Disclosing Party intends to make certain
disclosures, whether written, verbal and/or visual inspection, of
Confidential Information, as defined below, to Receiving Party. This
Agreement is intended to define the rights and duties of the parties with
respect to such Confidential Information which may be revealed to Receiving
Party by the Disclosing Party. All parties agree and acknowledge that this
Agreement is supported by fair and reasonable consideration in money or
monies worth, is governed exclusively by the laws of the United States of
America, State of California, and that all parties hereto voluntarily
consent to said jurisdiction and selected courts.
3. Confidential Information. For purposes of this Agreement the "Confidential
Information" shall include:
a. All information of a technical nature such as processes, know how,
trade secrets, programs, formulae, machines, discoveries, inventories,
techniques, studies, research projects, development plans, notes,
memoranda, reports, records, manual drawings, photographs, videos,
blueprints or other documents whether patentable or not relating to
patent application and the resulting letters, patent and other
intellectual property product(s);
b. Financial information;
c. Customer and vendor lists, marketing plans and surveys and other
marketing information; and,
d. Other similar information which the Disclosing Party considers and
treats as confidential.
Any "Confidential Information" provided in writing or print/reproduction form by
the Disclosing Party shall be clearly marked as "Confidential". Any Information
provided orally shall be considered as "Confidential Information".
4 Restrictions on Confidential Information. With respect to any Confidential
Information disclosed to Receiving Party by the Disclosing Party:
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<PAGE>
a. The Confidential Information shall not be further disclosed, to any
person outside of Receiving Party's organization, and shall only be
disclosed within Receiving Party's organization on a "need-to-know"
basis to individuals who have been apprised of the confidential nature
of the information and agree to be bound by the disclosure, use and
copying restrictions set forth herein;
b. The Confidential Information shall be treated according to the same
internal security procedures and with the same degree of care
regarding its secrecy and confidentiality as similar information of
Receiving Party is treated within Receiving Party's organization;
c. The Confidential Information shall remain the sole and exclusive
property of the Disclosing Party. Nothing in this Agreement, nor
actions of the parties hereto, shall be construed as granting a right
or a license of any kind or nature, whether for use, application,
duplication, research and development (R&D), or otherwise, by the
Disclosing Party to Receiving Party with respect to any Confidential
Information disclosed hereunder;
d. The Confidential Information and all copies shall be immediately
resumed to the Disclosing Party at the Disclosing Party's request and
upon such request, such Confidential Information shall be returned no
later than 24 hours after such request; provided, further that
Receiving Party shall not make or keep any copies of any Confidential
Information returned;
e. Use or disclosure of Confidential Information by the directors,
officers, employees, agents or representatives of a parent, subsidiary
or an affiliate of Receiving Party shall be deemed the act of
Receiving Party for purposes of this Agreement;
f Receiving Party shall give notice to the Disclosing Party of any
attempt via legal process to obtain any Confidential Information and
agrees to cooperate with the Disclosing Party in defending against any
such attempt.
5. Employee Obligations Receiving Party agrees to inform any employee or other
person in Receiving Party's organization of the confidentiality obligations
imposed by this Agreement, and to use its best efforts to require such
employees to agree to be bound by the disclosure, use and copying
restrictions set forth herein.
6. Miscellaneous
a. For breach hereof, the party hereto so wronged shall have all remedies
for damages and claims arising thereby, whether such be legal or
equitable.
b. Captions in this Agreement are for ease of the reference only, and
should not be
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<PAGE>
considered in the construction of this Agreement.
c. This Agreement constitutes the entire agreement between the parties
regarding the subject matter hereof, and supersedes any prior or
contemporaneous agreements, whether oral or written, between the
parties regarding the same.
d. This Agreement may be modified only in writing signed by the parties.
e. Failure by a party to enforce any provisions of this Agreement or to
exercise any option hereof, is not to be construed as a present or
future waiver of such provisions or option.
f. The provisions of this Agreement are to be considered as severable,
and in the event that any provision is held to be invalid or
unenforceable, the parties intend the remaining provisions should
remain in full force and effect.
g. There is no third party beneficiary to this Agreement.
h. This Agreement expires seven (7) years from the last day of execution
by the parties to this Agreement. Prior to expiration of this
Agreement, Receiving Party shall, without any further action required
on the part of Disclosing Party, return to Disclosing Party all
Confidential Information and copies thereof.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.
"Disclosing Party" "Receiving Party"
ATG, INC. Name: Regent Star LLC
-----------------------------
By: /s/ Doreen Chiu By: /s/ Francois Shih
----------------------------- -------------------------------
Print Name: Doreen Chiu Print Name: Francois Shih
--------------------- ------------------------
Title: President Title: President
--------------------- ------------------------
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EXHIBIT 10.25
TECHNOLOGY TRANSFER AND PURCHASE AGREEMENT
------------------------------------------
THIS AGREEMENT, entered into this 28th day of June, 1997 by and between
Allied Technology Group, Incorporated, hereinafter refer to as "ATG", with
office at 47375 Fremont Boulevard, Fremont, California 94538 and Pacific Trading
Company, hereinafter refer to as "Purchaser", with office at Block 3, 3/F, Lee
Sum Industrial Building, 23 Sze Mei Street, San Po Kong, Kowloon, Hong Kong.
WITNESSETH
WHEREAS, the parties have entered into a Nondisclosure Agreement and hereby
reaffirm the content and affect of the same;
WHEREAS, ATG has acquired, developed, permitted and constructed a
"vitrification" system, hereinafter referred to as the "SafGlas system", which
is used to volume reduce selected materials, and to volume reduce and stabilize
certain hazardous, mixed and low-level nuclear materials. ATG also applies other
non-vitrification, non-thermal, waste treatment and recycling systems and
processes in its business; and
WHEREAS, ATG has been operating a permitted facility in the city of
Richland, Washington since 1989, for the processing and treatment of low level
nuclear material, and another permitted facility in the city of Fremont,
California since 1995, for the recycling of spent fluorescent lamps. ATG has
designed, permitted, constructed and operated all such equipments and processes
at its facilities. The glassmelter in Richland, the mercury retort unit in
Fremont, various commercial grade equipment and components are purchased from
industry vendors and suppliers, and therefore are not subject to the technology
transfer agreement. "Technology" is defined as: (1) the SafGlas system except
the glassmelter and other commercial grade equipments, (2) ATG Supercompaction
system, (3) ATG Fluorescent Lamp recycling system, (4) ATG waste processing
know-how, operating and safety procedures, and licensing expertise, and (5)
process design and technical drawings, with the exception of commercial grade
equipment and instruments and (6) Technology is intended for commercial and
industrial use only and does not include any application for military use; and
WHEREAS, Purchaser is in the business of international trading and has
experience in both manufacturing and trading with mainland China and Taiwan.;
and
WHEREAS, Purchaser desires to acquire ATG's treatment processes and
technology on an exclusive basis in Taiwan. "Exclusive Territory" is therefore
defined as Taiwan, the Republic
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.
1
<PAGE>
of China. Purchaser desires to sell ATG product and services and to apply such
ATG treatment processes and technology within the exclusive territory. Any other
territories outside of the exclusive territory is not included in the Agreement,
any marketing and/or use of the technology by the Purchaser or its associates or
teaming partners, are therefore specifically prohibited; and
WHEREAS, the parties hereto desire to associate themselves with each other
for the purpose of marketing and/or use of the Technology in the exclusive
territory. The Purchaser may include other individuals or companies in the
exclusive territory from time to time. Any teaming partner Purchaser wishes to
add to its team requires ATG's prior written approval and acceptance. Sublicense
or transfer of ATG's technology to any outside party is not allowed; and
WHEREAS, the parties acknowledge that this Agreement supercedes any and all
other negotiation or agreements.
NOW THEREFORE, in consideration of the promises, mutual agreements and
covenants hereinabove and hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
is hereby agreed by and between the parties hereto as follows:
1. ATG shall be solely responsible for providing the SafGlas processing
system, fluorescent lamp recycling system and supercompaction system,
including but not limited to its design, engineering, fabrication, off
site pretesting, license application data and documentations. In
consideration of the technology transfer, Purchaser shall pay ATG as
follows:
<TABLE>
<S> <C>
SafGlas waste treatment processes: $[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]
Fluorescent Lamp Recycling system: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]
Operating Procedures: [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]
Total Amount: $1,000,000
</TABLE>
2. Purchaser shall be solely responsible for providing all initial
marketing expenses, office space and other related administrative
costs in the exclusive territory. ATG will be responsible for the
costs for any technical support and presentation.
3. Should the Purchaser fail to produce sales at least $ CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSSION within eighteen months in the exclusive
territory, this Agreement may be terminated at the option of ATG. In
the event of such termination, ATG shall exercise such termination
option by sending the termination notice to Purchaser in prepaid
registered mail Upon receipt of the notice, Purchaser shall
immediately return all technical data and all other documents concern
the ATG technology in Purchaser's possession, to ATG. Both parties
further agree that obligation of either party shall cease upon
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<PAGE>
the return of technical data by Purchaser to ATG. Should there be any
remaining revenue from sale of any ATG technology after the
termination, Purchaser shall continue to pay ATG the net profit from
such sales until the conclusion of the contract, ATG shall continue to
support such contract until it is completed.
4. ATG will sell any product or services to Purchaser at the same pricing
structure ATG sells to the U.S. Government. The price shall include
either ATG's government audited and approved overhead and general &
administrative costs plus a profit of [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSSION] % of the overall costs, or ATG's commercial catalog
pricing. In addition Purchaser shall pay ATG a [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSSION] % of the before tax net profits from the sale of
ATG Technology, product and services within the exclusive territory.
ATG at its own expenses, may audit Purchaser's accounting and other
financial record at Purchaser's office during regular office hours. If
there is any shortage in excess of $ [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] in
ATG's favor discovered by the audit, Purchaser shall pay for all
reasonable costs of the audit in addition to the shortage.
5. In the event there is no applicable Government audited overhead and
general & administrative rates, applicable ATG standard commercial
catalog prices for certain sale of product and services to the
Purchaser, nor any prior pricing available, ATG shall charge Purchaser
at [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] % above its overall loaded costs.
6. In the event construction is necessary, Purchaser shall arrange all
construction financing. In addition, Purchaser shall arrange letter of
credits in U.S. dollars to cover all ATG products. Such letter of
credits shall be acceptable to ATG's commercial bank and/or major
material suppliers.
7. Purchaser may reference and disclose ATG's track record and experience
in the marketing and promotion of ATG products and services only
according to material provided by ATG. All announcements for the
general public require ATG's prior written approval. Purchaser will
coordinate all local permitting and regulatory matters, ATG will
provide technical assistance to Purchaser in such local permitting
matters.
8. ATG shall be solely responsible for its facility-specific permitting
as necessary to support any contract should there be any R&D,
technology or process demonstration required.
9. During normal office hour, and upon reasonable prior notice to ATG,
Purchaser and its clients may tour ATG's facilities. Foreign nationals
may be subject to certain applicable rules and regulations, certain
property, area, equipment or documents may or may not be available for
inspection.
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<PAGE>
10. The parties agree that the exclusive agreement and its exclusive
arrangements are applicable to both parties. As such, Purchaser and
its teaming partners will not represent, market or use other competing
technology, product and services offered by ATG's competitors in the
Exclusive Territory.
11. Any net profits payable hereunder shall be calculated and paid
quarterly by the 30th day after the end of the previous quarter's
operation. Attached to the [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSSION] % net profit
payment, Purchaser shall provide a quarterly report to ATG which shall
reflect and specify material purchased, quantitatively and
qualitatively, as well as total profits-realized for the quarter
attributable to that material and supporting supplier/customer
information. At ATG's option, ATG may assign a full time, or part
time, accountant or representative at Purchaser's office for the
record keeping, or any other administrative functions.
12. All technical and engineering personnel shall be provided or appointed
by ATG. Purchaser shall assist ATG in the recruitment of local
subcontractors. Purchaser shall not modify, change or disassemble any
ATG equipment or processes without ATG's prior approval. All
replacement parts must be approved by ATG technical personnel.
13. The parties agree that should local financing is required, such
interest and related financing costs directly related to the ATG
equipment and product, will be considered as normal business expenses
and will not be included as part of the [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSSION] % Purchaser overhead and administrative costs. Purchaser
may pay such costs and deduct the cost before computing the net profit
payable to ATG.
14. The parties agree that Purchaser shall focus its marketing efforts in
the commercial power industry, nuclear or non-nuclear, chemical
plants, oil and gas industry for the ATG products and services.
Purchaser agrees that should it choose not to pursue a business
opportunity when offered, then ATG may pursue such business
opportunity(s) so declined by Purchaser in writing.
15. ATG warrants that the vitrification system provided hereunder will
process low-level, nuclear, and/or hazardous wastes at a rate of not
less than [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSSION] lbs per hour, of waste and
will be in accordance with the specifications set forth in the permit
application submitted by ATG. Notwithstanding the foregoing, ATG does
not represent nor warrant that the process can accept every kind of
low level radioactive, or hazardous material. On the other hand, ATG
only warrants those materials listed on ATG's existing licenses as
acceptable material suitable for treatment.
4
<PAGE>
16. Purchaser agrees to hold ATG harmless and to protect, defend and
indemnify ATG against losses and damages due to Purchaser's
negligence.
17. ATG agrees to hold Purchaser harmless and to indemnify Purchaser for
losses and damages due to ATG's negligence.
18. Under this Agreement, ATG warrants that it has full authority and
rights to all of its technology and processes, know-how, operating and
safety procedures being operated presently at its facilities. ATG
further warrants that it has full authority and rights to sell its
technology, processes, designs, know-how and procedures to Purchaser.
Commercial grade equipments from suppliers and vendors are not part of
the technology transfer. ATG reserves the right to replace any
commercial supplier and/or vendor in the future with comparable or
better quality products.
19. Neither party hereto shall sell, assign or in any manner transfer its
interest, or any part thereof, in this Agreement without first
obtaining the written consent of the other party or parties hereto.
Such consent shall not be unreasonably withheld. ATG hereby
acknowledges that from time to time a teaming partner is necessary in
the local area to be brought in as part of the team, however, ATG must
approve in writing such teaming partner/s of Purchaser.
20. In the event of bankruptcy, dissolution, or death of any parties
hereto, this agreement shall immediately upon the occurrence thereof,
cease and terminate with respect to the party thus affected. The
successors, receivers, trustees or other legal representatives of the
party thus affected shall cease to have any interest whatsoever in
this agreement. In any such event the remaining party or parties shall
have the right to carry out and complete the purpose of this
Agreement.
21. This agreement shall remain in effect unless terminated by ATG
provided for in Section 3. The term of this agreement is five (5)
years with an automatic extension of another five years at the end of
the fifth year unless either party gives written notice of intention
to terminate this agreement after the fifth year, in which event this
agreement shall terminate thirty days from the date of mailing of such
notice by either party.
22. Should ATG or Purchaser materially default on any of its obligations
under this agreement, in addition to legal remedies which may be
available to it, the non defaulting party may at its sole option send
to the defaulting party written notice of its intention to terminate
this agreement. Upon such termination of the term
5
<PAGE>
of this agreement, all rights, duties and obligations of the parties
hereunder shall terminate, except for those which may be prescribed by
law through legal remedies which may be available to the non-
defaulting party and as otherwise provided for herein and with the
exception of any and all obligations of the parties which have
heretofore accrued.
23. In all activities hereunder, each party is an independent contractor
and shall be solely responsible for all expenses incurred, including,
without limitation, operation of its offices, sales and service staffs
and activities, other than as herein provided.
24. The Nondisclosure Agreement entered into between the parties, is
incorporated herein by reference.
25. This agreement shall be constructed and interpreted in accordance with
the laws of the State of California.
26. The terms and conditions set forth herein constitute the entire
agreement between the parties and supersedes all prior agreements or
arrangements, written or oral, between ATG and Purchaser. This
agreement shall not be amended or changed or modified except by an
instrument in writing referencing this agreement and executed by
authorized agents of both parties.
27. The parties hereto agree to work together to market the use of the ATG
technology and systems for uses as outlined herein. If either party
requests marketing support from the other, the parties agree to
provide such support within reason and at their own expense. As part
of said marketing support to be provided by ATG to Purchaser, ATG
acknowledges and agrees that Purchaser shall have reasonable access to
ATG premises. Such access will be permitted only during normal
business hours and days of operation. An advance notice of at least
five days will be required.
6
<PAGE>
IN WITNESS WHEREOF, the parties herein have caused this Agreement to be executed
by duly authorized representatives of both parties on the day and date shown
below to be effective on the day and year first above written.
PACIFIC TRADING COMPANY ALLIED TECHNOLOGY GROUP, INC.
By: /s/ Yin Yiu Chan By: /s/ Doreen Chiu
----------------------------- -------------------------------
Name: Yin Yiu Chan Name: Doreen Chiu
Title: President Title: President
7
<PAGE>
AMENDMENT #1
TECHNOLOGY TRANSFER AND PURCHASE AGREEMENT
THIS AMENDMENT is made this October 15, 1997 by and between Allied Technology
Group Inc ("ATG") with office at 47375 Fremont Blvd., Fremont, California 94538
and Pacific Trading Company ("Pacific") with office at Block 3, 3/F, Lee Sum
Industrial Building, 23 Sze Mei Street, San Po Kong, Kowloon, Hong Kong.
WHEREAS, Pacific would like to add a teaming partner to cover the Exclusive
Territory, Taiwan, for the ATG Technology, products and services under the
Technology Purchase Agreement dated June 28, 1997. The teaming partner Pacific
is adding is Regent Star Limited represented by Francois Shih.
NOW THEREFORE, IT IS AGREED by and between the parties the followings:
1. Regent Star Limited is allowed to be added as a teaming partner of Pacific
to cover the Exclusive Territory, Taiwan, for all ATG technology, products and
services described in the June 28, 1997 Agreement.
2. The profit sharing arrangements described under section 4 of the June 28,
1997 Agreement is deleted, and is hereby replaced by the followings:
(a) ATG will be paid [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSSION] % of all profits generated in
the Exclusive Territory, and
(b) ATG will be paid a royalty fee of [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSSION] % of any
sales related to vitrification systems and products. Such royalty fee of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSSION] % shall not put ATG products noncompetitive, or
shall be renegotiated on good faith.
3. Pacific is consent to the September 30, 1997 Technology Purchase and Royalty
Agreement between ATG and Regent Star Limited. Pacific has no objection to any
provisions of the subject Agreement.
IN WITNESS, both parties have agreed to the above terms and conditions.
________________________ ______________________________________
Doreen Chiu, President Yin Yiu Chan, President
ATG, Inc. Pacific Trading Company
8
<PAGE>
EXHIBIT 10.26
<TABLE>
====================================================================================================================================
<S> <C> <C> <C> <C>
SOLICITATION, OFFER, SOLICITATION NO. 2. TYPE OF SOLICITATION 3. DATE ISSUED PAGE OF PAGES
AND AWARD DACW05-97-B-0095 [X] SEALED BID (??) 97 SEP 24 1 of 7
(Construction, Alteration, or Repair) [_] NEGOTIATED (RFP)
- ------------------------------------------------------------------------------------------------------------------------------------
IMPORTANT - The "offer" section on the reverse must be fully completed by offeror.
- ------------------------------------------------------------------------------------------------------------------------------------
4. CONTRACT NO. 5. REQUISITION/PURCHASE REQUEST NO. 8. PROJECT NO.
DACW05-98-C-0001
- ------------------------------------------------------------------------------------------------------------------------------------
7. ISSUED BY CODE 8. ADDRESS OFFER TO
-------------------
DEPARTMENT OF THE ARMY DEPARTMENT OF THE ARMY
U.S. ARMY ENGINEER DISTRICT, SACRAMENTO U.S. ARMY ENGINEER DISTRICT, SACRAMENTO
CORPS OF ENGINEERS 1325 J STREET
1325 J STREET SACRAMENTO, CALIFORNIA 95814-2922
SACRAMENTO, CALIFORNIA 95814-2922 ATTN: CONTRACTING DIVISION,
PLAN ROOM, FIRST FLOOR
- ------------------------------------------------------------------------------------------------------------------------------------
9. FOR INFORMATION . A. NAME 8. TELEPHONE NO. (include area code) (NO COLLECT CALLS)
CALL: See SECTION 00100 See SECTION 00100
- ------------------------------------------------------------------------------------------------------------------------------------
SOLICITATION
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: In sealed bid solicitations, "offer" and "offeror" mean "bid" and "bidder".
- ------------------------------------------------------------------------------------------------------------------------------------
10. THE GOVERNMENT REQUIRES PERFORMANCE OF THE WORK DESCRIBED IN THESE DOCUMENTS (Title, identifying no. date):
PL84-99 PHASE III LEVEE RESTORATION
RD 2064, RD 2075, AND RD 2094 (SJ 7)
SAN JOAQUIN COUNTY, CALIFORNIA
Specification No. 9905E
Description: Furnish materials and supplies and perform services for repairing existing levees. Work includes compacted embankment
fill, debris removal and disposal, levee road repair, rock removal, riprap, and hydroseeding.
Estimated Cost Range of Project: $1,000,000 to $5,000,000
Any Contract awarded under this solicitation will be made pursuant to Public Law 100-656, Small Business Competitiveness
Demonstration Program. See DD Form 1707, Block 5 for unrestricted/set-aside information.
*Schedule A - 45 calendar days
Schedule B - 60 calendar days
- ------------------------------------------------------------------------------------------------------------------------------------
11. The Contractor shall begin performance within 1 calendar days and complete it within 45/60* calendar days after receiving
[_] award. [X] notice to proceed. This performance period is [X] mandatory, [_] negotiable (See SECTION 00800, FAR 52.211-10
- ------------------------------------------------------------------------------------------------------------------------------------
12A. THE CONTRACTOR MUST FURNISH ANY REQUIRED PERFORMANCE AND PAYMENT BONDS? 12B. CALENDAR DAYS
(IF "YES", We give within how many calender days after award in item 12B.)
[X] YES [_] NO One (1)
- ------------------------------------------------------------------------------------------------------------------------------------
13. ADDITIONAL SOLICITATION REQUIREMENTS:
A. Sealed offer in original and 0 copies to perform the work required are due at the place specified in item 8 by 1:00 PM (hour)
local time, 97 SEP 30 (date). If this is a sealed bid solicitation, offers will be publicly opened at that time. Sealed
envelopes containing offers shall be marked to show the offeror's name and address, the solicitation number, and the date and
time offers are due.
B. An offer guarantee [X] is, [_] is not required.
C. All offers are subject to the (1) work requirements, and (2) other provisions and clauses incorporated in the solicitation in
full text or by reference.
D. Offers providing less than 60 calendar days for Government acceptance after the date offers are due will not be considered and
will be rejected.
- ------------------------------------------------------------------------------------------------------------------------------------
STANDARD FORM 1442 (REV. 4-85)
Prescribed by GSA
FAR (48 C F R) 53-238-1(d)
</TABLE>
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.
<PAGE>
<TABLE>
====================================================================================================================================
<S> <C>
OFFER (Must be fully completed by offeror)
- ------------------------------------------------------------------------------------------------------------------------------------
14. NAME AND ADDRESS OF OFFEROR (Include ZIP Code) 15. TELEPHONE NO. (Include area code)
Allied Technology Group, Inc (510) 490-3008 FAX (510) 651-3731
------------------------------------------------------
47375 Fremont Blvd 16. REMITTANCE ADDRESS (Include only if different than
Fremont CA 94538 item 14)
CEC: __________________________ CAGE CODE 2U955
- ---------------------------------------------------------------
CODE FACILITY CODE
- ------------------------------------------------------------------------------------------------------------------------------------
17. The offeror agrees to perform the work required at the prices specified below in strict accordance with the terms of this
solicitation, if this offer is accepted by the Government in writing within ____ calendar days after the date offers are due.
(Insert any number equal to or greater than the minimum requirement stated in item 13D. Failure to insert any number means the
offeror accepts the minimum in item 13D.)
AMOUNTS See Pricing Schedule
- ------------------------------------------------------------------------------------------------------------------------------------
18. The offeror agrees to furnish any required performance and payment bonds.
- ------------------------------------------------------------------------------------------------------------------------------------
19. ACKNOWLEDGEMENT OF AMENDMENTS
(The offeror acknowledges receipt of amendments to the solicitation - give number and date of each)
- ------------------------------------------------------------------------------------------------------------------------------------
AMENDMENT NO. 1 2 3
- ------------------------------------------------------------------------------------------------------------------------------------
DATE 9/26/97 9/26/97 9/26/97
- ------------------------------------------------------------------------------------------------------------------------------------
20A. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER 20B. SIGNATURE 20C. OFFER DATE
(Type or print)
Douglas C. Stovall ATG Inc.
Vice Pres. of Operations /s/ Douglas C. Stovall 9-29-97
- ------------------------------------------------------------------------------------------------------------------------------------
AWARD (To be completed by Government) See pg. 3 for 20D
- ------------------------------------------------------------------------------------------------------------------------------------
21. ITEMS ACCEPTED: Item Nos. 0001 through 0011 (Total Estimated Price).
- ------------------------------------------------------------------------------------------------------------------------------------
22. AMOUNT 23. ACCOUNTING AND APPROPRIATION DATA
96X3125 FC & CE S96042
$3,062,962.40 DC817 03 190 C0001 (VH)
- ------------------------------------------------------------------------------------------------------------------------------------
24. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM 25. OTHER THAN FULL AND OPEN COMPETITION PURSUANT TO
(4 copies unless otherwise specified) 26 [_] 10 U.S.C. 2304 (c) ( ) [_] 41 U.S.C. 253(c) ( )
- ------------------------------------------------------------------------------------------------------------------------------------
26. ADMINISTERED BY CODE 27. PAYMENT WILL BE MADE BY
------------------------
Sacramento District, Corps of Engineers Department of the Army
Valley Resident Office Sacramento District, Corps of Engineers
ATTN: Mr. William R. Cameron, Res. Engr. The Disbursing Officer
2021 Jefferson Blvd. 1325 J Street
West Sacramento, California 95651 Sacramento, California 95814-2922
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACTING OFFICER WILL COMPLETE ITEM 28 OR 29 AS APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------------------
[_] 28. NEGOTIATED AGREEMENT (Contractor is required to sign [X] 29. AWARD (Contractor is not required to sign this
this document and return _____ copies to issuing office.) document.) Your offer on this solicitation is hereby
Contractor agrees to furnish and deliver all items or accepted as to the items listed. This award consummates
perform all work requirements identified on this form the contract, which consists of (a) the Government
and any continuation sheets for the consideration stated in solicitation and your offer, and (b) this contract
this contract. The rights and obligations of the parties award. No further contractual document is necessary.
in this contract shall be governed by (a) this contract award,
(b) the solicitation and (c) the clauses, representations,
certifications, and specifications, incorporated by
reference in or attached to this contract.
- ------------------------------------------------------------------------------------------------------------------------------------
30A. NAME AND TITLE OF CONTRACTOR OR PERSON AUTHORIZED TO SIGN 31A. NAME OF CONTRACTING OFFICER (Type or Print)
(Type or Print)
Fred J. Strickland
- ------------------------------------------------------------------------------------------------------------------------------------
30B. SIGNATURE 30C. DATE 31B. UNITED STATES OF AMERICA 31C. AWARD DATE
BY /s/ Fred J. Strickland Oct 02 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STANDARD FORM 1442 BACK (REV. 4-85)
</TABLE>
<PAGE>
PRICING SCHEDULE
CONTRACTOR SHALL FURNISH ALL PLANT LABOR, MATERIAL EQUIPMENT ETC. NECESSARY TO
PERFORM ALL WORK IN STRICT ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH
IN THE CONTRACT TO INCLUDE ALL ATTACHMENTS THERETO
<TABLE>
<CAPTION>
LINE ESTIMATED UNIT OF UNIT TOTAL
ITEM NO. DESCRIPTION QUANTITY MEASURE PRICE PRICE
<S> <C> <C> <C> <C> <C>
0001 Clearing and
Grubbing 1 Job [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0002 Repair Site
Excavation 145,000* CY [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0003 Compacted Clay
Fill 103,000* CY [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0004 Levee Fill 70,000* CY [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0005 Levee Cover 23,500* CY [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0006 Miscellaneous
Fill 12,600* CY [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0008 Pit Run
Rockfill 48,900* Ton [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0009 Gravel Fill 12,300* Ton [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0010 Aggregate Base
Course 7,300* Ton [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
0011 Filter Fabric 38,400* SY [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND WITH THE SECURITIES AND
EXCHANGE COMMISSION.] EXCHANGE COMMISSION.]
TOTAL ESTIMATED PRICE $3,062,962.40
</TABLE>
* QUANTITY IS AN ESTIMATED AMOUNT. SEE SECTION 00700, FAR 52.211-18, FOR
VARIATION IN ESTIMATED CONTRACT CLAUSE.
<PAGE>
CONTINUATION OF STANDARD FORM 1442 PAGE 4
CORPORATION AUTHORIZATION CERTIFICATE
I, Frank Chiu, certify that I am the Secretary of the corporation named as
(name)
offeror in the within offer; that Douglas C. Stovall, who signed said offer on
(name)
behalf of the corporation, was then Vice Pres. of Operations of said
(title)
corporation, that the signature thereto is genuine; that said contract was duly
signed, sealed and attested for in behalf of said corporation by authority of
its governing body.
Allied Technology Group, Inc
---------------------------------
(Name of Corporation)
[SIGNATURE ILLEGIBLE]
---------------------------------
(Secretary)
(4) IF THE OFFEROR IS AN INDIVIDUAL DOING BUSINESS AS A FIRM, THE OFFER SHALL
BE SIGNED BY THAT INDIVIDUAL IN BLOCK 20B FOLLOWED BY THE WORDS AN INDIVIDUAL
DOING BUSINESS AS _________________________________ (INSERT NAME OF FIRM).
(5) WHEN AN AGENT SIGNS THE OFFER, PROVIDE PROOF OF THE AGENT'S AUTHORITY TO
BIND THE PRINCIPAL.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 10.27
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
THIS CONTRACT IS A RATED ORDER RATING 4. PAGE
SOLICITATION, OFFER AND AWARD
UNDER DPAS (15 CFR 3501 S10 1
- ----------------------------------------------------------------------------------------------------------------------------------
2. CONTRACT NO. 3. SOLICITATION NO. 4. TYPE OF SOLICITATION 5. DATE ISSUED 6. REQUISITION/PURCHASE
NO.
9-92-3-1046 DAKF04-91-R-0003 [_] SEALED BID (IFB) 2/8/91 F00000-0049-0000
DAKFO4-92-D-007 [X] NEGOTIATED (RFP)
- ----------------------------------------------------------------------------------------------------------------------------------
7. ISSUED BY CODE: 108 8. ADDRESS OFFER TO (if other than Item 7)
Directorate of Contracting, CD -----
P.O. Box 10039, NTC,
Fort Irwin, CA 92310-5000
ATTN: S. Wood 619 386-3893
- ----------------------------------------------------------------------------------------------------------------------------------
NOTE: In sealed bid solicitations "offer" and "offeror" mean "bid and "bidder".
- ----------------------------------------------------------------------------------------------------------------------------------
SOLICITATION
- ----------------------------------------------------------------------------------------------------------------------------------
9. Sealed offers in original and 0 copies for furnishing the supplies or services in the Schedule will be received at the place
specified in Item 8, or of handcarried.
in the depository located in Bldg 505, Fort Irwin, California until 03:30 P.M local time 3/12/91
------------------------------------------- ---------------- ------------
(Hour) (Date)
CAUTION - LATE Submissions, Modifications and Withdrawls: See Section L Provision No. 52.214-7 or 52.215-10. All offers are subject
to all terms and conditions contained in this solicitation.
- ----------------------------------------------------------------------------------------------------------------------------------
A. NAME B. TELEPHONE NO. (include area code) (NO COLLECT CALLS)
10. FOR INFORMATION
CALL: Sheryle M. Wood (619)386-3893
- ----------------------------------------------------------------------------------------------------------------------------------
11. TABLE OF CONTENTS
- ----------------------------------------------------------------------------------------------------------------------------------
X SEC DESCRIPTION PAGE(S) X SEC DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------------------
PART I - THE SCHEDULE PART II - CONTRACT CLAUSES
- ----------------------------------------------------------------------------------------------------------------------------------
X A SOLICITATION/CONTRACT FORM 1 X I CONTRACT CLAUSES
- ----------------------------------------------------------------------------------------------------------------------------------
X B SUPPLIES OR SERVICES AND PRICES/COST 4 PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.
- ----------------------------------------------------------------------------------------------------------------------------------.
X C DESCRIPTION/SPECS/WORK STATEMENT 7 X J LIST OF ATTACHMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
D PACKAGING AND MARKING PART IV - REPRESENTATIONS AND INSTRUCTIONS
- ----------------------------------------------------------------------------------------------------------------------------------
X E INSPECTION AND ACCEPTANCE 1 X K REPRESENTATIIONS, CERTIFICATIONS AND
- -----------------------------------------------------------------
X F DELIVERIES OR PERFORMANCE 2 OTHER STATEMENTS OF OFFERORS
- ----------------------------------------------------------------------------------------------------------------------------------
X G CONTRACT ADMINISTRATION DATA 2 X L INSTRS., CONDS., AND NOTICES TO OFFERORS
- ----------------------------------------------------------------------------------------------------------------------------------
X H SPECIAL CONTRACT REQUIREMENTS 2 X M EVALUATION FACTORS FOR AWARD
- ----------------------------------------------------------------------------------------------------------------------------------
OFFER (Must be fully completed by offeror)
- ----------------------------------------------------------------------------------------------------------------------------------
NOTE: Item 12 does not apply if the solicitation includes the provisions at 52.214-16. Minimum Bid Acceptance Period.
- ----------------------------------------------------------------------------------------------------------------------------------
12. In compliance with the above, the undersigned agrees, if this offer is accepted within _______ calendar days (60 calendar days
unless a different period is inserted by the offeror from the date for receipt of offers specified above, to furnish any or all
items upon which prices are offered at the price set opposite each item, delivered at the designated point(s), within the time
specified in the schedule.
- ----------------------------------------------------------------------------------------------------------------------------------
13. DISCOUNT FOR PROMPT PAYMENT 10 CALENDAR DAYS 20 CALENDAR DAYS 30 CALENDAR DAYS CALENDAR
See Section 1, Clause No. 52-232-8) % % %
- ----------------------------------------------------------------------------------------------------------------------------------
14. ACKNOWLEDGMENT OF AMENDMENTS AMENDMENT NO. DATE AMENDMENT NO. DATE
The offeror acknowledges receipt of amend- --------------------------------------------------------------------------------
ments to the SOLICITATION for offerors and --------------------------------------------------------------------------------
related documents numbered and dated:
- ----------------------------------------------------------------------------------------------------------------------------------
15A. NAME NAME AND TITLE OF PERSON AUTHORIZED TO SIGN
AND OFFER (Type or print)
ADDRESS ALLIED TECHNOLOGY GROUP, INC. U.S. Small Bus. Admin Michael Wilson
OF 44075 Fremont Blvd 211 Main St., 4th Floor Director of Marketing
OFFEROR Fremont, CA 94538 San Francisco, CA 94105
- ----------------------------------------------------------------------------------------------------------------------------------
15B TELEPHONE NO. (Include area code) ___ 15C. CHECK IF REMITTANCE ADDRESS 17. SIGNATURE 18. OFFER DATE
IS DIFFERENCE FROM ABOVE - ENTER
415-490-3008 ___ SUCH ADDRESS IN SCHEDULE. /s/ Michael Wilson 3-11-91
- ----------------------------------------------------------------------------------------------------------------------------------
AWARD (To be completed by Government)
- ----------------------------------------------------------------------------------------------------------------------------------
19. ACCEPTED AS TO ITEMS NUMBERED 20. AMOUNT 21. ACCOUNTING AND APPROPRIATION
ALL ITEMS BASE YEAR $872,885.00 SEE INDIVIDUAL DELIVERY ORDERS
- ----------------------------------------------------------------------------------------------------------------------------------
22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:
23. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM
10 U.S.C. 2304 (c) 21 U.S.C 253(c) ?copies unless otherwise specified 25
- ----------------------------------------------------------------------------------------------------------------------------------
24. ADMINISTERED BY (if other than Item 7) CODE_________ 25. PAYMENT WILL BE MADE BY CODE _______________
Finance & Accounting,
Commercial Accts, AFZI-RA-C Fort Iwin,
- ----------------------------------------------------------------------------------------------------------------------------------
25. NAME OF CONTRACTING OFFICER (Type or print) 27. UNITED STATES OF AMERICA
SEE SIGNATURE PAGE SEE SIGNATURE PAGE
Signature of Contracting Officer
- ----------------------------------------------------------------------------------------------------------------------------------
IMPORTANT - Award to be made on this form, or on standard Form 26, or by other authorized official written notice.
