Exhibit 10.48

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

 

 

AGREEMENT FOR PURCHASE OF A

 

SUREBEAM X-RAY SYSTEM

 

 

BETWEEN

 

 

SUREBEAM CORPORATION

 

AND

 

SON SON CO., LTD.

 

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

 

TABLE OF CONTENTS

 

SECTION

 

1.

DEFINITIONS

 

 

2.

EQUIPMENT AND SERVICES FURNISHED BY SELLER

 

 

3.

BUYER FURNISHED ITEMS AND SERVICES

 

 

4.

TIME OF PERFORMANCE AND FORCE MAJEURE

 

 

5.

DELIVERY, INSTALLATION AND ACCEPTANCE TEST

 

 

6.

AGREEMENT PRICE AND TAXES

 

 

7.

PAYMENTS, SECURITY INTEREST AND BONDS

 

 

8.

WARRANTIES

 

 

9.

LIMITATION OF REMEDIES AND LIABILITIES

 

 

10.

CHANGES

 

 

11.

COMPLIANCE WITH LAWS AND BUYER’S RULES

 

 

12.

INSURANCE

 

 

13.

INDEMNIFICATION

 

 

14.

ACCESS

 

 

15.

TERMINATION FOR DEFAULT

 

 

16.

TERMINATION

 

 

17.

OWNERSHIP AND LICENSING OF TECHNOLOGY

 

 

18.

AMENDMENTS

 

 

19.

ASSIGNMENTS AND SUBCONTRACTS

 

 

20.

NOTICES

 

 

21.

MISCELLANEOUS

 

 

22.

CONFIDENTIAL INFORMATION

 

 

23.

ARBITRATION

 

 

 

EXHIBIT  A - SELLER’S PROPOSAL

 

EXHIBIT  B - IMPLEMENTATION MILESTONES

 

EXHIBIT  C - PAYMENT SCHEDULE

 

EXHIBIT  D - LICENSE AGREEMENT

 

 

 

2

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

 

AGREEMENT FOR PURCHASE OF A

SUREBEAM ELECTRON BEAM SYSTEM

BETWEEN

SUREBEAM CORPORATION

AND

SON SON CO., LTD.

 

This Agreement, effective March 27, 2002 (“Effective Date”) is between SureBeam
Corporation, a Delaware corporation with a principal place of business at 9276
Scranton Road, Suite 600, San Diego, CA 92121, (“Seller”), and Son Son Co.,
Ltd., a company incorporated under the laws of the Socialist Republic of
Vietnam, with offices at […***…]("Buyer").

 

This Agreement is contingent upon Buyer opening a Letter of Credit with an
effective date on or before June 24, 2002.  If Letter of Credit is denied or
delayed beyond June 24, 2002, then Buyer or Seller may terminate the Agreement
as defined in Section 16 Termination.  Seller will not be authorized to proceed
with the work until Buyer obtains Government approval.

 

1.             DEFINITIONS

 

1.1                 “Acceptance” means the customer’s actual or deemed
acceptance of the Deliverables under paragraph 5.0 (“Delivery, Installation and
Acceptance Test”).

 

1.2                 “Agreement” means this document, the statement of work, and
the accompanying specifications and any exhibits including Seller’s Proposal as
set forth in Exhibit A, that constitutes the entire Agreement between the
parties and supersedes all other representations, understandings or
communications, whether written or verbal, with respect to the subject matter
hereof.  This Agreement is expressly limited to its terms and purchase order. 
The provisions of any of Buyer’s purchase order, invoice or similar
documentation are specifically rejected and shall have no effect.  Any
amendment, modification or waiver of this Agreement, or any part hereof, shall
be binding upon Seller only if designated as an amendment to this Agreement and
signed by a representative of the Seller specifically authorized to execute such
binding amendments.  Waiver of any provision of this Agreement in one instance
shall not preclude future enforcement of it in future situations.

 

1.3                 “Agreement Price” means the System Price and the Royalty
Fee.

 

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

*CONFIDENTIAL TREATMENT REQUESTED

 

3

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

 

1.4                 “Deliverables” means all equipment, products, software,
services, installation, documentation, and training, provided under this
Agreement by or through the Seller, as defined in the Proposal.

 

1.5                 “Facility” or “Facilities” refers to the collective
equipment, construction activities, and services required to support the
operation of the System, and includes electrical power, water cooling (primary),
compressed air, heating, ventilation, ozone ventilation, air conditioning,
radiation protection shield, fencing, building structure, lights, storage areas,
and finishes.

 

1.6                 “Information and Control” refers to the controls equipment
provided by Seller to monitor, control, and display the operating performance of
the System as defined in the Proposal. This equipment includes the SureTrack
control system.

 

1.7                 “LINAC” refers to the linear accelerator equipment provided
by Seller as defined in the “Proposal”. This equipment includes the accelerator,
closed loop water-cooling equipment, air blower for window cooling, AC power
distribution, beam stop and associated controls.

 

1.8                 “Material Handling” refers to the material handling
equipment provided by Seller as defined in the Proposal.  This equipment
includes the conveyor, closing conveyor, process conveyor and associated
controls.

 

1.9                 “Products” means the Buyer’s products that are to be
processed in the System. Products and the associated processing volumes and dose
requirements are defined in the Proposal.

 

1.10              “Project” refers to the electron beam System project as
described in the Proposal, which will be installed at Buyer’s Ho Chi Minh City,
cold storage facility.

 

1.11              “Proposal” refers to Seller’s Proposal, which defines Seller’s
responsibilities, scope-of-work, deliverables, and equipment.  Refer to Exhibit
A.

 

1.12              Royalty Fee means the royalty fee specified in Exhibit C2.

 

1.13              “Safety” refers to the equipment provided by Seller to
monitor, control, and display the safety conditions of the System as defined in
the Proposal. This equipment includes operating status indicators, alarms,
beacons, intrusion detection, and smoke detection equipment.

 

4

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

 

1.14              “Site” refers to the dedicated location where the System will
be constructed, at Buyer’s Ho Chi Minh City cold storage facility.

 

1.15              “Substantial Functionality” of a Deliverable means it operates
substantially in acceptance within the specifications, or performance criteria
as defined in the Proposal.

 

1.16              “System” refers to the collective equipment provided by Buyer
and Seller described in the Proposal, which is required to electron beam process
the Products.

 

1.17              “System Price” means the price for Seller to provide the
Deliverables.

 

1.18              “Warranty Period” means the 12-month period commencing upon
Acceptance of the Deliverables.

 

 

2.             EQUIPMENT AND SERVICES FURNISHED BY SELLER

 

2.1                                 Seller shall furnish to Buyer the machines,
equipment, and accessories (Deliverables) as defined in Seller’s Proposal,
Exhibit A, Item 1, “System Equipment and Deliverables,” (excluding items
identified as Buyer furnished items), which include:

 

•       Material Handling Subsystem

•       LINAC Subsystem

•       Information and Control Subsystem

•       Safety Subsystem

 

2.2                 Seller shall furnish to Buyer the services as defined in
Seller’s Proposal, which include:

 

•                  Program Management

•                  Operating Manuals & Procedures

•                  Operations & Maintenance Training

•                  Construction Drawings and Bill of Materials

•                  Maintenance & Troubleshooting Guides

•                  Installation, Testing & Start-up Services

 

2.3                                 Seller shall furnish to Buyer support
services to assist Buyer with Buyer’s tasks defined in the Proposal.

 

5

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

 

3.             BUYER FURNISHED ITEMS AND SERVICES

 

3.1                                 Buyer shall furnish the following at its own
expense, as defined in Seller’s Proposal, Exhibit A, Item 2, “Son Son Co., Ltd.,
Furnished Items and Services”:

 

3.1.1                                    Design, specification, testing and
development of the Product.

 

3.1.2                                    Determination of the Product processing
requirements (including Product dose, and packaging).

 

3.1.4                                    Design and construction of the
Facilities required to support the operation of the System, as defined in the
Proposal, and other tasks identified as Buyer’s responsibility.

 

3.1.5                                    Definition and implementation of the
procedures required to operate the System (including operating methods, safety
procedures, QA and operator work tasks).

 

3.1.6                                    Management of the overall Project
(including scheduling, budget definition and allocation, requirements
definition, review and approval of the work tasks, and Product Qualification).

 

3.2           Buyer shall provide the following items, equipment, and services:

 

3.2.1                                    Refer to the Proposal for a definition
of Buyer furnished items, equipment, and services.

 

3.2.2                                    Items shall be provided to Seller (as
required to perform the work) during the execution of this Agreement, at no cost
to Seller.

 

3.2.3                                    SureBeam’s work, cost, and schedule are
predicated upon Buyer providing these items in accordance with the schedule
defined in the Proposal.

 

4.             TIME OF PERFORMANCE AND FORCE MAJEURE

 

4.1                                 Performance under this Agreement by Seller
and Buyer shall be in accordance with the project schedule defined in the
Proposal, and the milestones set forth in Exhibit B.

 

4.2                 Periodically, Seller shall provide Buyer with a written
status report on the progress of the work.  This report shall summarize the
progress achieved, identify any anticipated delays in the performance of this
Agreement and highlight future schedule milestones.

 

6

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

 

4.3                                 If Buyer does not meet one or more Buyer
Milestones as defined in Exhibit B, Seller’s work, schedule and cost may be
adjusted accordingly as provided for in Section 10.0 Changes.

 

4.4                                 Neither Seller nor Buyer shall be liable for
delivery by it of any item on any specific date to the extent such delivery is
delayed for causes beyond its control, such as acts of God or the public enemy,
governmental orders or restrictions, fires, extremely severe weather, floods,
earthquakes, material shortages, strikes or other work stoppages, accidents,
catastrophes, war conditions, riot or civil commotion, labor disputes,
embargoes, or other actions or inaction by the other, which render performance
or timely delivery extremely difficult or impossible.  Provided however, the
delayed party shall not be excused for any such delay unless it furnished the
other party with written notice of the cause and likely extent of the delay
within fifteen (15) days after the delayed party becomes aware of the events
causing the delay.  Also, the delayed party shall be responsible for using its
best efforts to mitigate the delay and shall not be excused for any delay that
could have been avoided by the exercise of such efforts.

