Exhibit 10.40

FORM OF

TAX SHARING AND DISAFFILIATION AGREEMENT

Tax Sharing And Disaffiliation Agreement dated as of August 2, 2002, by and
between The Titan Corporation, a Delaware corporation (“Titan”), and SureBeam
Corporation, a Delaware corporation (“SureBeam”).

Recitals

Whereas, SureBeam is a first tier subsidiary of Titan;

Whereas, Titan is the common parent of an affiliated group of corporations
within the meaning of Section 1504(a) of the Code, which currently files
consolidated federal income Tax Returns and which includes SureBeam as a member
of that consolidated group;

Whereas, pursuant to the Exchange Agreement dated as of December 31, 2001 and
the Exchange Agreement dated February 1, 2002 by and between Titan and SureBeam
Titan has recapitalized its debt in SureBeam into equity (the
“Recapitalization”), and it is contemplated that Titan will convert its Class B
Common Stock into Class A Common Stock (the “Conversion”), and it is further
contemplated that, following receipt of a favorable ruling from the Internal
Revenue Service or tax opinions from Titan’s tax advisors, Titan will distribute
to the holders of Titan Common Stock all of the outstanding shares of SureBeam
Common Stock owned by Titan, with cash distributed in lieu of fractional shares
of SureBeam Common Stock (the “Distribution”);

Whereas, Titan and SureBeam intend that the Recapitalization and the Conversion
will qualify as one or more reorganizations within the meaning of Section 368(a)
of the Code, and the Distribution will qualify as a distribution described in
Section 355 of the Code, and none of the Recapitalization, the Conversion or the
Distribution will result in the recognition of any taxable gain or income to
Titan or any shareholder of Titan (except to the extent of cash received in lieu
of any fractional shares of SureBeam Common Stock);

Whereas, after the Distribution Date, SureBeam will cease to be a member of the
Titan Affiliated Group for federal income Tax purposes;

Whereas, members of the SureBeam Group and members of the Titan Group desire on
behalf of themselves and their successors to set forth their rights and
obligations with respect to Taxes for periods on and after the Distribution
Date; and

Whereas, Titan and SureBeam are parties to a Tax Allocation Agreement dated
August 4, 2002, that is not amended or modified in any respect by this
Agreement.

Now, Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

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ARTICLE I

DEFINITIONS

1.1  For the purposes of this Agreement:

“Acquisition Proposal” shall mean any proposal, plan, agreement or arrangement
contemplating (i) any merger, consolidation, reorganization, recapitalization or
similar transaction involving SureBeam, or (ii) any transfer of or issuance of
stock or other securities of SureBeam.  For the purposes of this paragraph,
“stock” shall have the meaning given to that term in Section 355(e) of the Code.

“Agreement” shall mean this Tax Sharing and Disaffiliation Agreement as the same
may be amended from time to time.

“Applicable Federal Rate” shall have the meaning set forth in Section 1274(d) of
the Code, compounded quarterly.

“Claim” shall have the meaning set forth in Section 5.3(a) of this Agreement.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

“Controlling Party” shall have the meaning set forth in Section 5.1 of this
Agreement.

“Conversion” shall have the meaning set forth in the third recital.

“Distribution” shall have the meaning set forth in the third recital.

“Distribution Date” shall mean the date of the Distribution of SureBeam common
stock to the holders of Titan common stock.

“Equity Transaction” shall mean (a) the grant, offer for sale, sale or issuance
of (i) any stock of SureBeam, (ii) any debt security of SureBeam convertible or
exchangeable into stock of SureBeam, (iii) any option, warrant, or other right
to subscribe for any stock of SureBeam, provided, however, that Equity
Transaction shall not include the grant, offer, sale or issuance of compensatory
equity arrangements that meet the criteria set forth in Temporary Treasury
Regulation §1.355-7T(g)(3)(ii), or any successor regulation thereto; (b) any
redemption, retirement, repurchase, cancellation or other transaction that
reduces the number of shares of SureBeam Common Stock outstanding; or (c) any
consideration, discussions, negotiations, provision of confidential information
relating to SureBeam or the SureBeam Business to any party regarding, or the
solicitation of or encouragement of any Acquisition Proposal.  For the purposes
of this paragraph, “stock” shall have the meaning given to that term in Section
355(e) of the Code.

“Filing Party” shall have the meaning set forth in Section 4.1 of this
Agreement.