- ----------------------------------------------------------------------------------------------------------------------------------
ISN 7540-01-152-8064 33-132 STANDARD FORM
PREVIOUS EDITION NOT USABLE
</TABLE>
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.
<PAGE>
PRIME CONTRACT NO. DAKF04-92-D-0007
SUB-CONTRACT NO. 9-92-3-1046
SIGNATURE PAGE
8 (a) SUB-CONTRACTOR
Allied Technology Group, Inc.
ADDRESS 44075 Fremont Blvd.
Fremont CA 94538
BY: ALLIED TECHNOLOGY GROUP INC.
-------------------------------
NAME & TITLE Michael L. Wilson
-----------------------
Director of Marketing DATE: JUN 02 1992
- -----------------------------------
PRIME CONTRACTOR
SMALL BUSINESS ADMINISTRATION
ADDRESS 211 Main Street, 4th Floor
San Francisco, CA 94105
UNITED STATES OF AMERICA
BY: /s/ Patricia Spikener
--------------------------------
NAME: Patricia Spikener
------------------------------
CONTRACTING OFFICER DATE: JUN 02 1992
ACQUISITION OFFICE CONTRACTING DIVISION, DOC, NTC
ADDRESS POST OFFICE BOX 10039
FORT IRWIN, CALIFORNIA 92310-5000
UNITED STATES OF AMERICA
BY: /s/ Tammy Sanchez
--------------------------------
NAME: TAMMY SANCHEZ
------------------------------
CONTRACTING OFFICER DATE: 11 Jun 92
<PAGE>
SECTION B
SUPPLIES OR SERVICES AND PRICES/COSTS
<TABLE>
<CAPTION>
ITEM DESCRIPTION ESTIMATED U/M U/P AMOUNT
QUANTITY
<S> <C> <C> <C> <C> <C>
0001 BASE YEAR
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0001AA TEMPORARY IMPACT AREAS: AREAS THAT HAVE 200 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
ALREADY BEEN SURFACE CLEARED AT LEAST WITH THE SECURITIES AND EXCHANGE COMMISSION.]
ONCE AND MUST BE SURFACE CLEARED AFTER
EACH DUD PRODUCING FIRING EXERCISE.
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0001AB REPORTED HAZARD AREAS: AREAS THAT MAY 150 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
OR MAY NOT HAVE BEEN SURFACE CLEARED BUT WITH THE SECURITIES AND EXCHANGE COMMISSION.]
WHERE SIGHTINGS OF ORDNANCE ARE REPORTED
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0002 OPTION YEAR ONE
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0002AA TEMPORARY IMPACT AREAS: AREAS THAT HAVE 200 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
ALREADY SEEN SURFACE CLEARED AT LEAST WITH THE SECURITIES AND EXCHANGE COMMISSION.]
ONCE AND MUST BE SURFACE CLEARED AFTER
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED
ITEM DESCRIPTION QUANTITY U/M U/P AMOUNT
<S> <C> <C> <C> <C> <C> <C>
0002AA (Continued)
EACH DUD PRODUCING FIRING EXERCISE.
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0002AB REPORTED HAZARD AREAS: AREAS THAT MAY 150 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED
OR MAY NOT HAVE BEEN SURFACE CLEARED BUT SEPARATELY WITH THE SECURITIES AND EXCHANGE
WHERE SIGHTINGS OF ORDNANCE ARE REPORTED COMMISSION.]
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0003 OPTION YEAR TWO
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0003M TEMPORARY IMPACT AREAS: AREAS THAT HAVE 200 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED
ALREADY BEEN SURFACE CLEARED AT LEAST SEPARATELY WITH THE SECURITIES AND EXCHANGE
ONCE AND MUST BE SURFACE CLEARED AFTER COMMISSION.]
EACH DUD PRODUCING FIRING EXERCISE.
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0003A6 REPORTED HAZARD AREAS: AREAS THAT MAY 150 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED
OR MAY NOT HAVE BEEN SURFACE CLEARED BUT SEPARATELY WITH THE SECURITIES AND EXCHANGE
WHERE SIGHTINGS OF ORDINANCE ARE REPORTED COMMISSION.]
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED
ITEM DESCRIPTION QUANTITY U/M U/P AMOUNT
<S> <C> <C> <C> <C>
0003AB (Continued)
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0004 OPTION YEAR THREE
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0004M TEMPORARY IMPACT AREAS: AREAS THAT HAVE 200 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED
ALREADY BEEN SURFACE CLEARED AT LEAST SEPARATELY WITH THE SECURITIES AND EXCHANGE
ONCE AND MUST BE SURFACE CLEARED AFTER COMMISSION.]
EACH DUO PRODUCING FIRING EXERCISE.
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0004AB REPORTED HAZARD AREAS: AREAS THAT MAY 150 KM [CONFIDENTIAL INFORMATION OMITTED AND FILED
OR MAY NOT HAVE SEEN SURFACE CLEARED BUT SEPARATELY WITH THE SECURITIES AND EXCHANGE
WHERE SIGHTINGS OF ORDNANCE ARE REPORTED COMMISSION.]
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0005 OPTION YEAR FOUR
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED
ITEM DESCRIPTION QUANTITY U/M U/P AMOUNT
<S> <C> <C> <C> <C> <C>
0005 (Continued)
FOB: Destination
0005AA TEMPORARY IMPACT AREAS: AREAS THAT HAVE 200 KM [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
ALREADY BEEN SURFACE CLEARED AT LEAST OMITTED AND FILED OMITTED AND FILED
ONCE AND MUST BE SURFACE CLEARED AFTER SEPARATELY WITH THE SEPARATELY WITH THE
EACH DUD PRODUCING FIRING EXERCISE. SECURITIES AND EXCHANGE SECURITIES AND EXCHANGE
COMMISSION.] COMMISSION.]
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
0005AB REPORTED HAZARD AREAS: AREAS THAT MAY 150 KM [CONFIDENTIAL INFORMATION [CONFIDENTIAL INFORMATION
OR MAY NOT HAVE SEEN SURFACE CLEARED BUT OMITTED AND FILED OMITTED AND FILED
WHERE SIGHTINGS OF ORDNANCE ARE REPORTED SEPARATELY WITH THE SEPARATELY WITH THE
SECURITIES AND EXCHANGE SECURITIES AND EXCHANGE
COMMISSION.] COMMISSION.]
Ship To: S46
DPTMSEC TRAINING
FORT IRWIN, CA 92310-5000
FOB: Destination
</TABLE>
END OF SECTION B
B-4
<PAGE>
SECTION C
DESCRIPTIONS/SPECIFICATIONS/WORK STATEMENT
C.l General. Since activation of the National Training Center, the
northern portion of Fort Irwin has been used as a live fire training area. As
such, large amounts of explosive ordnance have impacted in the area.
C.l.l Scope of work. The Contractor shall provide qualified personnel and
equipment as necessary to surface clear what has been designated as the live
fire area. Types of ammunition to be encountered will range from 5.56mm to
155mm artillery rounds and MK82 bombs. Pyrotechnic devices will also be
encountered in some quantity. Unexploded ordnance and pyrotechnics can be
expected to be encountered in any portion of the live fire area with
concentration around known objective points.
C.l.2 Personnel. The Contractor shall provide a team of qualified explosive
ordnance disposal personnel. Management personnel and first-line supervisors
shall be graduates of the Naval School of Explosive Ordnance Disposal at Indian
Head, Maryland. The project manager shall have demonstrated successful
management of range clearing operations with at least three years of experience
in this field.
C.1.3 Security of Classified Items and Information. As a minimum, the
Contractor's Project Manager shall possess a SECRET security clearance.
C.1.4 Accident/Incident/Safety Plan. The Contractor shall implement and
adhere to the Accident/Incident/Safety Plan as required by Section L, Paragraph
L.20I(b).
C.1.4.1 Any proposed changes in the plan, after contract award, shall be
submitted to the Government for approval prior to implementing.
C.1.5 Quality Control Plan. The Contractor shall implement and adhere to the
Quality Control Plan required by Section L, Paragraph L.201(c).
C.1.5.1 The Contractor shall maintain records of all quality control
inspections conducted. These records shall contain the dates of inspection,
area inspected, deficiencies noted and corrective actions taken. This
documentation shall be made available to the Government upon request.
C.1.5.2 Any proposed changes in the plan after the contract award shall be
submitted to the Government for approval prior to implementing.
C-1
<PAGE>
C.1.6 Operating Hours. The normal working hours of the installation are
0800 to 1630 hours, Monday through Friday. The Contractor may be required to
work Saturdays, Sundays and Holidays due to access into the live fire area.
Scheduled access in the live fire area will be coordinated with Operations Group
DTOC, Range Control and Live Fire Sections on a regular basis (i.e., prior to
or during a rotational training exercise). Problems in access will be brought
to the attention of DPTMSEC personnel for resolution. The NTC, due to its
mission, maintains Range Control Operations 24 hours a day, 365 days a year.
C.1.7 Management and Administration Plan. The Contractor shall implement and
adhere to the Management and Administration Plan required by Section L,
Paragraph L.20II.
C.1.7.1 Any proposed changes in the plan shall be submitted to the Government
for approval prior to implementing.
C.1.8 Access to Facilities. The Contractor may attend Range/Training Area
Utilization Conferences and, with prior coordination through DPTMSEC Training
Division, contact Operations Group; Live Fire Management Section to schedule
clearance operations on a non-interference basis. On each scheduled work day of
clearance, the contractor shall establish communications with Fort Irwin Range
Control and coordinate entrance to work areas. The Contractor shall maintain
communications with Range Control throughout the work day and report work shut
down and departure from the area.
C.1.8.1 The Contractor shall abide by the frequency management procedures as
prescribed in NTC Regulation 105-1.
C.1.9 Safety. The Contractor shall implement a safety program in accordance
with applicable Army, Federal, State and local regulations and directives.
C.1.9.1 The Contractor shall require the use of protective clothing and
equipment by employees in accordance with Sub Part I, 29 CFR 1910 OSHA Standard
related to the employee.
C.1.9.2 The Contractor shall be required to wear a red or orange vest (that
may be easily spotted from the air) when in the live fire area.
C.l.9.3 The Contractor, in accordance with AR 385-10, AR 358-63 and NTC Reg
350-3, shall:
C.1.9.3.1 Ensure that the applicable safety standards are followed by his
employees.
C.1.9.3.2 Ensure compliance with all practical precautions to protect life and
property in the performance of the contract. (Reference paragraph C.1.4)
C-2
<PAGE>
C.1.9.3.3 Ensure all personnel who participate in range clearance view Army
Training Film 9-6153.
C.1.9.3.4 Present safety briefings prior to initiation of any range clearance
operation to all concerned employees. The briefing will include, as a minimum,
the following: information concerning the area to be cleared; types and classes
at ordnance items likely to be encountered and associated hazards, basic
explosive safety, internal and external communication procedures,
accident/incident procedures, precautions to prevent hot/cold weather injuries,
and situation-peculiar instructions.
C.1.9.3.5 Contractor shall coordinate with Range Safety Officer, 259th EOD
Detachment, Operations Group Live Fire and NTC Safety Officer the first work day
of each week to ensure that any changes or new safety requirements that can
affect contractor work procedures or safety can be identified.
C.1.10 Conservation of Utilities. The Contractor shall abide and participate
in the installation conservation program.
C.1.11 Physical Security. The Contractor shall be responsible for the
physical security of all contractor and government-furnished equipment, supplies
and facilities.
C.1.12 Identification of Employees. The Contractor shall be responsible for
furnishing identification (badges) to each person employed on this contract.
This identification must be displayed at all times and shall include as a
minimum: employee picture, name, social security number, contract number,
contractor's name and a badge number.
C.2 Definitions/Acronyms.
Definitions and Acronyms included in AR 310-25 and AR 310-50, as well
as the following terms, have been used in this contract.
C.2.1 Definitions.
C.2.1.1 Coordination. As used herein refers to the active participation
between elements of the Services having an interest in range activities.
C.2.1.2 Explosive Ordnance (EO). All munitions containing explosives and
warheads: guided and ballistic missiles (to include ordnance missile body and
residue); artillery, mortar, rocket, and small arms ammunition; all mines,
torpedoes and depth charges: demolition charges; pyrotechnics; clusters and
dispensers: cartridge and propellant actuated devices; electro-explosive
devices; clandestine and improvised explosive devices: and all similar or
related items or components explosive in nature. Not all of the types listed
will be encountered in the performance of this contract.
C-3
<PAGE>
C.2.l.3 Explosive Ordnance Disposal (EOD). The detection, identification,
field evaluation, rendering-safe, recovery and final disposal of unexploded
explosive ordnance. It may also include the rendering-safe and/or disposal of
explosive ordnance which has become hazardous by damage or deterioration when
the disposal of such explosive ordnance is beyond the capabilities of personnel
normally assigned the responsibility of routine disposal.
C.2.1.4 Explosive Ordnance Disposal Incident (EOD incident). The suspected or
detected presence of unexploded explosive ordnance, or damaged explosive
ordnance, which constitutes a hazard to operations, installations, personnel or
material. Not included in this definition are the accidental arming or other
conditions that develop during the manufacture of high explosive material,
technical service assembly operations, or the laying of mines and demolition
charges. Such situations will be neutralized by qualified personnel of the
organization performing the manufacturing, assembling or placement of mines and
demolition charges. Such organizations may request assistance from explosive
ordnance disposal units.
C.2.l.5 EOD Procedures. Those particular courses or modes of action for access
to, recovery, rendering-safe and final disposal of explosive ordnance or any
hazardous material associated with an EOD incident.
C.2.l.6 Unexploded Explosive Ordnance (UXO). Explosive ordnance which has been
primed, fused, armed or otherwise prepared for action and which has been fired,
dropped, launched, projected or placed in such a manner as to constitute a
hazard to operations, installations, personnel or material and remains
unexploded either through malfunction or design or for any other cause.
C.2.1.7 Surface Clearance is a range clearance where the surface area is
systematically searched visually for unexploded and/or other munition
contamination and are removed and disposed of properly.
C.2.2 Acronyms.
C.2.2.l ASP - Ammunition Supply Point.
C.2.2.2 DA - Department of the Army.
C.2.2.3 EO - explosive ordnance.
C.2.2.4 EOD - explosive ordnance disposal;
C.2.2.5 OIC - Officer in Charge.
C.2.2.6 PDO - Property Disposal Officer.
C.2.2.7 RSP - render safe procedures.
0.2.2.8 SOP - standing operating procedures.
0.2.2.9 UXO - unexploded ordnance.
<PAGE>
C.2.2.10 DPDO - Defense Property Disposal Office.
C.2.2.11 MCLB - Marine Corps Logistics Base.
C.3 Government-Furnished Property and Service.
C.3.1 The Government will issue delivery orders, as required and at the
beginning of each contract year, which specify the location and amount of area
to be cleared.
C.3.1.1 The government will provide a piece of land, a 200' x 250' site rent
free, with accessible electricity, if required. The site will be designated at
the time of contract award. The Contractor will be responsible for establishing
a Contract for Sale of Utilities Services, with the Directorate of Engineering
and Housing, in accordance with AR 420-41. This site will also be utilized as
the designated collection point for residue (see para C.5.4).
C.3.1.2 The Contractor will maintain this site in a neat and orderly manner to
include keeping the area free of trash. If the site is fenced, the Contractor
will maintain the area to within 50 feet on both sides of the fence.
C.4 Contractor Furnished Items.
C.4.1 The Contractor shall furnish all personnel and equipment as necessary
to complete the contract with the exception of the 200' x 250' site.
C.4.2 The Contractor may procure, lease or otherwise cause to be placed on
the designated site, structures for use as office and administration,
maintenance and storage areas. These structures should be of a semi-permanent
nature (i.e., trailers or pre-fab buildings).
C.5 Specific Tasks. All tasks shall be performed in such a manner as to
conform to the standards required by the Performance Work Statements.
C.5.1 The Contractor shall have a qualified EOD person inspect all
unexploded ordnance items to ensure they can or cannot be moved.
C.5.2 The Contractor shall clear all ordnance items except armored and wheel
vehicle hulls, training mines and pyrotechnics installed by Operations Group
Live Fire Team. Residue can be considered as all metal, rubber, plastic or
wooden materials in excess of six (6) inches in length or a weight of four (4)
ounces or more. The Contractor shall, on a daily basis, mark all unexploded
ordnance items that cannot be moved, by using metal engineer stakes with a
minimum of five (5) feet above the ground and a red banner of at least twenty
four (24) inches in length attached to the stake. Metal stakes will be on the
north side of the unexploded ordnance and six (6) feet from the unexploded
ordnance item.
C-5
<PAGE>
C.5.3 The Contractor shall move all unexploded ordnance items, that have
been inspected by a qualified EOD person and rendered safe for movement, to a
location designated by the Government to be disposed of by 259th EOD Detachment.
C.5.4 The Contractor shall report all marked unexploded ordnance items to
259th EOD Detachment, Range Control and Operations Group Live Fire daily.
Information will include the following type of ordnance, quantity and location
of ordnance with six (8) digit coordinates.
C.5.5 The Contractor will positively identify and certify, in accordance
with Defense Logistics Agency letter dated 15 Feb 84, paragraph 13e, all
ordnance and target residue to contain no explosive and/or hazardous material
(to include incompletely spent white phosphorus) and remove same to a designated
collection point or staging area. The Contractor shall be responsible for
securing all residue which is stored at the designated collection point (the
200' x 250' site as stated in paragraph C.3.1.l).
C.5.6 The only personnel authorized to sign the certification of non-
hazardous material will be those contractor personnel who are school trained
from the Naval School of Explosive Ordnance Disposal at Indian Head, Maryland.
C.5.7 The Contractor shall dispose of collected residue when no more than 40
tons has been accumulated or as directed by the Contracting Officer.
C.5.7.l The Contractor shall check the area where UXO/duds were detonated by
259th EOD Detachment and remove all residue.
C.5.8 The Contractor shall dispose of residue in accordance with the
instructions contained in Attachment C (Defense Logistics Agency letter dated 15
Feb 83).
C.5.9 The Contractor, in the course of decontamination, may discover
engineer field fortification material (metal pickets, wood beams, wire, etc.).
Serviceable engineer items will be reported to Operations Live Fire.
C.5.9.1 The Contractor shall remove from the field site all non-recoverable
ordnance residue and turn-in to Fort Irwin Sanitary Landfill in accordance with
the Landfill Standing Operating Procedures.
C.5.9.2 The Contractor shall turn-in any serviceable items of ammunition found
during range decontamination that can be safely handled and transported (i.e..
belts of machinegun ammunition) to the Ammunition Supply Point (ASP).
C.5.10 The Contractor shall obtain a certified weight ticket at Fort Irwin
weight scales prior to transporting recoverable residue to the Defense Property
Disposal Office (DPDO), Marine Corps Logistics Base (MCLB), Barstow, CA. This
weight will be verified by the Defense Property Disposal Office, in accordance
with Defense Logistics Agency Letter dated 15 Feb 83. A record of both
certified weight turn-ins will be maintained by the Contractor
<PAGE>
C.5.11 The Contractor shall maintain auditable records and documentation of
specific areas cleared, locations of ordnance which has failed to detonate, a
statement that same was destroyed, and residue removed. This includes copies of
documentation turned-in to DPDO, MCLB and certifications. Maintain a record of
the date and trips of loads and estimated quantities of trash delivered to the
landfill.
C.5.12 The Contractor shall maintain copies of all records regarding
decontamination and disposal of residue for the life of this contract. These
records will be provided to the Government upon expiration of this contract.
C.5.13 The Contractor shall report to the Contracting Officer conditions
outside of his responsibilities which adversely effect his ability to perform.
C.5.14 The Contractor shall be present during the final inspection by the
Government (DPTMSEC Training) of cleared areas. (See Section E, paragraphs E.2
and E.4)
C.6 Applicable Documents.
The Contractor must abide by and adhere to the documents listed in
this paragraph. These documents can be obtained from the Government upon
request.
DOCUMENT TITLE MANDATORY
FM 9-15 Explosive Ordnance Disposal Service X
and Unit Operations, July 1981
Appendix B
AR 75-15 Responsibilities and Procedures for X
Explosive Ordnance Disposal,
1 Nov 78 chapters 3 and 6
FORSCOM SUPPL to AR 75-15
TM 9-1300-206 Ammunition and Explosives Standards, X
Aug 73, Appendix E, paragraph E-26(c)
AR 385-10 The Army Safety Program, 1 Feb 79, entire X
AR 385-63 Policies and Procedures for Firing X
Ammunition for Training, Target
Practice and Combat, 15 Nov 83,
paragraph 2-9
NTC Reg 350-3 Range Regulations, 1 Nov 84 X
DLA Letter Disposal of Excess Personal Property X
in the Southern California Desert
Area, 15 - Feb 03
NTC Letter Letter of Instruction, Turn-in and X
Withdrawal Procedures for Defense
Property Disposal Office, 11 Jan 85
<PAGE>
SECTION E
INSPECTION AND ACCEPTANCE
E.1 52.252-0002 CLAUSES INCORPORATED BY REFERENCE (JUN 1988)
This contract incorporates the following clauses by reference,
with the same force and effect as if they were given in full
text. Upon request, the Contracting Officer will make their
text available.
I. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1)
CLAUSES
II. DOD FAR SUPPLEMENT (48 CFR CHAPTER 2) CLAUSES
(End of clause)
(R 7-001)
E.2 52.246-0004 INSPECTION OF SERVICES--FIXED-PRICE (APR 1984)
(Reference 46.304)
E.3 52.246-0016 RESPONSIBILITY FOR SUPPLIES (APR 1984)
(Reference 46.316)
E.4 52.000-4611 INSPECTION AND ACCEPTANCE
Inspection and acceptance shall be by the OIC DPTMSEC Training
or his designated representative. Inspection of the cleared
areas shall be made in 5 square kilometer parcels within 48
hours after notification of DPTMSEC Training.
END OF SECTION E
<PAGE>
SECTION F
DELIVERIES OR PERFORMANCE
F.1 CONTRACT PERIOD
The base period of any contract resulting from this
solicitation shall be approximately twelve months. The
Government expects to award a contract by 15 June 1991, with
the period of performance to be 1 July 1991 through 31 June
1992. If awarded after 15 May 1990, there may be a
corresponding change in the performance period which will be
incorporated by unilateral modification to the contract.
Period of performance for base period will end 31 June 1992.
First Option year from 1 July 1992 through 31 June 1993;
Second Option year from 1 July 1993 through 3l June 1994;
Third Option year from 1 July 1994 through 31 June 1995; and
Fourth Option year from 1 July 1995 through 3l June 1996.
F.2 HOLIDAYS
The following legal holidays are observed at Fort Irwin,
California:
January 1st
3rd Monday in January
3rd Monday in February
Last Monday in May
July 4th
1st Monday in September
2nd Monday in October
November 11th
4th Tuesday in November
December 25th
When one of the above designated legal holidays falls on a
Sunday, the following Monday will be observed as a legal
holiday. When a legal holiday falls on a Saturday, the
preceding Friday is observed as a holiday by U.S. Government
agencies. Normal working hours at Fort Irwin are 0730-1630.
<PAGE>
F.3 DELIVERY ORDERS
Delivery orders will be placed as needed for contract line
items 0001 and 0002. The estimated quantity and dollar amount
shown for each item on each delivery order is a MAXIMUM
ceiling that shall not be exceeded by the contractor during
actual performance without prior approval of the Contracting
Officer.
F.4 ORAL ORDERS
Only the Contracting Officer or his designated representative
within the Contracting office may place oral orders under this
contract. Such orders shall be confirmed in writing not later
than the next business day. (Reference Clause I-73.)
F.5 ACTIVITIES AUTHORIZED TO ISSUE ORDERS UNDER CONTRACT
The Contracting Division, Fort Irwin, California is the only
activity authorized to issue orders under this contract.
END OF SECTION F
F-2
<PAGE>
SECTION G
CONTRACT ADMINISTRATION DATA
G.1 52.000-4607 CONTRACT ADMINISTRATION OFFICE
(Offeror complete when applicable) Offeror's office which
will administer any contract resulting from this
solicitation, if different from that shown on page 1 of
this document.
Allied Technology Group, Inc.
-----------------------------
(name)
44075 Fremont Blvd.
-----------------------------
(Street Address
Fremont, CA 94538
-----------------------------
(City, State, Zip)
G.2 52.000-4608 ADDRESS FOR PAYMENT
Bidders are requested to indicate below the address to which
payment should be mailed, if such address is different from
the one shown on Page 1 of this solicitation.
Allied Technology Group, Inc.
------------------------------
(Name)
44075 Fremont Blvd.
------------------------------
(Mailing Address)
Fremont, CA 94538
------------------------------
(City, State, Zip)
415-490-3008
------------------------------
(Area Code) Telephone Number)
G-1
<PAGE>
G.3 52.000-4703 ADMINISTRATION
Administration of this contract will be performed by
the Contracting Officer, Directorate of Contracting,
Contracting Division, Building 505, Fort Irwin,
California 92310-5000. Telephone Number (619) 386-3892.
G. 4 CONTRACTING OFFICER'S REPRESENTATIVE (COR)
A Contracting Officer's Representative (COR) may be
appointed to review and evaluate contractor
performance. The contractor will be provided a copy of
the COR letter of appointment citing COR authority and
limits to such authority.
END OF SECTION G
G-2
<PAGE>
SECTION H
SPECIAL CONTRACT REQUIREMENTS
H.1 52.000-4501 MOBILIZATION AND OTHER CONTINGENCY PLANNING (CIL 83-6)
a. The attention of the contractor is invited to the
clause in the general contract clauses entitled "CHANGES".
This clause permits the Contracting Officer to make changes
within the general scope of the contract to include the
definition of services, and place and time of performance.
b. Among the circumstances in which the provisions of this
clause may be invoked is a general or limited mobilization of
reserve forces or an emergency which impacts upon contract
performance. In the event of either eventuality, the
contractor will be expected to promptly take whatever measures
are needed to meet any new demands placed upon it. Such
demands may well require increases in contractor furnished
property, as well as extended work hours and expansion of the
contract workforce.
c. To ensure that Government operations which depend upon
the services provided hereunder can proceed with no or only
minimal disruption, the contractor shall during the life of
this contract anticipate the possibility of a mobilization or
similar emergency and the steps it will need to take to
rapidly expand its contract capabilities to meet the exigency.
H.2 52.000-4503 TRAFFIC REGULATIONS
ALL Contractor employees performing services under this
contract shall comply with the California Vehicle Code and the
Fort Irwin Motor Vehicle Traffic Regulations and shall
register their vehicles with the Provost Marshal.
H-1
<PAGE>
H.3 52.000-4504 THE FOLLOWING KINDS AND MINIMUM AMOUNTS OF INSURANCE ARE
REQUIRED
a. Worker's Compensation and Employer's Liability
Insurance;
In the amount of $250,000
b. General Liability Insurance for Bodily Injury;
Minimum per occurrence -$750,000
c. Automobile Liability Insurance;
Minimum per person $200,000
Minimum per occurrence for bodily injury $500,000
Minimum per occurrence for property damage $20,000
NOTE: All Certificates of Insurance forwarded to the
Contracting Officer must be identified by applicable contract
number.
END OF SECTION H
H-2
<PAGE>
SECTION I
CONTRACT CLAUSES
I.1 52.252-0002 CLAUSES INCORPORATED BY REFERENCE (JUN 1988)
This contract incorporates the following clauses by reference,
with the same force and effect as if they were given in full
text. Upon request, the Contracting Officer will make their
text available.
I. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1)
CLAUSES
II. DOD FAR SUPPLEMENT (48 CFR CHAPTER 2) CLAUSES
(End of clause)
(R 7-001)
I.2 52.202-0001 DEFINITIONS (APR 1984)
(Reference 2.201)
I.3 52.203-0001 OFFICIALS NOT TO BENEFIT (APR 1984)
(Reference 3.102-2)
I.4 52.203-0003 GRATUITIES (APR 1984)
(Reference 3.202)
I.5 52.203-0005 COVENANT AGAINST CONTINGENT FEES (APR 1984)
(Reference 3.404(c))
I.6 52.203-0006 RESTRICTIONS ON SUBCONTRACTOR SALES TO THE GOVERNMENT
(JUL 1985)
(Reference 3.503-2)
I.7 52.203-0007 ANTI-KICKBACK PROCEDURES (OCT 1988)
(Reference 3.502-3)
I.8 52.203-0012 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL
TRANSACTIONS (JAN 1990)
(Reference 3.808(b))
I.9 52.203-7001 SPECIAL PROHIBITION ON EMPLOYMENT (MAR 1989)
(Reference 3.571-5)
I-1
<PAGE>
I.10 52.203-7002 STATUTORY COMPENSATION PROHIBITIONS AND REPORTING
REQUIREMENTS RELATING TO CERTAIN FORMER DEPARTMENT OF
DEFENSE (DOD) EMPLOYEES (APR 1988)
(Reference 3.170-5)
I.11 52.204-7005 OVERSEAS DISTRIBUTION OF DEFENSE SUBCONTRACTS (AUG 1988)
(Reference 4.674-3)
I.12 52.205-7000 RELEASE OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS (FEB
1989)
(Reference 5.470(c))
I.13 52.212-0008 DEFENSE PRIORITY AND ALLOCATION REQUIREMENTS (MAY 1986)
(Reference 12.304(b))
I.14 52.215-0001 EXAMINATION OF RECORDS BY COMPTROLLER GENERAL (APR 1984)
(Reference 15.106-1(b))
I.15 52.215-0002 AUDIT--NEGOTIATION (DEC 1989)
(Reference 15.106-2(b))
I.16 52.215-0022 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA (APR
1988)
(Reference 15.804-8(a))
I.17 52.215-0024 SUBCONTRACTOR COST OR PRICING DATA (APR 1985)
(Reference 15.804-8(c))
I.18 52.215-0033 ORDER OF PRECEDENCE (JAN 1986)
(Reference 15.406-3(b))
I.19 52.219-0008 UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL
DISADVANTAGED BUSINESS CONCERNS (FEB 1990)
(Reference 19.708(a))
I.20 52.219-0016 LIQUIDATED DAMAGES--SMALL BUSINESS SUBCONTRACTING PLAN (AUG
1989)
(Reference 19.708(b)(2)
I-2
<PAGE>
I.21 52.222-0003 CONVICT LABOR (APR 1984)
(Reference 22.202)
I.22 52.222-0004 CONTRACT WORK HOURS AND SAFETY STANDARDS ACT--OVERTIME
COMPENSATION
(MAR 1986)
(Reference 22.305)
I.23 52.222-0024 PREAWARD ON-SITE EQUAL OPPORTUNITY COMPLIANCE REVIEW (APR
1984)
(Reference 22.810(c))
I.24 52.222-0026 EQUAL OPPORTUNITY (APR 1984)
(Reference 22.810(e))
I.25 52.222-0035 AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM ERA
VETERANS
(APR 1984)
(Reference 22.1308(a))
I.26 52.222-0036 AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (APR 1984)
(Reference 22.1408(a))
I.27 52.222-0037 EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS AND VETERANS
OF THE VIETNAM ERA (JAN 1988)
(Reference 22.1308(b))
I.28 52.222-0041 SERVICE CONTRACT ACT OF 1965, AS AMENDED (MAY 1989)
(Reference 22.1006(a))
I.29 52.223-0002 CLEAN AIR AND WATER (APR 1984)
(Reference 23.105(b))
I.30 52.223-0003 HAZARDOUS MATERIAL IDENTIFICATION AND MATERIAL SAFETY DATA
(DEC 1989)
(Reference 23.303)
I.31 52.223-0006 DRUG-FREE WORKPLACE (JUL 1990)
(Reference 23.505(b))
I-3
<PAGE>
I.32 52.223-7500 DRUG-FREE WORK FORCE (SEP 1988)
(Reference 23.7504)
I.33 52.225-0013 RESTRICTIONS ON CONTRACTING WITH SANCTIONED PERSONS (MAY
1989)
(Reference 25.1005(b))
I.34 52.225-7009 PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (APR 1990)
(Reference 25.7002(b))
I.35 52.227-0001 AUTHORIZATION AND CONSENT (APR 1984)
(Reference 27.201-2(a))
I.36 52.227-0002 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT
INFRINGEMENT
(APR 1984)
(Reference 27.202-2)
I.37 52.227-0003 PATENT INDEMNITY (APR 1984)
(Reference 27.203-1(b))
I.38 52.223-0005 INSURANCE--WORK ON A GOVERNMENT INSTALLATION (SEP 1989)
(Reference 28.310)
I.39 52.229-0003 FEDERAL, STATE, AND LOCAL TAXES (APR 1984)
(Reference 29.401-3)
I.40 52.229-0005 TAXES--CONTRACTS PERFORMED IN U.S. POSSESSIONS OR PUERTO
RICO (APR 1984)
(Reference 29.401-5)
I.41 52.231-7000 SUPPLEMENTAL COST PRINCIPLES (APR 1984)
(Reference 31.201)
I.42 52.232-0001 PAYMENTS (APR 1984)
(Reference 32.111(a)(1)
I.43 52.232-0008 DISCOUNTS FOR PROMPT PAYMENT (APR 1989)
(Reference 32.111(c)(1)
I-4
<PAGE>
I.44 52.232-0011 EXTRAS (APR 1984)
(Reference 32.111(d)(2)
I.45 52.232-0017 INTEREST (APR 1984)
(Reference 32.617(a))
I.46 52.232-0019 AVAILABILITY OF FUNDS FOR THE NEXT FISCAL YEAR (APR 1984)
(Reference 32.705-1(b))
I.47 52.232-0023 1 ASSIGNMENT OF CLAIMS (JAN 1986)--ALTERNATE I (APR 1984)
(Reference 32.806(a)(2)
I.48 52.232-0025 PROMPT PAYMENT (APR 1989)
(Reference 32.908(c))
I.49 52.233-0001 DISPUTES (APR 1984)
(Reference 33.214)
I.50 52.233-0003 PROTEST AFTER AWARD (AUG 1989)
(Reference 33.106(b))
I.51 52.233-7000 CERTIFICATION OF REQUESTS FOR ADJUSTMENT OR RELIEF
EXCEEDING $100,000 (APR 1990)
(Reference 33.7000)
I.52 52.235-7004 FREQUENCY AUTHORIZATION (OCT 1966)
(Reference 35.071(e))
I.53 52.237-0002 PROTECTION OF GOVERNMENT BUILDINGS, EQUIPMENT, AND
VEGETATION (APR 1984)
(Reference 37.110(b))
I.54 52.243-0001 1 CHANGES--FIXED-PRICE (AUG 1987)--ALTERNATE 1 (APR 1984)
(Reference 43.205(a)(2)
I.55 52.243-7001 PRICING OF ADJUSTMENTS (APR 1984)
(Reference 43.205(S-71)
I-5
<PAGE>
I.56 52.244-0001 SUBCONTRACTS (FIXED-PRICE CONTRACTS) (JAN 1986)
(Reference 44.204(a)(1)
I.57 52.244-0005 COMPETITION IN SUBCONTRACTING (APR 1984)
(Reference 44.204(e))
I.58 52.245-0001 PROPERTY RECORDS (APR 1984)
(Reference 45.106(a))
I.59 52.245-0002 I GOVERNMENT PROPERTY (FIXED-PRICE CONTRACTS) (DEC 1989)
--ALTERNATE I (APR 1984)
(Reference 45.106(b)(2)
I.60 52.246-0025 LIMITATION OF LIABILITY--SERVICES (APR 1984)
(Reference 46.805(a)(4)
I.61 52.248-0001 VALUE ENGINEERING (MAR 1989)
(Reference 48.201)
I.62 52.249-0002 TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE)
(APR 1984)
(Reference 49.502(b)(1)
I.63 52.249-0008 DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) (APR 1984)
(Reference 49.504(a)(1)
I.64 52.203-0010 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY
(SEP 1990)
(a) The Government, at its election, may reduce the price
of a fixed-price type contract or contract modification and
the total cost and fee under a cost-type contract or
contract modification by the amount of profit or fee
determined as set forth in paragraph (b) of this Clause if
the head of the contracting activity or his or her designee
determines that there was a violation of subsection 27(a) of
the Office of Federal Procurement Policy Act, as amended (41
U.S.C. 423), as implemented in the FAR. In the case of a
contract modification, the fee subject to reduction is the
fee specified in the particular contract modification at the
time of
I-6
<PAGE>
execution, except as provided in subparagraph (b)(5) of this
clause.