 

5.             DELIVERY, INSTALLATION AND ACCEPTANCE TEST

 

5.1                                 Seller shall properly package the System,
for shipment C.I.F. Buyer’s Port of destination, Ho Chih Minh City, Vietnam, at
which time “Risk of Loss” shall pass from Seller to Buyer.

 

5.2                                 After the equipment is received at Buyer’s
designated facility, Seller will supply qualified personnel to inspect and
install the System. Buyer shall provide reasonable access to its premises,
proper environmental and site conditions, and the full and complete cooperation
of its staff and any other contractors to assist Seller during installation and
testing of deliverables. During this start-up period, an acceptance test
(“Acceptance Test”) shall be performed by Seller in the presence of Buyer’s
personnel. To pass the test, the System must meet the applicable requirements
under this Agreement, as defined in the Proposal. When the System passes the
Acceptance Test, and all items and services to be furnished by Seller under
Section 2.0 and the exhibits of this Agreement are so furnished, then the System
shall be considered completed and fully accepted by Buyer (“Acceptance”).
On-site acceptance testing shall be conducted by reference to a written “test
procedure” approved by the Seller and Buyer in advance of the commencement of
such testing. Buyer shall provide to Seller contemporaneous “sign-offs” as each
function on the test procedure is demonstrated by the Seller. Except for losses
to the System covered under Seller’s warranty and indemnification obligations
under this Agreement, risk of

 

7

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

 

loss to the System shall pass from Seller to Buyer in accordance with the terms
of shipment.

 

 

6.             AGREEMENT PRICE AND TAXES

 

6.1                                 Seller shall furnish the System and all
documents, services, and other items required under this Agreement and shall
meet all its other obligations under this Agreement for the sum of US$
5,250,000.00 (Five Million Two Hundred and Fifty Thousand US Dollars), the
“System Price” and a Royalty Fee of […***…].

 

 

7.             PAYMENTS, SECURITY INTEREST AND BONDS

 

7.1                                 The System Price set forth in Section 6.0
(“Agreement Price and Taxes”) shall be due Seller according to the schedule set
forth in Exhibit C.  Payment shall be made by Buyer no later than the 10th day
of the month following the month such milestone is invoiced by Seller. The
entire System Price shall be secured by an irrevocable Letter of Credit in a
form acceptable to both Parties. Cost of the Letter of Credit shall be paid by
Buyer. Buyer may not withhold or “set-off” any amounts due hereunder and Seller
reserves the right to cease work without prejudice if amounts are not paid when
due. Seller retains a purchase money security interest and the right to assert
appropriate liens with respect to all deliverables until all amounts due are
paid in full. Any late payment shall be subject to any cost of collection
(including reasonable legal fees) and shall bear interest at the rate of one and
one-half (1.5%) percent per month, until paid.

 

7.2                                 Buyer shall have a security interest in the
System to secure any payments made by Buyer to Seller prior to the transfer to
Buyer of title to the System. Seller authorizes Buyer to prepare, sign on
Seller’s behalf, and file all necessary financing statements (UCC-1 forms) to
perfect this security interest.

 

 

8.             WARRANTIES

 

8.1                                 During the Warranty Period, as defined
below, Seller warrants that equipment provided by Seller is:

 

8.1.1                        Free from defects in design, materials, and
workmanship.

8.1.2                        In compliance with the specifications set forth in
the Proposal.

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

8

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

 

8.1.3                        Free from all security interests, and title to
system is good and transferable to Buyer.

 

8.2                                 The Warranty Period shall start with the
substantial completion of the System Acceptance Test or beneficial use by Buyer,
whichever occurs first, and shall continue for 12 months.  If the System
Acceptance Test cannot be completed because of reasons beyond Seller’s control
or responsibilities, then the Warranty Period will commence immediately and
extend for 12 months.

 

8.3                                 Seller’s total liability for breach of
warranty shall be limited to the following:

 

8.3.1                        Equipment manufactured by Seller — repair or
replacement, at Seller’s option, of defective components that have been
manufactured by Seller.  Parts only — labor to install, test, or calibrate
provided by Buyer.

8.3.2                        Equipment not manufactured by Seller —
manufacturers pass through warranty.

8.3.3                        Software developed by Seller — for defects that can
be specifically traced to Seller’s software, Seller will repair the defect.

8.3.4                        Software not developed by Seller — developer’s pass
through warranty.

8.3.5                        Exclusions:

•                  Items that have been damaged because of improper use,
maintenance, handling or operation.

•                  Items that are replaced during normal preventative
maintenance.

•                  Consumables or items with a value less than $250 (IC chips,
resistors, light bulbs, gaskets, oil, limit switches, actuator brackets, etc.).

8.3.6                        Nonconforming components shall be returned to
Seller for repair or replacement at Seller’s option.

 

8.4                                 System Performance Warranty - Seller
represents and warrants that during the Warranty Period, the Deliverables shall
operate at a level of Substantial Functionality as defined in the Proposal if
the System is properly operated, maintained, and used as defined in Seller’s
Proposal, final documentation, and maintenance instructions.  The foregoing
warranty is subject to the following conditions: (i) all Deliverables are
installed, and implemented by Seller or the applicable vendor;  (ii) Buyer
notifies Seller of any defect within ten (10) calendar days after the appearance
thereof and provides supporting data according to Seller’s standard “trouble
report” procedures; (iii) Buyer has properly installed and paid all applicable
fees for all updates made available with respect to Deliverables and any updates
recommended by Seller with respect to any other equipment or software that
materially affects the performance of the Deliverable; (iv) Buyer has properly
installed, maintained and operated all associated equipment, software and has
maintained all environmental conditions in

 

9

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

 

accordance with applicable specifications and industry standards; (v) Buyer has
not introduced other equipment or software, or made changes to the system, that
create an adverse impact on the Deliverables; (vi) Buyer has paid all amounts
due hereunder and is not in default of any provision of this Agreement; (vii)
any functional or technical design of the system provided by or approved by
Buyer is an accurate and complete rendering of the system, applicable interfaces
and associated operating environment, and (viii) Buyer has made no changes (nor
permitted any changes to be made other than by or with the express approval of
Seller) to the System or to the source code of any Deliverable.  ANY
UNAUTHORIZED CHANGES TO THE SYSTEM OR TO THE SOURCE CODE OF ANY DELIVERABLE WILL
VOID THE WARRANTY PROVIDED UNDER THIS SUBSECTION.

 

8.5                                 Warranty Disclaimer - EXCEPT AS SPECIFICALLY
PROVIDED IN THIS SECTION (“WARRANTIES”) THE SELLER HEREBY DISCLAIMS WITH RESPECT
TO ALL DELIVERABLES PROVIDED HEREUNDER, ALL EXPRESS AND IMPLIED WARRANTIES,
INCLUDING ANY IMPLIED WARRANTIES OF MERCHANT-ABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE.  SUREBEAM REPRESENTS AND WARRANTS THAT NONE OF THE THIRD
PARTY SOFTWARE PRODUCTS, STANDARD SOFTWARE PRODUCTS, CUSTOM WORK PRODUCT,
EMBEDDED SOFTWARE OR OTHER DELIVERABLES PROVIDED HEREUNDER CONSTITUTE “CONSUMER
PRODUCTS” WITHIN THE MEANING OF THE MAGNUSON-MOSS WARRANTY ACT AND THAT IF ANY
WARRANTY IS NEVERTHELESS IMPOSED UNDER THAT ACT IT SHALL BE LIMITED TO A PERIOD
OF THIRTY (30) DAYS FROM THE DATE OF DELIVERY.

 

8.6                                 Disclaimer Regarding Governmental Laws and
Regulations - THE PARTIES HEREBY AGREE THAT, TO THE EXTENT ANY DELIVERABLE
HEREUNDER IS USED FOR THE PURPOSE OF GENERATING OUTPUT USED IN COMPLYING WITH
GOVERNMENTAL LAWS AND REGULATIONS (INCLUDING TAX LAWS AND REGULATIONS), BUYER
SHALL ASSUME ALL RESPONSIBILITY FOR COMPLIANCE WITH ANY SUCH GOVERNMENTAL LAWS
AND REGULATIONS.

 

 

9.             LIMITATION OF REMEDIES AND LIABILITIES

 

The parties acknowledge that the following provisions have been negotiated by
them and reflect a fair allocation of risk:

 

9.1           Remedies - Except for certain injunctive relief authorized under
Section 22.0 (“Confidential Information”), Buyer’s sole and exclusive remedies
for Seller’s default hereunder shall be (i) to obtain the repair, replacement or
correction of

 

10

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

 

the defective Deliverable or, if Seller reasonably determines that such remedy
is not economically or technically feasible, (ii) to obtain in accordance with
the specific provisions of this Agreement an equitable partial refund of amounts
paid with respect to the defective Deliverable.

 

9.2                                 Liabilities - EXCEPT FOR DAMAGES ARISING
FROM BODILY INJURY CAUSED SOLELY BY THE NEGLIGENCE OF SELLER, SELLER SHALL NOT
BE LIABLE FOR ANY AMOUNT EXCEEDING THE PORTION OF THE TOTAL CONTRACT PRICE
ACTUALLY PAID BY BUYER.  IN NO EVENT SHALL SELLER BE LIABLE, WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFIT OR
BUSINESS INTERRUPTION) EVEN IF SELLER IS NOTIFIED IN ADVANCE OF SUCH POSSIBILITY
ARISING OUT OF OR PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT.

 

 

10.          CHANGES

 

10.1                           Changes in the Agreement Price or performance
schedule may result from changes in the requirements for the System or in other
related items of Seller’s work ordered in writing by Buyer.  Extensions of one
or more deadlines in the performance schedule may result from an excusable delay
authorized pursuant to the terms of Section 4.3.  Each such change in time or
price shall be determined by mutual agreement of the parties and confirmed in an
amendment to this Agreement, which conforms to the requirements of Section 18.0
Amendments, prior to implementation of any such changes.