 

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“Final Determination” shall mean with respect to any issue (i) a decision,
judgment, decree or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final and not subject to
further appeal, (ii) a closing agreement (whether or not entered into under
Section 7121 of the Code) or any other binding settlement agreement (whether or
not with the IRS) entered into in connection with or in contemplation of an
administrative or judicial proceeding, or (iii) the completion of the highest
level of administrative proceedings if a judicial contest is not or is no longer
available.

“Indemnitor” shall have the meaning set forth in Section 5.2 of this Agreement.

“IRS” shall mean the Internal Revenue Service of the United States.

“Liable Party” shall have the meaning set forth in Section 4.1 of this
Agreement.

“Post-Distribution Period” shall mean any taxable year or other taxable period
beginning after the Distribution Date and, in the case of any taxable year or
other taxable period that begins before and ends after the Distribution Date,
that part of the taxable year or other taxable period that begins at the
beginning of the day after the Distribution Date.

“Pre-Distribution Period” shall mean any taxable year or other taxable period
that ends on or before the Distribution Date and, in the case of any taxable
year or other taxable period that begins before and ends after the Distribution
Date, that part of the taxable year or other taxable period through the close of
the Distribution Date.

“Recapitalization” shall have the meaning set forth in the third recital.

“Representation Letters” shall mean the representation letters and any other
materials (including, without limitation, the ruling request and the
supplemental submissions to the IRS) delivered or deliverable by Titan and
others in connection with the issuance by the IRS of the Tax Rulings or in
connection with any tax opinions requested by Titan from its tax advisors
relating to the Tax Rulings, the Recapitalization, the Conversion, the
Distribution, or any event occurring during the period SureBeam was a member of
the Titan Affiliated Group.

“Restructuring Taxes” shall mean any Taxes and other liabilities, including,
without limitation, liability to stockholders of Titan and the costs of
defending against the imposition of such taxes and other liabilities, imposed as
a result of a Final Determination that (i) the Recapitalization and/or the
Conversion failed to qualify as a reorganization within the meaning of Section
368 (a) of the Code; (ii) the Distribution failed to qualify as a distribution
described in Section 355 of the Code, or (iii) any stock or securities of
SureBeam failed to qualify as “qualified property” within the meaning of Section
355(c)(2) of the Code because of the application of Section 355(d) or Section
355(e) of the Code to the Distribution.

“Retained Business” shall mean the business conducted by Titan, excluding only
the SureBeam Business.

“SureBeam” shall have the meaning set forth in the preamble to this Agreement.

 

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“SureBeam Business” shall mean the business conducted by SureBeam and any direct
or indirect subsidiary of SureBeam.

“SureBeam Group” shall mean, for any period, the affiliated group of
corporations as defined in Section 1504(a) of the Code, or similar group of
entities as defined under corresponding provisions of the laws of other
jurisdictions, of which SureBeam would be the common parent corporation if it
were not a subsidiary of Titan, and any corporation or other entity which may
be, may have been or may become a member of such group from time to time.

“SureBeam Indemnified Parties” shall mean each member of the SureBeam Group and
their respective directors, officers and employees.

“SureBeam Tainting Act” shall mean:

(a)           any inaccuracy or breach of any representation, warranty, or
covenant that is made by SureBeam pursuant to Section 2.1 of this Agreement.

(b)           any action (or failure to take any reasonably available action) by
any member of the SureBeam Group; or

(c)           any acquisition or other transaction involving the capital stock
of SureBeam (other than the Recapitalization, Conversion or Distribution).

“SureBeam Taxes” shall mean (i) any Taxes that are attributable to the SureBeam
Group, (ii) Restructuring Taxes allocable to SureBeam under Section 3.4, and
(iii) an amount equal to the product of (x) any Restructuring Taxes allocable to
SureBeam payable under (ii) hereof plus any amount payable by SureBeam under
this (iii), and (y) the highest marginal effective federal and California state
income tax rates applicable to a corporation.

“Tax” (and with correlative meaning, “Taxes” and “Taxable”) shall mean any
federal, state, local or foreign net income, gross income, gross receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorum, value-added, transfer, stamp, or environmental tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or additional
amount imposed by any governmental authority.

“Tax Allocation Agreement” shall mean the Tax Allocation Agreement dated as of
August 4, 2000 by and between Titan and SureBeam.