(b) The price or fee reduction referred to in paragraph (a)
of this Clause shall be--
(1) For cost-plus-fixed-fee contracts, the amount of the
fee specified in the contract at the time of award;
(2) For cost-plus-incentive-fee contracts, the target fee
specified in the contract at the time of award,
notwithstanding any minimum fee or "fee floor" specified in
the contract;
(3) For cost-plus-award-fee contracts--
(i) The base fee established in the contract at the time of
contract award;
(ii) If no base fee is specified in the contract, 30 percent
of the amount of each award fee otherwise payable to the
Contractor for each award fee evaluation period or at each
award fee determination point.
(4) For fixed-price-incentive contracts, the Government
may--
(f) Reduce the contract target price and contract target
profit both by an amount equal to the initial target profit
specified in the contract at the time of contract award; or
(ii) If an immediate adjustment to the contract target price
and contract target profit would have a significant adverse
impact on the incentive price revision relationship under the
contract, or adversely affect the contract financing
provisions, the Contracting Officer may defer such adjustment
until establishment of the total final price of the contract.
The total final price established in accordance with the
incentive price revision provisions of the contract shall be
reduced by an amount equal to the initial target profit
specified in the contract at the time of contract award and
such reduced price shall be the total final contract price.
(5) For firm-fixed-price contracts or contract
modifications, by 10 percent of the initial contract price; 10
percent of the contract modification price; or a profit amount
determined by the Contracting Officer from records or
documents in existence prior to the date of the contract award
or modification.
(c) The Government may, at its election, reduce a prime
Contractor's price or fee in accordance with the procedures of
paragraph (b) of this clause for violations of the Act by its
subcontractors by an amount not to exceed the amount of profit
or fee reflected in the subcontract at the time the
subcontract was first definitively priced.
(d) In addition to the remedies in paragraphs (a) and (c)
of this clause, the Government may terminate this contract or
modification for default. The rights and remedies of the
Government specified herein are not exclusive, and are in
addition to any other rights and remedies provided by law or
under this contract.
(End of clause)
I-7
<PAGE>
I.65 52.209-0006 PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH
CONTRACTOR DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT
(MAY 1989)
(a) The Government suspends or debars Contractors to protect
the Government's interest. Contractors shall not enter into
any subcontract equal to or in excess of $25,000 with a
Contractor that has been debarred, suspended, or proposed for
debarment unless there is a compelling reason to do so. If a
Contractor intends to subcontract with a party that is
debarred, suspended, or proposed for debarment (see FAR 9.404
for information on the List of Parties Excluded from
Procurement Programs), a corporate officer or designee of the
Contractor shall notify the Contracting Officer, in writing,
before entering into such subcontract. The notice must include
the following:
(1) The name of the subcontractor;
(2) The Contractor's knowledge of the reasons for the
subcontractor being on the List of Parties Excluded from
Procurement Programs;
(3) The compelling reason(s) for doing business with the
subcontractor notwithstanding its inclusion on the List of
Parties Excluded from Procurement Programs; and
(4) The systems and procedures the Contractor has
established to ensure that it is fully protecting the
Government's interests when dealing with such subcontractor in
view of the specific basis for the party's debarment,
suspension, or proposed debarment.
(b) The Contractor's compliance with the requirements of
52.209-6 will be reviewed during Contractor Purchasing System
Reviews (see FAR Subpart 44.3).
(End of clause)
I.66 52.209-7001 ACQUISITIONS FROM SUBCONTRACTORS SUBJECT TO ON-SITE INSPECTION
UNDER THE INTERMEDIATE-RANGE NUCLEAR FORCES (INF) TREATY (JAN
1990)
(a) The Contractor shall not deny consideration for a
subcontract award under this contract to a potential
subcontractor subject to on-site inspection under the INF
Treaty solely or in part because of the actual or potential
presence of Soviet inspectors at the subcontractor's facility
unless the decision is approved by the Contracting Officer.
(b) The Contractor shall incorporate this clause, with
appropriate changes to identify properly the contracting
parties, including this paragraph (b), in all solicitations
and contracts in excess of the dollar
I-8
<PAGE>
Limitation Identified at FAR 13.000, except those for
commercial or commercial-type products (see FAR 11.001).
(End of clause)
I.67 52.212-0013 STOP-WORK ORDER (AUG 1989)
(a) The Contracting Officer may, at any time, by written
order to the Contractor, require the Contractor to stop all,
or any part, of the work called for by this contract for a
period of 90 days after the order is delivered to the
Contractor, and for any further period to which the parties
may agree. The order shall be specifically identified as a
stop-work order issued under this clause. Upon receipt of the
order, the Contractor shall immediately comply with its terms
and take all reasonable steps to minimize the incurrence of
costs allocable to the work covered by the order during the
period of work stoppage. Within a period of 90 days after a
stop-work is delivered to the Contractor, or within any
extension of that period to which the parties shall have
agreed, the Contracting Officer shall either--
(1) Cancel the stop-work order; or
(2) Terminate the work covered by the order as provided in
the Default, or the Termination for Convenience of the
Government, clause of this contract.
(b) If a stop-work order issued under this clause is
canceled or the period of the order or any extension thereof
expires, the Contractor shall resume work. The Contracting
Officer shall make an equitable adjustment in the delivery
schedule or contract price, or both, and the contract shall be
modified, in writing, accordingly, if--
(l) The stop-work order results in an increase in the time
required for, or in the Contractor's cost properly allocable
to, the performance of any part of this contract; and
(2) The Contractor asserts its right to the adjustment
within 30 days after the end of the period of work stoppage;
provided, that, if the Contracting Officer decides the facts
justify the action, the Contracting Officer may receive and
act upon the claim submitted at any time before final payment
under this contract.
(c) If a stop-work order is not canceled and the work
covered by the order is terminated for the convenience of the
Government, the Contracting Officer shall allow reasonable
costs resulting from the stop-work order in arriving at the
termination settlement.
(d) If a stop-work order is not canceled and the work
covered by the order is terminated for default, the
Contracting Officer shall allow, by the equitable adjustment
or otherwise, reasonable costs resulting from the stop-work
order.
(End of clause)
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<PAGE>
I.68 52.215-7000 AGGREGATE PRICING ADJUSTMENT (APR 1985)
In determining whether a pricing adjustment is expected to
exceed $100,000, the term "pricing adjustment" shall mean "the
aggregate increases and/or decreases in cost plus applicable
profits."
(End of clause)
I.69 52.216-0018 ORDERING (APR 1984)
(a) Any supplies and services to be furnished under this
contract shall be ordered by issuance of delivery orders by
the individuals or activities designated in the Schedule. Such
orders may be issued from 1 July 1991 through 30 June 1992.
(b) All delivery orders are subject to the terms and
conditions of this contract. In the event of conflict between
a delivery order and this contract, the contract shall
control.
(c) If mailed, a delivery order is considered "issued" when
the Government deposits the order in the mail. Orders may be
issued orally or by written telecommunications only if
authorized in the Schedule.
(End of clause)
(R 7-1101 1968 JUN)
I.70 52.216-0019 DELIVERY-ORDER LIMITATIONS (APR 1984)
(a) Minimum order. When the Government requires supplies or
services covered by this contract in an amount of less than 1
KM2, the Government is not obligated to purchase, nor is the
Contractor obligated to furnish, those supplies or services
under the contract.
(b) Maximum order. The Contractor is not obligated to honor-
(1) Any order for a single item in excess of 450 KM2;
(2) Any order for a combination of items in excess of 450
KM2; or
(3) A series of orders from the same ordering office within
30 days that together call for quantities exceeding the
limitation in subparagraph (1) or (2) above.
(c) If this is a requirements contract (i.e., includes the
Requirements clause at subsection 52.216-21 of the Federal
Acquisition Regulation (FAR)), the Government is not required
to order a part of any one requirement from the Contractor if
that requirement exceeds the maximum-order limitations in
paragraph (b) above.
(d) Notwithstanding paragraphs (b) and (c) above, the
Contractor shall honor any order exceeding the maximum order
limitations in paragraph (b), unless that order (or orders) is
returned to the ordering office within 10 days after issuance,
with written notice stating the Contractor's intent not to
ship the item (or items) called for and the reasons. Upon
receiving this notice, the Government may acquire the supplies
or services from another source.
I-10
<PAGE>
(End of clause)
(R 7-1102.1(a) 1965 AUG)
(R 7-1102.2(a))
(R 7-1102.3(a))
I.71 52.216-0021 REQUIREMENTS (APR 1984)
(a) This is a requirements contract for the supplies or
services specified, and effective for the period stated, in
the Schedule. The quantities of supplies or services
specified in the Schedule are estimates only and are not
purchased by this contract. Except as this contract may
otherwise provide, if the Government's requirements do not
result in orders in the quantities described as "estimated" or
"maximum" in the Schedule, that fact shall not constitute the
basis for an equitable price adjustment.
(b) Delivery or performance shall be made only as authorized
by orders issued in accordance with the Ordering clause.
Subject to any limitations in the delivery-Order Limitations
clause or elsewhere in this contract, the Contractor shall
furnish to the Government all supplies or services specified
in the schedule and called for by orders issued in accordance
with the Ordering clause. The Government may issue orders
requiring delivery to multiple destinations or performance at
multiple locations.
(c) Except as this contract otherwise provides, the
Government shall order from the Contractor all the supplies or
services specified in the schedule that are required to be
purchased by the Government activity or activities specified
in the schedule.
(d) The Government is not required to purchase from the
Contractor requirements in excess of any limit on total orders
under this contract.
(e) If the Government urgently requires delivery of any
quantity of an item before the earliest date that delivery may
be specified under this contract, and if the Contractor will
not accept an order providing for the accelerated delivery,
the Government may acquire the urgently required goods or
services from another source.
(f) Any order issued during the effective period of this
contract and not completed within that period shall be
completed by the Contractor within the time specified in the
order. The contract shall govern the Contractor's and
Government's rights and obligations with respect to that order
to the same extent as if the order were completed during the
contract's effective period; provided, that the Contractor
shall not be required to make any deliveries under this
contract after 30 June 1992.
(End of clause)
(R 7-1102.2(b) 1966 OCT)
I-11
<PAGE>
I.72 52.217-0005 EVALUATION OF OPTIONS (JUL 1990)
Except when it is determined in accordance with FAR
17.206(b) not to be in the Government's best interests, the
Government will evaluate offers for award purposes by adding
the total price for all options to the total price for the
basic requirement. Evaluation of options will not obligate
the Government to exercise the option(s).
(End of provision)
I.73 52.217-0009 OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 1989)
(a) The Government may extend the term of this contract by
written notice to the Contractor within one (1) year;
provided, that the Government shall give the Contractor a
preliminary written notice of its intent to extend at least 60
days before the contract expires. The preliminary notice does
not commit the Government to an extension.
(b) If the Government exercises this option, the extended
contract shall be considered to include this option provision.
(c) The total duration of this contract, including the
exercise of any options under this clause, shall not exceed
five (5) years.
(End of clause)
I.74 52.219-0014 LIMITATIONS ON SUBCONTRACTING (OCT 1987)
By submission of an offer and execution of a contract, the
Offeror/Contractor agrees that in performance of the contract
in the case of a contract for--
(a) Services (except construction). At least 50 percent of
the cost of contract performance incurred for personnel shall
be expended for employees of the concern.
(b) Supplies (other than procurement for a regular dealer in
such supplies). The concern shall perform work for at least
50 percent of the cost of manufacturing the supplies, not
including the cost of materials.
(c) General construction. The concern will perform at least
15 percent of the cost of the contract, not including the cost
of materials, with its own employees.
(d) Construction by special trade contractors. The concern
will perform at least 25 percent of the cost of the contract,
not including the cost of materials, with its own employees.
(End of clause)
I.75 52.219-0017 SECTION 8(a) AWARD (FEB 1990)
(a) By execution of a contract, the Small Business
Administration (SBA) agrees to the following:
I-12
<PAGE>
(1) To furnish the supplies or services set forth in the
contract according to the specifications and the terms and
conditions by subcontracting with the Offeror who has been
determined an eligible concern pursuant to the provisions of
section 8(a) of the Small Business Act, as amended (15 U.S.C.
637(a)).
(2) Except for novation agreements and advance payments,
delegates to the Subcontractor (ATG) Prime (SBA) the
responsibility for administering the contract with complete
authority to take any action on behalf of the Government under
the terms and conditions of the contract; provided, however
that the contracting agency shall give advance notice to the
SBA before it issues a final notice terminating the right of
the subcontractor to proceed with further performance, either
in whole or in part, under the contract.
(3) That payments to be made under the contract will be made
directly to the subcontractor by the contracting activity.
(4) To notify the NA Contracting Officer immediately upon
notification by the subcontractor that the owner or owners
upon whom 8(a) eligibility was based plan to relinquish
ownership or control of the concern.
(b) The offeror/subcontractor agrees and acknowledges that
it will, for and on behalf of the SBA, fulfill and perform all
of the requirements of the contract.
(End of clause)
I.76 52.220-0001 PREFERENCE FOR LABOR SURPLUS AREA CONCERNS (APR 1984)
(a) This acquisition is not a set-aside for labor surplus
area (LSA) concerns. However, the offeror's status as such a
concern may affect (1) entitlement to award in case of tie
offers, or (2) offer evaluation in accordance with the Buy
American Act clause of this solicitation. In order to
determine whether the offeror is entitled to a preference
under (1) or (2) above, the offeror must identify, below, the
LSA in which the costs to be incurred on account of
manufacturing or production (by the offeror or the first-tier
subcontractors) amount to more than 50% of the contract price.
NA NA
------------ -------------
NA NA
------------ -------------
(b) Failure to identify the locations as specified above
will preclude consideration of the offeror as an LSA concern.
If the offeror is awarded a contract as an LSA concern and
would not have otherwise qualified for award, the offeror
shall perform the contract or cause the contract to be
performed in accordance with the obligations of an LSA
concern.
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<PAGE>
(End of clause)
(R 7-2003.13 1978 JUN)
I.77 52.222-0042 STATEMENT OF EQUIVALENT RATES FOR FEDERAL HIRES (MAT 1989)
In compliance with the Service Contract Act of 1965, as
amended, and the regulations of the Secretary of Labor (29
CFR Part 4), this clause identifies the classes of service
employees expected to be employed under the contract and
states the wages and fringe benefits payable to each if they
were employed by the contracting agency subject to the
provisions of 5 U.S.C. 5341 or 5332.
THIS STATEMENT IS FOR INFORMATION ONLY: IT IS NOT A WAGE
DETERMINATION
<TABLE>
<CAPTION>
<S> <C> <C>
Ordnance Worker Helper WG-5 $10.60
Ordnance Worker WG-9 $12.60
Heavy Equipment Operator WG-10 $13.06
</TABLE>
(End of clause)
I.78 52.222-0043 FAIR LABOR STANDARDS ACT AND SERVICE CONTRACT ACT--PRICE
ADJUSTMENT (MULTIPLE YEAR AND OPTION CONTRACTS) (MAY 1989)
(a) This clause applies to both contracts subject to area
prevailing wage determinations and contracts subject to
collective bargaining agreements.
(b) The Contractor warrants that the prices in this contract
do not include any allowance for any contingency to cover
increased costs for which adjustment is provided under this
clause.
(c) The wage determination, issued under the Service
Contract Act of 1965, as amended, (41 U.S.C. 351, et seq.), by
the Administrator, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor, current on
the anniversary date of a multiple year contract or the
beginning of each renewal option period, shall apply to this
contract. If no such determination has been made applicable to
this contract, then the Federal minimum wage as established by
section 6(a)(1) of the Fair Labor Standards Act of 1938, as
amended, (29 U.S.C. 206) current on the anniversary date of a
multiple year contract or the beginning of each renewal option
period, shall apply to this contract.
(d) The contract price or contract unit price labor rates
will be adjusted to reflect the Contractor's actual increase
or decrease in applicable wages and fringe benefits to the
extent that the increase is made to comply with or the
decrease is voluntarily made by the Contractor as a result of:
(1) The Department of Labor wage determination applicable on
the anniversary date of the multiple year contract, or at the
beginning of the
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<PAGE>
renewal option period. For example, the prior year wage
determination required a minimum wage rate of $4.00 per hour.
The Contractor chose to pay $4.10. The new wage determination
increases the minimum rate to $4.50 per hour. Even if the
Contractor voluntarily increases the rate to $4.75 per hour,
the allowable price adjustment is $.40 per hour;
(2) An increased or decreased wage determination otherwise
applied to the contract by operation of law; or
(3) An amendment to the Fair Labor Standards Act of 1938
that is enacted after award of this contract, affects the
minimum wage, and becomes applicable to this contract under
law.
(e) Any adjustment will be limited to increases or decreases
in wages and fringe benefits as described in paragraph (c) of
this clause, and the accompanying increases or decreases in
social security and unemployment taxes and worker's
compensation insurance, but shall not otherwise include any
amount for general and administrative costs, overhead, or
profit.
(f) The Contractor shall notify the Contracting Officer of
any increase claimed under this clause within 30 days after
receiving a new wage determination unless this notification
period is extended in writing by the Contracting Officer. The
Contractor shall promptly notify the Contracting Officer of
any decrease under this clause, but nothing in the clause
shall preclude the Government from asserting a claim within
the period permitted by law. The notice shall contain a
statement of the amount claimed and any relevant supporting
data, including payroll records, that the Contracting Officer
may reasonably require. Upon agreement of the parties, the
contract price or contract unit price labor rates shall be
modified in writing. The Contractor shall continue
performance pending agreement on or determination of any such
adjustment and its effective date.
(g) The Contracting Officer or an authorized representative
shall have access to and the right to examine any directly
pertinent books, documents, papers and records of the
Contractor until the expiration of 3 years after final payment
under the contract.
(End of clause)
I.79 52.236-7019 ACCIDENT PREVENTION (JUL 1989)
(a) The Contractor shall provide and maintain work
environments and procedures which will safeguard the public
and Government personnel, property, materials, supplies, and
equipment exposed to contractor operations and activities;
avoid interruptions of Government operations and delays in
project completion dates; and control costs in the performance
of the contract.
(b) For these purposes, on contracts for construction or
dismantling, demolition, or removal of improvements, the
Contractor shall--
(l) Provide appropriate safety barricades; sign, and signal
lights;
(2) Comply with the standards issued by the Secretary of
Labor at 29 CFR
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<PAGE>
Part 1926 and 29 CFR Part 1910;
(3) Ensure that may additional measures the Contracting
Officer determines to be reasonably necessary for the purposes
are taken.
(c) If this contract is for construction or dismantling,
demolition or removal of improvements with any Department of
Defense agency or component, the Contractor shall comply with
all pertinent provisions of the latest version of U.S. Army
Corps of Engineers Safety and Health Requirements Manual, EM
385-1-1, in effect on the date of the solicitation.
(d) Whenever the Contracting Officer becomes aware of any
noncompliance with these requirements or any condition which
poses a serious or imminent danger to the health or safety of
the public or Government personnel, the Contracting Officer
shall notify the Contractor orally, with written confirmation,
and request immediate initiation of corrective action. This
notice, when delivered to the Contractor or the Contractor's
representative at the work site, shall be deemed sufficient
notice of the noncompliance and that corrective action is
required. After receiving the notice, the Contractor shall
immediately take corrective action. If the Contractor fails
or refuses to take corrective action promptly, the Contracting
Officer may issue an order stopping all or part of the work
until satisfactory corrective action has been taken. The
Contractor shall not be entitled to equitable adjustment of
the contract price or extension of the performance schedule on
any stop work order issued under this clause.
(e) The Contractor shall insert this clause, including this
paragraph (e), with appropriate changes in the designation of
the parties, in subcontracts.
(End of clause)
I.80 52.247-4203 TRANSPORTATION OF SUPPLIES BY SEA (APR 1990)
(a) As used in this clause:
(1) "Armed services" means the Army, Navy, Air Force, Marine
Corps, and Defense Agencies.
(2) "Components" means articles, materials, and supplies
incorporated directly into end products at any level of
manufacture, fabrication or assembly by the Contractor or any
subcontractor.
(3) "Foreign flag vessel" means any vessel that is not a
U.S.-flag vessel.
(4) "Ocean transportation" means any transportation aboard a
ship, vessel, boat, barge, or ferry through international
waters.
(5) "Subcontractor" means a supplier, materialman,
distributor or vendor at any level below the prime contractor
whose contractual obligation to perform results from, or is
conditioned upon, award of the prime contract and who is.
performing any part of the work or other requirement of the
prime contract.
(6) "Supplies" means all property, except land and interests
in land,
I-16
<PAGE>
that is clearly identifiable for eventual use by the armed
services, or owned by the armed services, at the time of
transportation by sea. It includes (but is not Limited to)
public works, buildings. and facilities, ships, floating
equipment and vessels of every character, type, and
description, together with parts, subassemblies, accessories,
and equipment; machine tools, material, equipment, and stores
of all kinds; end items, construction materials and the
components of the foregoing. An item is clearly identifiable
for eventual use by the armed services if, for example, the
contract documentation contains a reference to a DoD contract
number or a military destination.
(7) "U.S. -flag vessel" means a vessel of the United States
or belonging to the United States, including any vessel
registered or having national status under the Laws of the
United States.
(b) The Contractor shall employ United States-flag vessels,
and no others, in the transportation by sea of any Supplies to
be furnished in the performance of its contractual
obligations.
(c) If the Contractor or a subcontractor believes that (1)
U.S.-flag vessels are not available for timely shipment; (2)
the freight charges are excessive or unreasonable; or (3)
freight charges are higher than charges to private persons for
transportation of like goods, the Prime Contractor, including
subcontractors through the Prime Contractor, may request from
the Contracting Officer, in accordance with paragraph (d)
below, authorization to ship in foreign-flag vessels or
designation of available U.S.-flag vessels. If the Prime
Contractor's request to ship supplies in foreign-flag vessels,
whether on its own account or on account of a subcontractor,
is granted in writing by the Contracting Officer, the supplies
may be shipped on foreign-flag vessels in accordance with the
approval. The Contracting Officer may condition approval to
ship on a foreign-flag vessel on an equitable adjustment of
the contract.
(d) The request for use of other than U.S. -flag vessels
because of matters concerning freight charges or matters
concerning vessel availability must be submitted in writing by
or through the Prime Contractor to the Contracting Officer at
least forty-five (45) days prior to the sailing date for the
shipper to meet its delivery schedules. Requests submitted
after such date(s) will be processed as expeditiously as
possible, but the failure of the appropriate official to grant
approvals to meet the shipper's sailing date will not of
itself constitute a compensable delay under this or any other
clause of this contract. The request shall contain at a
minimum:
(1) Type, weight, and cube of cargo.
(2) Required shipping date.
(3) Special handling and discharge requirements.
(4) Loading and discharge points.
(5) Name of shipper and consignee.
(6) Prime contract number.
(7) A documented description of efforts made to secure U.S.-
flag vessels,
I-17
<PAGE>
including points of contact with at Least two (2) U.S. -flag
carriers contacted by name and telephone number. Copies of
telephone notes, telegraphic and facsimile messages or
letters will be sufficient for this purpose.
(e) The Contractor shall, within thirty (30) days after
each shipment covered by this clause, provide the Contracting
Officer and the Division of National Cargo, Office of Market
Development, Maritime Administration, U.S. Department of
Transportation, Washington, DC 20590, one copy of the rated on
board vessel operating carrier's ocean-bill-of-lading, which
shall contain the following information:
(l) Applicable Government prime contract number;
(2) Name of vessel;
(3) Vessel flag of registry;
(4) Date of Loading;
(5) Port of Loading;
(6) Port of final discharge;
(7) Description of commodity;
(8) Gross weight in pounds and cubic feet if available;
(9) Total ocean freight in U.S. dollars.
(10) Name of the steamship company.
(f) Along with the submission of its final invoice under
this contract the Contractor agrees to provide a
representation that to the best of its knowledge and belief:
(l) No ocean transportation was used in the performance of
this contract;
(2) Ocean transportation was used and only United States-
flag vessels were used for all ocean shipments under the
contract. Legible copies of shipping documents have been
submitted to the Contracting Officer and to the Maritime
Administration in accordance with paragraph (e) of this
clause;
(3) Ocean transportation was used, and to the extent any
non-U.S.-flag vessels were used, the Contractor had the
written consent of the Contracting Officer for all non-U.S.-
flag ocean transportation; or
(4) Ocean transportation was used and some or all of the
shipments were made on non-U.S.-flag vessels without the
written consent of the Contracting Officer. These shipments
were as follows:
ITEM DESCRIPTION CONTRACT LINE ITEMS QUANTITY
Total
(g) If the final invoice does not include the required
representation, it will be rejected and returned to the
Contractor as an improper invoice for the purposes of the
clause of the contract entitled "Prompt Payment". In the event
there has been unauthorized use of non-U.S. -flag vessels in
the performance of this contract, the Contracting Officer is
entitled to equitably adjust the contract, based on
unauthorized use.
(h) The Contractor shall include this clause, including
this paragraph (h), revised as necessary to reflect the
relationship of the contracting
1-18
<PAGE>
parties, in all subcontracts hereunder. Subcontractor bills of
lading shall be submitted through the prime contractor to the
parties and with the information specified in paragraph (e) of
this clause.
(End of clause)
1.81 52.252-0006 ALTERATIONS IN CONTRACT (APR 1984)
Portions of this contract are altered as follows:
The Quality Control Plan, Accident/Incident/Safety Plan, and
Management and Administration Plan as approved by the
Government will be incorporated in Section C of the resultant
contract.
(End of clause)
(R 7-105.1(a) 1949 JUL)
1.82 52.252-4073 CONTRACT CLAUSES AND SOLICITATION PROVISIONS NUMBERING SYSTEM
(JUL 88)
(a) Offerors are advised that the clause/solicitation
provision numbering system used in this solicitation, and in
any contract that may result from this solicitation, is
structured as follows:
(1) Clauses/provisions numbered 52.XXX-OXXX are Federal
Acquisition Regulation (FAR) clauses/provisions. FAR clauses
are identified by the number zero in the 6th position of the
clause/provision number.
(2) Clauses/provisions numbered 52.XXX-7XXX are Defense
Federal Acquisition Regulation Supplement (DFARS)
clauses/provisions. DFARS clauses are identified by the
number 7 in the 6th position of the clause number.
(3) Clauses/provisions numbered 52.XXX.9XXX are Army
Federal Acquisition Regulation Supplement (AFARS)
clauses/provisions. AFARS clauses are identified by the number
9 in the 6th position of the clause/provision number.
(4) Clauses/provisions numbered 52.XXX.4XXX are Local
Clauses which reflect either an authorized FAR/DFAR Deviation
or delineate local regulations. Local Clauses are identified
by the number 4 in the 6th position of the clause/provision
number.
(End of Provision)
END OF SECTION I
1-19
<PAGE>
SECTION J
LIST OF ATTACHMENTS
<TABLE>
<CAPTION>
ATTACHMENT # DESCRIPTION # OF PAGES
- ------------ ----------- ----------
<S> <C> <C>
A National Training Center Letter of
Instruction, Turn-In and Withdrawal 2
Procedures for Defense Property
Disposal Office, dated 11 January 1985
B Defense Logistics Agency letter dated
15 February 1983 13
C DD Form 2051, Request for Assignment of
a Commercial and Government Entity 2
(CAGE) Code
D Standard Form 1412, Claim for Exemption
from Submission of Certified Cost or 2
Pricing Data
E Standard Form 1411, Contract Pricing
Proposal Cover Sheet 1
F Table 15-2, Instructions for Submission
of a Contract Pricing Proposal 3
G Standard Form LLL, Disclosure of
Lobbying Activities 3
H Certificate of Procurement Integrity 1
</TABLE>
END OF SECTION J
J-1
<PAGE>
DEPARTMENT OF THE ARMY
HEADQUARTERS, NATIONAL TRAINING CENTER AND FORT IRWIN
FORT IRWIN CALIFORNIA 92310
[SEAL APPEARS HERE]
REPLY to
ATTENTION or
AFZJ-DIS 11 January 1985
SUBJECT: Letter of Instruction, Turn-in and Withdrawal Procedures
for Defense Property Disposal Offices
SEE DISTRIBUTION:
1. Purpose: This Letter of instruction (1.01) outlines the procedures to be
followed for turn-ins and withdrawals to or from the Defense Property Disposal
System.
2. Applicability: This LOl applies to units assigned, attached and tenant to
the National Training Center and Fort Irwin, California. It also applies to
contractor operated activities that manage and control government property and
materials. It does not apply to non appropriated fund instrumentalities and
MEDDAC.
3. General:
a. Requests for withdrawal of material from Defense Property Disposal Offices
(DPDO) will be processed thru the Installation Supply Division (ISD) and
reviewed and personally authenticated by an officer or senior NCO from Supply
and Services Division, DIO.
b. All requests for turn-ins to include material release orders will be
processed thru the ISD and reviewed and authenticated by Supply and Services
Division, DIO as outlined in a above.
4. Responsibilities:
a. Withdrawals Procedures:
(1) Units/activities will submit requisitions through appropriate supply
support activities and or accountable officers.
(2) All withdrawals will be accounted for by the appropriate property
book officer in accordance with AR 710-2.
(3) Signature cards will be provided to DPDO for individuals authorized
to receipt for items picked up for the SSA DODAAC W80WKN.
ATTACHMENT A, Page 1
<PAGE>
AFZJ-DIS
SUBJECT: Letter of Instruction, Turn-in and Withdrawal Procedures
for Defense Property Disposal Offices
b. Turn-in Procedures:
(1) All excess items, servicable, unserviceable, and obvious scrap will
be turned-in to the supply and storage section of the ISD. The Cann Point
operated by the 31st Maintenance Company will not physically turn items in but
will process all documents through ISD.
(2) The following items will not be turned-in to the DPDO.
(a) Serviceable items (all classes).
(b) Any unserviceable material with AMDF recoverability codes F, H,
D, and L (not including scrap and furniture).
(c) Class VII (except those items already completely demilled and
approved by Supply and Services Division, DIO).
(3) All turn-in documents and material release orders will be routed thru
the ISD to Supply and Services Division, DIO for review and authentication.
(4) The DIO or Deputy DIO are the only individuals on the Installation
delegated the authority to sign and certify documents and transportation
manifests for shipment of hazardous waste/material to DPDO.
5. Monitoring Procedures:
(a) Supply and Services Division, DIO will make weekly checks with DPDO
Barstow to ensure compliance and recover property inappropriately turned-in.
(b) Unit/activity records will be checked during inspection/assistance visits
for compliance.
6. The above guidance will remain in effect until changed or rescinded by this
headquarters.
7. POC is MSG David, NCOIC Supply and Services Division, DIO, extension 3797.
/s/ BARRY E. KERBY
BARRY E. KERBY
ITC, CE
Director, Industrial Operations
DISTRIBUTION:
2
<PAGE>
DEPARTMENT LOGISTICS AGENCY
DEFENSE PROPERTY DISPOSAL OFFICE
MARINE CORPS LOGISTICS BASE
BARSTOW, CA 92311
[SEAL APPEARS HERE]
DPDO-YDF 15 February 1983
SUBJECT: Disposing of Excess Personal Property in the Southern California
Desert Area
TO:
1. References:
a. Defense Utilization and Disposal Manual, DoD 4160.21-M.
b. Defense Demilitarization Manual, DoD 4160.21-M-1.
c. Defense Scrap Yard Handbook, DLAH 4160.1/Army TM 755-200/NAVSANDA
Pub 5523/AFM 68-3/MCO P4010.2A.
d. Military Standard Requisitioning and Issue Procedures (MILSTRIP)
BASIC, DoD 4140.17-M.
2. DPDO Barstow letter of 1 March 1982, subject: Disposing of Excess Personal
Property in the Southern California Desert Area is superseded by this
instruction.
3. Scope. This instruction sets forth standarized procedures for the turn-
-----
in of excess personal property and scrap material to a defense property disposal
activity in the southern California desert area. It applies to all Department of
Defense (DoD) activities. Information contained herein emanates from and
implements the regulatory guidance contained in the DoD manuals referenced
above.
4. Turn-in Points and Hours of Operation. Defense Property Disposal Office
-------------------------------------
(DPDO) Barstow is the defense activity responsible for the disposal of excess
personal property and scrap materials generated by DoD activities in the
southern California desert area. DPDO Barstow maintains disposal facilities at
the following locations. The person responsible for receiving operations at
each location and their AUTOVON phone number are listed along with the hours
property may be turned-in.
a. MCLB Barstow - Nebo
(1) Receiving Hours: 0700-1100 and 1200-1500
(2) Receiving Foreman: Orlando Chavez, 282-6564/6563
(3) Receiving Location: Bldg. 164
Page 1 of 13 ATTACHMENT B
<PAGE>
b. MCLB Barstow - Yermo Annex (Scrap material and Rolling Stock only)
(1) Receiving Hours: 0700-1100 and 1200-1500
(2) Scrapyard Foreman: Pete Vasquez. 282-7312
(3) Receiving Location: Bldg. 593
c. NWC China Lake
(1) Receiving Hours: 0715-1045 and 1215-1545
(2) Off-site Branch Chief: Bill Giuliani, 437-2502/2538
(3) Receiving Location: Bldg. 1073
d. Edwards AFB
(1) Receiving Hours: 0730-1130 and 1230-1530
(2) Off-site Branch Chief: Billie Joe Driggs. 350-2209/3907
(3) Receiving Location: Bldg. 4904
e. MCAGCC Twentynine Palms (Scrap material and Rolling Stock only)
(1) Receiving Hours: 0730-1100 and 1200-1530
(2) Scrapyard Chief: George Furber, 952-6643
(3) Receiving Location: Bldg- 1045
5. Receipt of Property "In-Place". Occasionally, a particular piece of excess
-----------------------------
property would require an extraordinary conveyance to transport it to the
nearest disposal turn-in point. Other excess property may be extremely
dangerous to transport to a turn-in point. Sometimes, no disposal turn-in point
may have the storage capacity or regulation-conforming facilities to store
certain property. Still other property to be disposed of may be installed and
would require dismantling prior to shipment to a turn-in point. In these and
other unusual situations. DPDO Barstow may elect to receive such property "in-
place". This means a DPDO receiving person will visit the property's location,
inspect the property, verify the turn-in documentation. and sign for
accountability of the property "in-place". while DPDO Barstow takes
accountability for the property, the responsibility for the safekeeping care,
and frequently the issue or release of property remains with the activity
turning-in the property. All requests for DPDO Barstow to receive property in-
place should be directed to the Chief, DPDO Barstow, AUTOVON 282-6568.
6. Scheduling Turn-ins. The receiving personnel cited in paragraph 4 above
-------------------
should be contacted prior to shipping any property to a disposal turn-in point.
The number of pallets, truckloads, etc, and the types of property to be turned-
in should be made known to the receiving coordinator. A delivery date will then
be scheduled. By scheduling turn-ins, generating activities are assured of
receiving prompt disposal service. Scheduled deliveries are given first
receipt-processing priority. Unscheduled deliveries will be Off-loaded and
receipt-
Page 2 of 13 ATTACHMENT B
<PAGE>
processed as scheduled workload permits. DPDO Barstow is not authorized overtime
for the purpose of receiving property. Therefore, generating activities are
encouraged to schedule their arrival at a turn-in point early enough in the day
so all property is off-loaded prior to the end of receiving hours.
7. Unacceptable Property. The DPDO has responsibility for disposing of all
---------------------
excess personal property and scrap material generated by DoD activities except
for the categories of property listed below. The DPDO cannot accept either
physical custody or accountability for the following:
a. Records of the Federal Government
b. Classified material
c. Real property
d. Radioactive waste
e. Thermal batteries
f. DoD inspection stamps and devices
g. Cryptological equipment
h. Consecrated religious items
i. Wastewater treatment sludge
j. Mining, dredging, construction, and demolition refuse
k. Industrial Plant Sludges and residues
l. One-time Research and Development wastes and residues
m. Lethal chemical warfare materials
n. Garbage, refuse, and trash
o. Leaking and/or unidentified containers
8. Physically unacceptable Property. The DPDO is prohibited from taking
--------------------------------
physical custody of the property listed below. However, the DPDO may take
accountability for such property when the generating activity retains physical
custody (receive in-place) If you wish to dispose of any of the following
property call the Chief, DPDO Barstow, AUTOVON 282-6568.
a. Live animals
b. Explosives and ammunition
c. Incendiary, poisonous, and irritant products
d. Drugs, biologicals, and controlled substances
e. Nitrate base film
f. Acutely Hazardous Materials (See Enclosure 1)
Page 3 of 13 ATTACHMENT B
<PAGE>
9. Turn-in Documentation. Turn-ins are to be made on a DD Form 1348-1, DoD
---------------------
Single Line Item Release/Receipt Document. (The term "Turn-in Document (TID)"
is synonymous with DD Form 1348-1). The following information is the minimum
required to be entered on the DD Form 1348-1. Enclosure 2 is a sample of a
properly filled out turn-in document (TID) for non-hazardous usable property.