 

 

11.          COMPLIANCE WITH BUYER’S RULES

 

11.1                           During the performance of services at Buyer’s
facilities, Seller’s personnel and others acting on Seller’s behalf shall comply
with Buyer’s rules, specifications, guidelines, policies and customary practices
regarding safety, security, sanitation and other contractor and personnel
activities provided Seller has been informed in advance of such rules,
specifications, guidelines, policies and practices.

 

 

12.          INSURANCE

 

12.1                           Seller shall obtain, pay for, and maintain the
following insurance covering the performance of work under this Agreement:

 

12.1.1                       Comprehensive General Liability Insurance for each
occurrence of bodily injury and property damage, in an amount of not less than
One Million US Dollars (US$1,000,000.00) combined single limit, for each
occurrence of

 

11

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

 

bodily injury and property damage, covering Buyer as an additional insured and
containing endorsements providing coverage for the following:

 

•       Personal Injury Liability;

•       Premises - Operations Liability, including “XCU” coverage;

•       Blanket Contractual Liability; and

•      Broad Form Property Damage

 

12.1.2                       Comprehensive Automobile Liability Insurance for
owned, hired, and non–owned motor vehicles, if any, used for the performance of
the services under this Agreement.  This insurance shall have the same minimum
coverage limits as specified above the Comprehensive General Liability
Insurance.

 

12.1.3                       Worker’s Compensation Insurance, Occupational
Disease Insurance, and Disability Benefits Insurance, in accordance with
applicable statutory requirements.

 

12.1.4                       Employers’ Liability Insurance in an amount not
less than Five Hundred Thousand US Dollars (US$500,000).

 

12.1.5                       All Risk Installation Floater Property Insurance
covering properly damage arising out of the installation, assembly, and testing
of the System at Buyer’s designated facility prior to Final Acceptance.

 

12.2                           The insurance specified above shall cover all
work to be provided under this Agreement by Seller and all of its agents,
employees, representatives, and subcontractors.

 

12.3                           Prior to Seller’s commencement of any services on
Buyer’s premises, Seller shall furnish valid certificates of insurance to Buyer
showing that Seller has obtained insurance coverage as required under this
Section 12.0 (“Insurance”).  The certificate required for the insurance under
Section 12.1.1 shall specifically reference the endorsements required.  The
insurance policies and certificates shall also state that at least thirty (30)
days’ written notice shall be provided to Buyer prior to any cancellation,
expiration, non­renewal or material change in the insurance coverage which
occurs during the term of this Agreement.

 

 

13.          INDEMNIFICATION

 

13.1                           Buyer shall indemnify and hold Seller harmless
and will, upon request, defend Seller against all actions, proceedings, claims,
demands, suits, outlays,

 

12

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

 

damages or expenses, including reasonable attorneys’ fees and other costs that
may be assessed against Seller, arising out of the negligent acts or omissions
of Buyer, its representatives, agents or employees.

 

13.2                           Seller shall indemnify and hold Buyer harmless
and will, upon request, defend Buyer against all actions, proceedings, claims,
demands, suits, outlays, damages, or expenses, including reasonable attorneys
fees and other costs that may be assessed against Buyer arising out of the
negligent acts or omissions of Seller, its representatives, agents or employees.

 

 

14.          ACCESS

 

14.1                           Seller shall furnish or arrange Buyer’s
reasonable access to the System and its components at the site of their
manufacture and storage.  Buyer shall furnish or arrange Seller’s reasonable
access to the System during and after installation at Buyer’s Site.

 

 

15.          TERMINATION FOR DEFAULT

 

15.1                           Either party may be declared in default of this
Agreement if it breaches any material provision hereof and fails within ten (10)
days after receipt of notice of default to correct such default or to commence
corrective action reasonably acceptable to the other party and proceed with due
diligence to completion.  Either party shall be in default hereof if it becomes
insolvent, makes an assignment for the benefit of creditors, a receiver is
appointed or a petition for bankruptcy is filed with respect to it and such
proceeding is not dismissed within thirty (30) days.  Any notice of default
shall be sent in accordance with Section 21.0 (“Notices”) and shall identify the
contract provision at issue and describe in reasonable factual detail how the
other party has materially violated the provision.  If timely corrective action
is not forthcoming, the aggrieved party may then terminate the Agreement
pursuant to Section 16.0 (“Termination”) and pursue all other available
remedies.

 

 

16.          TERMINATION

 

16.1                           This Agreement shall terminate when the term, as
defined in the Proposal, expires or, if earlier, upon one party’s giving written
notice of termination after following the procedures in Section 15.0
(Termination for Default).  In addition, Buyer may terminate this Agreement for
its convenience and without cause upon thirty (30) days notice and payment to
Seller in accordance with Section 7.0 (Payments, Security Interest and Bonds),
of an equitable portion of the Agreement Price to reflect partial completion of
the project and financial commitments made by Seller.  Termination shall have no
effect upon the parties’

 

13

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

 

rights and obligations:  (i) under Section 22.0 Confidential Information, or
(ii) under Section 17.0 Ownership and Licensing of Technology, so long as Buyer
has paid all amounts due with respect to such technology and is otherwise not in
default of any provision of Section 15.0 Termination for Default.

 

 

17.          OWNERSHIP AND LICENSING OF TECHNOLOGY

 

17.1                           Third Party Software Products - In the case of
third party software products, Buyer hereby agrees to be bound and governed by
the terms and conditions of the original vendor’s license agreement accompanying
such products or, if no such license agreement is included, by the vendor’s
standard license terms generally applicable to the particular product.

 

17.2                           Seller’s System Deliverables - Seller agrees to
license, under the License Agreement attached in Exhibit D, the use of its
System Deliverables to Buyer for a single use license at the defined Site.
Seller will at all times maintain ownership of all licensable Deliverables and
derivative works. Buyer will not copy, use, or distribute the licensed
Deliverables for any purpose except as required to operate and maintain the
System at the Site without Seller’s explicit written approval.

 

 

18.          AMENDMENTS

 

18.1                           This Agreement represents the entire agreement
between Buyer and Seller concerning the purchase of the System and items
relating to it and supersedes all prior negotiations, representations, and
agreements, whether written or oral.

 

18.2                           This Agreement, including the attachments to it,
may be amended or modified only by a written instrument signed by an authorized
representative of each party.

 

 

19.          ASSIGNMENTS AND SUBCONTRACTS

 

19.1                           Neither party shall assign this Agreement without
the written consent of the other, except that each party may assign it to any of
such party’s subsidiaries, affiliates, or other related companies without the
consent of the other party.  Seller shall not assign any money due or to become
due it under this Agreement without the prior written consent of Buyer and any
such assignment to the contrary shall be void.

 

14

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

 

 

20.          NOTICES

 

20.1                           All notices to be given to Buyer shall be
sufficient if delivered personally to the Buyer’s representatives indicated
below or sent to the representative by telegram, telex, fax, or express or
regular mail, postage prepaid, at the following address:

 

Son Son Co., Ltd.

[…***…]

 

 

with copies of correspondence to:

 

ANLAC Co. Ltd.

[…***…]

 

20.2                           All notices to be given to Seller shall be
sufficient if delivered personally to the Seller’s representative indicated
below or sent to the representative by telegram, telex, fax or express or
regular mail, postage prepaid, at the following address:

 

Seller:

 

SureBeam Corporation

Attn:  Martha M. Cashman

9276 Scranton Rd., Suite 600

San Diego, CA 92121

 

with copies of correspondence to:

 

SureBeam Corporation

Attn:   Thomas Allen

9276 Scranton Road, Suite 600

San Diego, CA 92121

 

20.3         A divisional or corporate office of a party may change that party’s
designated representative under this Section 21.0 Notices, by serving proper
notice of the change to the other party.

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

15

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

 

21           MISCELLANEOUS

 

21.1                           Except where remedies are designated under this
Agreement as exclusive, the remedies and rights available under this Agreement
and the duties and obligations imposed by it shall be in addition to, and not a
limitation of, the remedies, rights, duties, and obligations otherwise available
or imposed by law.

 

21.2                           No action or failure to act by Buyer or Seller
shall constitute a waiver of any right or duty afforded either of them under
this Agreement nor shall any such action or failure to act constitute an
approval of, or acquiescence in, any breach under this Agreement, except as may
be specifically agreed in writing.

 

21.3                           If any provision of this Agreement or any remedy
provided in it is declared invalid, illegal, or unenforceable under law such
provision shall be deemed omitted from this Agreement the remaining provisions
shall continue in full effect.

 

21.4                           The following sections of this Agreement shall
survive the completion or termination of Seller’s work under this Agreement
13.0, 17.0 and 22.0.

 

21.5                           Independent Contractor Status - Each party and
its people are independent contractors in relation to the other party with
respect to all matters arising under this Agreement.  Nothing herein shall be
deemed to establish a partnership, joint venture, association or employment
relationship between the parties.  Each party shall remain responsible for and
shall indemnify and hold harmless the other party for the withholding and
payment of all federal, state and local personal income, wage, earnings,
occupation, social security, unemployment, sickness and disability insurance
taxes, payroll levies or employee benefit requirements (under ERISA, state law
or otherwise) now existing or hereafter enacted and attributable to themselves
and their respective people.

 

21.6              Non-solicitation - During the term of this Agreement and for a
period of one (1) year thereafter, Buyer and Seller agree not to hire, solicit,
nor attempt to solicit, the services of any employee or subcontractor of Buyer
or Seller without the prior written consent of Buyer or Seller.

 

21.7              Compliance with Export Regulations. Buyer has, or shall obtain
in a timely manner, all necessary or appropriate licenses, permits or other
governmental authorizations or approvals; shall indemnify and hold Seller
harmless from, and bear all expense of, complying with all foreign or domestic
laws, regulations or requirements pertaining to the importation, exportation, or
use of the technology to be developed or provided herein. Buyer shall take no
action, nor omit to take

 

16

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

 

any required action, which would cause either party to violate the Foreign
Corrupt Practices Act of 1977 or the U.S. Export Administration Regulations.

 

21.8              The Agreement, including any change orders thereto, takes
priority over any other document. In the event of a conflict in any document
referred to in this Agreement, the later version of any document takes
precedence over the earlier document.

 

21.9              All Agreement Deliverables will be provided in the English
language. Any translations required will be provided by Buyer at Buyer’s
expense.