“Tax Benefits” shall mean benefits taken into account in computing the tax
liability of a member of either the SureBeam Group or the Titan Group, including
the benefit of the graduated tax rates of Section 11 of the Code, as well as any
similar or corresponding benefits under state or local tax law.

“Tax Item” shall mean any item of income, gain, loss, deduction, credit,
provisions for reserves, recapture of credit, receipt, proceeds or any other
item or event that increases or

 

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decreases Taxes paid or payable, including an adjustment under Section 481 of
the Code resulting from a change in accounting method.

“Tax Return” shall mean any return, report or similar statement required to be
filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.

“Tax Rulings” shall mean the rulings by the IRS requested by Titan in connection
with the Distribution.

“Titan” shall have the meaning set forth in the preamble to this Agreement.

“Titan Affiliated Group” shall mean the corporations included in the affiliated
group, as defined in Section 1504 of the Code, of which Titan is the common
parent, and any successor group.

“Titan Group” shall mean, for any period, the affiliated group of corporations
as defined in Section 1504(a) of the Code, or similar groups of entities as
defined under corresponding provisions of the laws of other jurisdictions, of
which Titan is the common parent corporation, and any corporation or other
entity which may be, may have been or may become a member of such group from
time to time, but excluding any member of the SureBeam Group.

“Titan Indemnified Parties” shall mean each member of the Titan Group and their
respective directors, officers and employees.

“Titan Tainting Act” shall mean:

(a)           any inaccuracy or breach of any representation, warranty, or
covenant that is made by Titan pursuant to Section 2.2 of this Agreement;

(b)           any action (or failure to take any reasonably available action) by
any member of the Titan Group;

(c)           any acquisition or other transaction involving the capital stock
of Titan (other than the Distribution).

“Titan Taxes” shall mean (i) any Taxes that are attributable to the Titan Group
and (ii) Restructuring Taxes allocable to Titan under Section 3.4.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

2.1  Surebeam. SureBeam hereby represents and warrants that: (i) it has examined
the Tax Rulings and the Representation Letters, and (ii) the facts set forth
therein, and the representations made therein, to the extent descriptive of the
SureBeam Group or the SureBeam Business and not descriptive of the Titan Group
(including, without limitation, the facts and representations in the
Representation Letters and the Tax Rulings or tax opinions, as applicable,

 

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to the extent that they relate to the SureBeam Group or the SureBeam Business,
and the plans, proposals, intentions and policies of the SureBeam Group and the
SureBeam Business) were true, correct and complete in all material respects when
the Tax Rulings were issued, and will be true, correct and complete in all
material respects on the Distribution Date.

2.2  Titan. Titan hereby represents and warrants that (i) it has examined the
Tax Rulings and the Representation Letters, and (ii) the facts set forth
therein, and the representations made therein, to the extent descriptive of the
Titan Group or the Retained Business and not descriptive of the SureBeam Group
or the SureBeam Business (including, without limitation, the facts and
representations in the Representation Letters and the Tax Rulings or tax
opinions, as applicable, to the extent that they relate to the Titan Group or
the Retained Business and do not relate to the SureBeam Group or the SureBeam
Business, and the plans, proposals, intentions and policies of the Titan Group
and the Retained Business, and not of the SureBeam Group or the SureBeam
Business) were true, correct and complete in all material respects when the Tax
Rulings were issued, and will be true, correct and complete in all material
respects on the Distribution Date.

ARTICLE III

TAX RETURNS, TAX PAYMENTS AND TAX SHARING OBLIGATIONS

3.1  Obligations To File Tax Returns.

(a)           Titan shall timely file or cause to be filed all Tax Returns with
respect to the SureBeam Group that (i) are due on or before the Distribution
Date or (ii) are for any Pre-Distribution Period and are filed on a
consolidated, combined or unitary basis and include any member of the SureBeam
Group, on one hand, and any member of the Titan Group, on the other hand
(except, in all cases, with respect to any member of the SureBeam Group for
which Titan would not have filed or cause to be filed a Tax Return in accordance
with past practice). SureBeam shall timely file or cause to be timely filed any
other Tax Return with respect to the SureBeam Group.

(b)           Titan shall timely file or cause to be timely filed all Tax
Returns with respect to the Titan Group.