Enclosure 3 is a sample of a properly filled out TID for scrap property.
Property still identifiable as an item, regardless of its condition, must be
turned in as usable. Scrap material is defined as that which has no value
except for its basic material content.
a. Usable Property. A separate DD Form 1348-1 is required for each line
---------------
item of property turned in. A line item is defined as any one quantity of
property having the same stock number, description, condition code, and unit
cost. A line item is to be identified on the TID by the following information:
(1) National Stock Number (NSN) or a local stock number (LSN) con-
taining the Federal Supply Class (FSC) or Federal Supply Group
(FSG) of the property. Place in card columns (cc) 8-20.
(2) Unit of issue (each, pair, set, drum, gallons, etc.). Place in
cc 23, 24.
(3) Quantity. Place in cc 25-29.
(4) Document number constructed as shown below. Place in cc 30-43.
(a) First through sixth positions, DoD Activity Address Code
(DoDAAC) of the turn-in activity
(b) Seventh through tenth position, Julian date of material
release order for disposal
(c) Eleventh through fourteenth positions, serial number assigned
by turn-in activity to TID
(5) Disposal authority code-M, N, or R as appropriate. See Appendix
B-26, reference 1d for code definition and applicability. Place
in cc 64.
(6) Demilitarization (DEMIL) code (see reference lb). Place in cc
65.
(7) Reclamation requirements data, if applicable (Y, R, or N). Place
in cc 66.
(8) Supply condition code - MILSTRIP condition code (see reference
1d). Place in cc 71.
(9) Unit price (its original acquisition cost). Place in cc 74-80.
(10) Turn-in activity identity and DoDAAC. Enter in Block A.
(11) Disposal activity identity and DoDAAC: DPDO Barstow (SZ3129), OSB
China Lake (SZC129), OSB Edwards (SZEI29), or 0SB 29 Palms
(SZD129). Enter in Block B.
Page 4 of 13 ATTACHMENT B
<PAGE>
(12) Hazardous code, if applicable. HM for hazardous material. HW for
hazardous waste. Enter in Block C.
(13) Category of property requiring special processing by Chapter VI,
DoD 4160.21-M (e.g., shelf-life property, radioactive material,
nonappropriated fund). Enter in Block D. If nonappropriated fund,
enter "NAF" in Block Y. If proceeds are to be deposited to other
than the Defense Logistics Agency (DLA) deposit fund account, the
reimbursement data to include the account to be credited must be
entered in Blocks BB-EE.
(14) Total price (Unit Price X Quantity). Enter in Block E.
(15) Unit weight, if available. Enter in Block I.
(16) Item name (Nomenclature) and as much descriptive information as
possible, if LSN. Enter in Blocks W and X.
(17) Value and list of component parts that have been removed, if
available. Enter in Blocks 11-15 and FF-GG.
b. Scrap. A DD Form 1348-1 must be prepared for each quantity of scrap
-----
material of a different material content. Commingling of scrap materials for
turn-in is to be avoided since the turn-in will be rejected. TIDs with
nomenclatures such as "mixed metals" or "misc. scrap" are not acceptable. Scrap
TIDs must contain the following information:
(1) Unit of issue in terms of weight measurement (grains, grams, or
troy ounces for precious metals and pounds or tons for common
metals and other scrap). Place in cc 23-24.
(2) Weight. Place in cc 25-29.
(3) Document number. Place in cc 30-43
(4) Demilitarization (DEMIL) code. Place in cc 65
(5) Turn-in activity identity and DoDAAC. Enter in Block A.
(6) Disposal activity identity and DoDAAC. Enter in Block B.
(7) Category of scrap requiring special processing by Chapter VI, DoD
4160.21-M,(e.g., industrial fund, used oil). Enter in Block D.
If proceeds are to be deposited to other than the DLA deposit
fund account, the reimbursement data to include the account to be
credited must be entered in Blocks BB-EE.
(8) Basic material content. Enter in Blocks W-Y.
(9) Inert certification for expended ordnance items. Enter in Blocks
11-15 and FF-GG.
Page 5 of 13 ATTACHMENT B
<PAGE>
10. DPDO Acceptance of Accountability. The DPDO becomes accountable for
---------------------------------
property when an authorized DPDO employee signs and dates Block 8 of the DD Form
1348.1. Block 8 is not signed until a DPDO receiver has verified the property's
identity, determined its condition, and made a count of the property delivered.
The DPDO will not receipt for TIDs where the property's identity is
questionable. If the MILSTRIP condition code appears to be incorrect, the
receiver will challenge its validity by contacting the generating activity.
Quantity discrepancies will be annotated on the DD Form 1348-1 by the DPDO
receiver. The DPDO is accountable for only that quantity actually received.
11. TID Distribution. A minimum of four legible copies of the DD Form 1348-1
----------------
must accompany a turn-in. Three copies are kept for internal DPDO processing. A
fourth copy is returned to the generating activity after the receipt has been
posted to the DPDO property accounting system. This fourth copy, which has been
signed and dated in Block 8, is the official receipt document.
12. Batch Lotting. Batch lotting is the physical grouping of individual line
-------------
items of low dollar value property and the subsequent accounting for the group
(batch lot) as a single line item of excess personal property. The objective of
batch lotting is to reduce the cost, physical handling, and administrative time
required to process low dollar value items through the disposal process. If
your activity turns in a large percentage of low dollar value items, it may be
cost beneficial to turn in low dollar value property by batch lot. Paragraph
E2, Chapter IV, reference la explains batch lotting options open to generating
activities.
13. Property Requiring Special Processing. Reference is made to Chapter VI,
-------------------------------------
reference 1a. Some property, because of its peculiar nature, its potential
influence on public health, safety, or security, or its potential influence on
private industry, must be disposed of in other than a normal fashion.
Accordingly, some turn-ins may require additional documentation, special
handling, packaging, and/or storage facilities. This category of property will
be identified on the DD Form 1348-1 by an entry in Block D (e.g., compressed gas
cylinders; lost, abandoned, or unclaimed privately owned personal property;
shelf-life property; used oil). The most common DPDO Barstow turn-ins
requiring, special handling or additional documentation are discussed below:
a. Acutely Hazardous Material. Those substances appearing in Enclosure 1
--------------------------
Identified substances were categorized as being acutely hazardous in Part
261.33. 40 Code of Federal Regulations (CFR), Resource Conservation Recovery Act
(RCRA). DPDO Barstow does not have the regulation-conforming storage facilities
to physically accept acutely hazardous material. If you need to dispose of such
material, call the Chief, DPDO Barstow on AUTOVON 282-6568.
b. Batteries. Special handling or reporting requirements exist for four
---------
types of batteries normally turned in:
(1) Secondary storage (lead acid). The most prevalent example of a
----------------------------
secondary storage battery is a vehicle battery. These batteries
use sulfuric acid as an electrolyte. Sulfuric acid is an acutely
hazardous material. Accordingly, all the electrolyte must be
<PAGE>
drained from batteries prior to turn-in to the DPDO. These
batteries trust be stacked sideways or upside-down on pallets.
This prevents rainwater from accumulating in batteries. It is
suggested that for safety and ease of handling that all batteries
be banded to the pallet. The drained electrolyte must be
containerized and treated as an acutely hazardous material.
(2) Nickel Cadmium (NI-CAD). Since most NI-CAD batteries can be
-----------------------
rebuilt into serviceable batteries, they are ultimately offered
for sale as usable items, To assure item identity of NI-CADs,
they must be turned in as an item. Turn-in by NSN is preferred.
If the NSN is unknown, they are to be turned in by LSN with the
manufacturer, type or part number printed on the DD Form 1348-I.
(3) Silver Cell. Like NI-CADs, silver cell batteries can be rebuilt
-----------
into serviceable batteries. Therefore, they must be turned in as
an item in the same manner as NI-CADS. Silver cell batteries
which cannot be rebuilt remain valuable for their silver content.
Accordingly, they must be treated as precious metals-bearing
items.
(4) Thermal. DPDOs can not accept thermal batteries. Any thermal
-------
batteries you wish to dispose of must be reported to your
military service's item manager.
c. Compressed Gas Cylinders. Compressed gas cylinders are to be turned-
------------------------
in in accordance with MC010330.28/NAVSUPINST 4440.1288/AFR 67-12/AR700.68.
DPDOs can not assume physical custody of cylinders containing incendiary,
poisonous, or irritant properties. Cylinder valves must be in a closed position
and be protected (have a valve cover). Commercially owned cylinders cannot be
accepted by the DPDO. They are to be returned to the company identified on the
cylinder or processed as Lost, Abandoned, or Unclaimed Privately-Owned Personal
Property. The only compressed gas cylinders the DPDO is authorized to accept are
those with no identification markings or those identified as government-owned.
Government-owned cylinders are identified by the following serial number
prefixes stamped on the cylinder or embossed on the neckring: AF, DA, USA, USN,
N, US, US GOVT, WD, US PROPERTY, the name of a DoD or other Government agency,
or a military (MILSPEC)/ federal (FEDSPEC) specification number.
d. Demilitarized Items. Munitions List Items that have been demilitarized
-------------------
prior to turn-in must have the following signed certification on the DD Form
1348-1: "I certify that the items listed hereon were demilitarized in accordance
with Item (cite appropriate item #), Appendix 4, DoD 4160.21-M-1." Normally,
only those items assigned DEMIL code G or N should be demilitarized prior to
turn-in.
e. Extended Ordnance. All expended ordnance materials such as shell
-----------------
casings, rocket launching tubes, and dummy (inert loaded) ammunition projectiles
and warheads must be certified inert by qualified EOD personnel prior to turn-
in. All expended ordnance not certified inert will be rejected for turn-in.
----------------------------------------------------------------------
Signed inert certification must be on the DD Form 1348-1 as follows: "I certify
that the items listed hereon have been inspected by me and, to the best of my
knowledge and belief, contain no items of a dangerous or hazardous nature."
Page 7 of 13 ATTACHMENT B
<PAGE>
f. Empty Containers. A container is considered empty if no more than one
----------------
(1) inch of residue remains on the bottom. The stock number placed on the DD
Form 1348-1 must apply to the container itself; not the container's previous
contents. No 55 gallon drums will be accepted unless they are sealed with bungs.
(1) If a container held a non-hazardous material, "NON-HZ" must be
entered in Block C of the DD Form 1348-1.
(2) If a container held a hazardous material and has not been triple-
rinsed with an appropriate solvent. "HM" must be entered in Block
C. In addition, the following must be entered in Blocks W and X
of the DD Form 1348-1:
(a) "EMPTY CONTAINER"
(b) Everyday, common description of the container; e.g., 55-
gallon drum, quart can, etc.
(c) Stock number and generic (not brand name) name of the
previously held hazardous material; e.g., ethyl alcohol,
paint, gasoline, oil, etc.
(3) If a container held an acutely hazardous material (see Enclosure
-----------------
1) that has not been triple rinsed with the appropriate solvent,
it is considered a Hazardous Waste (HW). DPDO Barstow does not
have the regulation-conforming storage facilities to physically
accept HW. If you have HW empty containers to dispose of call the
Chief, DPDO Barstow on AUTOVON 282-6568.
(4) If a container held a hazardous material or an acutely hazardous
material and has been triple-rinsed with an appropriate solvent,
----------------------
it is considered non-hazardous. For triple-rinsed containers, the
words "NON-HZ/TRIPLE RINSE" must be entered in Block C, DD Form
1348-1.
g. Hazardous Material (HM). Material that exhibits any one of the
-----------------------
following four characteristics is defined as hazardous: 1) ignitable, 2)
corrosive, 3)reactive, or 4) toxic. When an item or scrap exhibits one or more
of these characteristics, it must be treated as a "hazardous material" (HM).
All HM must be in containers that are non-leaking and safe to handle. Each
container must be labeled to indicate the container's contents. The code "HM"
must be entered in Block C of the DD Form 1348-1. Any HM that is not 1) properly
packaged or containerized, 2) labeled, and 3) adequately identified on the DD
Form 1348-1 will not be accepted for turn-in until all three requirements are
met.
h. Hazardous Waste (HW). Except for the list of "Pre-Determined
--------------------
Hazardous Wastes" appearing at Enclosure 4, all material exhibiting one or more
of the four hazardous characteristics of ignitably, corrosiveness, reactivity,
or toxicity is considered as hazardous material (HM) at the time of turn-in for
disposal. If DPDO cannot redistribute HM to another government agency or sell
it, the HM is then declared a hazardous waste (HW). Used HM stands a good
chance of being declared a HW. Therefore, the following additional
documentation should appear on the
<PAGE>
DD Form 1348-1 for used HM. Enclosure 5 is a sample TID for the turn-in of used
HM.
(1) Block A must contain the turn-in activity's Environmental
Protection Agency's (EPA) identification number. This number may
be obtained from your base environmental office. The telephone
number of the office responsible for the turn-in must also be
listed.
(2) Block B must contain the disposal activity's EPA identification
number and telephone number. The following numbers apply:
(a) Nebo (DPDO Barstow): EPA #CA8170024261. Telephone 282-6564.
(b) Yermo (DPDO Barstow): EPA #CA8170090023. Telephone 282-7312.
(c) OSB China Lake: EPA #CA8170090015. Telephone 437-2502.
(d) OSB Edwards: EPA #CA1570024504. Telephone 350-2209.
(e) OSB 29 Palms: EPA #CA8170090013. Telephone 952-6643.
(3) Block C. Enter "HM".
(4) Block D. Enter "Used HM".
Turn-in documentation for HW must have EPA identification numbers and telephone
numbers in Blocks A and B and the following additional entries:
(5) Block C. Enter "HW".
(6) Block D. Enter EPA Hazardous Waste Number.
When HW is transported over public highways to your servicing disposal activity,
the following additional entries on the DD Form 1348-1 are required and must be
accompanied by a properly filled out State of California Hazardous Waste
Manifest. See Enclosure 6 for manifest instructions.
(7) Block U. Enter six character (2 alpha, 4 numeric) identification
number as shown in 49 CFR, Part 172.
(8) Blocks AA and BB. Enter EPA licensed transporter's name and his
EPA identification number.
(9) Block CC. Have transporter sign and date upon his receipt of the
HW.
(10) Blocks DD, EE, FF, and GG. Enter following statement. "This is to
certify that the above-named materials are properly classified,
described, packaged, marked and labeled, and are in proper
condition for transportation according to the applicable
regulations of DOT and EPA." This statement must be signed by the
person responsible for the turn-in.
Page 9 of 13 ATTACHMENT B
<PAGE>
i. Lost, Abandoned, or Unclaimed Privately-Owned Personal Property.
---------------------------------------------------------------
Paragraph 856, reference Ia should be read prior to initiating any action to
dispose of lost, abandoned or unclaimed privately-owned personal property
(LAPP). The DPDO can not accept LAPP unless the DD Form 1348-1 is accompanied
by one of two supporting documents:
(1) A notarized release document in the format of Enclosure 7 signed
by the owner of LAPP, or
--
(2) A Board of Officers Findings. These findings must include a
written, dated, itemized inventory list which includes the fair
market value of each item and the name of the owner, if known. If
assistance is required to determine the fair market value, call
the DPDO Sales Preparation Branch, AUTOVON 282-6561.
(3) When a vehicle is to be disposed of, a statement that indicates
there is no lien against the vehicle or a release statement from
the lienholder must accompany the Owner's Release Document or the
Board of Officers Findings.
j. Nonappropriated Fund (NAF) Property. The DD Form 1348-1 for NAF
-----------------------------------
property must contain a certification that the property was procured with
nonappropriated funds. The applicable funds account number must also be placed
on the TID. The certification and fund citation should be entered in Blocks BB-
EE. "NAF" should be entered in Block Y. The unit price entered on the TID must
be the same as that recorded in the financial/accounting records of the fund
account.
k. Precious Metals and Precious Metals-Bearing Items.
-------------------------------------------------
(1) Quantities of fine precious metals and silver recovered from hypo
solution may be reported directly to the Precious Metals Recovery
Facility-Earle, Naval Ammunition Depot Earle, Bldg. C-38, Colts
Neck, NJ 07722, AUTOVON.449-1289. Fine precious metals and
recovered silver may also be turned in directly to a DPDO site.
The turn-in documentation requirements are the same as for scrap
material. Weights entered on the DD Form 1348-1 should be
carefully measured using the appropriate measure of weight
(grains, grams, or troy ounces). Fine precious metals/recovered
silver will be weighed in immediately upon receipt, in the
presence of your truck driver, by the DPDO's Precious Metals
Monitor or by the 0S8 Chief. Any discrepancies between the
received weight and the weight entered by the generating activity
on the TID is the responsibility of the generating activity. DPDO
Barstow will not initiate Reports of Discrepancies (ROD) for
erroneous weights originally entered on the TID by the generating
activity. However, such weight discrepancies may be reported to
the appropriate military investigative service (CID, OSI, NIS)
for their action.
(2) Many items, particularly electronic components, contain much
economically recoverable precious metals. The words "PRECIOUS
METALS" should be entered in Block D if precious metals content
is known or even suspected. Often, these precious metals are not
<PAGE>
externally visible. It is requested that users of an item
containing concealed precious metals write any available
information about the presence, type, and location of the
precious metals on the DD Form 1348-1.
(3) Any questions regarding the general precious metals recovery
program may be directed to Sally Wigmore, Southern California-
Nevada Precious Metals Area Representative (PMAR), at DPDO San
Diego, Bldg. 193, P. 0. Box 337, Imperial Beach, CA 92032. If
your activity needs a silver recovery unit placed in a
dispensary, dental clinic, photo lab, print plant, micro film and
microfiche producing facility, or hobby craft shop, please call
Mrs. Wigmore on AUTOVON 951-5542. Questions relating to specific
DPDO Barstow precious metals procedures and turn-ins to the
DPDO/OSB should be addressed to the DPDO Precious Metals Monitor,
Mr. Tom Bittman, AUTOVON 282-6563.
1. Scrap. Scrap is defined as having no value except for its basic
-----
material content.
(1) Scrap and "salvage" are not the same thing. Salvage has some
value other than its basic material content. While salvage is no
longer fit for its originally intended use, other uses may be
made of the salvage. A stripped vehicle is a good example of
salvage. While the stripped vehicle cannot be used as originally
intended, it has salvage value as a target for artillery or
bombing missions. Therefore, salvage must be turned in as usable
property; i.e., by stock number, unit of issue, quantity, etc.
Salvage should be supply condition (MILSTRIP) coded "H".
(2) Any material identified by a stock number must be turned in as
usable property regardless of the material's condition. If the
material has no value except for its basic material content, the
DPDO will downgrade it to scrap. The generating activity will
receive credit for a usable property turn-in.
(3) Since the value of scrap is its basic material content, it is
essential that the integrity of this basic content be maintained.
The Government receives sales proceeds in direct proportion to
the extent a scrap accumulation is one type of material. This
means commingling of different basic material contents is to be
avoided. The way to avoid commingling of scrap is to segregate
scrap as it is generated. In a production shop, scrap can easily
be segregated as it is generated by placing a container for each
type of scrap near the scrap generating operation. Segregation of
scrap as it is produced is further discussed in Chapter IV,
reference 1c.
(4) Paragraph E3a, reference la states, "Initial segregation of scrap
is the responsibility of the generating unit to the maximum
extent feasible." DPDO Barstow strongly supports this DoD policy.
DPDO personnel are available to assist you in achieving
segregation at the source. If assistance is needed in determining
the degree of
Page 11 of 13 ATTACHMENT B
<PAGE>
segregation required, in obtaining containers for segregated
scrap collection, or optimal container placement, call the
scrapyard foreman or OSB Chief servicing your installation.
Issuance of a base order pertaining to the segregated collection
of scrap as it is generated is a strong step towards implementing
the DoD policy of segregation at the source.
(5) At a minimum, all metal scrap must be segregated into at least
four categories:
a. Light ferrous (less than 1" thick, such as sheet metal,
steel strapping, and steel cans),
b. Heavy ferrous (more than 1" thick, such as I-beams, engine
blocks, rails),
c. Nonferrous (aluminum, brass, copper),
d. Expended ordnance (shell casings, rocket tubes, dummy
projectiles).
Within the nonferrous category, further segregation into the
basic material contents should be made. Expended ordnance scrap
-----------------------
will not be accepted unless it has been certified inert, in
-----------------------------------------------------------
writing, by qualified EOD personnel. Turn-ins not segregated to
-----------------------------------
the minimum standards specified above will be rejected.
m. Transformers, Capacitors, and Transformer/Capacitor Fluids. Many
----------------------------------------------------------
transformers and capacitors use the chemical Polychlorinated Biphenyls (PCB) as
a cooling agent. PCB is suspected of causing cancer. In the state of California,
any material with a PCB concentration of seven parts per million (ppm) or
greater is considered "PCB material." The DPDO and OSBs do not have the
conforming storage required for PCB material storage. Accordingly, the DPDO/OSB
will not accept physical custody for any PCB material (PCB concentration greater
or equal to 7 ppm). DPDO Barstow will accept accountability of PCB material
received in-place (off DPDO site) provided a laboratory analysis showing an
item's PCB concentration in ppm is attached to the DD Form 1348-1. No DPDO
accountability will be accepted unless the ppm is known, in addition,
accountability will not be accepted if PCB material is not properly packaged or
labeled (including a PCB Warning label). Material with a PCB concentration of
less than 7 ppm is considered non-PCB material and will be physically accepted
by the DPDO/OSB provided a laboratory analysis showing less than 7 ppm is
attached to the DD Form 1348-1. Non-PCB material must be properly packaged and
labeled for DPDO acceptance. PCB ppm should be entered in Block D.
n. Small Arms. All DoD small arms are registered by serial number in the
----------
DoD Small Arms Serialization Program. Each military service and DLA maintains a
Small Arms Registry. No small arms turn-ins/shipments are to be made without the
prior knowledge of the appropriate small arms registry. Chapter III, reference
lb devotes itself to DoD policy on the disposal of small arms. Currently, there
is a DoD moratorium on the disposal of small arms. The DPDO OSB cannot accept
--------------------------
any small arms, no matter what the generating activity's circumstances are. No
- -------------- --
exceptions will be granted. Questions concerning this DoD moratorium may be
- --------------------------
directed to the Defense Property Disposal Service (DPDS-RP). AUTOVON 369-6936.
<PAGE>
o. Typewriters. The following information is to be entered on the DD Form
-----------
1348-1 when typewriters are turned in: make, model, type, (standard, silent,
noiseless, portable, manual, or electric), carriage width, typeface, and serial
number. Typewriter turn-ins that do not have the information listed above on the
TID will be refused. Paragraph B101, Chapter VI, reference 1a applies.
p. Used Oil. Used oil is differentiated from "waste oil" in that used oil
--------
has reuse or sales value. Used oil becomes waste oil when it has no reuse or
sales value. Used oil turn-ins must be documented as an used hazardous material
(HM). See paragraph 13h above and Enclosure 8 for a sample DD form 1348-1.
(1) Used oil is disposed of in-place. It may be disposed of on a
continual or on a one-time basis, depending on how it is
generated. If used oil is generated fairly regularly in salable
quantities, a term contract may be arranged to have the
contractor pick up whenever the oil custodian notifies the
contractor to do so. Under this arrangement, the custodian must
measure or weigh out the oil delivered, fill out delivery
documents, and forward the delivery documents to DPDO Barstow.
(2) Pursuant to the DoD Oil Recycling and Reuse Program (see
paragraph B70.1, Chapter VI, reference 1a), net proceeds from the
sale of used oil will be deposited to the account specified by
the turning-in activity on the TID. No proceeds will be
-------------------
distributed to the turning-activity unless the fund account is
--------------------------------------------------------------
cited on the DD Form 1348-1. Enter the account number in Blocks
---------------------------
BB-EE.
(3) The State of California considers used oils generated by
government agencies as hazardous waste (HW). In order to comply
with the State's ruling, all used oil removed from your base must
be manifested as a HW. The sales contractor removing your used
oil must present a properly filled out State of California
Hazardous Waste Manifest. The person(s) you have designated to
fill out delivery documents must sign this manifest as the TSDF
(transfer/storage/disposal facility), using your base's EPA
identification number. Enclosure 6 is the State of California's
instructions on the use of the Hazardous Waste Manifest.
q. Vehicles. The following information must be attached to the DD Form
--------
1348-1 when vehicles having commercial application in Federal Supply Group (FSG)
23, 24, 38, and 39 are turned in. If the following information is not provided,
the turn-in will be refused. Paragraph 1022, Chapter VI, reference 1a applies.
(1) List and value of any major components that are missing (or have
been reclaimed) such as engine, transmission, differential,
wheels, axles, or doors, which would impair the utility of the
vehicle, regardless of the other repairs that are necessary.
(2) One-time cost of repairs (parts and labor).
(3) The vehicle maintenance record.
/s/ Wayne R. Woosley
WAYNE R. WOOSLEY
Chief, DPDO Barstow
Page 13 of 13 ATTACHMENT B
<PAGE>
EXHIBIT 10.29
ATG INC.
1998 STOCK OWNERSHIP INCENTIVE PLAN
ARTICLE 1. PURPOSE
The purpose of this 1998 Stock Ownership Incentive Plan ("Plan") is to
advance the interests of ATG Inc., a California corporation ("Company"), and its
subsidiaries by encouraging employees who will largely be responsible for the
long-term success and development of the Company to acquire and retain an
ownership interest in the Company. The Plan is also intended to provide
flexibility to the Company in attracting and retaining such employees and
stimulating their efforts on behalf of the Company.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. As used in the Plan, terms defined parenthetically
immediately after their use or otherwise herein shall have the respective
meanings provided by such definitions, and the terms set forth below shall have
the following meanings (in either case, such terms shall apply equally to both
the singular and plural forms of the terms defined):
2.1.1 "Award" shall mean, individually or collectively, a
grant under the Plan of Options, Restricted Stock or Performance Units.
2.1.2 "Board" shall mean the Board of Directors of the
Company.
2.1.3 "Cause" shall mean, unless otherwise defined in an
agreement evidencing an Award, a felony conviction of a Participant or the
failure of a Participant to contest prosecution for a felony, or a
Participant's willful misconduct or dishonesty, or the Participant's gross
insubordination or willful neglect of duty, any of which is determined by the
Board to be directly and materially harmful to the business or reputation of
the Company or its Subsidiaries.
2.1.4 A "Change in Control" shall mean any of the following
events:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company ("Voting Securities") by any
Person immediately after which such Person has Beneficial Ownership (within
the meaning of
-1-
<PAGE>
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A Non-Control Acquisition shall mean acquisition by (i) the Company
or any Subsidiary, (ii) an employee benefit plan (or a trust forming a part
thereof) maintained by the Company or any Subsidiary or (iii) any Person in
connection with a Non-Control Transaction (as hereinafter defined).
(b) The individuals who, as of the Effective Date
(as hereinafter defined), are members of tho Board ("Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by the Company's
shareholders, of any new director was approved by a vote of at least a
majority of the Incumbent Board, such new director shall, for purposes of the
Plan, be considered as a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of either an
actual or threatened election contest (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board ("Proxy Contest")
including by reason of any agreement intended to avoid or settle any such
election contest or Proxy Contest; or
(c) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such is a Non-Control Transaction. For purposes of
the Plan, the term "Non-Control Transaction" shall mean a merger, consolidation
or reorganization of the Company in which:
(A) the shareholders of the Company
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least a majority of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger,
consolidation or reorganization ("Surviving Corporation") in substantially the
same respective proportions as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
-2-
<PAGE>
(B) the individuals who were members of
the Board immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least a majority of
the members of the board of directors of the Surviving Corporation; and
(C) no Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan (or a trust forming a
part thereof) maintained by the Company, the Surviving Corporation or any
Subsidiary of the Company, or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
the then outstanding Voting Securities) has Beneficial Ownership of 20% or
more of the combined voting power of the Surviving Corporation's then
outstanding voting securities;
(ii) A complete liquidation or dissolution of
the Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person ("Subject Person") acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Person; provided, however, that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall be deemed to occur.
2.1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.
2.1.6 "Disability" shall mean the total disability as
determined by the Board in accordance with standards and procedures similar to
those under the Company's long-term disability plan, or, if none, a physical or
mental infirmity which the Board determines impairs the Participant's ability to
perform substantially his or her duties for the Company and its Subsidiaries
for a period of 180 consecutive days.
-3-
<PAGE>
2.1.7 "Employee" shall mean an individual who is a full-time
or part-time employee of the Company or a Subsidiary of the Company.
2.1.8 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
2.1.9 "Fair Market Value" of the Shares shall mean, as of any
applicable date, the closing sale price of the Shares on the NASDAQ National
Market or any national or regional stock exchange on which the Shares are
traded, or if no such reported sale of the Shares shall have occurred on such
date, on the next preceding date on which there was such a reported sale. If
there shall be any material alteration in the present system of reporting sale
prices of the Shares, or if the Shares are not included in the NASDAQ National
Market or listed on a national or regional stock exchange, the Fair Market Value
of the Shares as of a particular date shall be determined by such method as
shall be determined by the Board.
2.1.10 "ISOs" shall have the meaning given such term in
Section 6.1.
2.1.11 "NQSOs" shall have the meaning given such term in
Section 6.1.
2.1.12 "Option" shall mean an option to purchase Shares
granted pursuant to Article 6.
2.1.13 "Option Agreement" shall mean an agreement evidencing
the grant of an Option as described in Section 6.2.
2.1.14 "Option Exercise Price" shall mean the purchase price
per Share subject to an Option, which shall not be less than the Fair Market
Value of the Share on the date of grant (110% of Fair Market Value in the case
of an ISO granted to a Ten Percent Shareholder).
2.1.15 "Participant" shall mean any Employee selected by the
Board to receive an Award under the Plan.
2.1.16 "Performance Goals" shall have the meaning given such
term in Section 8.4.
2.1.17 "Performance Period" shall have the meaning given such
term in Section 8.3.
-4-
<PAGE>
2.1.18 "Performance Unit" shall mean the right to receive a
payment from the Company upon the achievement of specified Performance Goals as
set forth in a Performance Unit Agreement.
2.1.19 "Performance Unit Agreement" shall mean an agreement
evidencing a Performance Unit grant, as described in Section 8.2.
2.1.20 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
2.1.21 "Plan" shall mean this ATG Inc. 1998 Stock Ownership
Incentive Plan, as the same may be amended from time to time.
2.1.22 "Restriction Period" shall mean the period determined
by the Board during which transfer of Shares is limited in some way or Shares
are otherwise restricted or subject to forfeiture as provided in Article 7.
2.1.23 "Restricted Stock" shall mean Shares granted pursuant
to Article 7 as to which the restrictions have not expired.
2.1.24 "Restricted Stock Agreement" shall mean an agreement
evidencing a Restricted Stock grant, as described in Section 7.2.
2.1.25 "Retirement" shall mean retirement by a Participant in
accordance with the terms of the Company's retirement or pension plans or
policies.
2.1.26 "Shares" shall mean the shares of the Company's common
stock, no par value per share.
2.1.27 "Subsidiary" shall mean, with respect to any company,
any corporation or other Person of which a majority of its voting power, equity
securities, or equity interest is owned directly or indirectly by such company.
2.1.28 "Taxable Event" shall mean any event upon which the
Company has a withholding obligation and which involves the issuance of Shares
to a Participant.
2.1.29 "Ten Percent Shareholder" shall mean an Employee who,
at the time an ISO is granted, owns (within the meaning of section 422(b)(6) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company.
-5-
<PAGE>
2.2 Gender and Number. Except where otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Board. The Plan shall be administered by the Board. The Board
in administering the Plan shall meet at such times and places as it determines
and may meet through telephone conference call.
3.2 Authority of the Board. Subject to the provisions of the Plan, the
Board shall have full authority to:
3.2.1 select Participants to whom Awards are granted;
3.2.2 determine the size, types and frequency of Awards
granted under the Plan;
3.2.3 determine the terms and condition of Awards, including
any restrictions on or conditions to the Award, which need not be identical;
3.2.4 cancel or modify, with the consent of the Participant,
outstanding Awards and to grant new Awards in substitution therefor;
3.2.5 accelerate the exercisability of any Award, for any
reason;
3.2.6 construe and interpret the Plan and any agreement or
instrument entered into under the Plan;
3.2.7 establish, amend and rescind rules and regulations for
the Plan's administration; and
3.2.8 amend the terms and conditions of any outstanding Award
to the extent such terms and conditions are within the discretion of the Board
as provided in the Plan.
-6-
<PAGE>
The Board shall make all determinations which may be necessary or advisable for
the administration of the Plan. To the extent permitted by law and Rule 16b-3
promulgated under the Exchange Act, the Board may delegate its authority
hereunder.
3.2.9 Decisions Binding. All determinations and decisions made
by the Board pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board, shall be final, conclusive and binding for all
purposes upon all persons, including the Company, its shareholders, Employees,
Participants and their estates and beneficiaries.
3.3 Section 16 Compliance; Bifurcation of Plan. It is the intention of
the Company that the Plan and the administration of the Plan comply in all
respects with Section 16(b) of the Exchange Act and the rules and regulations
promulgated thereunder, if such rules and regulations are applicable to the
Company. If any Plan provision, or any aspect of the administration of the Plan,
is found not to be in compliance with Section 16(b) of the Exchange Act, the
provision or administration shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3
promulgated under the Exchange Act. Notwithstanding anything in the Plan to the
contrary, the Board, in its discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
Participants who are subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Directors and officers who fall within the definition of "officer"
under Rule 16a-1(f) promulgated under the Exchange Act shall deliver to the
Corporate Secretary of the Company an executed notice of his/her intention to
sell Shares acquired directly or indirectly hereunder. Such notice, in which
there shall be specified the number of Shares which are to be sold and the date
such Shares were acquired, shall be provided at least one full business day in
advance of the proposed date of sale.
ARTICLE 4. SHARES AVAILABLE UNDER THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
the maximum number of Shares reserved for issuance under this Plan shall be Five
Hundred Thousand (500,000). Any Shares issued under the Plan may consist, in
whole or in part, of authorized and unissued Shares or treasury Shares. If and
to the extent an Award shall expire or terminate for any reason without having
been exercised in full (including a cancellation and re-grant of an Option), or
shall be forfeited, without, in either case, the Participant having realized
any of the economic benefits of a shareholder (such as the receipt of
dividends or other distributions paid on Shares of Restricted Stock), the
Shares (including Restricted Stock) associated with such Awards shall again
become available for Award under the Plan.
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4.2 Shares of Restricted Stock Available Under the Plan. Subject to
adjustment as provided in Section 4.3, the number of Shares which may be the
subject of Awards granted in the form of Restricted Stock is limited to a
maximum of Two Hundred Fifty Thousand (250,000) Shares.
4.3 Adjustments in Authorized Shares and Outstanding Awards. In the
event of a merger, reorganization, consolidation, recapitalization,
reclassification, split-up, spin-off, stock dividend, stock split, reverse stock
split, cash dividend, property dividend, share repurchase, share combination,
share exchange, or other fundamental change in the corporate structure of the
Company affecting the Shares, the Board may substitute or adjust the total
number and class of Shares or other stock or securities which may be issued
under the Plan, and the number, class and/or price of Shares subject to
outstanding Awards, as it determines to be appropriate and equitable to prevent
dilution or enlargement of the rights of Participants and to preserve, without
increasing, the value of any outstanding Awards; and further provided, that the
number of Shares subject to any Award shall always be a whole number. In the
case of ISOs, such adjustments shall be made in such a manner so as not to
constitute a "modification" within the meaning of section 424(h)(3) of the Code
and only to the extent otherwise permitted by sections 422 and 424 of the Code.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
All Employees of the Company and its Subsidiaries are eligible to
receive Awards under the Plan. In selecting Employees to receive Awards under
the Plan, as well as in determining the number of Shares subject to, and the
other terms and conditions applicable to, each Award, the Board shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan, including the duties of the Employees, their present and potential
contribution to the success of the Company and their anticipated number of years
of active service remaining with the Company or a Subsidiary.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
the Board may grant Options to Participants at any time and from time to time,
in the form of options which are intended to qualify as incentive stock options
within the meaning of section 422 of the Code ("ISOs"), Options which are not
intended to so qualify ("NQSOs"), or a combination thereof.
6.2 Option Agreement. Each Option shall be evidenced by an Option
Agreement that shall specify the Option Exercise Price, the duration of the
Option, the
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number of Shares to which the Option relates and such other provisions as the
Board may determine which are required by the Plan. The Option Agreement shall
also specify whether the Option is intended to be an ISO or a NQSO and shall
include such provisions applicable to the particular type of Option granted.
6.3 Duration of Options. Each Option shall expire at such time as is
determined by the Board at the time of grant ("Expiration Date"); provided,
however, that no Option shall be exercised later than the tenth anniversary of
its grant (fifth anniversary, in the case of an ISO granted to a Ten Percent
Shareholder).