 

 

22           CONFIDENTIAL INFORMATION

 

22.1                           Acknowledgment of Confidentiality - Each party
hereby acknowledges that it may be exposed to confidential and proprietary
information of the other party including, without limitation, the System and
Deliverables and other technical information (including functional and technical
specifications, designs, drawings, analysis, research, processes, computer
programs, algorithms, methods, ideas, “know how” and the like) business
information (sales and marketing research, materials, plans, accounting and
financial information, personnel records and the like) and other information
that has been clearly designated in writing as confidential (“Confidential
Information”).  Confidential Information does not include (i) information
already known or independently developed by the recipient; (ii) information in
the public domain through no wrongful act of the recipient, or (iii) information
received by the recipient from a third party who was free to disclose it.

 

22.2                           Covenant Not to Disclose - With respect to the
other party’s Confidential Information, the recipient hereby agrees that during
the Term and at all times thereafter it shall not use, commercialize or disclose
such Confidential Information to any person or entity, except to its own
employees having a “need to know” (and who are themselves bound by similar
nondisclosure restrictions), and to such other recipients as the other party may
approve in a signed writing; provided that all such recipients shall have first
executed a confidentiality agreement in a form acceptable to the owner of such
information.  Each party shall use at least the same degree of care in
safeguarding the other party’s Confidential Information as it uses in
safeguarding its own confidential information.  Neither party nor any recipient
may alter or remove from any software or associated documentation owned or
provided by the other party hereunder, any proprietary, copyright, trademark or
trade secret legend, nor may it attempt to decompile or reverse engineer the
System.  The provisions of this Section 22.0 (“Confidential Information”) shall
survive termination of this Agreement.

 

17

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

 

22.3                           Remedies for Breach of Confidentiality - Each
party acknowledges that the unauthorized use, commercialization or disclosure of
the other party’s Confidential Information would cause irreparable harm to such
other party.  The parties acknowledge that remedies at law would be inadequate
to redress the actual or threatened unauthorized use, commercialization or
disclosure of such Confidential Information and that the foregoing restrictions
may be enforced by temporary and permanent injunctive relief.  In addition, any
award of injunctive relief shall include recovery of associated costs and
expenses (including reasonable attorneys’ fees).

 

 

23.          ARBITRATION

 

23.1         The parties hereby submit all controversies, claims and matters of
difference arising out of or relating to this Agreement, or the breach thereof,
to arbitration in San Diego, California, USA, according to the rules and
practices of the American Arbitration Association from time to time in force. 
This submission and agreement to arbitrate shall be specifically enforceable. 
Without limiting the generality of the foregoing, the controversies to be
arbitrated hereunder include all questions as to whether the right to arbitrate
any question exists.  A panel of three arbitrators shall conduct the arbitration
unless otherwise agreed, and the decision of the majority thereof shall be the
decision of the panel.  One arbitrator shall be selected by each party, and the
two so selected shall select a third arbitrator.  Arbitration may proceed in the
absence of any party if notice of the proceedings has been given to such party. 
The parties agree to abide by all awards rendered in such proceedings.  Such
awards shall be final and binding on all parties to the extent and in the manner
provided by the California Rules of Civil Procedure.  All awards may be filed
with the Clerk of the District Court for the County of San Diego, California,
USA, as a basis of declaratory or other judgment and, at the election of the
party making such filing, with the clerk of one or more courts, state or
federal, having jurisdiction over the party against whom such an award is
rendered or its property.  The prevailing party shall be awarded its costs,
expenses and fees’, including reasonable attorneys’ fees, and the panel is
hereby authorized to apportion such fees, costs and expenses in the event it
deems it fair and equitable to do so.

 

18

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

 

This Agreement shall be governed by the laws of the State of California, United
States of America.

 

 

Agreed,

 

SON SON CO., LTD.

SUREBEAM CORPORATION

 

 

 

 

 

 

 

 

Signed:

/s/ Tram Be

 

Signed:

/s/ Larry Oberkfell

 

 

 

 

 

Name:

Mr. Trâm Bê

Name:

Mr. Larry Oberkfell

 

 

 

 

Title:

President

Title:

President & CEO

 

 

 

 

Date:

6/17/2002

Date:

6/11/2002

 

 

 

Witnessed by:

 

 

  /s/ William Hsu

 

 

William Hsu

 

19

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

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

 

EXHIBIT A

SELLER’S PROPOSAL

 

 

SUREBEAM PROPOSAL # P###-##-####.A1

FOR A

SUREBEAM  X-RAY PASTEURIZATION SYSTEM

 

 

Prepared for:

 

SON SON CO., LTD.

 

Ho Chi Minh City, Vietnam

 

 

February 9, 2002

 

 

Submitted by:

SureBeam Corporation

9276 Scranton Road, Suite 600

San Diego, CA  92121

 

 

This document contains SureBeam Proprietary Information to be used solely for
evaluating this Proposal and may not be disclosed to any outside 3rd party.

 

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

 

February 9, 2002

 

 

Mr. Trâm Bê

Son Son Co., Ltd.

[…***…]

 

 

Subject:                                                   SureBeam Proposal
#P###-##-####.A1

SureBeam X-Ray Pasteurization System

 

 

Dear Mr. Bê:

 

Thank you for the opportunity to work with Son Son Co., Ltd., to develop a
SureBeam Proposal (#P###-##-####.A1) for the implementation of a SureBeam
On-Siteâ System to electronically pasteurize food products at your processing
facility in Ho Chi Minh City, Vietnam.

 

Purpose of the Proposal

 

This proposal defines our recommendations to effectively implement x-ray
pasteurization technology at the Son Son Co., Ltd., Vietnam facility, to meet
the following objectives:

 

ý      Eliminate Potential Pathogens

ý      Minimize the Processing Cost per Pound

ý      Meet  Processing Requirements (Volume, Dose, etc.)

ý      Achieve System Availability > 95%

ý      Minimize Capital Expenditures

ý      Minimize Logistics Expenses

 

The purpose of this Proposal is to provide Son Son Co., Ltd. (hereto referred to
as “Buyer”), with a price, schedule, and scope-of-work for a SureBeam System to
meet Buyer’s requirements for processing shrimp, fish, and frog legs and other
food products. At this point in time, a specific site has not been selected and
hence the recommended concept has not been tailored to site-specific conditions.
In addition, the specific processing requirements for individual products have
not been defined. Once these items

 

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

*CONFIDENTIAL TREATMENT REQUESTED

 

 

 

2

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

 

have been defined, this Proposal will become the basis for continued discussions
to refine the concept to achieve the “best processing concept.”

 

Requirements Definition

 

The Buyer’s requirements to be addressed by the System include the following key
points:

 

•                  Integrate the x-ray process directly into the distribution
and cold storage operations.

 

•                  […***…]

 

•                  Deliver an average treatment dose of 1.0 - 1.50 kGy, and
maintain the overall Max/Min ratio <1.8. A higher Max/Min ratio (>1.8) may be
acceptable to some products depending on specific test results.

 

•                  Meet the required quality, process integrity, and regulatory
requirements defined by Buyer, ISO-11137, and USDA guidelines.

 

•                  Develop an operating concept that meets the production,
processing, and operating requirements defined in this Proposal.

 

•                  Integrate the equipment subsystems, procedures, and process
into an overall operating “System”, which will meet the performance
requirements.

 

•                  Define a System concept that provides > 95% system
availability, and maintains the overall integrity, safety and security of the
process at 100%.

 

•                  Provide on-site maintenance and operations support.

 

•                  Guarantee the performance of the system.

 

Proposal Summary

 

To meet Buyer’s requirements, we are proposing to implement a SureBeamÒ X-Ray
Pasteurization System (see attached system isometrics and layout drawings) using
our x-ray technology and patented system concepts. The system design is based
upon field proven concepts and utilizes equipment with a demonstrated track
record. The design uses a simple “flow through” concept — products are
continuously moved through the x-ray field at a defined processing rate and scan
height.

 

Carriers are introduced into the process on an overhead track. Double sided
processing is accomplished by rotating the carrier and processing it through the
x-ray field a second time. Carriers move through the x-ray field in a precisely
controlled manner on a process conveyor with “close packing” of the carriers
accomplished using a closing conveyor.

 

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

*CONFIDENTIAL TREATMENT REQUESTED

3

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

 

Based upon equipment set-points in the pre-defined processing protocol, the
desired treatment dose is uniformly delivered to the products.

 

What are X-rays and how are they generated? X-rays (or Bremsstrahlung) are
photons emitted when a rapidly moving charged particle (normally an electron) is
decelerated by an atom. X-rays are generated when an electron beam strikes any
object, but they are most efficiently generated when using high energy electrons
(5 MeV) and a dense object or target - like tungsten. The conversion efficiency
from electrons to X-rays is low (5-7%), hence high power is needed to make up
for the low conversion efficiency.[j5540ex10d48image002.gif] In the SureBeam
system electrons generated from a linear accelerator with 5 MeV energy and 100
kW power are used to generate X-rays. Once the X-rays are created, product is
moved through the x-ray field in a precisely controlled manner with the goal of
distributing the x-rays throughout the product. When x-rays penetrate the
product they occasionally strike electrons in the outer rings of atoms at the
molecular level of the product. When the collision occurs the photon imparts
part of its kinetic energy into the electron in the same manner as a cue ball
would break a rack of billiard balls in a pool game. This process is referred to
as the Compton Effect. It is these secondary electrons that damage the DNA
molecules in living organisms such as E. Coli and Listeria and produce the
desire effect of “killing” the pathogen. The amount of energy or “dose” required
to reduce a population of organisms by 1/10th (or one log) is readily known and
quantifiable (for example, Listeria with a dose from 0.4 to 0.6 kGy will reduce
a population by 1 log). A typical dose of 1.75 kGy will reduce the population by
3 to 4 log (4 x 0.4 kGy = 1.60 kGy), or 99.99%.