3.2  Obligation To Remit Taxes. Titan and SureBeam shall each remit or cause to
be remitted any Taxes due in respect of any Tax Return it is required to file or
cause to be filed pursuant to Section 3.1, and shall be entitled to
reimbursement for such payments to the extent provided in Section 3.3.

3.3  Tax Sharing Obligations.

(a)           SureBeam shall be liable for and pay, and shall indemnify, defend,
and hold harmless Titan and the Titan Indemnified Parties from and against, any
and all loss, cost, damage or expense, including reasonable attorneys’ fees and
costs incurred or suffered by Titan or one or more of the Titan Indemnified
Parties in connection with, relating to, arising out of or due to, directly or
indirectly (i) any SureBeam Taxes and (ii) any amount determined to be
SureBeam’s liability under Section 3.4. SureBeam shall be entitled to any refund
of or credit for Taxes for which SureBeam is responsible under this Section
3.3(a).

 

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(b)           Titan shall be liable for and pay, and shall indemnify, defend,
and hold harmless SureBeam and the SureBeam Indemnified Parties from and
against, any and all loss, cost, damage or expense, including reasonable
attorneys’ fees and costs incurred or suffered by SureBeam or one or more of the
SureBeam Indemnified Parties in connection with, relating to, arising out of, or
due to, directly or indirectly (i) any Titan Taxes and Titan shall be entitled
to any refund of or credit for Taxes for which Titan is responsible under this
Section 3.3(b).

(c)           Except as set forth in this Agreement or the Tax Allocation
Agreement and in consideration of the mutual indemnities and other obligations
of this Agreement, any and all prior Tax sharing agreements or practices between
any member of the Titan Group and any member of the SureBeam Group shall be
terminated with respect to the SureBeam Group as of the Distribution Date.

3.4  Restructuring Taxes.

(a)           SureBeam and Titan shall each be liable for 50% of Restructuring
Taxes that are imposed as a result of neither a SureBeam Tainting Act nor a
Titan Tainting Act.  In the case of the imposition of a Restructuring Tax where
there is both a SureBeam Tainting Act and a Titan Tainting Act, and each of the
SureBeam Tainting Act and the Titan Tainting Act would alone be sufficient to
result in the imposition of such Restructuring Tax, SureBeam and Titan shall
each be liable for 50% of such Restructuring Tax.  In the case of a
Restructuring Tax that would not have been imposed but for the existence of both
a SureBeam Tainting Act and a Titan Tainting Act, SureBeam and Titan shall be
liable for such Restructuring Tax to the extent the SureBeam Tainting Act and
the Titan Tainting Act, respectively, contributed to the imposition of such
Restructuring Tax.

(b)           Except as described in Section 3.4(a), SureBeam shall be liable
for Restructuring Taxes imposed as a result of a SureBeam Tainting Act.

(c)           Except as described in Section 3.4(a), Titan shall be liable for
Restructuring Taxes imposed as a result of a Titan Tainting Act.

3.5  Additional SureBeam Equity Financing.  Notwithstanding Section 3.4, (a) any
Equity Transaction by SureBeam during the two year period following the
Distribution Date and (b) any shareholder vote contemplated by Section 6(b)(ii)
of the Certificate of Incorporation of SureBeam; shall be subject to the prior
written consent of Titan, which consent shall not be unreasonably withheld but
which consent may be conditioned upon the receipt by Titan of (i) a legal
opinion or tax opinion in form and substance satisfactory to Titan of a
reputable tax counsel or tax adviser of national reputation reasonably
satisfactory to Titan which opinion has been concurred in by Titan’s tax counsel
or advisors or (ii) a favorable ruling from the Internal Revenue Service, in
each case to the effect that the proposed issuances of stock should not result
in the imposition of any Restructuring Taxes.

3.6  Period That Includes The Date Of Distribution.

(a)           To the extent permitted by law or administrative practice, the
taxable year of the SureBeam Group shall be treated as closing at the close of
the Distribution Date.

 

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(b)           If it is necessary for purposes of this Agreement to determine the
SureBeam Taxes or Titan Taxes for a taxable year that begins on or before and
ends after the Distribution Date and is not treated under Section 3.6(a) as
closing at the close of the Distribution Date, the determination shall be made
by assuming that such taxable year ended on a “closing of the books” basis at
the close of the Distribution Date, except that exemptions, allowances or
deductions that are calculated on an annual basis shall be apportioned on a time
basis.