6.4 Exercise of Options. Options shall be exercisable at such times and
be subject to such restrictions and conditions as the Board shall approve at the
time of grant, which need not be the same for each grant or for each
Participant. Options shall be exercised by delivery to the Company of a written
notice of exercise, setting forth the number of Shares with respect to which the
Option is to be exercised and accompanied by full payment of the Option Exercise
Price and all applicable withholding taxes.
6.5 Payment of Option Exercise Price. The Option Exercise Price for
Shares as to which an Option is exercised shall be paid to the Company in full
at the time of exercise either (a) in cash in the form of currency or other cash
equivalent acceptable to the Company, (b) by rendering Shares having a Fair
Market Value at the time of exercise equal to the Option Exercise Price, (c) any
other reasonable consideration that the Board may deem appropriate or (d) by a
combination of the forms of consideration described in (a), (b) and (c) of this
Section 6.5. The Board may permit the cashless exercise of Options, subject to
applicable securities law restrictions and the requirements of Regulation T
promulgated by the Federal Reserve Board, or by any other means which the Board
determines to be consistent with the Plan's purpose and applicable law; except
that in the case of any Participant subject to Section 16(b) of the Exchange Act
such cashless exercise of his or her Option may not occur within six months of
the date of grant of such Option, to the extent such exercise during such
six-month period would not be exempted from Section 16(b) of the Exchange Act by
virtue of Rule 16b-3 promulgated thereunder.
6.6 Vesting Upon Change in Control. Upon a Change in Control, any then
outstanding Options held by Participants shall become fully vested and
immediately exercisable.
6.7 Termination of Employment. If the employment of a Participant is
terminated for Cause, all then outstanding Options of such Participant, whether
or not exercisable, shall terminate immediately. If the employment of a
Participant is terminated for any reason other than for Cause, death, Disability
or Retirement, to the
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extent then outstanding Options of such Participant are exercisable, such
Options may be exercised by such Participant or such Participant's personal
representative at any time prior to the Expiration Date of the Options or
within 60 days after the date of such termination of employment, whichever is
earlier. In the event of the Retirement of a Participant, to the extent then
outstanding Options of such Participant are exercisable, such Options may be
exercised by the Participant (a) in the case of NQSOs, within two years after
the date of Retirement and (b) in the case of ISOs, within 90 days after
Retirement; provided, however, that no such Options may be exercised on a date
subsequent to their Expiration Date. In the event of the death or Disability
of a Participant while employed by the Company or a Subsidiary, all then
outstanding Options of such Participant shall become fully vested and
immediately exercisable, and may be exercised at any time (x) in the case of
NQSOs, within two years after the date of death or determination of Disability
and (y) in the case of ISOs, within one year after the date of death or
determination of Disability; provided, however that no such Options may be
exercised on a date subsequent to their Expiration Date. In the event of the
death of a Participant, the Option may be exercised by the person or persons
to whom rights pass by will or by the laws of descent and distribution, or if
appropriate, the legal representative of the deceased Participant's estate. In
the event of the Disability of a Participant, the Option may be exercised by
the Participant, or if such Participant is incapable of exercising the Option,
by such Participant's legal representative.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Board may grant shares of Restricted Stock to Participants at any
time and from time to time and upon such terms and conditions as it may
determine. The purchase price per share, if any, of Restricted Stock granted
shall be determined by the Board, but shall not be less than the par value per
Share.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement which shall specify the Restriction
Period, the number of shares of Restricted Stock granted and such other
provisions as the Board may determine and which are required by the Plan.
7.3 Non-Transferability of Restricted Stock. Except as provided in
this Article 7, shares of Restricted Stock may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated until the end of the
applicable Restriction Period as specified in the Restricted Stock Agreement,
or upon earlier satisfaction of any other conditions determined at the time of
grant specified in the Restricted Stock Agreement.
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7.4 Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock as it may deem advisable,
including, without limitation, restrictions based upon the achievement of
Performance Goals, years of service and/or restrictions under applicable Federal
or state securities laws. The Committee may provide that any share of Restricted
Stock shall be held (together with a stock power executed in blank by the
Participant) in custody by the Company until any or all restrictions thereon
shall have lapsed.
7.5 Forfeiture. The Committee shall determine and set forth in a
Participant's Restricted Stock Agreement such events upon which a Participant's
shares of Restricted Stock shall be forfeitable, which may include, without
limitation, the termination of a Participant's employment during the Restriction
Period or the nonachievement of Performance Goals. Any such forfeited shares of
Restricted Stock shall be immediately returned to the Company by the
Participant, and the Participant shall only receive the amount, if any, paid by
the Participant for such Restricted Stock.
7.6 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4, each certificate representing shares of
Restricted Stock shall bear the following legend:
"The sale or other transfer of the shares represented by this
Certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer as set
forth in the ATG Inc. 1998 Stock Ownership Incentive Plan, and
in the related Restricted Stock Agreement. A copy of the Plan
and such Restricted Stock Agreement may be obtained from the
Secretary of ATG Inc."
7.7 Lapse of Restrictions Generally. Except as otherwise provided in
this Article 7, shares of Restricted Stock shall become freely transferable by
the Participant and no longer subject to forfeiture after the last day of the
Restriction Period, provided however, that if the restriction relates to the
achievement of a Performance Goal, the Restriction Period shall not end until
the Board has certified in writing that the Performance Goal has been meet. Once
the shares of Restricted Stock are released from their restrictions, the
Participant shall be entitled to have the legend required by Section 7.6 removed
from the Participant's share certificate, which certificate shall thereafter
represent freely transferable and nonforfeitable Shares free from any and all
restrictions under the Plan.
7.8 Lapse of Restrictions Upon Change in Control. Upon a Change in
Control, any restrictions and other Plan conditions pertaining to then
outstanding shares of Restricted Stock held by Participants, including, but not
limited to, vesting
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requirements, shall lapse and such Shares shall thereafter be immediately
transferable and nonforfeitable.
7.9 Voting Rights: Dividends and Other Distributions. During the
Restriction Period, Participants holding shares of Restricted Stock may exercise
full voting rights, and shall, unless the Board exercises its discretion as
provided in Section 7.10, be entitled to receive all dividends and other
distributions paid with respect to such Restricted Stock. If any dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
7.10 Treatment of Dividends. At the time shares of Restricted Stock are
granted to a Participant, the Board may, in its discretion, determine that the
payment of dividends, or a specified portion thereof, declared or paid on such
shares shall be deferred until the lapse of the restrictions applicable to such
shares, in which event such deferred dividends shall be held by the Company for
the account of the Participant. In the event of such deferral, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account during the year at a rate per annum as the Board, in its discretion,
may determine. Deferred dividends, together with interest accrued thereon, if
any, shall be (a) paid to the Participant upon the lapse of restrictions on the
shares of Restricted Stock as to which the dividends related or (ii) forfeited
to the Company upon the forfeiture of such shares by the Participant.
7.11 Termination of Employment. If the employment of a Participant is
terminated for any reason other than death or Disability prior to the expiration
of the Restriction Period applicable to any shares of Restricted Stock then held
by the Participant, such shares shall thereupon be forfeited immediately by the
Participant and returned to the Company, and the Participant shall only receive
the amount, if any, paid by the Participant for such Restricted Stock. If the
employment of a Participant is terminated as a result of death or Disability
prior to the expiration of the Restriction Period applicable to any shares of
Restricted Stock then held by the Participant, any restrictions and other
conditions pertaining to such shares then held by the Participant, including,
but not limited to, vesting requirements, shall immediately lapse and such
Shares shall thereafter be immediately transferable and nonforfeitable.
Notwithstanding anything in the Plan to the contrary, except in the case of
Restricted Stock for which a Performance Goal must be achieved, the Board may
determine, in its sole discretion, in the case of any termination of a
Participant's employment other than for Cause, that the restrictions on some or
all of the shares of Restricted Stock awarded to a Participant shall
immediately lapse and such Shares shall thereafter be immediately transferable
and nonforfeitable.
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ARTICLE 8. PERFORMANCE UNITS
8.1 Grant of Performance Units. The Board may, from time to time and
upon such terms and conditions as it may determine, grant Performance Units
which will become payable to a Participant upon certification in writing by the
Board that the Performance Goals related thereto have been achieved.
8.2 Performance Unit Agreement. Each Performance Unit grant shall be
evidenced by a Performance Unit Agreement that shall specify the Performance
Goals, the Performance Period and the number of Performance Units to which it
pertains.
8.3 Performance Period. The period of performance ("Performance
Period") with respect to each Performance Unit shall be such period of time,
which shall not be less than one year, nor more than five years, as determined
by the Board, for the measurement of the extent to which Performance Goals are
attained.
8.4 Performance Goals. The goals ("Performance Goals") that are to be
achieved with respect to each Performance Unit, or Restricted Stock subject to a
requirement that Performance Goals be achieved, shall be those objectives
established by the Board as it deems appropriate, and which may be expressed in
terms of, by way of illustration and not limitation, (a) earnings per Share, (b)
Share price, (c) pre-tax profit, (d) net earnings, (e) return on equity or
assets, (f) revenues or (g) any combination of the foregoing Performance Goals,
in respect of the performance of the Company and its Subsidiaries (which may be
on a consolidated basis), a Subsidiary, a division or other operating unit of
the Company. Performance goals may be absolute or relative and may be expressed
in terms of a progression within a specified range. The Performance Goals with
respect to a Performance Period shall be established by the Board in order to
comply with Rule 16b-3 under the Exchange Act and section 162(m) of the Code, as
applicable.
8.5 Termination of Employment. If the employment of a Participant shall
terminate prior to the expiration of the Performance Period for any reason other
than for death, Disability or Retirement, the Performance Units then held by the
Participant shall immediately terminate. In the case of termination of
employment by reason of death, Disability or Retirement of a Participant prior
to the expiration of the Performance Period, any then outstanding Performance
Units of such Participant shall be payable in an amount equal to the maximum
amount payable under the Performance Unit multiplied by a percentage equal to
the percentage that would have been earned under the terms of the Performance
Unit Agreement assuming that the rate at which the Performance Goals have been
achieved as of the date of such termination of employment would have continued
until the end of the Performance Period; provided,
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however, that if no maximum amount payable is specified in the Performance
Unit Agreement, the amount payable shall be such amount as the Board shall
determine is reasonable.
8.6 Payment Upon Change in Control. Upon a Change in Control, any then
outstanding Performance Units shall become fully vested and immediately payable
in an amount which is equal to the greater of (a) the maximum amount payable
under the Performance Unit multiplied by a percentage equal to the percentage
that would have been earned under the terms of the Performance Unit Agreement
assuming that the rate at which the Performance Goals have been achieved as of
the date of such Change in Control would have continued until the end of the
Performance Period or (b) the maximum amount payable under the Performance Unit
multiplied by the percentage of the Performance Period completed by the
Participant at the time of the Change in Control; provided, however, that if no
maximum amount payable is specified in the Performance Unit Agreement, the
amount payable shall be such amount as the Board shall determine is reasonable.
8.7 Time and Manner of Payment of Performance Units. Subject to such
terms and conditions as the Board may impose, and unless otherwise provided in
the Performance Unit Agreement, Performance Units shall be payable within 90
days following the end of the Performance Period during which the Participant
attained at least the minimum acceptable level of achievement under the
Performance Goals, or 90 days following a Change in Control, as applicable. The
Board, in its discretion, may determine at the time of payment required in
connection with a Performance Unit whether such payment shall be made (a) solely
in cash, (b) solely in Shares (valued at the Fair Market Value of the Shares on
the date of payment) or (c) a combination of cash and Shares; provided, however,
that if a Performance Unit becomes payable upon a Change in Control, the
Performance Unit shall be paid solely in cash.
8.8 Designation of Beneficiary. Each Participant may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom the right to receive payments under a Performance Unit is
to be paid in case of the Participant's death before receiving any or all such
payments. Each such designation shall revoke all prior designations by the
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant in writing with the Board or its designee
during the Participant's lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
ARTICLE 9. AMENDMENT, MODIFICATION AND TERMINATION
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9.1 Termination Date. The Plan shall terminate on the earliest to occur
of (a) the tenth anniversary of the adoption of the Plan by the Board, (b) the
date when all Shares available under the Plan shall have been acquired pursuant
to the exercise of Awards and the payment of all benefits in connection with
Performance Unit Award has been made or (c) such other date as the Board may
determine in accordance with Section 9.2.
9.2 Amendment, Modification and Termination. The Board may, at any
time, amend, modify or terminate the Plan. Without the approval of the
shareholders of the Company (as may be required by section 162(m) of the Code,
Section 16 of the Exchange Act and the rules promulgated thereunder, any
national securities exchange or national market system on which the Shares are
then listed, included or reported or a regulatory body having jurisdiction with
respect hereto), however, no such amendment, modification or termination may:
9.2.1 materially increase the benefits accruing to
Participants under the Plan;
9.2.2 increase the total amount of Shares which may be issued
under the Plan, except as provided in Section 4.3;
9.2.3 materially modify the class of Employees eligible to
participate in the Plan;
9.2.4 extend the term of the Plan; or
9.2.5 otherwise modify or add a material term of the Plan (as
determined under section 162(m) of the Code and Proposed Treasury Regulation
section 1.162-27).
9.3 Awards Previously Granted. No amendment, modification or
termination of the Plan shall in any manner adversely affect any outstanding
Award without the written consent of the Participant holding such Award.
ARTICLE 10. NON -TRANSFERABILITY
A Participant's rights under the Plan may not be assigned, pledged or
otherwise transferred other than by will or the laws of descent and
distribution, except that upon a Participant's death, the Participant's rights
to payment pursuant to a Performance Unit may be transferred to a beneficiary
designated in accordance with the provisions of Section 8.8; provided,
however, that in the case of NQSOs, the Participant may, subject
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to any restriction under Section 16(b) of the Exchange Act, if applicable,
transfer the Options to the Participant's spouse, lineal descendants, trusts
for their benefit or a charitable remainder trust of which the Participant or
such family members referred to above are a beneficiary or beneficiaries.
ARTICLE 11. NO GRANTING OF EMPLOYMENT RIGHTS
Neither the Plan, nor any action taken under the Plan, shall be
construed as giving any Employee the right to become a Participant, nor shall an
Award under the Plan be construed as giving a Participant any right with respect
to continuance of employment by the Company or any of its Subsidiaries. The
Company expressly reserves the right to terminate, whether by dismissal,
discharge or otherwise, a Participant's employment at any time, with or without
Cause, except as may otherwise be provided by any written agreement between the
Company and the Participant.
ARTICLE 12. WITHHOLDING
12.1 Tax Withholding. A Participant shall remit to the Company an
amount sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA and Medicare obligation) required by law to be then withheld
by the Company with respect to any grant, exercise or payment made under or as a
result of the Plan.
12.2 Share Withholding. If the Company has a withholding obligation
upon the issuance of Shares under the Plan, a Participant may, subject to the
discretion of the Board, elect to satisfy the withholding requirement, in whole
or in part, by having the Company withhold Shares having a Fair Market Value on
the date the withholding tax is to be determined equal to the amount required to
be withheld under applicable law.
ARTICLE 13. INDEMNIFICATION
Except in relation to matters as to which the Board member was grossly
negligent or engaged in willful misconduct, no member of the Board shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.
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ARTICLE 14. SUCCESSORS
All obligations of the Company with respect to Awards granted under the
Plan shall be binding on any successor to the Company, whether the existence of
such successor is a result of a direct or indirect purchase, merger,
consolidation or otherwise, of all or substantially all of the business and/or
assets of the Company.
ARTICLE 15. GOVERNING LAW
To the extent not preempted by Federal law, the Plan and all agreements
under the Plan, shall be governed by, and construed in accordance with, the laws
of the State of California without regard to its conflict of laws principles.
ARTICLE 16. APPROVAL OF SHAREHOLDERS
This Plan is effective as of the date of adoption by the Board (the
"Effective Date") but is subject to the approval of the holders of a majority of
the outstanding shares of the voting stock of the Company, which approval must
occur no later than one year after the date of the adoption of this Plan by the
Board. Any amendments to the Plan requiring shareholder approval must be
approved by the affirmative vote of the holders of a majority of the outstanding
shares of the voting stock of the Company.
Date Plan Adopted by Board of Directors: February __, 1998
Date Plan Approved by Shareholders: _____________________
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EXHIBIT 10.30
ATG INC.
EMPLOYEE STOCK PURCHASE PLAN
Adopted February __, 1998
Approved By Stockholders _____, 1998
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of ATG Inc., a California corporation (the
"Company"), and its Affiliates, as defined in subparagraph 1(b), which are
designated as provided in subparagraph 2(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
existing employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company and its designated Affiliates.
(d) The Company intends that the rights to purchase stock of the
Company granted under the Plan be considered options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
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(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company and its Affiliates and to carry out the intent that the Plan be
treated as an "employee stock purchase plan" within the meaning of Section 423
of the Code.
(c) The Board may delegate administration of the Plan to a committee
comprised of two or more non-employee directors (the "Committee"), which may be
constituted in accordance with the applicable requirements of Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act" and "Rule 16b-3"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate Two Hundred Thousand (200,000)
shares of the Company's common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees
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(an "Offering") on a date or dates (the "Offering Date(s)") selected by the
Board or the Committee. Each Offering shall be in such form and shall contain
such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges. The terms and conditions of an
Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or otherwise) the
period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in paragraphs 5 through 8, inclusive.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any such Affiliate shall not be eligible to
be granted rights under the Plan, unless, on the applicable Offering Date, such
employee has been in the employ of the Company or any such Affiliate for such
continuous period preceding such grant as the Board or the Committee may
require, but in no event shall the required period of continuous employment be
equal to or greater than two (2) years. In addition, unless otherwise determined
by the Board or the Committee and set forth in the terms of the applicable
Offering, no employee of the Company or any such Affiliate shall be eligible to
be granted rights under the Plan, unless, on the applicable Offering Date, such
employee's customary employment with the Company or such Affiliate is for at
least twenty (20) hours per week and at least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate of the Company will, on a date or dates specified during
the Offering which coincides with the day on which such person becomes an
eligible employee or occurs thereafter, receive a right under that Offering,
which right shall thereafter be deemed to be a part of that Offering. Such right
shall have the same characteristics as any rights originally granted under that
Offering, as described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the period of the Offering with respect to such right
shall begin on its Offering Date and end coincident with the end of such
Offering; and
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(iii) the Board or the Committee may provide that if such
person first becomes an eligible employee within a specified period of time
before the end of the Offering, he or she will not receive any right under that
Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if. immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds Twenty-Five
Thousand Dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage,
to be designated by the Board or the Committee and not exceeding fifteen percent
(15%), of such employee's "earnings" (as defined by the Board or the Committee
in each Offering) during the period which begins on the Offering Date (or such
later date as the Board or the Committee determines for a particular Offering)
and ends on the date stated in the Offering, which date shall be no later than
the end of the Offering. The Board or the Committee shall establish one or more
dates during an Offering (the "Purchase Date(s)") on which rights granted under
the Plan shall be exercised and purchases of Common Stock carried out in
accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all
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eligible employees pursuant to such Offering. In addition, in connection with
each Offering that contains more than one Purchase Date, the Board or the
Committee may specify a maximum aggregate number of shares which may be
purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board
or the Committee shall make a pro rata allocation of the shares available in
as nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be equal to the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's "earnings" during the
Offering (as defined by the Board or Committee in each Offering). The payroll
deductions made for each participant shall be credited to an account for such
participant under the Plan and shall be deposited with the general funds of the
Company. A participant may reduce (including to zero) or increase the amount of
such payroll deductions, and an eligible employee may begin such payroll
deductions after the beginning of any Offering only as provided for in the
Offering. A participant may make additional payments into his or her account
only if specifically provided for in the Offering and only if the participant
has not had the maximum amount withheld during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering.
Upon such withdrawal from the Offering by a participant, the Company shall
distribute to such participant all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without interest, and
such participant's withdrawal of such participant's interest in that Offering
will have no effect upon such participant's
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eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee) under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. EXERCISE.
(a) On each Purchase Date specified therefor in the relevant Offering,
each participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price provided for in paragraph 6(c). No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase whole share of stock on the final Purchase Date of an
Offering shall be distributed in full to the participant after such Purchase
Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including, to
the extent required by applicable law, rights granted thereunder) are covered by
an effective registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), and the Plan is in material compliance with all
applicable state, foreign and other securities and other laws applicable to the
Plan. If on a Purchase Date in any Offering hereunder the shares to be issued
are not so registered or the Plan is not in such compliance, no rights granted
under the Plan or any Offering shall be exercised on such Purchase Date, and the
Purchase Date shall be delayed until the Plan is subject to such an effective
registration statement and such compliance, except that the Purchase Date
shall not be delayed more than twelve (12) months and the Purchase Date shall
in no event be more than twenty-seven (27) months from the applicable Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such
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compliance, no rights granted under the Plan or any Offering shall be
exercised and all payroll deductions accumulated during the Offering (reduced
to the extent, if any, such deductions have been used to acquire stock) shall
be distributed to the participants, without interest.
(c) Directors and officers who fall within the definition of "officer"
under Rule 16a-1(f) promulgated under the Exchange Act shall deliver to the
Corporate Secretary of the Company an executed notice of his/her intention to
sell shares acquired upon exercise of rights granted hereunder. Such notice, in
which there is specified the number of shares which are to be sold and the date
such shares were acquired, shall be provided at least one full business day in
advance of the proposed date of sale.
9. COVENANTS OF THE COMPANY.
(a) During the term of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any
of the rights of, a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan or any
rights granted under the Plan (through merger, consolidation, reorganization,
recapitalization,
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reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidation dividend, combination of shares, exchange of shares, change
in corporate structure or other fundamental corporate transaction not
involving the receipt of consideration by the Company), the Plan and
outstanding rights will be appropriately adjusted as to the class(es) and
maximum number of shares subject to the Plan and the class(es) and number of
shares, and price per share of stock, subject to outstanding rights. Such
adjustments shall be made by the Board or the Committee, the determination of
which shall be final, binding and conclusive for all purposes.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act or any comparable successor provisions (excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company or any
Affiliate of the Company) of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then, as
determined by the Board in its sole discretion (i) any surviving or acquiring
corporation may assume outstanding rights or substitute similar rights for those
under the Plan, (ii) such rights may continue in full force and effect, or (iii)
participants' accumulated payroll deductions may be used to purchase Common
Stock immediately prior to the transaction described above and the participants'
rights under the ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment by the Board, where the amendment will:
(i) Increase the number of shares reserved for rights under
the Plan;
(ii) Modify the provisions as to eligibility for participation
in the Plan (to the extent such modification requires shareholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3); or
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(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3 or Section 162(m) of the Code.
It is expressly contemplated that the Board shall take all action it deems
necessary or advisable to provide eligible employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to employee stock purchase plans and/or to bring
the Plan and/or rights granted under it into compliance therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as necessary
to comply with any laws or governmental regulations, or except as necessary to
ensure that the Plan and/or rights granted under the Plan comply with the
requirement of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file with the Company's secretary a written
designation of a beneficiary who is to receive any shares and cash, if any, from
the participant's account under the Plan in the event of such participant's
death during, or subsequent to the end of, an Offering but prior to delivery to
the participant of such shares and cash.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice filed with the Company's secretary. In the event
of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its sole discretion, may deliver such shares and/or cash to the spouse or to
any one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
as expressly provided
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in the Plan or with the consent of the person to whom such rights were
granted, or except as necessary to comply with any laws or governmental
regulation, or except as necessary to ensure that the Plan and/or rights
granted under the Plan comply with the requirements of Section 423 of the
Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on ____________, 1998 (the "Effective
Date"), but no rights granted under the Plan shall be exercised unless and until
the Plan has been approved by the shareholders of the Company within twelve (12)
months before or after the date the Plan is adopted by the Board, which date may
be prior to the Effective Date.
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EXHIBIT 10.31
ATG INC.
1998 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
ARTICLE 1. PURPOSE
The purpose of this 1998 Non-Employee Directors Stock Option Plan is to
promote the interests of ATG Inc., its subsidiaries and shareholders, by having
non-employee directors of the Company acquire a proprietary interest in the
Company. Such investments should increase the personal interest and the special
effort of such persons in providing for the continued success and progress of
the business of the Company and should enhance the Company's efforts to attract
and retain competent non-employee directors.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
1 Definitions. As used in the Plan, terms defined parenthetically
immediately after their use or otherwise herein shall have the respective
meanings provided by such definitions, and the terms set forth below shall have
the following meanings (in either case, such terms shall apply equally to both
the singular and plural forms of the terms defined):
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean, unless otherwise defined in an Option
Agreement, a felony conviction of a Non-Employee Director or the failure of a
Non-Employee Director to contest prosecution for a felony, or a Non-Employee
Director's willful misconduct, gross negligence or dishonesty or the
Non-Employee Director's breach of his or her fiduciary duty to the Company or
its shareholders, any of which is determined by the Board to be directly and
materially harmful to the business or reputation of the Company or its
Subsidiaries.
(c) "Change in Control" shall mean any of the following
events:
(1) An acquisition (other than directly from the Company)
of any voting securities of the Company ("Voting Securities") by any Person
immediately after which such Person has Beneficial Ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, that in
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determining whether a Change in Control has occurred, Voting Securities which
are acquired in a Non-Control Acquisition (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A Non-Control
Acquisition shall mean an acquisition by (i) the Company or any Subsidiary,
(ii) an employee benefit plan (or a trust forming a part thereof) maintained
by the Company or any Subsidiary or (iii) any Person in connection with a Non-
Control Transaction (as hereinafter defined);
(2) The individuals who, as of the Effective Date, are
members of the Board ("Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that if the election, or
nomination for election by the Company's shareholders, of any new director was
approved by a vote of at least a majority of the Incumbent Board, such new
director shall, for purposes of the Plan, be considered as a member of the
Incumbent Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened election contest (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board ("Proxy Contest") including by reason of any agreement intended
to avoid or settle any such election contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(A) A merger, consolidation or reorganization
involving the Company, unless such is a Non-Control Transaction. For purposes of
the Plan, the term "Non-Control Transaction" shall mean a merger, consolidation
or reorganization of the Company in which:
(i) the shareholders of the Company
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least a majority of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger,
consolidation or reorganization ("Surviving Corporation") in substantially the
same respective proportions as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
(ii) The individuals who were members of the
Board immediately prior to the execution of the agreement providing for such
merger, consolidation or reorganization constitute at least a majority of the
members of the board of directors of the Surviving Corporation; and
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(iii) no Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, the Surviving Corporation or any
Subsidiary of the Company, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the then
outstanding Voting Securities) has Beneficial Ownership of 20% or more of the
combined voting power of the Surviving Corporation's then outstanding voting
securities;
(B) A complete liquidation or dissolution of the
Company; or
(C) An agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any Person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person ("Subject Person") acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Person; provided, however, that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall be deemed to occur.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(e) "Company" shall mean ATG Inc., a California corporation.
(f) "Disability" shall mean the total disability as determined
by the Board in accordance with standards and procedures similar to those under
the Company's long-term disability plan, or, if none, a physical or mental
infirmity which the Board determines impairs the participant's ability to
perform substantially his or her duties as a Non-Employee Director for a period
of 180 consecutive days.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
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(h) "Fair Market Value" of the Shares shall mean as of any
applicable date, the closing sale price of the Shares on the Nasdaq National
Market or any national or regional stock exchange on which the Shares are
traded, or if no such reported sale of the Shares shall have occurred on such
date, on the next preceding date on which there was such a reported sale. If
there shall be any material alteration in the present system of reporting sale
prices of the Shares, or if the Shares shall no longer be included in the Nasdaq
National Market or listed on a national or regional stock exchange, the Fair
Market Value of the Shares as of a particular date shall be determined by such
method as shall be determined by the Board.
(i) "Initial Grant Date" shall mean the date the Registration
Statement with respect to the Company's initial public offering of Shares
becomes effective.
(j) "Non-Employee Director" shall mean a member of the Board
who is not an employee of the Company or any of its Subsidiaries.
(k) "Option" shall mean an option to purchase Shares granted
to an Optionee pursuant to the Plan.
(l) "Option Agreement" shall mean a written agreement between
the Company and an Optionee evidencing the grant of an Option and containing
terms and conditions concerning the exercise of the Option.
(m) "Option Price" shall mean the price to be paid for Shares
to be purchased pursuant to the exercise of an Option.
(n) "Optionee" shall mean a Non-Employee Director who has been
granted an Option or the personal representative, heir or legatee of an Optionee
who has the right to exercise the Option upon the death of the Optionee.
(o) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d)
thereof, including a "group"' as defined in Section 13(d).
(p) "Plan" shall mean this 1998 Non-Employee Directors Stock
Option Plan, as the same may be amended from time to time.
(q) "Shares" shall mean the shares of the Company's common
stock, no par value per share.
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(r) "Subsidiary" shall mean, with respect to any company, any
corporation or other Person of which a majority of its voting power, equity
securities or equity interest is owned directly or indirectly by such company.
2 Gender and Number. Except where otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.
3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included, to the maximum extent
permitted by applicable law.
ARTICLE 3. GRANTING OF OPTIONS
1 Non-Employee Directors Grants. Each Non-Employee Director shall
automatically be granted an Option to purchase 20,000 Shares upon the later of
(a) the initial date of his or her election to the Board or (b) the Initial
Grant Date, provided that the number of Shares available for grant under the
Plan is sufficient to permit such automatic grant.
2 Proportionate Reduction. If as of any date on which there is to be a
grant of Options hereunder there is an insufficient number of Shares available
pursuant to Article 4 to make all of the grants then to be made, each
Non-Employee Director then entitled to be granted an Option shall receive an
Option to purchase a proportionately lesser number of Shares.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
The stock subject to options granted under the Plan shall be the
Shares. Subject to the adjustments provided for in Article 7, the aggregate
number of Shares to be delivered upon exercise of all Options granted under the
Plan shall not exceed Two Hundred Thousand (200,000). Shares subject to, but not
delivered under, an Option terminating or expiring for any reason prior to its
exercise in full shall be deemed available for Options to be granted thereafter
during the term of the Plan.
ARTICLE 5. TERMS AND CONDITIONS OF OPTIONS
All Options granted hereunder shall be subject to the following terms
and conditions which shall be set forth in the Option Agreement for all Options
to the extent applicable:
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1 To Whom Options May Be Granted. Options shall be granted
only to Non-Employee Directors.
2 Non-Transferability of Options. No Option shall be
transferable by the Optionee otherwise than by bequest or the laws of descent
and distribution, and each Option shall be exercisable during the Optionee's
lifetime only by the Optionee; provided, however, that the Optionee may
transfer the Options to the Optionee's spouse, lineal descendants, trusts for
their benefit or a charitable remainder trust of which the Optionee or such
family members referred to above are beneficiaries.
3 Termination of Option.
(a) If the Optionee ceases to be a director of the Company for
any reason other than death, Disability or removal for Cause, the Option shall
terminate three months after the Optionee ceases to be a director of the Company
(unless the Optionee dies during such period), or on the Option's expiration
date, if earlier, and shall be exercisable during such period after the Optionee
ceases to be a director of the Company only with respect to the number of Shares
which the Optionee was entitled to purchase on the day preceding the day on
which the Optionee ceased to be a director.
(b) If the Optionee ceases to be a director of the Company
because of removal for Cause, the Option shall terminate on the date of the
Optionee's removal.
(c) In the event of the Optionee's death or Disability while a
director of the Company, or the Optionee's death within three months after the
Optionee ceases to be a director (other than by reason of removal for Cause),
the Option shall terminate upon the earlier to occur of (A) 12 months after the
date of the Optionee's death or Disability; or (B) the Option's expiration date
(as provided in Section 5.6). The Option shall be exercisable during such period
after the Optionee's death or Disability with respect to the number of Shares as
to which the Option shall have been exercisable on the date preceding the
Optionee's death or Disability, as the case may be.
4 Number of Shares of Common Stock. The number of Shares to which the
Option pertains, which shall be 20,000.
5 Option Price. The exercise price of the Option, which shall be equal
to 100% of the Fair Market Value of the Shares at the time of the grant of the
Option.
6 Term of Options. The term of the Option, which shall be 10 years.
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7 Exercisability. The time at which the Option becomes exercisable.
The Option shall be exercisable as follows:
(a) Immediately from the date the Option is granted until the
first anniversary thereof, the Option may be exercised with respect to 25% of
the Shares subject to the Option.
(b) Beginning on the day following the first anniversary of
the date the Option is granted, the Option may be exercised with respect to an
additional 25% of the Shares subject to the Option.
(c) Beginning on the day following the second anniversary of
the date the Option is granted, the Option may be exercised with respect to an
additional 25% of the Shares subject to the Option.
(d) Beginning on the day following the third anniversary of
the date the Option is granted, the Option may be exercised with respect to all
of the Shares subject to the Option.
Notwithstanding the provisions of this Section 5.7, upon a Change in Control the
Optionee shall have the right to exercise the Option in full as to all Shares
subject to the Option.
8 Exercise and Payment of Option Price. Options shall be exercised by
delivery to the Company of a written notice of exercise, setting forth the
number of Shares with respect to which the Option is to be exercised and
accompanied by full payment of the Option Price. The Option Price shall be paid
in cash at the time of exercise, except that in lieu of all or part of the cash,
the Optionee may tender to the Company Shares owned by the Optionee having a
Fair Market Value equal to the Option price, less any cash paid. The Fair Market
Value of such tendered Shares shall be determined as of the close of the
business day immediately preceding the day on which the Option is exercised;
except that in the case of any Plan participant subject to Section 16(b) of the
Exchange Act such cashless exercise of his or her Option may not occur within
six months of the date of grant of such Option, to the extent such exercise
during such six-month period would not be exempted from Section 16(b) of the
Exchange Act by virtue of Rule 16b-3 promulgated thereunder.
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ARTICLE 6. ADMINISTRATION
1 The Administrator. The Plan is designed to operate automatically and
not require any significant administration. To the extent administration is
required, the Plan shall be administered by the Board. The Board shall meet at
such times and places as it determines and may meet through telephone conference
call. A majority of its members shall constitute a quorum, and the decision of
the majority of those present at any meeting at which a quorum is present shall
constitute the decision of the Board. Any decision reduced to writing and signed
by a majority of the members of the Board shall be fully effective as if it had
been made by a majority at a meeting duly held. All decisions, determinations
and selections made by the Board pursuant to the provisions of the Plan shall be
final. To the extent required by law and Rule 16b-3 promulgated under the
Exchange Act, the Board may delegate its authority hereunder.
2 Section 16 Compliance. It is the intention of the Company that the
Plan and the administration of the Plan comply in all respects with Section
16(b) of the Exchange Act and the rules and regulations promulgated thereunder.
If any Plan provision, or any aspect of the administration of the Plan, is found
not to be in compliance with Section 16(b) of the Exchange Act, the provision or
administration shall be deemed null and void, and in all events the Plan shall
be construed in favor of its meeting the requirements of Rule 16b-3 promulgated
under the Exchange Act. Each Optionee shall deliver to the Corporate Secretary
of the Company an executed notice of his/her intention to sell Shares acquired
upon exercise, in whole or in part, of the Option granted hereunder. Such
notice, in which there is specified the number of shares which are to be sold
and the date such shares were acquired, shall be provided at least one full
business day in advance of the proposed date of sale.
ARTICLE 7. ADJUSTMENTS UPON CHANGE IN CAPITALIZATION
Notwithstanding the limitations set forth in Article 4, in the event of
a merger, consolidation, reorganization, recapitalization, reclassification,
split-up, spin-off, stock dividend, stock split, reverse stock split, property
dividend, share repurchase, share combination, share exchange or other
fundamental change in the corporate structure of the Company affecting the
Shares, the Board shall make an appropriate and equitable adjustment in the
maximum number of Shares available under the Plan and in the number, kind and
Option Price of Shares subject to Options granted under the Plan to prevent
dilution or enlargement of the rights of Non-Employee Directors under the Plan
and outstanding Options.
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ARTICLE 8. AMENDMENTS AND DISCONTINUANCE
1 In General. Except as provided in Section 8.2, the Board may
discontinue, amend, modify or terminate the Plan at any time.
2 Section 16(b) Compliance. To the extent required to meet the
conditions for exemption from Section 16(b) of the Exchange Act or the
requirements of any regional or national securities exchange or over-the-counter
national market system on which the Shares are then listed, included or reported
or a regulatory body having jurisdiction with respect thereto, without the
approval of the shareholders of the Company, no discontinuation, amendment,
modification or termination may:
(a) materially increase the benefits accruing to Non-Employee
Directors under the Plan;
(b) materially increase the total number of Shares which may
be issued under the Plan, except as provided in Article 7; or
(c) materially modify the eligibility requirements to receive
an Option under the Plan.