 

How are products processed using x-ray technology? Because x-rays are
electromagnetic energy with no mass they have a greater depth of penetration
into the product than electrons. When cases are processed in the system,
multiple passes and double sided processing will achieve a more uniform
application of the dose into the case, but there will always be some regions
where the dose is higher or lower. Dose mapping the case(s) in the desired
production configuration will determine where regions of high (Dmax) and low
(Dmin) dose are located. The system processing parameters are then selected to
ensure that the delivered dose in the low dose region (Dmin) is always higher
than the target dose needed to accomplish the “kill”, and the delivered dose in
the high dose region (Dmax) is always lower than the highest dose the product
will tolerate and not sustain any changes in product quality (i.e., color, odor,
taste, etc.). The highest dose the product will tolerate is experimentally
determined by delivering a variety of doses to the product and determining the
highest level that detrimentally affects the product quality (i.e., taste,
color, smell, texture, etc.). Once the characteristics of how the product
processes in the x-ray field are known the processing efficiency can be
addressed. If the dose mapping tests indicate the Dmax is comfortably below the
highest dose, then there is a good chance that more product cases can be added
to the processing configuration increasing the thickness of

 

 

4

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

 

the product in the x-ray. This second or third case essentially “rides through
the process free”. Because of this it is very important to optimize the amount
of product processed wherever possible. To summarize, the amount of product
(lbs./hour) which can be processed is a function of many variables including the
available accelerator power, target dose, product density, highest dose (or the
highest Max/Min ratio for the specific product), packaging configuration,
product loading configuration, and processing efficiency of the system design
(i.e., ability to close pack, lot changeover times, etc.). Each product
processed will be dose mapped to determine the impact of these variables on the
throughput of the system.

 

SureBeam has developed a very efficient system to accomplish the
“pasteurization” process. For the Buyer system one standard [...***...]
accelerator is integrated into a single system providing the high power
[...***...] needed to process the projected volume [...***...]. Space is
provided for a second accelerator to be added at a later point in time to
accommodate higher throughputs. The x-ray generator is mounted to produce a
horizontal field of x-rays. Depending on the product density, x-rays will
provide the ability to penetrate approximately [...***...]. The material
handling system provides the ability to move and queue carriers or individual
product cases from the load area workstations (2), through the x-ray process,
and back to unload area workstations (2). A “process and closing conveyor” is
used to independently convey products through the x-ray process. This conveyor
is used to achieve precise movement of the products through the x-ray field and
“close pack” carriers for increased processing efficiency. A concrete shield is
used to surround the equipment and protect the operators from x-rays. Concrete
was selected because of its effectiveness, availability, and low cost.

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

5

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

 

The proposed x-ray system layout is defined in the isometric view below:

 

[j5540ex10d48image004.jpg]

 

Figure 1-1  System Isometric View

 

The system will be contained in an existing Buyer cold storage and distribution
facility. The building addition is sized to stage in-coming products (» 7,000
ft2) prior to pasteurization and out-going products (» 3,000 ft2) after
pasteurization while they are waiting for QA release. These areas are physically
separated to prevent co-mingling of processed and un-processed products, and
have been sized to accommodate the expected product flow direct from
manufacturing and loads from other Buyer manufacturing locations. The system is
contained in approximately 5,000 ft2 which includes the concrete shield and the
load / unload areas. Equipment rooms for the process equipment are located
adjacent to the shield. Additional space for offices, control and dosimetry labs
(» 1,500 ft2) are also required. The staging areas in and out are refrigerated
spaces - other spaces are not. This configuration has the following advantages:

 

•                  Simplifies the interfaces between Buyer cold storage /
distribution functions and the system, reduced fork truck traffic;

•                  Minimizes the need for new facility construction;

•                  Provides the ability to expand the staging areas if required
in the future;

•                  Minimizes the disruption and interference with Buyer
operations while construction is in progress.

 

This system concept will permit SureBeam to accomplish the following business
objectives:

•                  Provide an operation that can meet Buyer’s operating and
performance requirements – functionality, throughput, availability, and quality;

 

6

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

 

•                  Coordinate an On-Site spares and maintenance program with
Buyer to maintain system reliability > 95%;

•                  Achieve 100% process integrity – process operation, dose
delivery;

•                  Achieve 100% safe operation;

•                  Operation to meet USDA requirements for validation, and Good
Manufacturing Practices;

•                  Guaranteed system performance.

 

 

System Description of Operation

 

To meet Buyer’s requirements, SureBeam is proposing to implement a SureBeamâ
X-ray Sterilization System (refer to attached system layout drawings). The
System concept is based upon the field proven designs of the SureBeam System.
The base system re-applies X-ray processing know-how, designs, and engineering
developed by SureBeam, and integrates the Model [...***...] accelerator, into
the standard SureBeam System.

 

The SureBeam System consists of the following major subsystems:

 

•                  X-ray source or “accelerator”

•                  Material Handling

•                  Information & Control system — “SureTrack” system

•                  Safety equipment

•                  Radiation shield and support utilities (by Buyer)

 

The design for each of the above subsystems is based upon field proven
experience in  similar applications.

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

7

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

 

[j5540ex10d48image006.gif]

 

Figure 1-1  System Layout (viewed from work area)

 

The System design proposed for Buyer consists of a concrete radiation protection
shield sized to contain the accelerator and the material handling system, and
provide protection from ionizing radiation produced from the interaction of the
electrons and materials. The shield’s concrete walls and roof are between  6 and
12  feet thick, and are graduated down in size as you reach the entry to the
maze. A maze with several 90° turns is used to

 

[j5540ex10d48image007.jpg]

 

Figure 1-2 System Layout (viewed from behind shield)

 

provide a “torturous” path to limit any ionizing radiation from escaping (i.e.
no direct line of sight path). The size of the shield is approximately 3000 ft2
(65 ft. x 47 ft.).

 

 

8

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

 

[j5540ex10d48image009.jpg]

 

Figure 1-5 Loading Area

 

The accelerator is located inside of the shield and protected from ionizing
radiation and ozone by interior walls. The accelerator design philosophy is to
limit variability in the accelerator to one parameter (scan height). All other
operating parameters are fixed at validated set points and pre-defined high/low
limits. The goal is to provide stable equipment operation that always produces a
consistent beam. If the beam characteristics exceed pre-defined limits, then the
system is shutdown.

 

The beam centerline is oriented horizontally and scans the products as they are
moved in front of the scan horn. This horizontal beam orientation is very
advantageous to the processing and generates a more reliable and cost effective
design.

 

Products are conveyed into the shield and through the X-ray process on a
material handling system that was specifically designed to operate in a
radiation and medical device application. Basic transport functions are
accomplished using an overhead power & free conveyor that moves captive carriers
into and out of the shield. This design significantly improves the efficiency of
the processing by permitting products to be stacked multiple layers high and
deep, taking advantage of the accelerator’s selectable scan height and depth of
penetration. In addition, products are oriented in the carriers in the position
that best facilitates X-ray processing, which is generally not the same product
orientation for conveyability.

 

 

9

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

 

[j5540ex10d48image011.jpg]

 

Figure 1-6 Loading product into Carrier

 

The use of a captive carrier eliminates conveyability issues and jams,
significantly improving the system reliability. To achieve precise dose
requirements an independent process conveyor is used to control the movement of
carriers through the electron beam. An independent servo controlled conveyor is
used to achieve positioning and speed control of ±0.5% variance from the set
point.

 

Overseeing all information and processing functions is the SureTrack information
and control system. The Suretrack system uses a distributed network of
industrial PLC’s and PC to monitor and control the system functions. The
software modules have been used in similar applications and provide a robust
control system.

 

 

System Description of Operation

 

The system is simple to operate and provides the built-in integrity checks
needed to insure compliance with the processing protocol. The basic operation is
as follows (refer to the system layout drawings):

 

The System operator initiates sterilization “Lot” setup and release by entering
the product code, Lot information, and selecting the pre-defined processing
instructions.

 

 

10

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

 

[j5540ex10d48image013.jpg]

 

Figure 1-7 Operator at I&CS Computer

 

The SureTrack control system checks the information to insure the validity of
the data and schedules the Lot for processing. The scheduled Lot is then moved
into the load area and the first carrier processed. The control system checks
the integrity of the data and downloads to the accelerator and material handling
controllers the predetermined processing set points for the key parameters
including processing rate, beam scan height, number of passes (single or double
sided processing), dosimeter placement criteria, key high/low limit settings,
and error recovery directions. The controls system checks that these parameters
are set correctly, the equipment is operating within specifications, and that
the system validation parameters are initialized to the previously validated
settings — this insures the integrity of the process.

 

 

11

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

 

          [j5540ex10d48image015.jpg]

 

Figure 1-8 Placing a Dosimeter on Product

 

Products to be processed are manually loaded into the captive carriers in the
orientation defined by the processing protocol. Dosimeters are placed on
selected carriers as an independent means of monitoring the integrity of the
delivered dose. In general, dosimeters are placed on the first and last carriers
in a Lot, and on a periodic basis (every 10-15 carriers) while the Lot is being
processed, to verify that the Lot has received the defined dose. Current
regulatory guidelines recommend placement of dosimeters at the beginning,
middle, and end of the Lot (at a minimum). The quantity/frequency of dosimeters
periodically processed within the Lot will be determined by QA, and input into
the system as part of the Lot processing instructions.

 

The SureTrack information and control system guides the system operator and
material loaders through the overall process checking for the completion of each
task and verifying the integrity of the process. (As an option, bar code
scanners can be used to verify that the correct product code has been loaded
onto the carrier). In addition, the control system verifies that the operating
parameters and variables are correctly set and operating within the pre-defined
limits before the carrier is released into the system.

 

Released carriers are moved into the shield on an overhead Power & Free
conveyor. The Power & Free conveyor is the primary means of transporting the
carrier through the sterilization process and load/unload areas. The conveyor
consists of two overhead tracks made up of a power section containing a drive
chain and a free section. Products are loaded into the carrier suspended from
the free section. The power section will engage the carrier and drive the
carrier along the fixed overhead track. Mechanical drive dogs on the power
section are designed to disengage from the carrier to allow carriers to
accumulate or interface with the automated equipment. The power and free control
system manages the traffic flow and accumulation of carriers through the system.