ARTICLE IV

PAYMENTS

4.1  General Tax Payments. With respect to any Taxes for which one party (the
“Liable Party”) is liable under Section 3.3 and that are to be remitted in
connection with Tax Returns to be filed by the other party (the “Filing Party”)
after the Distribution Date pursuant to Sections 3.1 and 3.2, (i) upon the
request of the Filing Party, the Liable Party shall promptly provide to the
Filing Party all information necessary to enable the Filing Party to file such
Tax Returns and (ii) assuming compliance by the Liable Party with the Liable
Party’s obligations under clause (i) (or written waiver by the Filing Party of
such compliance), the Filing Party shall, not later than ten (10) days prior to
the due date for remitting such Taxes (or, if the due date is within sixty (60)
days after the Distribution Date, as promptly following the Distribution Date as
possible) provide the Liable Party with a written request showing in reasonable
detail the calculation of the amount of such Liable Party’s Taxes (and any other
amounts) owing by the Liable Party to the Filing Party pursuant to this
Agreement.  Subject to Section 4.2 which provides for payments due as a result
of a Final Determination, the Liable Party shall have the right to object in
writing to such calculation on or before sixty (60) days after the date on which
such request is provided to the Liable Party, on the grounds that there is
substantial authority that such calculation is incorrect; provided that if the
Liable Party so objects, (i) the Filing Party and the Liable Party shall
promptly submit the dispute to an independent accounting or law firm acceptable
to both the Filing Party and the Liable Party for prompt resolution, whose
decision shall be final and binding on the Filing Party and the Liable Party,
and (ii) the party that such accounting or law firm determines has lost the
dispute shall pay all of the fees and expenses incurred in connection with
submitting such dispute. The Liable Party shall pay to the Filing Party any
amount not in dispute on or before the thirtieth (30th) day following the
receipt of such request by the Liable Party, with additional amounts to be paid
by the Liable Party (together with interest at the Applicable Federal Rate
accruing from the date on which such Return is filed) promptly upon resolution
of any objection.

4.2  Other Payments. Other payments due to a party under Section 3.3 shall be
due not later than twenty (20) days after the receipt or crediting of a refund
or the receipt of notice of a Final Determination to the effect that the
indemnified party is liable for an indemnified cost, together with interest at a
rate equal to the Applicable Federal Rate from the date on which the
indemnifying party receives such receipt, credit or notice.

4.3  Notice. Titan and SureBeam shall give each other prompt written notice of
any payment that may be due under this Agreement.

 

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ARTICLE V

TAX AUDITS

5.1  General. Except as otherwise provided in this Agreement, each of SureBeam
and Titan (as the case may be, the “Controlling Party”) shall have sole
responsibility for all audits or other proceedings with respect to Tax Returns
that it is required to file under Section 3.1. Except as provided in Section
5.3, the Controlling Party shall have the sole right to contest the audit or
proceeding and to employ advisors of its choice.

5.2  Indemnified Claims In General. Titan or SureBeam shall promptly notify the
other in writing upon the receipt of an actual oral or written notice from any
relevant Taxing authority of any proposed adjustment to a Tax Return that may
result in liability of the other party (the “Indemnitor”) under this Agreement.
If the Indemnitor is not also the Controlling Party, the Controlling Party shall
provide the Indemnitor with information about the nature and amounts of the
proposed adjustments and, subject to additional rights of the Indemnitor in
certain circumstances under Section 5.3 of this Agreement, shall permit the
Indemnitor to participate in the proceeding at the Indemnitor’s own expense;
provided, however, that the Controlling Party shall not be required to indemnify
the Indemnitor if the Controlling Party fails to notify or provide such
information to the Indemnitor, unless the Indemnitor is materially prejudiced
thereby. The Indemnitor shall pay all (or, in the case of Restructuring Taxes
for which liability is shared under Section 3.4(a) of this Agreement, a portion
based on the Indemnitor’s share of such Restructuring Taxes) reasonable expenses
(including, but not limited to, legal and accounting fees) incurred by the
Controlling Party in connection with the assessment or adjustment within seven
(7) days after a written request by the Controlling Party.