3 No Effect on Outstanding Options. Any Option which is outstanding
under the Plan at the time of its amendment or termination shall remain in
effect in accordance with its terms and conditions and those of the Plan as in
effect when the Option was granted.
ARTICLE 9. MERGER, CONSOLIDATION, ETC.
1 Conversion on Certain Mergers and Other Transactions. In the event
that the Company merges or consolidates with another corporation, or all or
substantially all of the Company's capital stock or assets are acquired by
another corporation, and the surviving or acquiring corporation issues shares of
its stock to the Company's shareholders in connection with the merger,
consolidation or acquisition, the surviving or acquiring corporation shall adopt
the Plan and upon the exercise of an Option, the Optionee shall, at no
additional cost (other the Option Price), be entitled to receive, in lieu of the
number of Shares with respect to which such Option is then exercisable, the
number and class of stock or other securities to which the Optionee would have
been entitled pursuant to the terms of the merger, consolidation or acquisition
if immediately prior thereto the Optionee had been the holder of record of a
number of Shares equal to the number of Shares as to which the Option shall then
be exercisable.
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2 No Conversion on Mergers and Other Transactions. In the event that
the Company merges or consolidates with another corporation, or all or
substantially all of the Company's capital stock or assets are acquired by
another corporation, and the surviving or acquiring corporation does not issue
shares of its stock to the Company's stockholders in connection with the merger,
consolidation or acquisition, then, notwithstanding any other provision of the
Plan to the contrary, no Option may be exercised after the effective date of the
merger, consolidation or acquisition.
ARTICLE 10. EFFECTIVENESS AND TERMINATION OF THE PLAN
1 Effective Date. The Plan shall become effective only upon its
adoption by the Board, or the date the initial public offering of the Company's
Common Stock is consummated, whichever comes later (the "Effective Date"). The
Plan shall be rescinded and all Options granted hereunder shall be null and void
unless within 12 months from the Effective Date it shall have been approved by
the holders of a majority of the outstanding Shares.
2 Termination Date. The Plan shall terminate on the earliest to occur
of (1) the date when all of the Shares available under the Plan shall have been
acquired through the exercise of Options granted under the Plan; (ii) 10 years
after the Effective Date; or (iii) such other date as the Board may determine.
ARTICLE 11. NO RIGHT OF REELECTION
Neither the Plan, nor my action taken under the Plan, shall be
construed as conferring upon a Non-Employee Director any right to continue as a
director of the Company, to be renominated by the Board or reelected by the
shareholders of the Company.
ARTICLE 12. INDEMNIFICATION
Except in relation to matters as to which the member of the Board was
grossly negligent or engaged in willful misconduct, no member of the Board shall
be personally liable for any action, determination or interpretation taken with
respect to the Plan, and all members of the Board shall, to the extent permitted
by law, be fully indemnified and protected by the Company with respect to any
such action, determination or interpretation.
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ARTICLE 13. GOVERNING LAW
The provisions of the Plan shall be construed, administered and
enforced according to the laws of the State of California without regard to its
conflict of laws principles.
Date Plan Adopted by Board of Directors: February __, 1998
Date Plan Approved by Shareholders: _______________________
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EXHIBIT 10.32
LETTER OF CREDIT AGREEMENT
This Letter of Credit Agreement (the "Agreement") is made and entered
into this 6th day of March, 1998, by and between SANWA BANK CALIFORNIA (the
"Bank") and ATG, INC. (the "Borrower").
SECTION 1
DEFINITIONS
1.1 Certain Defined Terms: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be generally
applicable to the singular and plural forms of the terms defined):
a. "Business Day" shall mean a day other than a Saturday
or Sunday on which the Bank is open for business in Oakland,
California.
b. "Collateral" shall mean the property described in Section 6.1,
together with any other personal or real property in which the Bank may
be granted a lien or security interest to secure payment of the
Obligations.
c. "Credit Line" shall mean Two Million dollars ($2,000,000.00).
d. "Debt" shall mean all liabilities of the Borrower.
e. "Debt" shall mean the presentation of a draft(s) together with any
accompanying documents by a beneficiary under a Letter of Credit to
seeking payment under such Letter of Credit.
f. "Effective Tangible Net Worth" shall mean the Borrower's stated net
worth plus Subordinated Debt but less all intangible assets of the
Borrower (i.e., goodwill, trademarks, patents, copyrights, organization
expense and similar intangible items including, but not limited to
trade notes receivable, loans to officers and employees, and loans due
from Affiliates).
g. "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage,
natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based
upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental placement, spills,
leaks, discharges, emissions or releases) of any Hazardous Material at,
in, or from Property, whether or not owned by the Borrower, or (b) any
other circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
h. "Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters; including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA), the Clean Air Act, the Federal Water Pollution Control Act
of 1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Emergency Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid
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Waste Management, Resource, Recovery and Recycling Act, the
California Water Code and the California Health and Safety Code.
i. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context
otherwise requires) any rules or regulations promulgated thereunder.
j. "Event of Default" shall have the meaning set forth in Section 10.
k. "Expiration Date" shall mean September 30, 1998, or the date of
termination of the Bank's commitment to lend under this Agreement
pursuant to Section 11, whichever shall occur first.
l. "GAAP" shall mean generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements, and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may
be in general use by significant segments of the U.S. accounting
profession, which are applicable to the circumstances as of the date
of determination.
m. "Guarantor" shall mean each of those individuals and/or entities
identified in Section 6.2.
n. "Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as
a pollutant, contaminant, hazardous waste, hazardous constituent,
special waste, hazardous substance, hazardous material, or toxic
substance, or petroleum or petroleum derived substance or waste.
o. "Indebtedness" shall mean, with respect to the Borrower, (i) all
indebtedness for borrowed money or for the deferred purchase price of
property or services in respect of which the Borrower is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which the Borrower otherwise assures a creditor against loss
and (ii) obligations under leases which shall have been or should be,
in accordance with GAAP, reported as capital leases in respect of which
the Borrower is liable, contingently or otherwise, or in respect of
which the Borrower otherwise assures a lessor against loss.
p. "Letter of Credit" shall mean a letter of credit issued by Bank
pursuant to Section 2.
q. "Letter of Credit Obligations" shall mean, at any time, the
aggregate obligations of the Borrower then outstanding, or which may
thereafter arise in respect of Letters of Credit then issued by Bank,
to reimburse the amount paid by the Bank with respect to a past,
present or future Drawing under Letters of Credit.
r. "Obligations" shall mean all amounts owing by the Borrower to the
Bank Pursuant to this Agreement.
s. "Permitted Liens" shall mean: (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank; (ii) liens for
taxes, assessments or similar charges either not yet due or being
contested in good faith; (iii) liens of materialmen, mechanics,
warehousemen, or carriers or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (iv) purchase money liens or purchase money security
Interests upon or in any properly acquired or held
by the Borrower in the ordinary course of business to secure
Indebtedness outstanding on the
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date hereof or permitted to be incurred under Section 10 hereof; (v)
liens on equipment leased by the Borrower provided the aggregate
amount of such leases complies with Section 10 hereof; (vi) liens and
security interests which, as of the date hereof, have been disclosed
to and approved by the Bank in writing; and (vii) those liens and
security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
the Borrower's assets.
t. "Reference Rate" shall mean an index for a variable interest rate
which is quoted, published or announced from time to time by the Bank
as its reference rate and as to which loans may be made by the Bank at,
below or above such reference rate.
u. "Sight Credit" means a Letter of Credit, the terms of which require
the Bank to make payment upon presentation of conforming documents.
1.2 Accounting Terms: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein shall
mean such financial statements or such items prepared or determined in
accordance with generally accepted accounting principles consistently applied
and, except where otherwise specified, all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
1.3 Other Terms: Other terms not otherwise defined shall have, the meanings
attributed to such terms in the California Uniform Commercial Code.
SECTION 2
LETTERS OF CREDIT
2.1 Sight Credits. Subject to Section 5.1. the Bank hereby agrees to issue Sight
Credits for and on behalf of Borrower for the purpose of credit enhancement for
numerous bonding requirements to obtain government contracts.
2.2 Letter of Credit General Conditions.
a. As a condition precedent to Bank's obligation to issue any Letter of
Credit hereunder, the Borrower shall pay to the Bank its standard
issuance fees and shall promptly pay, upon request, such other fees,
commissions, costs and any out-of-pocket expenses charged or incurred,
by the Bank with respect to any Letter of Credit.
b. The commitment by the Bank to issue Letters of Credit shall, unless
earlier terminated in accordance with the terms of the Agreement,
automatically terminate on the Expiration Date and no Letter of Credit
shall expire, and no draft under a Letter of Credit shall be payable,
on a date which is after the Expiration Date.
c. Each Letter of Credit shall be in form and substance satisfactory to
the Bank and in favor of beneficiaries satisfactory to the Bank,
provided that the Bank may refuse to issue a Letter of Credit due to
the nature of the "transaction or its terms or in connection with any
transaction where the Bank, due to the beneficiary or the nationality
or residence of the beneficiary, would be prohibited by any applicable
law, regulation or order from issuing such Letter of Credit.
d. Prior to the issuance of each Letter of Credit, but in no event
later than 10:00 a.m. (California time) on the day such Letter of
Credit is to be issued (which shall be a Business Day), the Borrower
shall deliver to the Bank the Bank's standard form of application for
issuance of a letter of credit with proper insertions, duly executed by
Borrower.
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2.3 Drawings: Upon receipt from any beneficiary under a Letter of Credit of a
demand for payment under such Letter of Credit (each a "Drawing"), the Bank
shall promptly notify the Borrower. Borrower promises and agrees to immediately
reimburse the Bank for any amounts paid the Bank pursuant to a Drawing. In the
event the Borrower shall fail to reimburse the Bank for a Drawing and without
waiving any Event of Default occasioned by such failure, the Borrower promises
and agrees to pay interest on the amount of such Drawing at a rate equal to the
Reference rate plus one percent (1%) per annum, calculated on the basis of 360
day per year but charged on the actual number of days elapsed, said rate of
interest to be adjusted concurrently with any change in the Reference Rate.
SECTION 3
[Omitted]
SECTION 4
[Omitted]
SECTION 5
(Omitted)
SECTION 6
OTHER LOAN TERMS AND CONDITIONS
6.1 The Collateral: To secure payment and performance of all the Borrower's
Obligations under this Agreement and all other liabilities, loans, guarantees,
covenants and duties owed by the Borrower to the Bank, whether or not evidenced
by this or by any other agreement, absolute or contingent, due or to become due,
now existing or hereafter and howsoever created, the Borrower hereby grants the
Bank a security interest in and to all of the following property:
Cash collateral of 50% of the amount outstanding of all letters of
credit in account number 1137-58446 or in any other monies, deposit
accounts, certificates of deposit and securities of the Borrower now or
hereafter in the Bank's or its agents' possession.
The Bank's security interest in the Collateral shall be a continuing lien and
shall include the proceeds and products of the Collateral including, but not
limited to, the proceeds of any insurance thereon.
6.2 Guarantees: All of Borrower's Obligations and the full and timely
performance by Borrower hereunder shall be unconditionally guaranteed in
writing, in form and substance satisfactory to Bank (the "Guarantee"), by Doreen
Chiu, Frank Chiu, and ATG Richland, each in the amount of $8,000,000 (each a
"Guarantor").
6.3 Commitment Fee: Borrower promises and agrees to pay to Bank (i) a commitment
fee (the "Commitment Fee") of 1.25% annually, pro-rated from the date of this
Agreement to the Expiration Date, payable concurrently with the execution of
this Agreement.
6.4 Costs. Borrower shall, upon Bank's request, promptly pay to and reimburse
the Bank for all costs incurred and payments made by the Bank by reason of any
future assessment, reserve, deposit or similar requirements or any surcharge,
tax or fee imposed upon the Bank or as a result of the Bank's compliance with
any directive or requirement of any regulatory authority pertaining or relating
to any Import Letter of Credit or Acceptance.
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SECTION 7
CONDITIONS OF LENDING
7.1 Conditions Precedent to the Initial Extension of Credit: The obligation of
the Bank to issue the Initial Letter of Credit to, for or on account of the
Borrower hereunder is subject to the conditions precedent that the Bank shall
have received before the date of such initial Letter of Credit all of the
following, in form and substance satisfactory to the Bank:
a. Evidence that the execution, delivery and performance
by the Borrower of this Agreement and any document,
instrument or agreement required hereunder have been duly
authorized.
b. The Guarantee described in Sections 6.2 and 6.4 respectively.
c. The Commitment Fee described in Section 6.3.
d. Evidence satisfactory to Bank that its security interest in the
Collateral is perfected and has priority over all other security
interests and liens except those which may otherwise be approved by the
Bank.
e. Such other evidence as the Bank may request to establish the
consummation of the transaction contemplated hereunder and compliance
with the conditions of this Agreement.
7.2 Conditions Precedent to All Extensions of Credit: The obligation of the Bank
to issue each Letter of Credit to, for or on account, of the Borrower (including
the initial Letter of Credit) shall be subject to the further conditions
precedent that, or, on the date of each Letter of Credit and after the making,
issuance or creation thereof:
a. The Bank shall have received current reports, certifications and
information required under Section 9.7.
b. The Bank shall have received such supplemental approvals, opinions
or documents as the Bank may reasonably request.
c. The representations contained in Section 8 and in any other
document, instrument or certificate delivered to the Bank hereunder are
correct.
d. No event has occurred and is continuing which constitutes, or, with
the lapse of time or giving of notice or both, would constitute an
Event of Default.
e. The Bank's security interest in the Collateral has been duly
authorized, created and perfected, is of first priority and is in full
force and effect.
f. The Guaranties and are each in full force and effect.
7.3 Affirmation. The Borrower's acceptance of the proceeds of any Advance or
Acceptance or applying for any Letter of Credit shall be deemed to constitute
the Borrower's representation and warranty that all of the above conditions
precedent have been satisfied.
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SECTION 8
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to the
Bank, which representations and warranties are continuing:
8.1 Status: Borrower is a corporation duly organized and validly existing under
the laws of the State of California, and is properly licensed and is qualified
to do business and in good standing in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed could have a material adverse effect on Borrower; Borrower has
all necessary powers, authority, rights and franchises to own its property and
to carry on its business as now conducted. Borrower has no subsidiaries.
8.2 Authority: The execution, delivery and performance by the Borrower of this
Agreement and any instrument, document or agreement required hereunder have been
duly authorized and do not and will not: (i) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having application to the Borrower; (ii) result In a
breach of or constitute a default under any material indenture or loan or credit
agreement or other material agreement, lease or instrument to which the Borrower
is a party or by which it or its properties may be bound or affected: or (iii)
require any consent or approval of its stockholders or violate any provision of
its articles of incorporation or by-laws, if the Borrower is a corporation; or
(iv) violate any provision of its partnership agreement, if the Borrower is a
partnership.
8.3 Legal Effect. This Agreement constitutes, and any instrument, document or
agreement required hereunder when delivered hereunder will constitute, legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with their respective terms.
8.4 Fictitious Trade Styles: Borrower is not, at present, doing business under
or using any trade style in connection with its business operations. The
Borrower shall notify the Bank not less than 30 days prior to using any other
fictitious trade style at any future date, indicating the trade style and
state(s) of its use.
8.5 Financial Statements: All financial statements, information and other
data which may have been and which may hereafter be submitted by the Borrower
to the Bank are true, accurate and correct and have been and will be prepared
in accordance with GAAP consistently applied and accurately represent the
financial condition and, as applicable, the other information disclosed
therein. Since the most recent submission of such financial information and
data to the Bank, the Borrower represents and warrants that no material
adverse change in the Borrower's financial condition or operations has
occurred which has not been fully disclosed to the Bank in writing.
8.6 Litigation: There are no, actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or the
Borrower's properties before any court or administrative agency which, if
determined adversely to the Borrower, would have a material adverse effect on
the Borrower's financial condition or operations or on the Collateral.
8.7 Title to Assets: The Borrower has good and marketable title to all of its
assets (including, but not limited to, the Collateral) and the same are not
subject to any security interest, encumbrance, lien or claim of any third person
except for Permitted Liens.
8.8 ERISA: If the Borrower has a pension, profit sharing or retirement plan
subject to ERISA, such plan has been and will continue to be funded in
accordance with its terms and otherwise complies with and continues to comply
with the requirements of ERISA.
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8.9 Taxes: The Borrower has filed all tax returns required to be filed and paid
all taxes shown thereon to be due, including interest and penalties, other than
such taxes which are currently payable without penalty or interest or those
which are being duly contested in good faith.
8.10 Environmental Matters. (a) The operations of the Borrower complies, and
during the term of this Agreement will at all times comply, in all respects with
all Environmental Laws, the Borrower has obtained all licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for its ordinary course operations, all
such Environmental Permits are in good standing, and the Borrower is in
compliance with all material terms and conditions of such Environmental Permits;
neither the Borrower nor any of its present Property or operations is subject to
any outstanding written order from or agreement with any governmental authority
nor subject to any judicial or docketed administrative proceeding, respecting
any Environmental Law, Environmental Claim or Hazardous Material; there are no
Hazardous Materials or other conditions or circumstances existing, or arising
from operations prior to the date of this Agreement, with respect to any
Property of the Borrower that would reasonably be expected to give rise to
Environmental Claims; provided, however, that with respect to Property leased
from an unrelated third party, the foregoing representation is made to the
best knowledge of the Borrower. In addition, (i) the Borrower does not have
any underground storage tanks (x) that are not properly registered or
permitted under applicable Environmental Laws, or (y) that are leaking or
disposing of Hazardous Materials off-site, and (ii) the Borrower has notified
all of their employees of the existence, if any, of any health hazard arising
from the conditions of their employment and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws.
SECTION 9
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as the Borrower is indebted to the Bank under this Agreement,
the Borrower will, unless the Bank shall otherwise consent in writing:
9.1 Preservation of Existence; Compliance with Applicable Laws: Maintain and
preserve its existence and all rights and privileges now enjoyed; not liquidate
or dissolve, merge or consolidate with or into, or acquire any other business
organization; and conduct its business and operations in accordance with all
applicable laws, rules and regulations.
9.2 Maintenance of Insurance: Maintain insurance in such amounts and covering
such risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower
operates and maintain such other insurance and coverages as may be required by
the Bank.
9.3 Payment of Obligations and Taxes: Make timely payment of all assessments and
taxes and all of its liabilities and obligations including, but not limited to,
trade payables, unless the same are being contested in good faith by appropriate
proceedings with the appropriate court or regulatory agency. For purposes
hereof, the Borrower's issuance of a check, draft or similar instrument without
delivery to the intended payee shall not constitute payment.
9.4 Inspection Rights. At any reasonable time and from time to time, permit the
Bank or any representative thereof to examine and make copies of the records and
visit the properties of the Borrower and discuss the business and operations of
the Borrower with any employee or representative, thereof. If the Borrower shall
maintain any records (including, but not limited to, computer generated
records or computer programs for the generation of such records) in the
possession of a third party, the Borrower hereby agrees to notify such third
party to permit the Bank free access to such records at all reasonable times
and to provide the Bank with copies of any records which it may request, all
at the Borrower's expense, the amount of which shall be
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payable immediately upon demand. In addition, the Bank may, at any reasonable
time and from time to time, conduct inspections and audits of the Collateral
and the Borrower's accounts payable, the cost and expenses of which shall be
paid by the Borrower to the Bank upon demand.
9.5 Reporting and Certification Requirements. Deliver or cause
to be delivered to the Bank in form and detail satisfactory to
the Bank:
a. Not later than 120 days after the end of each of the Borrower's
fiscal years, a copy of the Borrower's corporate tax return for the
year just ended and a copy of the Borrower's annual financial report
for such year which report shall be CPA audited.
b. Not later than 30 days after the end of each of Borrower's quarter
for the first three quarters, the Borrower's financial statement as of
the end of such period which report shall be company prepared.
c. Not later than April 1, 1998, a certified copy of the financial
statement of the Guarantor who is an individual and a copy of such
Guarantor's federal and state income tax returns for the year just
ended.
d. Not later than 304 days after Guarantor's fiscal year end (for each
Guarantor who is other than an individual), a certified copy of the
financial statement for such Guarantor which financial statement shall
be company prepared and within 10 days of filing, a copy of such
Guarantor's federal and state income tax returns.
e. Promptly upon the Bank's request, such other information pertaining
to the Borrower, the Collateral or any Guarantor hereunder as the Bank
may reasonably request.
9.6 Additional Indebtedness: Not, after the date hereof, create, incur or
assume, directly or indirectly, any additional Indebtedness in excess of
$2,000,000.00 outstanding at any time other than (i) indebtedness owed or to be
owed to the Bank; or (ii) indebtedness to trade creditors incurred in the
ordinary course of the Borrower's business as conducted as of the date of this
Agreement.
9.7 Loans: Not make any loans or advances or extend credit to any third person
in excess of $500,000.00, including, but not limited to, directors, officers,
shareholders, employees, affiliated entities and subsidiaries of the Borrower,
except for credit extended in the ordinary course of the Borrower's business as
presently conducted.
9.8 Liens and Encumbrances: Not create, assume or permit to exist in excess of
$2,000,000.00 any security interest, encumbrance, mortgage, deed of trust, or
other lien (including, but not limited to, a lien of attachment, judgment or
execution) affecting any of the Borrower's properties or assets (including but
not limited to any and all patents, trademarks, trade styles and trade names),
or execute or allow to be filed any financing statement or continuation thereof
affecting any of such properties, except for Permitted Liens or as otherwise
provided in this Agreement.
9.9 Compensation of Employees: Compensate its employees for services rendered at
an hourly rate at least equal to the minimum hourly rate prescribed by any
applicable federal state law or regulation.
9.10 Capital Expense: Not make any investment in fixed assets or fixed capital
expenditures, including, but not limited to, incurring liability for leases
which would be, in accordance with generally accepted accounting principles,
reported as capital leases, or purchase any real or personal property in an
aggregate amount exceeding $4,000,000.00 in any one fiscal year.
9.1 Redemption or Repurchase of Stock: Not redeem or repurchase any class of the
Borrower's stock now or hereafter outstanding.
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9.32 Payment of Dividends. Borrower will not declare or pay any dividends on any
class of stock now or hereafter outstanding except dividends payable solely in
the Borrower's capital stock.
9.13 Transfer Assets: Not, after the date hereof, sell, contract for sale,
convey, transfer, assign, lease or sublet, any of its assets (including, but not
limited to, the Collateral and any and all patents, trademarks, trade styles and
trade names) except in the ordinary course of business as presently conducted by
the Borrower and, then, only for full, fair and reasonable consideration.
9.14 Change in Nature of Business: Not make any material change in its financial
structure or the nature of its business as existing or conducted as of the date
hereof.
9.15 Financial Condition: Maintain at all times:
a. A minimum Effective Tangible Net Worth of at least $13,250,000.00.
b. A ratio of Debt to Effective Tangible Net Worth of not more than
1.15 to 1.
c. A ratio of current assets to current liabilities of not less than
1.3 to 1.
d. No two consecutive quarter losses.
e. A minimum debt service coverage ratio of the sum of net profit after
tax plus depreciation and amortization (and term interest expense),
less dividends, distributions and withdrawals, divided by the current
portion of long term debt (plus term interest expense) of 1.05 to 1.
9.16 Compensation of Employees: Compensate its employees for services rendered
at an hourly rate at least equal to the minimum hourly rate prescribed by any
applicable federal or state law or regulation.
9.17 Notice: Give prompt written notice to the Bank of:
a. any and all Events of Default;
b. any and all litigation, arbitration or administrative proceedings to
which the Borrower is a party and in which the claim or liability
exceeds $100,000.00; and
c. upon, but in no event later than 10 days after, becoming aware of
(i) any enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against the
Borrower or any of its Subsidiaries or any of their respective
Properties pursuant to any applicable Environmental Laws, (ii) all
other Environmental Claims, and (iii) any environmental or similar
condition on any real property adjoining or in the vicinity of the
property of the Borrower or any Subsidiary that could reasonably be
anticipated to cause such property or any part thereof to be subject to
any restrictions on the ownership, occupancy, transferability or use of
such property under any Environmental Laws.
9.18 Environmental Laws. The Borrower shall conduct its operations and keep and
maintain all of its property in compliance with all Environmental Laws and, upon
the written request of the Bank, the Borrower shall submit to the Bank, at the
Borrower's sole cost and expense, at reasonable intervals, a report providing
an update of the status of any environmental, health or safety compliance,
hazard or liability issue identified in any notice or report required pursuant
to Section 9.17C.
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SECTION 10
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an event of
default (an "Event of Default") under this Agreement:
10.1 Non-Payment: The Borrower shall fail to pay any Obligations within ten (10)
days of when due.
10.2 Performance Under This and Other Agreements: The Borrower shall fail in any
material respect to perform or observe any term, covenant or agreement contained
in this Agreement or in any document, instrument or agreement evidencing or
relating to any indebtedness of the Borrower (whether such indebtedness is owed
to the Bank or third persons), and any such failure (exclusive of the payment of
money to the Bank under this Agreement or under any other instrument, document
or agreement, which failure shall constitute and be an immediate Event of
Default if not paid when due or when demanded to be due) shall continue for more
than fifteen (15) days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.
10.3 Representations and Warranties; Financial Statements: Any representation or
warranty made by the Borrower under or in connection with this Agreement or any
financial statement given by the Borrower or any guarantor shall prove to have
been incorrect in any material respect when made or given or when deemed to have
been made or given.
10.4 Insolvency: The Borrower or any Guarantor shall: (i) become insolvent or be
unable to pay its debts as they mature; (ii) make an assignment for the benefit
of creditors or to an agent authorized to liquidate any substantial amount of
its properties and assets; (iii) file a voluntary petition in bankruptcy or
seeking reorganization or to effect a plan or other arrangement with creditors;
(iv) file an answer admitting the material allegations of an involuntary
petition relating to bankruptcy or reorganization or join in any such petition;
(v) become or be adjudicated a bankrupt; (vi) apply for or consent to the
appointment of, or consent that an order be made, appointing any receiver,
custodian or trustee, for itself or any of its properties, assets, or
businesses; or (vii) any receiver, custodian or trustee shall have been
appointed for all or substantial part of its properties, assets or businesses
and shall not be discharged within 30 days after the date of such appointment.
10.5 Execution: Any writ of execution or attachment or any judgment lien shall
be issued against any property of the Borrower and shall not be discharged or
bonded against or released within 30 days after the issuance or attachment of
such writ or lien.
10.6 Revocation or Limitation of Guaranty and/or Subordination: Any Guaranty or
Subordination Agreement shall be revoked or limited or its enforceability or
validity shall be contested by any Guarantor or Creditor, by operation of law,
legal proceeding or otherwise or any Guarantor who is a natural person shall
die.
10.7 Suspension: The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any permit,
license or approval of any governmental body necessary to conduct the Borrower's
business as now conducted.
10.8 Change in Ownership: There shall occur a sale, transfer, disposition or
encumbrance (whether voluntary or involuntary), or an agreement shall be entered
into to do so, with respect to more than 10% of the issued and outstanding
capital stock of the Borrower, if a corporation, or there shall occur a change
in any general partner or a change affecting the control of the Borrower, if a
partnership.
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SECTION 11
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:
11.1 Acceleration: Declare any or all of the Borrower's indebtedness Owing to
the Bank, whether under this Agreement or any other document, instrument or
agreement, immediately due and payable, whether or not otherwise due and
payable.
11.2 Letter of Credit Collateralization: Require Borrower to deposit with Bank
an amount equal to the then existing Letter of Credit Obligations.
11.3 Cease Extending Credit: Cease issuing Letter of Credit or otherwise
extending credit to or for the account of the Borrower under this Agreement or
under any other agreement now existing or hereafter entered into between the
Borrower and the Bank.
11.4 Termination: Terminate this Agreement as to any future obligation of the
Bank without affecting the Borrower's obligations to the Bank or the Bank's
rights and remedies under this Agreement or under any other document,
instrument or agreement.
11.5 Protection of Security Interest: Make such payments and do such acts as the
Bank, in its sole judgment, considers necessary and reasonable to protect its
security interest or lien in the Collateral. The Borrower hereby irrevocably
authorizes the Bank to pay, purchase, contest or compromise any encumbrance,
lien or claim which the Bank, in its sole judgment, deems to be prior or
superior to its security interest. Further, the Borrower hereby agrees to pay to
the Bank, upon demand therefor, all expenses and expenditures (including
attorneys' fees) incurred in connection with the foregoing.
11.6 Foreclosure: Enforce any security interest or lien given or provided for
under this Agreement or under any security agreement, mortgage, deed of trust or
other document, in such manner and such order, as to all or any part of the
properties subject to such security interest or lien, as the Bank, in its sole
judgment, deems to be necessary or appropriate and the Borrower hereby waives
any and all rights, obligations or defenses now or hereafter established by law
relating to the foregoing. In the enforcement of its security interest or lien,
the Bank is authorized to enter upon the premises where any Collateral is
located and take possession of the Collateral or any part thereof, together with
the Borrower's records pertaining thereto, or the Bank may require the Borrower
to assemble the Collateral and records pertaining thereto and make such
Collateral and records available to the Bank (including a copy of the Borrower's
customer lists) at a place designated by the Bank. The Bank may sell the
Collateral or any portions thereof, together with all additions, accessions and
accessories thereto, giving only such notices and following only such procedures
as are required by law, at either a public or private sale, or both, with or
without having the Collateral present at the time of the sale, which sale shall
be on such terms and conditions and conducted in such manner as the Bank
determines in its sole judgment to be commercially reasonable. Any deficiency
which exists after the disposition or liquidation of the Collateral shall be a
continuing liability of the Borrower to the Bank and shall be immediately paid
by the Borrower to the Bank.
11.7 Non-Exclusivity of Remedies: Exercise one or more of the Bank's rights set
forth herein or seek such other rights or pursue such other remedies as may be
provided by law, in equity or in any other agreement now existing or hereafter
entered into between the Borrower and the Bank, or otherwise.
11.8 Application of Proceeds: All amounts received by the Bank as proceeds from
the disposition or liquidation of the Collateral shall be applied to the
Borrower's indebtedness to the Bank as follows: first, to the costs and
expenses of collection, enforcement, protection and preservation of the Bank's
lien in the Collateral,
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including court costs and reasonable attorneys' fees, whether or not suit is
commenced by the Bank; next, to those costs and expenses incurred by the Bank
in protecting, preserving, enforcing, collecting, liquidating, selling or
disposing of the Collateral; next, to the payment of accrued and unpaid
interest on all of the Obligations; next, to the payment of the outstanding
principal balance of the Obligations; and last, to the payment of any other
indebtedness owed by the Borrower to the Bank. Any excess Collateral or excess
proceeds existing after the disposition or liquidation of the Collateral and
after the expiration of all outstanding Letters of Credit will be returned or
paid by the Bank to the Borrower.
SECTION 12
MISCELLANEOUS
12.1 Amounts Payable on Demand: If the Borrower shall fall to pay on demand any
amount so payable under this Agreement (including but not limited to interest),
the Bank may, at its option and without any obligation to do so and without
waiving any default occasioned by the Borrower having so failed to pay such
amount, create an Advance under the Line of Credit in an amount equal to the
amount so payable, which Advance shall thereafter bear interest as provided
under the Line of Credit.
12.2 Reliance: Each warranty, representation, covenant, obligation and agreement
contained in this Agreement shall be conclusively presumed to have been relied
upon by the Bank regardless of any investigation made or information possessed
by the Bank and shall be cumulative and in addition to any other warranties,
representations, covenants and agreements which the Borrower now or hereafter
shall give, or cause to be given, to the Bank.
12.3 Attorneys' Fees: In the event of any dispute or legal action in relation to
this Agreement or any document, instrument or agreement executed with respect
to, evidencing or securing the Obligations, Borrower, in the case of a dispute,
or the prevailing party, in the case of a legal action, shall, in addition to
all other sums to which it may be entitled, be entitled to reasonable attorneys'
fees.
12.4 Notices: All notices, payments, requests, information and demands which
either party hereto may desire, or may be required to give or make to the other
party hereto, shall be given or made to such party by hand delivery or through
deposit in the United States mail, postage prepaid, or by Western Union
telegram, addressed as set forth below or to such other address as may be
specified from time to time in writing by either party to the other.
To the Borrower: To the Bank
ATG, INC. SANWA BANK CALIFORNIA
47375 Fremont Boulevard Oakland Main Office
Fremont, CA 94538 2127 Broadway
Oakland, CA 94612
Attn. Doreen Chiu
Attn: John Norawong
12.5 Waiver: Neither the failure nor delay by the Bank in exercising any right
hereunder or under any document, instrument or agreement mentioned herein shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder or under any other document, instrument or agreement mentioned
herein preclude other or further exercise thereof or the exercise of any other
right; nor shall any waiver of any right or default hereunder, or under any
other document, instrument or agreement mentioned herein, constitute a waiver of
any To the Bank; other right or default or constitute a waiver of any other
default of the same or any other term or provision.
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12.6 Conflicting Provisions: To the extent the provisions contained in this
Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and provisions
contained herein shall control. Otherwise, such provisions shall be considered
cumulative.
12.7 Waiver Of Jury Trial. THE BORROWER AND THE BANK EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OR ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12.8 Binding Effect; Assignment: This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Bank, and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank. The Bank may sell, assign or grant participation in all
or any portion of its rights and benefits hereunder. The Borrower agrees that,
in connection with any such sale, grant or assignment, the Bank may deliver to
the prospective buyer, participant or assignee financial statements and other
relevant information relating to the Borrower and any guarantor.
12.9 Jurisdiction: THIS AGREEMENT, THE RIGHTS OF THE PARTIES HEREUNDER TO AND
CONCERNING THE COLLATERAL, AND ANY DOCUMENTS, INSTRUMENTS OR AGREEMENTS
MENTIONED OR REFERRED TO HEREIN SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF CALIFORNIA, TO THE JURISDICTION OF WHOSE COURTS THE
PARTIES HEREBY SUBMIT.
12.10 Headings: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
12.11 Entire Agreement: This Agreement and all documents, instruments and
agreements mentioned herein constitute the entire and complete understanding of
the parties with respect to the transactions contemplated hereunder. All
previous conversations, memoranda and writings between the parties pertaining to
the transactions contemplated hereunder not incorporated or referenced in this
Agreement or in such documents, instruments and agreements are superseded
hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA ATG, INC.
By: By:
------------------------------------- ---------------------------------
John Norawong, Vice President
Name/Title:
-------------------------
By:
---------------------------------
Name/Title:
-------------------------
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EXHIBIT 10.33
[LETTERHEAD OF SANWA BANK APPEARS HERE]
CONTINUING GUARANTY
For value received and in consideration of the extension of credit by SANWA BANK
CALIFORNIA (the "Bank") to ATG INC. (the "Debtor") or the benefits to the
undersigned (the "Guarantor"), guaranties and promises to pay to the Bank any
and all Indebtedness (as defined below) and agrees as follows:
1. Indebtedness. The term "Indebtedness" is used herein in its most
comprehensive sense and includes any and all advances, debts, obligations,
guaranties and liabilities of the Debtor heretofore, now, or hereafter made,
incurred or created, whether voluntary or involuntary and however arising,
whether direct or acquired by the Bank by assignment or succession, whether due
or not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether the Debtor may be liable individually or jointly with
others, or whether recovery upon any Indebtedness may be or hereafter becomes
barred by any statute of limitations or whether any Indebtedness may be or
hereafter becomes otherwise unenforceable.
2. Guaranty. The Guarantor unconditionally agrees to pay to the Bank or its
order, on demand, an amount equal to the amount of the Indebtedness or otherwise
perform any obligation of the Debtor undertaken pursuant to any Indebtedness. In
addition to any maximum principal liability hereunder, the Guarantor agrees to
(i) bear the expenses enumerated hereunder in the paragraph herein entitled
"Attorneys' Fees" and (ii) pay interest on the Indebtedness at the rate(s)
applicable thereto. Notwithstanding the foregoing, the Bank may allow the
Indebtedness to exceed the Guarantor's liability hereunder. Any payment by the
Guarantor shall not reduce the maximum principal obligation of the Guarantor
hereunder unless written notice to that effect is actually received by the Bank
at or prior to the time of such payment. Any payment by the Debtor or any other
person shall not reduce the Guarantor's maximum principal liability hereunder.