 

 

12

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

 

Prior to entry into the beam area, an automatic closing conveyor is used to move
carriers from the Power & Free conveyor to the precisely controlled “Process
Conveyor”. The closing conveyor engages the carrier and moves it to within
inches of the preceding carrier, minimizing the “gap” or non-productive space
between carriers, and precisely matches the speed of the preceding carrier. In
this manner, carriers are “closed packed” to maximize the productive utilization
of the electron beam. Carriers may “touch” in order to achieve close packing,
but not in a manner that would be detrimental to the integrity of the delivered
dose.

 

An independent, servo driven “Process Conveyor” is used to precisely control the
movement and positioning of the carrier through the electron beam. The speed of
the conveyor is selectable to a predetermined set-point which permits a variety
of dose levels to be delivered. The conveyor speed is monitored constantly by 2
independent sensors to verify accuracy.

 

[j5540ex10d48image017.jpg]

 

Figure 1-9 Process Conveyor

 

The X-ray field is horizontally scanned over the products as the carrier moves
through the beam. The scan height is adjustable to match the height of the
products in the carrier providing an efficient utilization of the beam.

 

Carriers move through the beam at a pre-defined speed that is adjustable
between  1.00 and 15.00 feet/minute. This means that products are “in the beam”
only for a few seconds. The control system continuously monitors the X-ray key
parameters to insure the process is within the operating limits. Any out of
limits condition will be cause a coordinated shutdown of the equipment generally
within 250 msec.

 

 

13

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

 

Because of this level of control, and the design of the beam scanning system,
the integrity of the process is maintained on a restart of the process with
product in the beam. A positive transition dose is generated in the region where
the interrupt occurred and eliminates the need to discard products that were in
the beam.

 

Carriers exiting from the beam are re-engaged on the Power & Free conveyor and
transported to either the rotate mechanism where the carrier is rotated 180° and
recirculated through the X-ray process for double sided irradiation or diverted
to exit the chamber.

 

[j5540ex10d48image019.jpg]

 

Figure 1-10 Carrier Entering Rotation Mechanism

 

Carriers exiting the chamber are conveyed to the unload area where an operator
manually unloads the products and places them on a pallet. Carriers containing
dosimeters are identified and the operator removes the dosimeter for subsequent
processing. Empty carriers are re-circulated to the load area and the process is
repeated. The overall cycle time to process a carrier is about 7-10 minutes.
Changeover from one lot to another can be accomplished in 3-5 minutes.

 

At the completion of the last carrier in a sterilization lot exiting the unload
area, the SureTrack control system checks to insure the Lot processing is
complete and record/archives all processing information required to substantiate
successful completion of the process. QA reviews this information and the
independent dosimetry results to determine if the Lot can be released.

 

 

14

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

 

System Equipment and Deliverables

 

The SureBeam System consists of the following deliverables and services:

 

1.1                                 Engineering Analysis & Concept Definition. 
An initial engineering effort will be performed prior to the implementation of
the system to develop answers to the following issues:

 

1.1.1                        Define the system concept and the site specific
layout

1.1.2                        Assist Buyer with the qualification and selection
of the facility General Contractor. Buyer will contract directly with the
General Contractor for the construction of the Facility and all support
utilities.

1.1.3                        Assist Buyer resolve site specific questions
(location, local codes, finalize costs, utilities, ozone ventilation)

1.1.4                        Assist Buyer evaluate carrier sizes best suited for
achieving the processing and production requirements

1.1.5                        Define interfaces to other operations

 

1.2                                 Linear Accelerator – the x-ray source
consists of one linear accelerator that generates an electron beam of 100 kW
power at 5 MeV energy. The electrons are converted into x-rays when they strike
an x-ray converter. the x-ray source will include the following equipment:

 

1.2.1                        […***…]

1.2.2                        Horizontal accelerator configuration

1.2.3                        Selectable scan heights (3)

1.2.4                        X-Ray converter and water cooling system

1.2.5                        Secondary water conditioning and cooling system for
the accelerator

1.2.6                        Equipment provided C.I.F. Port of Ho Chi Minh City.

 

1.3                                 Material Handling system - a material
handling system is provided to contain, position, and move product through the
pasteurization process. The equipment shall be capable of conveying a diverse
set of product case sizes through the system providing integrity over the
process. The mh system shall include the following items:

 

1.3.1                        Overhead Power & Free Conveyor - Heavy duty (500
lb. design) overhead transport conveyor moves the carriers through the load and
unload areas, and irradiation process. The conveyor uses delatching drive dogs
to provide smooth asynchronous flow of the carriers at 14 m/min through the
process. Carrier queuing is provided for line

 

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

*CONFIDENTIAL TREATMENT REQUESTED

15

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

 

balancing, process equipment interfacing, and local flow control.

 

1.3.2                        Product Carriers — Fifteen (15) Aluminum and steel
carriers (engineered to be efficient) are used to contain and position the
products through the X-ray process. This method yields the highest productivity
and reliability, providing the capability to stack products multiple layers high
and deep, without the possibility of incurring product jams.

1.3.3                        Closing Conveyor — An independent servo driven
closing conveyor is provided to “close pack” the carriers through the beam to
within several inches of the preceding carrier. This increases the processing
efficiency.

1.3.4                        Process Conveyor — An independent servo driven
chain conveyor that precisely controls the speed of the carrier through the beam
to ± 0.5 % variance from the set-point. This provides precise control over the
delivery of the dose and maintains the continuity of the process in the event of
a process interruption.

1.3.5                        180° Rotation Device — An independent rotation
device is provided to horizontally rotate the carriers 180°. The mechanism is
slave driven from the power & free conveyor thus synchronizing the rotate
mechanism with the power & free conveyor, and eliminating an extra drive motor
and controls. Fail-safe integrity checks are provided to insure that the
rotation is completed correctly.

1.3.6                        Controls – controls are provided to monitor and
control the flow of carriers through the system. All actions that result in a
product movement (such as merge, divert, release, rotate, and stop) are
confirmed independently. Any action that effects the dose or integrity of the
process is redundantly monitored. Errors or out-of-limits conditions will result
in a system shutdown.

1.3.7                        Equipment provided C.I.F. Port of Ho Chi Minh City.

 

1.4                                 SureTrack Control System – a real-time
information and control system is provided to monitor and control the overall
process. The control system shall provide the data management, system operating
functions, “logical” error detection, and overall error recovery functions for
the entire system, and provide the following capabilities:

 

1.4.1                        Industrial PC based information and control
computer, Pentium CPU with  512Mb ram, mirrored hard drives (2), color graphics
monitor, and interface to Allen Bradley PLC.

1.4.2                        Real-time PLC control system for monitoring,
tracking and control of the sterilization process

1.4.3                        Real-time SureTrack information system to perform
the following

 

 

16

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

 

functions:

 

•                                          System start-up and shutdown

•                                          Creation, audit, and scheduling of
processing protocols

•                                          Sterilization lot control

•                                          Real-time monitor and information
display

•                                          Process integrity checks

•                                          Error detection and recovery

•                                          Processing reports, data management,
and information archiving

 

1.4.4                        Redundant sensors for all key process monitors

1.4.5                        Software Validation per SureBeam Software
Development Procedures

 

1.5                                 Safety System – a safety system is provided
that meets the requirements for x-ray system protection as specified by OSHA,
IAEA Safety Series 107, NCRP Report 51 regulatory requirements. Safety system
shall be fail-safe, and provide “defense-in-depth”, redundancy, and
independence. all safety system components shall be fit for the purpose intended
and include the following capabilities:

 

1.5.1                        Intrusion alarms to detect unauthorized access into
controlled areas (pressure mats, light curtain, electronically locked doors).

1.5.2                        Emergency stop(s) and pull cords.

1.5.3                        Fire / smoke detection.

1.5.4                        System start-up & shutdown.

1.5.5                        Key lockouts.

1.5.6                        Radiation monitors for out-of-limits conditions.

1.5.7                        Status display (accelerator ON / OFF, Access OK /
PROHIBITED.

1.5.8                        Start-up alarms and horns.

1.5.9                        Start-up timer.

1.5.10                  Status alarms and beacons (rotating beacons).

1.5.11                  Ozone exhaust flow monitor.

1.5.12                  Safety signs and markings (Radiation Hazard, Access
Prohibited, High Voltage, etc.).

1.5.13                  Automatic shut-down for out-of-limits conditions.

1.5.14                  Sequenced start-up.

 

1.6                                 Dosimetry System — a redundant dosimetry
system is provided to independently measure delivered dose to the products. The
system shall conform to applicable ANSI standards. The following equipment shall
be included:

 

 

 

17

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

 

1.6.1                        Equipment - One (1) Genesys 20 spectrophotometers
with accompanying software shall be provided.  Units shall be integrated to a PC
for data processing.

1.6.2                        Dosimeters - Five thousand (5,000) B3 radiochromic
dosimeters that cover a range of doses from 1.0 kGy — 100 kGy shall be provided.

1.6.3        Beam Energy Measurement Equipment - Two (2) Certified RISO Aluminum
Energy Wedges shall be provided.

1.6.4        Dosimetry Computer (PC) and associated software and laser printer.

1.6.5        Equipment calibration and procedures.

 

1.7           Facilities and Utilities

 

1.7.1                        General design and specification of facility and
utility requirements (power, compressed air, water, ozone exhaust) associated
with the X-ray process. Detail design and shop drawings will be the
responsibility of the General Contractor / Buyer.

1.7.2                        General design and specification of the shielding
requirements. SureBeam will be responsible for the layout and design of the
shield. Buyer and the General Contractor will be responsible for the
construction of the shield, building, and all utilities. Detail design and shop
drawings will be the responsibility of the General Contractor / Buyer.

1.7.3                        Hookup of SureBeam equipment to Buyer furnished
utilities (power, compressed air, water, ozone exhaust).

1.7.4                        Participate in design review(s) of Buyer furnished
equipment

 

1.8           Equipment installation, checkout, and system validation to
ISO-11137, USDA, and ASTM standards

1.8.1                        Installation and checkout of SureBeam furnished
equipment

1.8.2                        Hook-up of Buyer furnished utilities to SureBeam
equipment

1.8.3                        Checkout and testing of equipment

1.8.4                        System integration and performance testing

1.8.5                        Validation of the system to ISO-11137 requirements:

 

•                                 Installation Qualification

•                                 Irradiator Dose Mapping

•                                 Certification

 

 

1.9                                 Maintenance system and support – the
following maintenance support is provided to augment the local site support:

 

1.9.1                        A computerized maintenance system (MPII) will be
used to track and schedule the maintenance activities. This system will be
loaded with

 

 

 

18

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

 

maintenance instructions and schedules, and maintained to provide a record of
maintenance activities for regulatory reviews.