3. Right to Amend or Modify Indebtedness. The Guarantor authorizes the Bank, at
its sole discretion, with or without notice and without affecting the
Guarantor's liability hereunder, from time to time to: (i) change the time or
manner of payment, or any Indebtedness by renewal, extension, modification,
acceleration or otherwise; (ii) alter or change any provision of any
Indebtedness including, but not limited to, the rate of interest thereon, and
any document, instrument or agreement (other than this Guaranty), evidencing,
guaranteeing, securing or related to any Indebtedness; (iii) release, discharge,
exonerate, substitute or add one or more parties liable on any Indebtedness or
one or more endorsers, cosigners or guarantors for any Indebtedness; (iv) obtain
collateral for the payment of any Indebtedness or any guaranty thereof; (v)
release existing or after-acquired collateral on such terms as the Bank, in its
sole discretion, shall determine; (vi) apply any sums received from the Debtor,
any endorser, cosigner, other guarantor or other person liable on any
Indebtedness or from the sale or collection of collateral or its proceeds to
any indebtedness whatsoever owed or to be owed to the Bank by the Debtor in
any order or amount and regardless of whether or not such indebtedness is
guaranteed hereby, is secured by collateral or its due and payable; and (vii)
apply to any Indebtedness, in any order or amount, regardless of whether such
Indebtedness is secured by collateral or is due and payable, any sums received
from the Guarantor or from the sale of collateral in which the Guarantor has
granted the Bank a security interest.
4. Waivers. The Guarantor hereby unconditionally and irrevocably acknowledges
and agrees to the matters set froth below:
A. Deficiency. In the event that any Indebtedness is now or hereafter
secured by a deed of trust, the Guarantor waives any defense and all
rights and benefits of those laws purporting to state that no
deficiency judgment may be recovered on certain real property purchase
money obligations (as presently contained in Section 580b of the
California Code of Civil Procedure and as it may be amended or
superseded in the future) and those laws purporting to state that no
deficiency judgment may be received after a trustee's sale under a deed
of trust (as presently contained in Section 580d of the California Code
of Civil Procedure and as it may be amended or superseded in the
future). THE GUARANTOR ACKNOWLEDGES THAT A FORECLOSURE BY A TRUSTEE'S
SALE UNDER A DEED OF TRUST MAY RESULT IN THE DESTRUCTION OF THE
GUARANTOR'S SUBROGATION RIGHTS THAT MAY OTHERWISE EXIST AND THAT A
DESTRUCTION OF THOSE RIGHTS MAY CREATE A DEFENSE TO A DEFICIENCY
JUDGMENT. THE GUARANTOR HEREBY SPECIFICALLY WAIVES ANY SUCH DEFENSE.
B. Election of Remedies. The Guarantor waives any defense based upon
the Guarantor's loss of a right against the Debtor arising from the
Bank's election of a remedy on any Indebtedness under bankruptcy or
other debtor relief laws or under any other laws, including, but not
limited to, those purporting to reduce the Bank's right against the
Guarantor in proportion to the principal obligation of any Indebtedness
(as presently continued in Section 2809 of the California Civil Code
and as it may be amended or superseded in the future).
C. Statute of Limitations. The Guarantor waives the benefit of the
statute of limitations affecting the Guarantor's liability hereunder
or the enforcement hereof.
D. Action Against the Debtor and Collateral (and Other Remedies). The
Guarantor waives all right to require the Bank to: (i) proceed against
the Debtor, any endorser, cosigner, other guarantor or other person
liable on any Indebtedness; (ii) join the Debtor or any endorser,
cosigner, other guarantor or other person liable on any Indebtedness in
any action or actions that may be brought and prosecuted by the Bank
solely and separately against the Guarantor on any Indebtedness; (iii)
proceed against any item or items of collateral securing any
Indebtedness or any guaranty thereof; or (iv) pursue or refrain from
pursuing any other remedy whatsoever in the Bank's power.
E. Debtor's Defense. The Guarantor waives any defense arising by reason
of any disability or other defense of the Debtor, the Debtor's
successor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness. Until all Indebtedness has been paid in
full, even though it may be in excess of the liability incurred hereby,
the Guarantor shall not have any right of subrogation and the Guarantor
waives any benefit of and right to participate in any collateral now or
hereafter held by the Bank. The Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices
of protest, notices of dishonor, notices of sale of any collateral
securing any Indebtedness or any guaranty thereof, and notice of the
existence, creation or incurring of new or additional Indebtedness.
F. Debtor's Financial Condition. The Guarantor hereby recognizes,
acknowledges and agrees that advances may be made in the future from
time to time with respect to any Indebtedness without authorization
from or notice to the Guarantor even though the financial condition of
the Debtor, any endorser, cosigner, other guarantor or other person
liable on any Indebtedness may have deteriorated since the date of this
Guaranty. The Guarantor waives all right to require the Bank to
disclose any information with respect to: (i) any Indebtedness now
existing or hereafter incurred; (ii) the present or future financial
condition, credit or character of the Debtor, any endorser, cosigner,
other guarantor or other person liable on any Indebtedness; (iii) any
present or future
(1)
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collateral securing any Indebtedness or any guaranty thereof; or (iv)
any present or future action or inaction on the part of the Bank, the
Debtor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness. The Guarantor hereby assumes the
responsibility for being informed of the financial condition, credit
and character of the Debtor and of all circumstances bearing upon the
risk of non-payment of any Indebtedness which diligent inquiry would
reveal.
5. Right of Set-off; Grant of Security Interest. In addition to all liens upon
and rights of set-off against any monies, securities or other property of the
Guarantor given to the Bank by law, the Bank shall have a security interest in
and a right to set off against all monies, securities and other property of
the Guarantor now or hereafter in the possession of or on deposit with the
Bank, the Bank's agents or any one or more of them, whether held in general or
special account or deposit or for safekeeping or otherwise; and each such
security interest and right to set-off may be exercised without demand upon or
notice to the Guarantor. No action or inaction by the Bank with respect to any
security interest or right of set-off shall be deemed a waiver thereof and
every right of set-off and security interest shall continue in full force and
effect until specifically released by the Bank in writing. The security
interest created hereby shall secure all of the Guarantor's obligations under
this Guaranty.
6. Right of Foreclosure. The Bank may foreclose, either by judicial foreclosure
or by exercise of power of sale, any deed of trust securing any Indebtedness
even though such foreclosure may destroy or diminish the Guarantor's rights
against the Debtor. The Guarantor shall be liable to the Bank for any part of
any Indebtedness remaining unpaid after any such foreclosure whether or not such
foreclosure was for fair market value.
7. Subordination. Any indebtedness of the Debtor or any endorser, cosigner,
other guarantor or other person liable on any Indebtedness now or hereafter owed
to the Guarantor is hereby subordinated to the Indebtedness. Such indebtedness
owed to the Guarantor shall, if the Bank so requests, be collected, enforced and
received by the Guarantor as trustee for the Bank and be paid over to the Bank
on account of the Indebtedness but without reducing or affecting in any manner
the liability of the Guarantor set forth herein. Should the Guarantor fail to
collect the proceeds of any such indebtedness owed to it and pay the proceeds to
the Bank, the Bank, as the Guarantor's attorney-in-fact, may do such acts and
sign such documents in the Guarantor's name as the Bank considers necessary to
effect such collection.
8. Invalid, Fraudulent or Preferential Payments. The Guarantor agrees that, to
the extent the Debtor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness makes a payment or payments to, or is credited for
any payment or payments made for or on behalf of the Debtor to the Bank, which
payment or payments, or any part thereof, is subsequently invalidated,
determined to be fraudulent or preferential, set aside or required to be repaid
to any trustee, receiver, assignee or any other party whether under any
bankruptcy, state or federal law or under any common law or equitable cause or
otherwise, then, to the extent thereof, the obligation or part thereof intended
to be satisfied thereby shall be revived, reinstated and continued in full force
and effect as if such payment or payments had not originally been made or
credited.
9. Joint and Several Obligations; Independent Obligations. If more than one
Guarantor signs this Guaranty, the obligations hereunder are joint and several.
The Guarantor's obligations hereunder are independent of the obligations of the
Debtor or any endorser, cosigner, other guarantor or other person liable on any
Indebtedness and a separate action or actions may be brought and prosecuted
against the Guarantor on any Indebtedness.
10. Financial Information. The Guarantor hereby agrees to deliver or cause to be
delivered to the Bank:
A. Other Information. (i) Financial Statements. Not later than April
1st of each year, a copy of the personal financial statement of the
Guarantor for such year; and (ii) Tax Returns. Within 10 days of filing
but not later than October 31st of each year, a copy of the Guarantor's
federal income tax returns filed for each year.
11. Acknowledgment of Receipt. Receipt of a true copy of this Guaranty is hereby
acknowledged by the Guarantor. The Guarantor understands and agrees that this
Guaranty shall not constitute a commitment of any nature whatsoever by the Bank
to renew or hereafter extend credit to the Debtor. The Guarantor agrees that
this Guaranty shall be effective with or without notice from the Bank of the
Bank's acceptance hereof.
12. Continuing Guaranty. This Guaranty is a continuing guaranty. Revocation
shall be effective only upon written notice personally received by an officer of
the Bank at the originating office indicated below or actually received at the
originating office by United States mail postage prepaid. Notice shall be
effective at any office of the Bank should the originating office no longer be
in existence. Revocation shall be effective at the close of the Bank's business
day when such notice is actually received. Any revocation shall be effective
only as to the revoking party and shall not affect that party's obligation with
respect to any Indebtedness existing before such revocation is effective.
13. Non-Reliance. In executing this Guaranty, the undersigned is not relying,
and has not relied, upon any statement or representation made by the Bank, or
any employee, agent or representative of the Bank, with respect to the status,
financial condition or other matters related to the Debtor or the relationship
between the Debtor and the Bank.
14. Multiple Guaranties. If the Guarantor has executed or does execute more than
one guaranty of any indebtedness of the Debtor to the Bank, the limits of
liability thereunder and hereunder shall be cumulative.
15. Severability. Should any one or more provisions of this Guaranty be
determined to be illegal or unenforceable, all other provisions shall remain
effective.
16. Corporate or Partnership Authority. If the Debtor is a corporation or
partnership, the Bank need not inquire into the power of the Debtor or the
authority of its officers, directors, partners or agents acting or purporting to
act in its behalf and any credit granted in reliance upon the purported exercise
of such power or authority is guaranteed hereunder.
17. Separate Property. Any married person who signs this Guaranty expressly
agrees that recourse may be had against such person's separate property for all
obligations hereunder.
18. Assignment. The Bank may, with or without notice, assign this Guaranty in
whole or in part. This Guaranty shall inure to the benefit of the Bank, its
successors and assigns, and shall bind the Guarantor and the Guarantor's heirs,
executors, administrators, successors and assigns.
19. Waiver of Jury. The Guarantor and the Bank hereby expressly and voluntarily
waive any and all rights, whether arising under the California constitution, any
rules of the California Code of Civil Procedure, common law or otherwise, to
demand a trial by jury in any action, matter, claim, or cause of action
whatsoever arising out of or in any way related to this Guaranty or any other
agreement, document or transaction contemplated hereby.
20. Dispute Resolution.
A. Disputes. It is understood and agreed that, upon the request of any
party to this Guaranty, any dispute, claim or controversy of any kind,
whether in contract or in tort, statutory or common law, legal or
equitable, now existing or hereinafter arising between the parties in
any way arising out of, pertaining to or in connection with : (i) this
Guaranty, or any related agreements, documents or instruments, (ii) all
past and present loans, credits, accounts, deposit accounts (whether
demand deposits or time deposits), safe deposit boxes, safekeeping
agreements, guarantees, letters of credit, goods or services, or other
transactions, contracts or agreements of any kind, (iii) any incidents,
omissions, acts, practices, or occurrences causing injury to any party
whereby another party or its agents, employees or representatives may
be liable, in whole or in part, or (iv) any aspect of the past or
present relationships of the parties, shall be resolved through a
two-step dispute resolution process administered by the Judicial
Arbitration & Medication Services, Inc. ("JAMS") as follows:
(2)
<PAGE>
B. Step I - Mediation. At the request of any party to the dispute,
claim or controversy, the matter shall be referred to the nearest
office of JAMS for mediation, which is an information, non-binding
conference or conferences between the parties in which a referred judge
or justice from the JAMS panel will seek to guide the parties to a
resolution of the case.
C. Step II - Arbitration (Contracts Not Secured By Real Property).
Should any dispute, claim or controversy remain unresolved at the
conclusion of the Step I Mediation Phase, then (subject to the
restriction at the end of this subparagraph) all such remaining matters
shall be resolved by final and binding arbitration before a different
judicial panelist, unless the parties shall agree to have the mediator
panelist act as arbitrator. The hearing shall be conducted at a
location determined by the arbitration in Los Angeles, California (or
such other city as may be agreed upon by the parties) and shall be
administered by and in accordance with the then existing Rules of
Practice and Procedure of JAMS and judgment upon any award rendered by
the arbitrator may be entered by any State or Federal Court having
jurisdiction thereof. The arbitrator shall determine which is the
prevailing party and shall include in the award that party's reasonable
attorneys' fees and costs. This subparagraph shall apply only if, at
the time of the submission of the matter to JAMS, the dispute or issues
involved do not arise out of any transaction which is secured by real
property collateral or, if so secured, all parties consent to such
submission.
As soon as practicable after selection of the arbitrator, the
arbitrator, or the arbitrator's designated representative, shall
determine a reasonable estimate of anticipated fees and costs of the
arbitrator, and render a statement to each party setting forth that
party's pro-rata share of said fees and costs. Thereafter, each party
shall, within 10 days of receipt of said statement, deposit said sum
with the arbitrator. Failure of any party to make such a deposit shall
result in a forfeiture by the non-deposing party of the right to
prosecute or defend the claim which is the subject of the arbitration,
but shall not otherwise serve to abate, stay or suspend the arbitration
proceedings.
D. Step II - Trial By Court Reference (Contracts Secured By Real
Property). If the dispute, claim or controversy is not one required or
agreed to be submitted to arbitration, as provided in the above
subparagraph, and has not been resolved by Step I mediation, then any
remaining dispute, claim or controversy shall be submitted for
determination by a trial on Order of Reference conducted by a retired
judge or justice from the panel of JAMS appointed pursuant to the
provisions of Section 638(l) of the California Code of Civil Procedure,
or any amendment, addition or successor section thereto, to hear the
case and report a statement of decision thereon. The parties intend
this general reference agreement to be specifically enforceable in
accordance with said section. If the parties are unable to agree upon
a member of the JAMS panel to act as referee, then one shall be
appointed by the Presiding Judge of the county wherein the hearing is
to be held. The parties shall pay in advance, to the referee, the
estimated reasonable fees and costs of the reference, as may be
specified in advance by the referee. The parties shall initially
share equally, by paying their proportionate amount of the estimated
fees and costs of the reference. Failure of any party to make such a
fee deposit shall result in a forfeiture by the non-depositing party
of the right to prosecute or defend any cause of action which is the
subject of the reference, but shall not otherwise serve to abate,
stay or suspend the reference proceeding.
E. Provisional Remedies, Self Help and Foreclosure. No provision of, or
the exercise of any rights under any portion of this Dispute Resolution
provision, shall limit the right of any party to exercise self help
remedies such as set off, foreclosure against any real or personal
property collateral, or the obtaining of provisional or ancillary
remedies, such as injunctive relief or the appointment of a receiver,
from any court having jurisdiction before, during or after the pendency
of any arbitration. At the Bank's option, foreclosure under a deed of
trust or mortgage may be accomplished either by exercise of power of
sale under the deed of trust or mortgage, or by judicial foreclosure.
The institution and maintenance of an action for provisional remedies,
pursuit of provisional or ancillary remedies or exercise of self help
remedies shall not constitute a waiver of the right of any party to
submit the controversy or claim to arbitration.
21. Attorneys' Fees. Whether or not any suit, action, arbitration or other
dispute resolution proceeding is instituted, the Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses which may be
incurred in the collection of any indebtedness, in the protection or
preservation of, or realization on, any collateral securing any Indebtedness and
in the enforcement by the Bank of this Guaranty.
22. Governing Law. This Guaranty shall be governed by and construed according to
the laws of the State of California and the Guarantor hereby submits to the
jurisdiction of the courts of the State of California.
23. Entire Agreement. This Guaranty and all documents, instruments and
agreements mentioned herein constitute the entire and complete understanding of
the parties with respect to the transactions contemplated hereunder. All
previous conversations, memoranda and writings between the parties pertaining to
the transactions contemplated hereunder not incorporated or referenced in this
Guaranty or in such documents, instruments and agreements are superseded hereby.
24. Headings. The headings used herein are solely for the purpose of
identification and have no legal significance.
25. Address of the Bank. The Bank's originating office under this Guaranty is:
Oakland Main Office, 2127 Broadway, Oakland, CA 94612.
26. Maximum Principal Liability. THE MAXIMUM PRINCIPAL LIABILITY UNDER THIS
GUARANTY IS the amount of $8,000,000.00, plus interest at the rate(s) applicable
to any Indebtedness as set forth in the paragraph herein entitled "Guaranty" and
the expenses estimated in the paragraph herein entitled "Attorneys' Fees".
This Guaranty is made as of March 6, 1998, which shall be the date of this
Guaranty.
Executed by the undersigned Guarantor as of the date set forth above.
GUARANTOR:
X
----------------------------------------
Doreen Chiu
Address:
46970 Ocotillo Court
Fremont, CA 94539
(3)
<PAGE>
EXHIBIT 10.34
CONTINUING GUARANTY
For value received and in consideration of the extension of credit by SANWA BANK
CALIFORNIA (the "Bank") to ATG INC. (the "Debtor") or the benefits to the
undersigned (the "Guarantor"), guaranties and promises to pay to the Bank any
and all Indebtedness (as defined below) and agrees as follows:
1. Indebtedness. The term "Indebtedness" is used herein in its most
comprehensive sense and includes any and all advances, debts, obligations,
guaranties and liabilities of the Debtor heretofore, now, or hereafter made,
incurred or created, whether voluntary or involuntary and however arising,
whether direct or acquired by the Bank by assignment or succession, whether due
or not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether the Debtor may be liable individually or jointly with
others, or whether recovery upon any Indebtedness may be or hereafter becomes
barred by any statute of limitations or whether any Indebtedness may be or
hereafter becomes otherwise unenforceable.
2. Guaranty. The Guarantor unconditionally agrees to pay to the Bank or its
order, on demand, an amount equal to the amount of the Indebtedness or otherwise
perform any obligation of the Debtor undertaken pursuant to any Indebtedness. In
addition to any maximum principal liability hereunder, the Guarantor agrees to
(i) bear the expenses enumerated hereunder in the paragraph herein entitled
"Attorneys' Fees" and (ii) pay interest on the Indebtedness at the rate(s)
applicable thereto. Notwithstanding the foregoing, the Bank may allow the
Indebtedness to exceed the Guarantor's liability hereunder. Any payment by the
Guarantor shall not reduce the maximum principal obligation of the Guarantor
hereunder unless written notice to that effect is actually received by the Bank
at or prior to the time of such payment. Any payment by the Debtor or any other
person shall not reduce the Guarantor's maximum principal liability hereunder.
3. Right to Amend or Modify Indebtedness. The Guarantor authorizes the Bank, at
its sole discretion, with or without notice and without affecting the
Guarantor's liability hereunder, from time to time to: (i) change the time or
manner of payment, or any Indebtedness by renewal, extension, modification,
acceleration or otherwise; (ii) alter or change any provision of any
Indebtedness including, but not limited to, the rate of interest thereon, and
any document, instrument or agreement (other than this Guaranty), evidencing,
guaranteeing, securing or related to any Indebtedness; (iii) release, discharge,
exonerate, substitute or add one or more parties liable on any Indebtedness or
one or more endorsers, cosigners or guarantors for any Indebtedness; (iv) obtain
collateral for the payment of any Indebtedness or any guaranty thereof; (v)
release existing or after-acquired collateral on such terms as the Bank, in its
sole discretion, shall determine; (vi) apply any sums received from the Debtor,
any endorser, cosigner, other guarantor or other person liable on any
Indebtedness or from the sale or collection of collateral or its proceeds to
any indebtedness whatsoever owed or to be owed to the Bank by the Debtor in
any order or amount and regardless of whether or not such indebtedness is
guaranteed hereby, is secured by collateral or is due and payable; and (vii)
apply to any Indebtedness, in any order or amount, regardless of whether such
Indebtedness is secured by collateral or is due and payable, any sums received
from the Guarantor or from the sale of collateral in which the Guarantor has
granted the Bank a security interest.
4. Waivers. The Guarantor hereby unconditionally and irrevocably acknowledges
and agrees to the matters set forth below:
A. Deficiency. In the event that any Indebtedness is now or hereafter
secured by a deed of trust, the Guarantor waives any defense and all
rights and benefits of those laws purporting to state that no
deficiency judgment may be recovered on certain real property purchase
money obligations (as presently contained in Section 580b of the
California Code of Civil Procedure and as it may be amended or
superseded in the future) and those laws purporting to state that no
deficiency judgment may be recovered after a trustee's sale under a
deed of trust (as presently contained in Section 580d of the
California Code of Civil Procedure and as it may be amended or
superseded in the future). THE GUARANTOR ACKNOWLEDGES THAT A
FORECLOSURE BY A TRUSTEE'S SALE UNDER A DEED OF TRUST MAY RESULT IN
THE DESTRUCTION OF THE GUARANTOR'S SUBROGATION RIGHTS THAT MAY
OTHERWISE EXIST AND THAT A DESTRUCTION OF THOSE RIGHTS MAY CREATE A
DEFENSE TO A DEFICIENCY JUDGMENT. THE GUARANTOR HEREBY SPECIFICALLY
WAIVES ANY SUCH DEFENSE.
B. Election of Remedies. The Guarantor waives any defense based upon
the Guarantor's loss of a right against the Debtor arising from the
Bank's election of a remedy on any Indebtedness under bankruptcy or
other debtor relief laws or under any other laws, including, but not
limited to, those purporting to reduce the Bank's right against the
Guarantor in proportion to the principal obligation of any Indebtedness
(as presently continued in Section 2809 of the California Civil Code
and as it may be amended or superseded in the future).
Without limiting the generality of the foregoing, the Guarantor
waives all rights and defenses arising out of an election of remedies
by the Bank, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed
obligation has destroyed the Guarantor's rights of subrogation and
reimbursement against the Debtor by operation of Section 580d of the
California Code of Civil Procedure or otherwise .
C. Statute of Limitations. The Guarantor waives the benefit of the
statute of limitations affecting the Guarantor's liability hereunder
or the enforcement hereof.
D. Action Against the Debtor and Collateral (and Other Remedies). The
Guarantor waives all right to require the Bank to: (i) proceed against
the Debtor, any endorser, cosigner, other guarantor or other person
liable on any Indebtedness; (ii) join the Debtor or any endorser,
cosigner, other guarantor or other person liable on any Indebtedness in
any action or actions that may be brought and prosecuted by the Bank
solely and separately against the Guarantor on any Indebtedness; (iii)
proceed against any item or items of collateral securing any
Indebtedness or any guaranty thereof; or (iv) pursue or refrain from
pursuing any other remedy whatsoever in the Bank's power.
E. Debtor's Defense. The Guarantor waives any defense arising by reason
of any disability or other defense of the Debtor, the Debtor's
successor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness. Until all Indebtedness has been paid in
full, even though it may be in excess of the liability incurred hereby,
the Guarantor shall not have any right of subrogation and the Guarantor
waives any benefit of and right to participate in any collateral now or
hereafter held by the Bank. The Guarantor waives all presentments,
demands for performance, notices of nonperformance, protests, notices
of protest, notices of dishonor, notices of sale of any collateral
securing any Indebtedness or any guaranty thereof, and notice of the
existence, creation or incurring of new or additional Indebtedness.
F. Debtor's Financial Condition. The Guarantor hereby recognizes,
acknowledges and agrees that advances may be made in the future from
time to time with respect to any Indebtedness without authorization
from or notice to the Guarantor even though the financial condition of
the Debtor, any endorser, cosigner, other guarantor or other person
liable on any Indebtedness may have deteriorated since the date of this
Guaranty. The Guarantor waives all right to require the Bank to
disclose any information with respect to: (i) any Indebtedness now
existing or hereafter incurred; (ii) the present or future financial
condition, credit or character of the Debtor, any endorser, cosigner,
other guarantor or other person liable on any Indebtedness; (iii) any
present or future
(1)
<PAGE>
collateral securing any Indebtedness or any guaranty thereof; or (iv)
any present or future action or inaction on the part of the Bank, the
Debtor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness. The Guarantor hereby assumes the
responsibility for being informed of the financial condition, credit
and character of the Debtor and of all circumstances bearing upon the
risk of non-payment of any Indebtedness which diligent inquiry would
reveal.
5. Right of Set-off; Grant of Security Interest. In addition to all liens upon
and rights of set-off against any monies, securities or other property of the
Guarantor given to the Bank by law, the Bank shall have a security interest in
and a right to set off against all monies, securities and other property of
the Guarantor now or hereafter in the possession of or on deposit with the
Bank, the Bank's agents or any one or more of them, whether held in general or
special account or deposit or for safekeeping or otherwise; and each such
security interest and right of set-off may be exercised without demand upon or
notice to the Guarantor. No action or inaction by the Bank with respect to any
security interest or right of set-off shall be deemed a waiver thereof and
every right of set-off and security interest shall continue in full force and
effect until specifically released by the Bank in writing. The security
interest created hereby shall secure all of the Guarantor's obligations under
this Guaranty.
6. Right of Foreclosure. The Bank may foreclose, either by judicial foreclosure
or by exercise of power of sale, any deed of trust securing any Indebtedness
even though such foreclosure may destroy or diminish the Guarantor's rights
against the Debtor. The Guarantor shall be liable to the Bank for any part of
any Indebtedness remaining unpaid after any such foreclosure whether or not such
foreclosure was for fair market value.
7. Subordination. Any indebtedness of the Debtor or any endorser, cosigner,
other guarantor or other person liable on any Indebtedness now or hereafter owed
to the Guarantor is hereby subordinated to the Indebtedness. Such indebtedness
owed to the Guarantor shall, if the Bank so requests, be collected, enforced and
received by the Guarantor as trustee for the Bank and be paid over to the Bank
on account of the Indebtedness but without reducing or affecting in any manner
the liability of the Guarantor set forth herein. Should the Guarantor fail to
collect the proceeds of any such indebtedness owed to it and pay the proceeds to
the Bank, the Bank, as the Guarantor's attorney-in-fact, may do such acts and
sign such documents in the Guarantor's name as the Bank considers necessary to
effect such collection.
8. Invalid, Fraudulent or Preferential Payments. The Guarantor agrees that, to
the extent the Debtor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness makes a payment or payments to, or is credited for
any payment or payments made for or on behalf of the Debtor to the Bank, which
payment or payments, or any part thereof, is subsequently invalidated,
determined to be fraudulent or preferential, set aside or required to be repaid
to any trustee, receiver, assignee or any other party whether under any
bankruptcy, state or federal law or under any common law or equitable cause or
otherwise, then, to the extent thereof, the obligation or part thereof intended
to be satisfied thereby shall revived, reinstated and continued in full force
and effect as if such payment or payments had not originally been made or
credited.
9. Joint and Several Obligations; Independent Obligations. If more than one
Guarantor signs this Guaranty, the obligations hereunder are joint and several.
The Guarantor's obligations hereunder are independent of the obligations of the
Debtor or any endorser, cosigner, other guarantor or other person liable on any
Indebtedness and a separate action or actions may be brought and prosecuted
against the Guarantor on any Indebtedness.
10. Financial Information. The Guarantor hereby agrees to deliver or cause to be
delivered to the Bank:
A. Other Information. (i) Financial Statements. Not later than April
1st of each year, a copy of the personal financial statement of the
Guarantor for such year; and (ii) Tax Returns. Within 10 days of filing
but not later than October 31st of each year, a copy of the Guarantor's
federal income tax returns filed for each year.
11. Acknowledgment of Receipt. Receipt of a true copy of this Guaranty is hereby
acknowledged by the Guarantor. The Guarantor understands and agrees that this
Guaranty shall not constitute a commitment of any nature whatsoever by the Bank
to renew or hereafter extend credit to the Debtor. The Guarantor agrees that
this Guaranty shall be effective with or without notice from the Bank of the
Bank's acceptance hereof.
12. Continuing Guaranty. This Guaranty is a continuing guaranty. Revocation
shall be effective only upon written notice personally received by an officer
of
the Bank at the originating office indicated below or actually received at the
originating office by United States mail postage prepaid. Notice shall be
effective at any office of the Bank should the originating office no longer be
in existence. Revocation shall be effective at the close of the Bank's business
day when such notice is actually received. Any revocation shall be effective
only as to the revoking party and shall not affect that party's obligation with
respect to any Indebtedness existing before such revocation is effective.
13. Non-Reliance. In executing this Guaranty, the undersigned is not relying,
and has not relied, upon any statement or representation made by the Bank, or
any employee, agent or representative of the Bank, with respect to the status,
financial condition or other matters related to the Debtor or the relationship
between the Debtor and the Bank.
14. Multiple Guaranties. If the Guarantor has executed or does execute more than
one guaranty of any indebtedness of the Debtor to the Bank, the limits of
liability thereunder and hereunder shall be cumulative.
15. Severability. Should any one or more provisions of this Guaranty be
determined to be illegal or unenforceable, all other provisions shall remain
effective.
16. Corporate or Partnership Authority. If the Debtor is a corporation or
partnership, the Bank need not inquire into the power of the Debtor or the
authority of its officers, directors, partners or agents acting or purporting to
act in its behalf and any credit granted in reliance upon the purported exercise
of such power or authority is guaranteed hereunder.
17. Separate Property. Any married person who signs this Guaranty expressly
agrees that recourse may be had against such person's separate property for all
obligations hereunder.
18. Assignment. The Bank may, with or without notice, assign this Guaranty in
whole or in part. This Guaranty shall inure to the benefit of the Bank, its
successors and assigns, and shall bind the Guarantor and the Guarantor's heirs,
executors, administrators, successors and assigns.
19. Waiver of Jury. The Guarantor and the Bank hereby expressly and voluntarily
waive any and all rights, whether arising under the California constitution, any
rules of the California Code of Civil Procedure, common law or otherwise, to
demand a trial by jury in any action, matter, claim, or cause of action
whatsoever arising out of or in any way related to this Guaranty or any other
agreement, document or transaction contemplated hereby.
20. Dispute Resolution.
A. Disputes. It is understood and agreed that, upon the request of any
party to this Guaranty, any dispute, claim or controversy of any kind,
whether in contract or in tort, statutory or common law, legal or
equitable, now existing or hereinafter arising between the parties in
any way arising out of, pertaining to or in connection with : (i) this
Guaranty, or any related agreements, documents or instruments, (ii) all
past and present loans, credits, accounts, deposit accounts (whether
demand deposits or time deposits), safe deposit boxes, safekeeping
agreements, guarantees, letters of credit, goods or services, or other
transactions, contracts or agreements of any kind, (iii) any incidents,
omissions, acts, practices, or occurrences causing injury to any party
whereby another party or its agents, employees or representatives may
be liable, in whole or in part, or (iv) any aspect of the past or
present relationships of the parties, shall be resolved through a
two-step dispute resolution process administered by the Judicial
Arbitration & Mediation Services, Inc. ("JAMS") as follows:
(2)
<PAGE>
B. Step I - Mediation. At the request of any party to the dispute,
claim or controversy, the matter shall be referred to the nearest
office of JAMS for mediation, which is an informal, non-binding
conference or conferences between the parties in which a retired judge
or justice from the JAMS panel will seek to guide the parties to a
resolution of the case.
C. Step II - Arbitration (Contracts Not Secured By Real Property).
Should any dispute, claim or controversy remain unresolved at the
conclusion of the Step I Mediation Phase, then (subject to the
restriction at the end of this subparagraph) all such remaining matters
shall be resolved by final and binding arbitor before a different
judicial panelist, unless the parties shall agree to have the mediator
panelist act as arbitrator. The hearing shall be conducted at a
location determined by the arbitor in Los Angeles, California (or
such other city as may be agreed upon by the parties) and shall be
administered by and in accordance with the then existing Rules of
Practice and Procedure of JAMS and judgment upon any award rendered by
the arbitrator may be entered by any State or Federal Court having
jurisdiction thereof. The arbitrator shall determine which is the
prevailing party and shall include in the award that party's reasonable
attorneys' fees and costs. This subparagraph shall apply only if, at
the time of the submission of the matter to JAMS, the dispute or issues
involved do not arise out of any transaction which is secured by real
property collateral or, if so secured, all parties consent to such
submission.
As soon as practicable after selection of the arbitrator, the
arbitrator, or the arbitrator's designated representative, shall
determine a reasonable estimate of anticipated fees and costs of the
arbitrator, and render a statement to each party setting forth that
party's pro-rata share of said fees and costs. Thereafter, each party
shall, within 10 days of receipt of said statement, deposit said sum
with the arbitrator. Failure of any party to make such a deposit shall
result in a forfeiture by the non-deposing party of the right to
prosecute or defend the claim which is the subject of the arbitration,
but shall not otherwise serve to abate, stay or suspend the arbitration
proceedings.
D. Step II - Trial By Court Reference (Contracts Secured By Real
Property). If the dispute, claim or controversy is not one required or
agreed to be submitted to arbitration, as provided in the above
subparagraph, and has not been resolved by Step I mediation, then any
remaining dispute, claim or controversy shall be submitted for
determination by a trial on Order of Reference conducted by a retired
judge or justice from the panel of JAMS appointed pursuant to the
provisions of Section 638(l) of the California Code of Civil Procedure,
or any amendment, addition or successor section thereto, to hear the
case and report a statement of decision thereon. The parties intend
this general reference agreement to be specifically enforceable in
accordance with said section. If the parties are unable to agree upon
a member of the JAMS panel to act as referee, then one shall be
appointed by the Presiding Judge of the county wherein the hearing is
to be held. The parties shall pay in advance, to the referee, the
estimated reasonable fees and costs of the reference, as may be
specified in advance by the referee. The parties shall initially
share equally, by paying their proportionate amount of the estimated
fees and costs of the reference. Failure of any party to make such a
fee deposit shall result in a forfeiture by the non-depositing party
of the right to prosecute or defend any cause of action which is the
subject of the reference, but shall not otherwise serve to abate,
stay or suspend the reference proceeding.
E. Provisional Remedies, Self Help and Foreclosure. No provision of, or
the exercise of any rights under any portion of this Dispute Resolution
provision, shall limit the right of any party to exercise self help
remedies such as set off, foreclosure against any real or personal
property collateral, or the obtaining of provisional or ancillary
remedies, such as injunctive relief or the appointment of a receiver,
from any court having jurisdiction before, during or after the pendency
of any arbitration. At the Bank's option, foreclosure under a deed of
trust or mortgage may be accomplished either by exercise of power of
sale under the deed of trust or mortgage, or by judicial foreclosure.
The institution and maintenance of an action for provisional remedies,
pursuit of provisional or ancillary remedies or exercise of self help
remedies shall not constitute a waiver of the right of any party to
submit the controversy or claim to arbitration.
21. Attorneys' Fees. Whether or not any suit, action, arbitration or other
dispute resolution proceeding is instituted, the Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses which may be
incurred in the collection of any indebtedness, in the protection or
preservation of, or realization on, any collateral securing any Indebtedness and
in the enforcement by the Bank of this Guaranty.
22. Governing Law. This Guaranty shall be governed by and construed according to
the laws of the State of California and the Guarantor hereby submits to the
jurisdiction of the courts of the State of California.
23. Entire Agreement. This Guaranty and all documents, instruments and
agreements mentioned herein constitute the entire and complete understanding of
the parties with respect to the transactions contemplated hereunder. All
previous conversations, memoranda and writings between the parties pertaining to
the transactions contemplated hereunder not incorporated or referenced in this
Guaranty or in such documents, instruments and agreements are superseded hereby.
24. Headings. The headings used herein are solely for the purpose of
identification and have no legal significance.
25. Address of the Bank. The Bank's originating office under this Guaranty is:
Oakland Main Office, 2127 Broadway, Oakland, CA 94612.
26. Maximum Principal Liability. THE MAXIMUM PRINCIPAL LIABILITY UNDER THIS
GUARANTY IS the amount of $8,000,000.00, plus interest at the rate(s) applicable
to any Indebtedness as set forth in the paragraph herein entitled "Guaranty" and
the expenses estimated in the paragraph herein entitled "Attorneys' Fees".
This Guaranty is made as of March 6, 1998, which shall be the date of this
Guaranty.
Executed by the undersigned Guarantor as of the date set forth above.
GUARANTOR:
X
----------------------------------------
Frank Chiu
Address:
46970 Ocotillo Court
Fremont, CA 94539
(3)
<PAGE>
EXHIBIT 10.35
INDEMNITY AGREEMENT
This Agreement is made and entered into by the undersigned Indemnitor
(Indemnitors) in favor of ACSTAR Insurance Company, 233 Main Street, New
Britain, CT 06050-2350 (Surety) for the purpose of inducing Surety to furnish
Bonds.
WHEREAS, in the transaction of business, certain bonds, undertakings and other
writings obligatory in the nature of a bond may have heretofore been, and may
hereafter be, required by, for, or on behalf of the Indemnitors or any one or
more of the Indemnitors, in whose bonds and undertakings the Indemnitors do
hereby affirm to have a substantial material and beneficial interest, and as a
condition precedent to the execution of any and all such bonds, the Surety
requires execution of this Indemnity Agreement.
WHEREAS, the Indemnitors have or may have a substantial, material and beneficial
interest in the obtaining of said bonds on behalf of various related companies,
it is agreed that this Agreement shall apply to any bonds executed on behalf of
any subsidiary, affiliated partnership, joint venture or corporation of the
Indemnitors, now existing or hereafter formed or acquired, and whether partially
or wholly owned or controlled, as fully as if the names and signatures of such
subsidiary or affiliates appeared herein as Indemnitors.
NOW, THEREFORE, in consideration of the foregoing premises, and of the execution
or continuance of such bonds and undertakings, and for other good and valuable
considerations the Indemnitors do, for themselves, their heirs, executors,
administrators and assigns jointly and severally agree with the Surety as
follows:
(1) The Indemnitors will pay, when due, all premiums for each of such bonds
in accordance with the Surety's rates in effect on the date each of
such bonds become effective, as long as liability thereunder shall
continue, and until the Surety is furnished with evidence satisfactory
to the Surety of its discharge or release from the bonds or of all
liability by reason thereof.
(2) The Indemnitors will (a) perform all the conditions of each said bond
or obligation, and any and all alterations, modifications, renewals,
continuations, and extensions thereof, and (b) indemnify and save the
Surety harmless from and against any and all liability, loss, costs,
damages, fees of attorneys and other expenses which the Surety may
sustain or incur by reason or in consequence of the execution of such
bond or bonds and any renewal, continuation or successor thereof,
including but not limited to (i) sums paid or liabilities incurred in
settlement of, and expenses paid or incurred in connection with
claims, suits or judgments under such bonds, or (ii) expenses paid or
incurred (A) in enforcing the terms hereof, (B) in procuring or
attempting to procure release from liability, or (C) in recovering or
attempting to recover losses or expenses paid or incurred as
aforesaid. In the event of payments by the Surety, the Indemnitors
agree to accept the voucher of the Surety or other evidence of such
payments as prima facie evidence of the propriety thereof, and of the
Indemnitor's liability therefor to the Surety.
(3) If the Surety shall set up a reserve to cover any claim, liability,
suit or judgment under any such bond, the Indemnitors will, immediately
upon demand, deposit with the Surety a sum of money equal to such
reserve and any increase thereof as collateral security on such bond or
bonds. Such sum and any other money or property which shall have
been, or shall hereafter be, pledged as collateral security on any
such bond or bonds shall, unless otherwise agreed in writing by the
Surety, be available, in the discretion of the Surety, as collateral
security on all bonds coming within the scope of this instrument or
for any other indebtedness of the Indemnitors to the Surety.
(4) The Surety, in its sole discretion, is authorized but not required,
a)to consent to any change in the contract or the contract documents
including the plans and specifications, b) to make or guarantee
advances or loans for the purposes of executing the contract without
any obligation to see to the application thereof, it being understood
that the amount of all such advances or loans shall be conclusively
presumed to be a loss hereunder for which the Indemnitors are liable,
and c) in the event of any breach, delay or default asserted by the
obligee in any said bonds, or in the performance of the contract, or a
breach of this Agreement or of any bond or bonds connected therewith,
or the failure to diligently prosecute the work under any contract, or
a breach of this Agreement or of any bond or bonds connected therewith,
or the failure to diligently prosecute the work under any contract,
or to pay for labor and materials used the prosecution of the
contract or in the event work has ceased or been suspended on any
contract or contracts covered by any said bonds, to take possession
of the work under the contract, at the expense of the Indemnitors to
complete the contract or cause the same to be completed or to consent
to the completion thereof, and to take any other action, which the
Surety may deem appropriate. The Indemnitors hereby release and
discharge the Surety from any and all liability for all its actions
and omissions.
(5) The Indemnitors hereby transfer, assign, pledge and convey to the
Surety a security interest in 1) all equipment, tools, and material in
which the Indemnitor have any interest, whether on site or elsewhere or
on order, 2) all sums due or to become due to Indemnitors or any of
them in connection with any contract, and 3) all subcontracts let by
Indemnitors in connection with any contract. The security interests
granted herein are effective in the case of each contract as of the
date of the contract. Indemnitors hereby agree to execute any form of
financing statement or other agreement or writing which Surety, in its
sole discretion, deems necessary or advisable to perfect the security
interests granted herein, and further authorize Surety at its
discretion and at any time to file or serve this instrument, or a
true copy hereof, or any other instrument executed pursuant hereto as
a financing statement or other notice under the Uniform Commercial
Code or any similar law, and Indemnitors authorize Surety to complete
this instrument in any manner required for such use, and to prepare
an attached schedule describing items of security covered hereunder.
The Indemnitors hereby appoint Surety as Attorney-In-Fact for each of
them to endorse and to deposit or negotiate checks, drafts and all
similar instruments payable to Indemnitors, with the right, but not
the obligation to exercise all of the rights of the Indemnitors
assigned, transferred and set over to the Surety in this Agreement
and in the name of the Indemnitors to make, execute and deliver any
and all additional assignments, documents as deemed necessary and
proper by the Surety to give full force and effect to this paragraph
(5). The Indemnitors agree that all equipment, tools, and material
and all subcontracts are dedicated to the performance of the contract
to which they pertain and that such equipment, tools and material and
subcontracts shall be subject to a trust in favor of the contract
owner and Surety and that they be used to that end.
(6) The Surety shall have the exclusive right to determine for itself and
the Indemnitors whether any claim or suit brought against the Surety or
the principal upon any such bond shall be settled or defended and the
Surety's decision shall be final and binding upon the Indemnitors.
<PAGE>
(7) If any of the bonds are executed in connection with a contract which by
its terms or by law prohibits the assignment of the contract price or
any part thereof, Indemnitors covenant and agree that all payments due
or received for or on account of said contract shall be held in trust
for Surety for the payment of obligations incurred in the performance
of the contract and for labor, materials, and services furnished in the
prosecution of the work provided in such contract or any authorized
extension or modification thereof, and, further, it is expressly
understood that all monies due and to become due under any contact or
contracts covered by the bonds shall be held in trust, whether such
monies are in the possession of the Indemnitors or otherwise, for the
benefit of and for payment of all such obligations in connection with
any such contract or contracts for which the Surety would be liable
under any of said bonds.
(8) The Surety may, without incurring any liability, decline to execute any
bond and if the Surety executed a bid or proposal bond it shall have
the right to decline to execute any and all of the bonds that may be
required in connection with any award that may be made under the
proposal for which the bid or proposal bond is given and such
declination shall not diminish or alter the liability of the
Indemnitors that may arise by reason of having executed the bid or
proposal bond.
(9) The Indemnitors hereby waive notice of the execution of any such bonds
or of any act, fact or information coming to the knowledge or notice of
the Surety concerning or affecting its right or liabilities under any
such bonds or rights or liabilities of the Indemnitors hereunder,
notice of all such being hereby expressly waived.
(10) If the Surety shall procure any other company or companies to execute
or join with it in executing, or to reinsure any such bond or bonds,
this instrument shall inure to the benefit of such other company or
companies, its or their successors and assigns, so as to give to it
or them a direct right of action against the Indemnitors to enforce
this instrument and, in the event, the work "Surety", wherever used
herein, shall be deemed to include such company or companies, as
their respective interest may appear.
(11) The Indemnitors hereby waive all rights to claim any of their property,
including their respective homesteads, as exempt from levy, execution,
sale or other legal process under the laws of any state.
(12) In the event any claim or demand is made by the Surety against
Indemnitors, or any one or more of them, by reason of the execution of
a bond or bonds, the Surety is hereby expressly authorized to settle
with any one or more of the Indemnitors individually, and with
reference to the others, and such settlement or composition shall not
affect the liability of any of the others, and the Indemnitors hereby
expressly waive the right to be discharged and released by reason of
the release of any one or more of the Indemnitors and hereby consent
to any settlement or compromise that may hereafter be made. Separate
suits may be brought hereunder as causes of action accrue and the
bringing of suit or the recovery of judgment upon any cause of action
shall not or bar the bringing of other suits upon other causes of
action whether therefore of thereafter arising.
(13) In the event any Indemnitor fails to execute this Agreement or in the
event the execution hereof by any Indemnitor be defective or invalid
for any reason, such failure, defect, or invalidity shall not in any
manner affect the validity of this Agreement or the liability of any
other Indemnitor executing the same, but each and every party so
executing shall be and remain fully bound and liable.
(14) This Agreement may be terminated by any Indemnitor upon twenty days
written notice received by the Surety but any such notice of
termination shall not operate to modify, bar or discharge the
Indemnitors as to the bonds that may have been theretofore executed.
(15) This Agreement may not be changed or modified orally. No change or
modification shall be effective unless make by written endorsement
executed by the Surety and the Indemnitors to form a part hereof.
(16) The Indemnitors agree to notify the Surety immediately upon their
receiving any notice or knowledge that their liability insurance has
been or will be cancelled or non-renewed, or that such coverage is or
will be reduced.
(17) At any time, and until such time as liability of the Surety under any
and all said Bonds is terminated, the Surety shall have the right to
reasonable access to the books, records and accounts of the Indemnitor
and Indemnitors, and any bank depository, materialman, supply house, or
other person, firm or corporation when requested by the Surety is
hereby authorized to furnish the Surety any information requested
including by not limited to, the status of the work under contracts
being performed by the Indemnitor, the condition of the performance
of such contracts and payments or accounts.
(18) The word indemnitor or pronouns referring to said word, whether
singular or plural, are to be construed as referring to each of the
undersigned Indemnitors, individually and collectively, though the
Indemnitor be one or more individuals, partnerships, associations, or
corporations.
IN TESTIMONY WHEREOF the Indemnitors intending to be legally bound hereby have
hereunto set their hands and affixed their seals this 12th day of August, 1992.
Witness or Attest
Name of Individual, (Type) Doreen Chiu Address
Signature: /s/ Doreen Chiu 46970 Ocotillo Court
Fremont, Ca. 94538
Name of Individual, (Type) Frank Chiu Address
Signature: /s/ Frank Chiu 46970 Ocotillo Court
Fremont, Ca. 94538
<PAGE>
Name of Company (Type): Allied Technology Group, Inc.
Signature: /s/ Doreen Chiu
Name: Doreen Chiu 44075 Fremont Blvd.
Title: President Fremont, CA 94538
Name of Company (Type): National Safety Consultants, Inc.
dba: Radiation Services, Inc.
Signature: /s/ Doreen Chiu
Name: Doreen Chiu 44075 Fremont Blvd.
Title: President Fremont, CA 94538
INDIVIDUAL(S) ACKNOWLEDGMENT
STATE OF California )
)
COUNTY OF Alameda )
On this 12th day of August, 1992, before me personally came Doreen Chiu, to me
known and known to me to be the individual(s) who executed the foregoing
instrument, and acknowledged that she executed same.
/s/ P. de Peralta
P. de Peralta [SEAL]
INDIVIDUAL(S) ACKNOWLEDGMENT
STATE OF California )
)
COUNTY OF Alameda )
On this 12th day of August, 1992, before me personally came Frank Chiu, to me
known and known to me to be the individual(s) who executed the foregoing
instrument, and acknowledged that he executed same.
/s/ P. de Peralta
P. de Peralta [SEAL]
<PAGE>
CORPORATE ACKNOWLEDGMENT(S)
STATE OF California )
)
COUNTY OF Alameda )
On this 12th day of August, 1992, before me personally came Doreen Chiu, to me
known, who, being by me duly sworn, did depose and say that [s]he resides in
Fremont, CA that [s]he is the president of the Allied Technology Group, Inc. the
corporation which executed the foregoing instrument; that [s]he knows the seal
of the said corporation; that the seal affixed to the said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of the
said corporation, and that [s]he signed his/her name to said instrument by like
order.
/s/ P. de Peralta
P. de Peralta [SEAL]
CORPORATE ACKNOWLEDGMENT(S)
STATE OF California )
)
COUNTY OF Alameda )
On this 12th day of August, 1992, before me personally came Doreen Chiu, to me
known, who, being by me duly sworn, did depose and say that [s]he resides in
Fremont, CA that [s]he is the president of the National Safety Consultants, Inc.
the corporation which executed the foregoing instrument; that [s]he knows the
seal of the said corporation; that the seal affixed to the said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of the said corporation, and that [s]he signed his/her name to said instrument
by like order.
/s/ P. de Peralta
P. de Peralta [SEAL]
<PAGE>
EXHIBIT 10.36
[LETTERHEAD OF RELIANCE SURETY COMPANY APPEARS HERE]
CONTINUING AGREEMENT OF INDEMNITY-CONTRACTOR'S FORM
THIS AGREEMENT is made by the Undersigned for the continuing benefit of
RELIANCE INSURANCE COMPANY, UNITED PACIFIC INSURANCE COMPANY, RELIANCE NATIONAL
INDEMNITY COMPANY and/or RELIANCE SURETY COMPANY (collectively the Surety) for
the purpose of saving each and all of them harmless and indemnifying each and
all of them from all loss and expense in connection with any Bonds executed on
behalf of any one or more of the following persons, firms or corporations:
ATG Inc.; Doreen M. Chiu; Frank Y. Chiu
(Contractor).
WITNESSETH,
WHEREAS, the Contractor, individually or jointly with others, may desire or be
required from time to time to give certain bonds, undertakings, or instruments
of guarantee (all of which will hereinafter be included within the term "Bond"
or "Bonds"), and
WHEREAS, upon the express condition that this instrument be executed, the Surety
has executed or procured the execution of, and may hereafter execute or procure
the execution of such Bonds.
NOW, THEREFORE, in consideration of the execution of any such Bond or Bonds and
as an inducement to such execution, we, the Undersigned, agree and bind
ourselves, our heirs, executors, administrators, successors and assigns, jointly
and severally, as follows:
FIRST: To pay all premiums on said Bonds computed in accordance with the
Surety's regular manual of rates in effect on the date said Bonds are executed.
SECOND: To indemnify, and keep indemnified, and hold and save harmless the
Surety against all demands, claims, loss, costs, damages, expenses and
attorneys' fees whatever, and any and all liability therefor sustained or
incurred by the Surety by reason of executing or procuring the execution of any
said Bond or Bonds, or any other Bonds, which may be already or hereafter
executed on behalf of the Contractor, or renewal or continuation thereof; or
sustained or incurred by reason of making any investigation on account thereof,
prosecuting or defending any action brought in connection therewith, obtaining a
release therefrom, recovering or attempting to recover any salvage in connection
therewith or enforcing by litigation or otherwise any of the agreements herein
contained. Payment of amounts due Surety hereunder together with legal
interest shall be payable upon demand.
THIRD: To furnish money to the Contractor or to the Surety as needed for the
prompt payment of labor, materials, and any other costs or expenses in
connection with the performance of contracts when and as requested to do so by
the Surety.
FOURTH: To assign, transfer and convey, and each of the Undersigned does by
these presents assign, transfer and convey to the Surety, as of the date of
execution of said Bond or Bonds, as collateral security for the full performance
of the covenants and agreements herein contained and the payment of any other
indebtedness or liability of the Undersigned to the Surety, whether heretofore
or hereafter incurred, the following:
(a) All right title and interest of the Undersigned in and to all
machinery, equipment plant tools and materials which are, on the date
of execution of any such Bond or Bonds, or may thereafter be, about or
upon the site of the work to be performed under the contract referred
to in and guaranteed by such Bond, or elsewhere for the purpose
thereof, including as well materials purchased for or chargeable to
said contract which may be in process of construction or in storage
elsewhere or in transportation to said site;
(b) All rights, actions, causes of action, claims and demands of the
undersigned in, or arising from or out of, said contract or any
extensions, modifications, changes or alterations thereof or additions
thereto;
(c) All rights, actions, causes of action, claims and demands
whatsoever which the Undersigned or any of them may have or acquire in
any subcontract in connection with said contract and against any
subcontractor or any person, firm or corporation furnishing or agreeing
to furnish or supply labor, materials, supplies, machinery, tools or
other equipment in connection with or on account of said contract and
against any surety or sureties of any such materialmen, subcontractor,
laborer or other person, firm or corporation;
(d) All right title and interest to all monies due or to become due to
the undersigned arising out of or in any way relating to said contract
including, but not limited to progress payments, deferred payments,
retained percentages, compensation for extra work and claims and the
proceeds thereof that at the time of abandonment, forfeiture or breach
of said contract or such Bond or Bonds or of the terms of this
Agreement or at the time of any advance, payment or guaranty by the
Surety for the purpose of avoiding such abandonment, forfeiture or
breach, may be due or may thereafter become due under said contract to
or on behalf of the Undersigned, together with any and all sums due or
which may thereafter become due under or on all other contracts, bonded
or unbonded, in which any or all of the Undersigned have an
interest.
FIFTH: Each of the Undersigned does hereby irrevocably nominate and appoint any
officer of the Surety the true and lawful attorney-in-fact of the Undersigned,
with full right and authority, in the event the Contractor fails or is unable to
complete the work called for by the contract guaranteed by any Bond or in the
event of the breach of any provision of this Agreement to execute on behalf of,
and sign the names of each of the Undersigned to, any voucher, release,
satisfaction, check, bill of sale of all or any property by this Agreement
assigned to the Surety or any other paper or contract necessary or desired to
carry into effect the purposes of this Agreement; with full right and authority
also, in such event, to dispose of the performance of said contract by
subletting the same in the name of the Contractor or otherwise; and each of the
Undersigned does hereby ratify and confirm all that such attorney-in-fact or the
Surety may lawfully do in the premises and further authorizes and empowers the
Surety and such attorney-in-fact and each of them to enter upon and take
possession of the tools, plant equipment, materials and subcontracts and all
other collateral security mentioned In this Agreement and enforce, use, employ
and dispose
<PAGE>
thereof for the purposes set forth in this Agreement. Each of the Undersigned
specifically agrees to protect, indemnity and hold harmless the Surety and such
attorney-in-fact against any and all claims, damages, costs and expenses that
may in any way arise or grow out of the exercise of the assignments contained in
this Agreement and the powers herein granted, specifically waiving any claim
which any Undersigned has or might hereafter have against the Surety or such
attorney-in-fact on account of anything done in enforcing the terms of this
agreement, assignments and power-of-attorney.
SIXTH: That the entire contract price of any contract referred to in a Bond or
Bonds, whether in the possession of the Undersigned or another, shall be and
hereby is impressed with a trust in favor of Surety for the payment of
obligations incurred for labor, materials and services in the performance of the
contract work for which Surety would be liable under such Bond or Bonds and for
the purpose of satisfying the conditions of the Bond executed in connection with
the contract.
SEVENTH: That if Surety shall be required or shall deem it necessary to set up a
reserve in any amount to cover any claim, demand, liability, expense, suit,
order, judgment or adjudication under or on any Bond or Bonds or for any other
reason whatsoever, to immediately upon demand deposit with Surety an amount of
money sufficient to cover such reserve and any increase thereof, such funds to
be held by Surety as collateral, in addition to the indemnity afforded by this
instrument, with the right to use such funds or any part thereof, at any time,
in payment or compromise of any liability, claims, demands, judgment, damages,
fees and disbursements or other expenses; and the Undersigned, in the event of
their failure to comply with such demand, hereby authorize and empower any
attorney or any court of record of the United States or any of its territories
or possessions, to appear for them or any of them in any suit by Surety and to
confess judgment against them or any of them for any sum or sums of money up
to the amount of any or all Bond or Bonds, with costs, interest and reasonable
attorneys' fees; such judgment, however, to be satisfied upon the payment of
any and all such sums as may be found due by the Undersigned to Surety under
the terms of this Agreement. Demand shall be sufficient if sent by registered
or certified mail to the Undersigned at the address or addresses given herein
or last known to Surety, whether or not actually received. The authority to
confess judgment as set forth herein shall not be exhausted by any one
exercise thereof, but may be exercised from time to time and more than one
time until all liability of the Undersigned to Surety shall have been paid in
full.
EIGHTH: All collateral security held by or assigned to the Surety may be used by
the Surety at anytime in payment of any claim, loss or expense which the
Undersigned have agreed to pay hereby, whether or not such claim, loss or
expense arises out of or in connection with such Bond or contract under which
such collateral is held. The Surety may sell or realize upon any or all such
collateral security, at public or private sale, with or without notice to the
Undersigned or any of them, and with the right to be purchaser itself at any
such public sale, and shall be accountable to the Undersigned only for such
surplus or remainder of such collateral security or the proceeds thereof as may
be in the Surety's possession after it has been fully indemnified as in this
Agreement provided. The Surety shall not be liable for decrease in value or loss
or destruction of or damage to such security, however caused.
NINTH: The Surety shall have the right at its option and in its sole
discretion:
(a) To deem this Agreement breached should the Contractor become
involved in any agreement or proceeding of liquidation, receivership,
or bankruptcy, voluntarily or involuntarily, or should the Contractor
if an individual die, be convicted of a felony, become a fugitive from
justice, or for any reason disappears and cannot immediately be found
by the Surety by use of usual methods.
(b) To take possession of the work under any contract and at the
expense of the Undersigned to complete or to contract for the
completion of the same, or to consent to the reletting of the
completion thereof by the obligee in said contract Bond or Bonds, or to
take such other steps as in the discretion of the Surety may be
advisable or necessary to obtain its release or to secure itself from
loss thereunder.
(c) To adjust settle or compromise any claim, demand, suit or judgment
upon said Bond or Bonds, or any of them.
(d) To increase or decrease the penalty or penalties of any such Bond
or Bonds, to change the obligee or obligees therein, to execute any
continuations, enlargements, modifications and renewals thereof or
substitute therefore with the same or different conditions,
provisions and obligees, and with the same or larger or smaller
penalties, it being agreed that this instrument shall apply to and
cover such new or changed bonds or renewals even though the consent
of the Surety may or does substantially increase the liability of the
Contractor and the Undersigned and to take such steps as it may deem
necessary or proper to obtain release from liability under any such
Bond or Bonds.
All damage, loss or expense of any nature which the Surety may incur under
Section Ninth shall be borne by the Undersigned.
TENTH: The Surety shall have the exclusive right for itself and for the
Undersigned to decide and determine whether any claim, demand, suit or judgment
upon said Bond or Bonds shall, on the basis of liability, expediency or
otherwise, be paid, settled, defended or appealed, and its determination shall
be final, conclusive and binding upon the Undersigned; and any loss, costs,
charges, expense or liability thereby sustained or incurred, as well as any and
all disbursements on account of costs, expenses and attorneys' fees, deemed
necessary or advisable by the Surety, shall be borne and paid immediately by the
Undersigned, together with legal interest In the event of any payment settlement
compromise or investigation, an itemized statement of the payment loss, costs,
damages, expenses or attorneys' fees, sworn to by any officer of the Surety or
the voucher or vouchers or other evidence of such payment settlement or
compromise, shall be prima facie evidence of the fact and extent of the
liability of the Undersigned to the Surety in any claim or suit hereunder and in
any and all matters arising between the Undersigned and the Surety.
ELEVENTH: The Surety is further authorized and empowered to advance money or to
guarantee loans to the Contractor which the Surety may see fit to advance to
said Contractor for the purpose of any contract referred to in or guaranteed by
said Bond or Bonds; and all money so loaned or advanced and all costs,
attorneys' fees and expenses incurred by the Surety in relation thereto, unless
repaid with legal interest when due, shall be conclusively presumed to be a loss
by the Surety for which each and all of the Undersigned shall be responsible,
notwithstanding said money or any part thereof so loaned or advanced to the
Contractor for the purpose of any such contract should not be so used by the
Contractor. The Undersigned hereby waive all notice of such advance or loan, or
of any default or any other act or acts giving rise to any claim under any said
Bond or Bonds, and waive notice of any and all liability of the Surety under any
said Bond or Bonds or any and all liability on the part of the Undersigned to
the effect and end that each of the Undersigned shall be and continue liable to
the Surety hereunder notwithstanding any notice of any kind to which the
Undersigned might have been or be entitled and notwithstanding any defenses
which the Undersigned might have been or be entitled to make.
TWELFTH: No assent, assignment, change in time or manner of payment or other
change or extension in the terms of any Bond or of any contract referred to in
such Bond or in the general conditions, plans or specifications incorporated in
such contract granted or authorized by the Surety or the refusal to so grant or
authorize, shall release, discharge or in any manner whatsoever affect the
obligations assumed by the Undersigned in executing this Continuing Agreement of
Indemnity. This Agreement shall apply to any and all renewal, continuation or
substitution bonds executed by the Surety, The Surety shall not be required to
notify or obtain the approval or consent of the Undersigned prior to granting,
authorizing or executing any assent, assignment, change or extension. The Surety
shall have the absolute right to cancel any bond in accordance with any
cancellation provision contained therein and the Surety is hereby released from
any liability for expenses, costs, or damage alleged to be sustained by the
Undersigned by reason of such cancellation.
THIRTEENTH: Until the Surety shall have been furnished with competent legal
evidence of its discharge without loss from any and all Bonds, the Surety shall
have the right at all times to free access to the books, records and accounts of
each of the Undersigned for the purpose of examining the same. Each of the
Undersigned hereby authorizes and requests any and all depositories in which
funds of any of the Undersigned may be deposited to furnish to the Surety the
amount of such deposits as of any date requested and any person, firm or
corporation doing business with the Undersigned is hereby authorized to furnish
any information requested by the Surety concerning any transaction. The Surety
may furnish copies of any and all statements, agreements and financial
statements and any information which it now has or may hereafter obtain
concerning each of the Undersigned, to other persons or companies for the
purpose of procuring co-suretyship or reinsurance or of advising interested
persons or companies.
FOURTEENTH: Each of the Undersigned does hereby waive all right to claim any
property, including homestead as exempt from levy, execution, sale or other
legal process under the law of any state, province or other government as
against the rights of the Surety to proceed against the same for indemnity
hereunder.
FIFTEENTH: The Surety shall have every right and remedy which a personal surety
without compensation would have, including the right to secure its discharge
from the suretyship and nothing herein contained shall be considered or
construed to waive, abridge or diminish any right or remedy which the Surety
might have if this instrument were not executed. The Undersigned will, on
request of the Surety procure the discharge of the Surety from any Bonds, and
all liability by reason thereof. Separate suits may be brought hereunder as
causes of action may accrue, and the pendency or termination of any such suit
shall not bar any subsequent action. The Surety shall be notified immediately by
the Undersigned of any claim or action which may result in a claim against the
Surety, such notice to be given by registered mail to the Surety at its Home
Office. In the event of legal proceedings against the Surety, upon or on account
of any said Bond or Bonds, the Surety may apply for a court order making
any or all of the Undersigned parties defendants, and each Undersigned hereby
consents to the granting of such application and agrees to become such a party
defendant and to allow judgment in the event of judgment against the Surety,
to be rendered also against such Undersigned in like amount and in favor of
the Surety, if the Surety so desires.
<PAGE>
SIXTEENTH: The Surety reserves the right to decline to execute any such Bond;
and if it shall execute any proposal Bond, and if the Contractor is awarded the
contract, the Contractor shall not be obligated to obtain any Bond or Bonds
required by the contract from the Surety nor shall the Surety be obligated to
execute such Bond or Bonds.
SEVENTEENTH: This Agreement shall, in all its terms and agreements, be for the
benefit of and protect any person or company joining with the Surety in
executing said Bond or Bonds, or any of them, or executing at the request of the
surety said Bond or Bonds, or any of them as well as any company or companies
assuming co-suretyship or reinsurance thereon.
EIGHTEENTH: The Undersigned warrant that each of them is specifically and
beneficially interested in the obtaining of each Bond. Failure to execute, or
defective execution, by any party, shall not affect the validity of this
obligation as to any other party executing the same and each such other party
shall remain fully bound and liable hereunder. Invalidity of any portion or
provision of this Agreement by reason of the laws of any state or for any other
reason shall not render the other provisions or portions hereof invalid.
Execution of any application for any Bond by the Contractor, or of any other
indemnity agreement by any Undersigned for the Contractor shall in no way
abrogate, waive or diminish any rights of Surety under this Agreement. The
Undersigned acknowledge that the execution of this Agreement and the undertaking
of indemnity was not made in reliance upon any representation concerning the
financial responsibility of any Undersigned, or concerning the competence of the
Contractor to perform.
NINETEENTH: Each of the Undersigned expressly recognizes and covenants that this
Agreement is a continuing obligation applying to and indemnifying the Surety and
that the rights of Indemnification of each Surety signatory to this Agreement
shall be individual and not joint with those of the other signatory Sureties as
to any and all Bonds (whether or not covered by any application signed by
Contractor--such application to be considered between the parties hereto as
merely supplemental to this Continuing Agreement of Indemnity) heretofore or
hereafter executed by Surety on behalf of Contractor (whether contracting alone
or as a Co-venture) until this Agreement shall be canceled in the manner
hereinafter provided. Any of the Undersigned may notify the Surety(ies) at its
Head Office, of such Undersigned's withdrawal from this Agreement; such notice
shall be sent by certified or registered mail and shall state when, not less
than thirty days after receipt of such notice by the Surety, such withdrawal
shall be effective. Such Undersigned will not be liable under this Agreement
as to any Bonds executed by the Surety after the effective date of such
notice; provided, that as to any and all such Bonds executed or authorized by
the Surety prior to effective date of such notice and as to any and all
renewals, continuations and extensions thereof or substitutions therefore
(and, if a proposal or Bid Bond has been executed or authorized prior to such
effective date, as to any contract Bond executed pursuant thereto) regardless
of when the same are executed, such Undersigned shall be and remain fully
liable hereunder, as if said notice had not been served. Such withdrawal by
any Undersigned shall in no way affect the obligation of any other Undersigned
who has given no such notice of termination.
TWENTIETH: That this Agreement or a carbon, photographic, xerographic or other
reproduction or copy of this Agreement shall constitute a Security Agreement to
Surety and also a Financing Statement both in accordance with the provisions of
the Uniform Commercial Code of every jurisdiction wherein such Code is in
effect, but that the filing or recording of this Agreement shall be solely at
the option of Surety and that the failure to do so shall not release or impair
any of the obligations of the Undersigned under this Agreement or otherwise
arising, nor shall such failure be in any manner in derogation of the rights of
Surety under this Agreement or otherwise.
Signed, sealed, and dated this 19th day of March, 1998
Attest: ATG Inc.
_________________________________ (Seal) _____________________________ (Seal)
/s/ Doreen M. Chiu
_________________________________ (Seal) _____________________________ (Seal)
Steven J. Guerrettaz Doreen M. Chiu, President
/s/ Doreen M. Chiu
_________________________________ (Seal) _____________________________ (Seal)
Doreen M. Chiu, Individually
/s/ Frank Y. Chiu
_________________________________ (Seal) _____________________________ (Seal)
Frank Y. Chiu, Individually
_________________________________ (Seal) _____________________________ (Seal)
_________________________________ (Seal) _____________________________ (Seal)
_________________________________ (Seal) _____________________________ (Seal)
_________________________________ (Seal) _____________________________ (Seal)
_________________________________ (Seal) ____________________________________
Name of Surety(ies)
By:_________________________________
IMPORTANT: Print or type the name and address of each signatory to this
agreement. Each signature must be acknowledged - See REVERSE HEREOF.
<PAGE>
STATE OF CALIFORNIA
ss.
COUNTY OF ALAMEDA
On this 19th day of March, 1998, before me personally appeared Doreen M. Chiu
and Frank Y. Chiu to me known and known to me to be the individual(s) described
in and who executed the foregoing agreement and acknowledged that _____ he _____
executed the same for the purposes, considerations and uses therein set forth as
_____ h ____ free and voluntary act and deed.
/s/ Rudy Yeung
Notary Public, residing at Fremont, California
(Commission expires December 7, 1998)
RUDY YEUNG (SEAL)
STATE OF CALIFORNIA
ss.
COUNTY OF ALAMEDA
On this 19th day of March, 1998, before me personally appeared Doreen M. Chiu to
me known, who being by me duly sworn, did repose and say: that he resides in
47315 Fremont Blvd., Fremont, CA 94538 that he is the President of the ATG,
Inc., the corporation described in and which executed the foregoing instrument;
that he knows the seal of the said corporation; that the seal affixed to the
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name to the said
instrument by like order.
/s/ Rudy Yeung
Notary Public, residing at Fremont, California
(Commission expires December 7, 1998)
RUDY YEUNG (SEAL)
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT 16.1
LETTER REGARDING CHANGE IN INDEPENDENT ACCOUNTANTS
The Board of Directors
ATG Inc.
Fremont, California
Reference is made to the Registration Statement on Form S-1 (the
"Registration Statement") of ATG Inc. We hereby concur with the statements
contained in the Registration Statement under the caption "Experts" concerning
the change in the Company's independent certified public accountants.
Storek, Carlson & Strutz
Certified Public Accountants
March 28, 1998
San Jose, California
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Amendment No. 1 to the Registration
Statement on Form S-1 of our report, dated January 31, 1998, on our audits of
the consolidated financial statements of ATG Inc. and subsidiary. We also
consent to the references to our firm under the captions "Experts" and
"Selected Consolidated Financial Data."
Coopers & Lybrand L.L.P.
San Jose, California
March 30, 1998
<PAGE>
EXHIBIT 99.1
CONSENT OF DIRECTOR DESIGNEE
I, Andrew C. Kadak, hereby consent to being named as a director designee of
ATG Inc., a California corporation (the "Company"), in connection with the
filing with the Securities and Exchange Commission (the "Commission") of the
Company's Registration Statement on Form S-1, as may be amended from time to
time prior to being declared effective by the Commission (as amended, the
"Registration Statement"). I understand that the Registration Statement is
being filed with the Commission in connection with the initial public offering
of the Company's Common Stock.
Dated: March 27, 1998 /s/ Andrew C. Kadak
-----------------------------------
Andrew C. Kadak
<PAGE>
EXHIBIT 99.2
CONSENT OF DIRECTOR DESIGNEE
I, Earl E. Gjelde, hereby consent to being named as a director designee of
ATG Inc., a California corporation (the "Company"), in connection with the
filing with the Securities and Exchange Commission (the "Commission") of the
Company's Registration Statement on Form S-1, as may be amended from time to
time prior to being declared effective by the Commission (as amended, the
"Registration Statement"). I understand that the Registration Statement is
being filed with the Commission in connection with the initial public offering
of the Company's Common Stock.
Dated: March 27, 1998 /s/ Earl E. Gjelde
----------------------------------------
Earl E. Gjelde
<PAGE>
EXHIBIT 99.3
CONSENT OF DIRECTOR DESIGNEE
I, William M. Hewitt, hereby consent to being named as a director
designee of ATG Inc., a California corporation (the "Company"), in connection
with the filing with the Securities and Exchange Commission (the "Commission")
of the Company's Registration Statement on Form S-1, as may be amended from
time to time prior to being declared effective by the Commission (as amended,
the "Registration Statement"). I understand that the Registration Statement is
being filed with the Commission in connection with the initial public offering
of the Company's Common Stock.
Dated: March 27, 1998 /s/ William M. Hewitt
-----------------------------------
William M. Hewitt
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EXHIBIT 99.4
CONSENT OF DIRECTOR DESIGNEE
I, Steven J. Guerrettaz, hereby consent to being named as a director
designee of ATG Inc., a California corporation (the "Company"), in connection
with the filing with the Securities and Exchange Commission (the "Commission")
of the Company's Registration Statement on Form S-1, as may be amended from time
to time prior to being declared effective by the Commission (as amended, the
"Registration Statement"). I understand that the Registration Statement is
being filed with the Commission in connection with the initial public offering
of the Company's Common Stock.
Dated: March 27, 1998 /s/ Steven J. Guerrettaz
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Steven J. Guerrettaz
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EXHIBIT 99.5
CONSENT OF DIRECTOR DESIGNEE
I, Yasushi Chikagama, hereby consent to being named as a director designee
of ATG Inc., a California corporation (the "Company"), in connection with the
filing with the Securities and Exchange Commission (the "Commission") of the
Company's Registration Statement on Form S-1, as may be amended from time to
time prior to being declared effective by the Commission (as amended, the
"Registration Statement"). I understand that the Registration Statement is
being filed with the Commission in connection with the initial public offering
of the Company's Common Stock.
Dated: March 27, 1998 /s/ Yasushi Chikagama
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Yasushi Chikagama