1.9.2                        On-line link connecting the site control system to
SureBeam support personnel to provide remote diagnostic capability will be
provided.

1.9.3                        Two system check-ups during the warranty period.
SureBeam will check the equipment at the site and perform an audit of the
system. Additional training shall be performed during these site visits

1.9.4                        An initial complement of spare parts will be
stocked at the site to cover expected component failures during the warranty
period.  At the end of the warranty period these parts shall be purchased by
Buyer or returned to Seller.

1.9.5                        Additional maintenance or diagnostic support may be
provided by Seller at the request of the Buyer on an as needed basis.  The cost
of this support shall be paid by Buyer on a time and material basis.

 

1.10         Project management, engineering, and documentation

 

1.10.1                  Structured development methodology (Project Plan)

1.10.2                  Project management and engineering

1.10.3                  Hazards analysis

1.10.4                  Radiation Survey

1.10.5                  Ozone survey

1.10.6                  Project documentation (Design History Record)

1.10.7                  Manuals — operating, equipment

1.10.8                  Drawings, schematics, source code, logic diagrams

 

1.11                           System Start-up and Operations Support — to
ensure proper start-up of the system the following technical services are
provided:

1.11.1                  Operations training (operations, dosimetry).

1.11.2                  Assist Buyer develop and implement standard operating
procedures (SOPs, and HACCP Plan) for the overall operation of the System.

1.11.3                  Assist Buyer  perform dose mapping of each product to be
processed — define the processing parameters and protocol.

 

1.12         Equipment warranty — 12 months parts only; labor to be furnished by
Buyer.

 

1.13                           System warranty and performance guarantee -
SureBeam represents and warrants that during the Warranty Period, the System
shall operate at a level of Substantial Functionality as defined in the Proposal
if the System is properly operated, maintained, and used as defined in the
proposal, final documentation, and maintenance instructions.

 

 

 

19

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

 

System Options

 

THE FOLLOWING ITEMS ARE INCLUDED AS OPTIONS TO THE BASE SYSTEM. EITHER BUYER OR
SUREBEAM MAY PROVIDE THESE ITEMS:

 

•                                 Spare parts

•                                 Operations support

•                                 Permits, Licenses, CE Mark

 

Buyer Furnished Items and Services

 

The following items or services are to be provided by Buyer:

 

1.1                                 Land and Facility

1.1.1                        Detail design and construction of the facility.

1.1.2                        Dosimetry Lab — 10 x 15 ft.; temperature and
humidity controlled with UV filters on fluorescent lights.

1.1.3                        Equipment Room — 15 x 30 ft.; conditioned air,
noise protection. Room to contain modulator equipment and other LINAC equipment.

1.1.4                        Control Room — 10 x 10 ft.; temperature controlled;
secured access.

1.1.5                        Storage and work areas — size to be determined

1.1.6                        Implementation of concrete shield at the site.
Design and specification by SureBeam. The shield is designed to provide
protection from ionizing radiation generated from the interaction of the beam
and material. The design requirements for the system require that radiation
levels in the load and unload areas be < 20 mSv per year; and in areas such as
the Equipment Room the levels can be < 20 mSv per 400 hours. Access to the beam
area is strictly prohibited because the radiation level exceeds 3 mSv per hour.
The shield can be designed as an external building.

1.1.7                        Temporary construction offices

1.1.8                        Permits and licenses

 

1.2                                 Utilities – both temporary and permanent
utilities

 

1.2.1                        Compressed air — 10 CFM @ 100PSI; two drops

1.2.2                        Electrical power — Seller will engineer System to
accommodate local Power (50Hz, 380 VAC, 3 phase).  The requirements listed in
section 1.2.3 will be modified accordingly.

1.2.3                        Electrical power requirements listed below. All
system voltages are ±10%, 3Φ, 60Hz, 3 wire plus ground for 480VAC and 4 wire
plus ground for 208 VAC. A panel supplying and providing a single point of

 

 

 

20

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

 

disconnect for the following sources:

•                    480 VAC ±10%, 3φ, 60Hz., 400A, 4 wire -  Modulator and
LINAC Control System

•                    480 VAC ±10%, 3φ, 60Hz., 85A, 4 wire -  LINAC Water System
and converter

•                    480 VAC ±10%, 3φ, 60Hz., 30A, 4 wire -  LINAC E-Beam Window
Air Blower System

•                    480 VAC ±10%, 3φ, 60Hz., 100A, 4 wire -  Modulator and
LINAC Control System

•                    Isolated 480 VAC ±10%, 3φ, 60Hz., 20A, 5 wire - Material
Handling Controls

•                    Ground Rod, resistance = 1 W to ground

 

1.2.4                        Heating, Ventilation, and Air Conditioning (HVAC) -
Conditioned Air 70°F Non Condensing to be supplied to Equipment Room. Total
equipment heat load for the HVAC system is 36 kW. Air will be drawn from room
through cabinets and exhausted out cabinet top through duct. The heat loads are
as follows - Modulator Cabinet = 15 kW; Control Cabinet = 15 kW; Miscellaneous =
6 kW.

 

1.2.5                        Water cooling (primary) - Chilled water generated
from an overall chilled water system, not greater than the values listed in the
table below nor less than 40º F (4º C) up to the flow rates listed below, is to
be delivered to each SureBeam Water Cooling System heat exchanger. The chilled
water must run through ball valves designed to throttle water flow to each heat
exchanger.   A flow meter must be provided to monitor the flow of facility water
through each ball valve. The heat exchanger connections size and type are listed
below. Pressure drop across each SureBeam Water Cooling System is less than 20
PSI (1.4 Bar).  All lines must  be flushed prior to connection of system
components with a solution of TSP (Tri-Sodium Phosphate, 1 cup to 10 gallons)
and then clear water. The overall Chilled Water System shall have the capability
to continuously operate at 25% of rated capacity. Inlet temperature and flow may
vary depending on the system design.

 

[…***…]

 

1.2.6                        Ozone ventilation — Buyer shall install an Ozone
Extraction system to continuously extract ozone from the process chamber of the
Shield

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

21

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

 

Cell. The system shall be designed to maintain a net negative pressure (> 0.05
Inch. W.C.) inside the cell as compared to outside the cell at the entrance. The
duct system may be installed in or under the concrete floor of the shield or
inside the cell via ductwork running through the labyrinth. If ductwork inside
the cell is chosen, the ductwork must be 100% stainless steel from the inside of
the shield to the ozone exhaust fan as schematically shown by SureBeam. The fan
shall be controlled by a Variable Frequency Drive Controller that is furnished
by SureBeam (max. cap. 5 HP). The fan and ductwork shall be designed to maintain
the minimum net negative pressure in the cell as specified under a low fan speed
setting. It also should be able to provide exhaust capability of 1 complete air
change (approximately 4,000 – 6,000 cfm) of the cell within 3 minutes or less at
the maximum design capacity/speed of the fan.

 

1.2.7                        Interface Control Panel - A panel housing the
following signals:

•                    Inputs from Buyer to SureBeam System:

1. One set dry contacts - Ozone Exhaust Flow

2. One set dry contacts - Facility Fire Alarm OK

3. One set dry contacts - HVAC OK

4. One set dry contacts - Chilled Water OK

 

•                    Outputs from SureBeam System to Buyer:

1. 24 VDC relay - E-Beam Fire Alarm

2. 24 VDC contactor - Run Ozone Exhaust Fan

 

1.2.8                        Lighting – work areas, rooms, inside shield

1.2.9                        Permits, licenses, or CE Marks

 

1.3                                 Other Equipment

 

1.3.1                        Maintenance Tools – oscilloscope, vacuum roughing
pump, leak detector, etc.

1.3.2                        Fork Trucks, telephones, office equipment, or other
processing equipment

1.3.3                        Stretch wrap equipment

 

1.4                                 Regulatory compliance (Local Regulatory, US
FDA, ISO11137)

 

1.4.1                        Product qualifications

1.4.2                        Process qualifications

1.4.3                        Dose determination and setting

1.4.4                        Regulatory filings

1.4.5                        System modifications required to meet local
regulatory or building department requirements

 

 

 

22

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

 

1.4.6                        Buyer system operating procedures

 

1.5                                 Other engineering support

 

1.5.1                        A&E services

1.5.2                        Product development

 

 

I hope this information will assist you with your evaluation of X-ray
technology. We are anxious to move forward with the “next step”.  Please let me
know how we can assist you further.

 

Sincerely,

 

 

/s/ Larry Oberkfell

 

 

Mr. Larry Oberkfell

President and CEO

SureBeam Corporation

 

 

cc:           Tom Allen - SureBeam

Kevin Claudio – SureBeam

Martha M. Cashman - SureBeam

Art Gomez – SureBeam

Michael Gormley - SureBeam

David Rane - SureBeam

George Sullivan – SureBeam

 

 

 

23

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

 

EXHIBIT B

MILESTONES

 

 

Implementation Milestones

The overall implementation of the system will be completed four months after
SureBeam receives beneficial access and use of the shield, utilities, and
facility provided by Buyer. The overall project is expected to take […***…] to
complete, and is predicated upon Buyer’s furnishing their deliverables by
[…***…]. We expect the major milestones to approximate the following schedule:

 

 

Event

 

Months after Execution of Agreement

 

 

 

Opening of Letter of Credit

 

[…***…]

Obtain Government approval and removal of all contingencies

 

[…***…]

System Design complete (joint SURE and Buyer effort)

 

[…***…]

Shipment of Material Handling & Controls equipment

 

[…***…]

Shipment of Accelerator

 

[…***…]

Substantial completion of shield, facilities, and utilities (by Buyer)

 

[…***…]

MH & Controls installation complete

 

[…***…]

Accelerator installation complete

 

[…***…]

System Integration & Test complete

 

[…***…]

Acceptance Test complete

 

[…***…]

 

 

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

1

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

 

EXHIBIT C

PAYMENT SCHEDULE

 

 

 

C1      SYSTEM PRICE

 

The price for the system defined above is as follows:

 

 

System Price (Exhibit A items 1.1 - 1.13)

US$5,250,000.00

 

 

Options (not included in base price):

 

Tariffs, taxes, and duties

To be defined

Freight and handling to Site

To be defined

Spare parts

To be defined in maintenance contract (refer to 1.9.4)

 

 

[…***…]

 

 

Payments will be made through an irrevocable letter of credit issued within 30
days of the Buyer obtaining government approval to build and operate the System,
by a Bank of Seller’s choosing.   The Letter of Credit will be in a form
acceptable to Seller, and based upon the Payment Terms as outlined below.  Cost
of the Letter of Credit shall be paid by Buyer.

 

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

1

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

 

Payment Terms

The System Price to be paid by Buyer to Seller shall be paid in installments in
accordance with the following payment schedule:

 

First Payment:

[…***…]

[…***…]

 

 

 

 

 

 

 

 

 

Second Payment:

[…***…]

[…***…]

 

 

 

 

 

 

 

 

 

Third Payment:

[…***…]

[…***…]

 

 

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

2

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

 

C2           ROYALTY FEE

 

A Royalty fee shall be paid to Seller based upon gross pounds of product
processed through the irradiation process to deliver a target dose for the
elimination of pathogens in food. The Royalty shall equal […***…] per pound
(gross weight of product) of product processed in a production or test protocol.
To this end, Buyer shall furnish or arrange for Seller’s reasonable access to
the System during the life of this Agreement for the purpose of monitoring the
operations of the System, including the pounds of processed Product, hours of
operation and total Royalty Fees due. Buyer agrees to pay seller all Royalty
Fees Thirty (30) days following receipt of invoice or 30 days after the last day
of the month in which Product was processed. Payment will be deposited in US
dollars in a Bank of Seller’s choosing.

 

 

C2.1 Royalty will be calculated as follows:

 

C2.1.1 […***…]

 

C2.1.2 All product lots shall be processed according to “standard operating
procedures.”

 

 

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

3

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

 

C2.1.3 For each Lot processed production Lot information shall be entered into
the SureTrack information system defining the “lot”, i.e., type of product,
product code, quantity of cases to be processed.

 

C2.1.4 No product shall be processed unless under the control of the SureTrack
system in the automatic mode of operation.

 

C2.1.5 At the completion of the Lot, the Lot processing report will be
generated, defining the quantity of carriers processed and the gross weight of
the product.  Empty carriers shall not be included in the carrier count.

 

C2.1.6 On a monthly basis, all Lot completion reports shall be produced,
summarized, and submitted to Seller as the record of products processed.

 

C2.1.7 […***…]

 

 

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

4

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

 

EXHIBIT D

LICENSE AGREEMENT

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

 

 

AGREEMENT FOR SUPPLY OF TECHNOLOGY

AND LICENSE OF PATENT

 

 

 

THIS AGREEMENT made and entered into on March 27, 2002, by and between:

 

 

THE SUREBEAM CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, having executive offices at 9276 Scranton Road, Suite
600, San Diego, California  92121, United States of America, in this act
represented by its President and CEO, Mr. Larry A. Oberkfell, hereinafter
referred to as “Supplier,”

 

 

and

 

 

TRIEU AN LAC CLINIC and SON SON CO., LTD., companies incorporated under the laws
of the Socialist Republic of Vietnam, with offices at […***…], in this act
represented by its Chief Executive Officer, Mr. Trâm Bê, hereinafter referred to
as “Recipient”,

 

 

WITNESSETH

 

 

WHEREAS, Supplier possesses considerable and valuable know-how and experience
useful in designing, manufacturing, selling, installing, operating and servicing
product disinfestation, pasteurization and sterilization equipment and systems,
including its patented electron beam and x-ray equipment and systems
(hereinafter the “System”);

 

WHEREAS Recipient desires to benefit from Supplier’s experience and know-how
regarding Supplier’s System, and has therefore requested Supplier to render it
all possible technical assistance in connection with the System,

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

1

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

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

 

1.             DEFINITIONS

 

When used in this Agreement each of the terms set forth in this Clause 1 shall
have the meanings indicated:

 

1.1                 “TECHNICAL INFORMATION” - Any unpatented knowledge or
information pertaining to the techniques, rendering, applications or marketing
of the System, or any of them.

 

1.2                 “TECHNICAL DATA” - Documents or other written or printed
materials which embody Technical Information, including, but not limited to,
plans, specifications, material lists, instruction manuals, quality control
procedures and other prepared literature sufficient to enable competent
personnel employing the requisite equipment to apply effectively the Technical
Information in the rendering and marketing of the System. “TECHNICAL DATA” shall
also mean, as the context shall require, any copies, reprints, extractions,
reproductions and translations of any of the foregoing.

 

1.3                 “PATENT” - shall mean the patents and/or patent applications
listed in Appendix A hereto.

 

1.4                 “EFFECTIVE DATE” - the date of execution of this Agreement.

 

 

2.             SUPPLY OF TECHNOLOGY

 

2.1                 Supplier hereby agrees that under the terms and conditions
specified herein, it shall furnish to Recipient all Technical Information and/or
Technical Data presently available in connection with the System. Further,
Supplier hereby agrees to and during the term hereof shall promptly disclose to
Recipient in the terms and conditions specified herein, all Technical
Information and/or Technical Data it may have during the term hereof, including
such information which may be developed or created by its employees and which is
necessary or suitable for the System.

 

 

3.             LICENSE OF PATENT

 

3.1                 Supplier also grants to Recipient an exclusive license to
use the Patent in connection with the System.

 

2

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

 

4.             NON-DISCLOSURE

 

4.1                 Recipient agrees that, during the term hereof and for a
period of ten (10 ) years after termination of this Agreement, it will keep in
strict confidence all Technical Information or Technical Data obtained from
Supplier pursuant to this Agreement and will not reveal or disclose such
Technical Information or Technical Data to third parties whether in Vietnam or
elsewhere, except as strictly necessary to enable Recipient to use the System by
itself or through a third party. Recipient further agrees that it will limit the
dissemination of Technical Information or Technical Data to employees who need
to know such information or data and will require such employees to hold such
information or data in strict confidence.

 

4.2                 The obligations undertaken by Recipient pursuant to this
Clause shall not apply to any such Technical Information or Technical Data
obtained from Supplier which is or becomes published or otherwise generally
available to the public through no fault of Recipient.

 

 

5.             PAYMENT

 

5.1                 The Recipient will pay the Supplier a royalty fee equal to
[…***…] of product processed through the System.   Payments will be made on a
monthly basis.

 

 

6.             TERM AND TERMINATION

 

6.1                 This Agreement shall be in full force and effect from the
Effective Date, and shall continue in force for as long as the Patent is valid.

 

6.2                 In case of default, by either party, of any of its
obligations under this Agreement, the other party shall notify the defaulting
party in writing, and this Agreement may be terminated immediately if the
defaulting party does not correct or take substantial steps to cure the default
within thirty (30) days as of receipt of the default notification.

 

6.3                 The parties may terminate this Agreement without case upon
prior written notice of 30 (thirty) days to the other party.

 

6.4                 Upon termination of this Agreement, Recipient shall
discontinue immediately all use of the Patent and the Technical Information/
Technical Data.

 

 

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

* CONFIDENTIAL TREATMENT REQUESTED

 

3

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

 

7.             MARKING

 

7.1                 Recipient shall take whatever steps may be necessary to
comply with the laws of Vietnam with respect to the marking of all products
manufactured or services rendered under the Patent.

 

7.2                 Recipient shall include in its advertising material, and, if
requested by Supplier, on its invoices, quotations and other documents, and on
the products, labels and containers, a statement that the products are
manufactured or the services are rendered under patent license from Supplier.

 

 

8.             OWNERSHIP OF PATENT

 

8.1                 Recipient shall take all reasonable steps to safeguard the
right, title and interest of Supplier in and to the Patent, and shall not, in
any manner, challenge or assist others in challenging, the Patent. It is
expressly understood, however, that Recipient shall not be responsible for the
maintenance of the validity of the Patent in Vietnam and for the payment of the
annual fees necessary to such maintenance.

 

 

9.             INFRINGEMENTS

 

9.1                 Recipient agrees to give notice in writing to Supplier of
any infringement or threatened infringement of said Patent within Vietnam which
shall at any time come to Recipient’s attention. Supplier retains the right to
take proceedings in or out of a court of law which may be necessary or proper to
stop or enjoin infringement of the Patent by others not licensed by Supplier,
provided, however, that Recipient, in the event Supplier should request such
action, take proceedings consistent with law to stop or enjoin any such
infringement, bringing suit in its own name, if necessary, and in any event, the
parties will cooperate to the fullest extent possible if litigation should be
necessary in order to protect the rights of either party with respect to the
Patent.

 

 

10.          INTERPRETATION

 

10.1               This Agreement shall be governed by and construed in
accordance with the laws of Vietnam.

 

10.2               Any dispute or controversy arising out of the interpretation
of or performance under this Agreement shall be settled by the Central Courts of
the State of California, United States, with waiver of any other Court,
privileged as it may be.

 

4

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

 

IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed by their respective authorized officers, together with the 2 (two)
witnesses below.

 

 

THE SUREBEAM CORPORATION

 

SON SON CO., LTD.

 

 

 

 

 

  /s/ Larry Oberkfell

 

/s/ Tram Be

 

 

 

 

 

Name:  Mr. Larry Oberkfell

 

Name:  Mr. Trâm Bê

 

Title:    President and CEO

 

Title:    President

 

 

5

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

 

A P P E N D I X     A

 

 

To the Agreement for the Supply of Technology and License of Patent by and
between The SureBeam Corporation  and  SON SON CO., LTD.,  executed on March 27,
2002.

 

 

PATENT

 

Title

 

Number of
Application /
Registration

 

Date of
Application /
Registration

 

Class

Irradiation System Utilizing Conveyor-Transported Article Carriers

 

In the process of Registration in Vietnam

 

 

 

 

 

 

 

 

 

 

 

 

6

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