5.3  Certain Federal Income Tax Claims.

(a)           Any issues (other than issues relating to Restructuring Taxes for
which liability is shared under Section 3.4(a), which shall be excluded from the
provisions of this Section 5.3) raised by the IRS in any Tax inquiry, audit,
examination, investigation, dispute, litigation or other proceeding that would
result in liability to the Indemnitor under this Agreement that in the aggregate
would equal or exceed $250,000 with respect to any taxable year are defined as a
Claim (a “Claim”). Except as provided in Section 5.3(d) and notwithstanding any
other provision of this Agreement that may be construed to the contrary, the
Controlling Party agrees to contest any Claim and not to settle any Claim
without prior written consent of the Indemnitor, provided that (i) the
Controlling Party shall provide notice to Indemnitor pursuant to Section 5.2 of
any Claim, (ii) within thirty (30) days after such notice is received by the
Indemnitor, the Indemnitor shall request in writing that such Claim be contested
and the Indemnitor shall provide an opinion of independent tax counsel, selected
by the Indemnitor and reasonably acceptable to the Controlling Party, to the
effect that it is more likely than not that a Final Determination will be
substantially consistent with the Indemnitor’s position relating to such Claim,
(iii) the Indemnitor shall agree to pay (and shall pay) on demand all
out-of-pocket costs, losses and expenses (including, but not limited to,
reasonable legal and accounting fees) paid or incurred by the Controlling Party
in connection with contesting such Claim, and (iv) the Controlling Party, after
reasonable consultation with the Indemnitor, shall determine in the Controlling
Party’s sole discretion the nature of all actions to be taken to contest

 

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such Claim, including (x) whether any action to contest such Claim shall
initially be by way of judicial or administrative proceeding, or both, (y)
whether any such Claim shall be contested by resisting payment thereof or by
paying the same and seeking a refund thereof, and (z) the court or other
judicial body before which judicial action, if any, shall be commenced. To the
extent the Indemnitor is not participating, the Controlling Party shall keep the
Indemnitor (and, upon request by the Indemnitor, its counsel) informed as to the
progress of the contest.

(b)           If the Indemnitor requests that the Controlling Party accept a
settlement of a Claim offered by the IRS and if such Claim may, in the
reasonable discretion of the Controlling Party, be settled without prejudicing
any claims the IRS may have with respect to matters unrelated to the Claim, the
Controlling Party shall either accept such settlement offer or agree with the
Indemnitor that the Indemnitor’s liability with respect to such Claim shall be
limited to the lesser of (i) an amount calculated on the basis of such
settlement offer plus interest owed to the IRS on the date of eventual payment
or (ii) the amount calculated on the basis of a Final Determination.

(c)           If the Controlling Party shall elect to pay the Tax claimed and
seek a refund, the Indemnitor shall lend sufficient funds on an interest-free
basis to the Controlling Party (with no net after-tax cost to the Controlling
Party), to cover any applicable indemnity obligations of the Indemnitor. To the
extent such refund claim is ultimately disallowed, the loan or portion thereof
equal to the amount of the refund claim so disallowed shall be applied against
the Indemnitor’s obligation to make indemnity payments pursuant to this
Agreement. To the extent such refund claim is allowed, the Controlling Party
shall pay to the Indemnitor all amounts advanced to the Controlling Party with
respect to the indemnity obligation within ten (10) days of the receipt of such
refund (or if the Controlling Party would have received such refund but for the
existence of a counterclaim or other claim not indemnified by the Indemnitor
under this Agreement, within ten (10) days of the final resolution of the
contest), plus an amount equal to any interest received (or that would have been
received) from the IRS that is properly attributable to such amount.

(d)           Except as provided below, the Controlling Party shall not settle a
Claim that the Indemnitor is entitled to require the Controlling Party to
contest under Section 5.3(a) without the prior written consent of the
Indemnitor. At any time, whether before or after commencing to take any action
pursuant to this Section 5.3 with respect to any Claim, the Controlling Party
may decline to take action with respect to such Claim and may settle such Claim
without the prior written consent of the Indemnitor by notifying the Indemnitor
in writing that the Indemnitor is released from its obligations to indemnify the
Controlling Party with respect to such Claim (which notification shall release
the Indemnitor from such obligations except to the extent the Indemnitor has
agreed in writing that it would be willing to have its liability calculated on
the basis of a settlement offer, as provided in Section 5.3(b), at that point in
the contest) and with respect to any Claim related to such Claim or based on the
outcome of such Claim. If the Controlling Party settles any Claim or otherwise
takes or declines to take any action pursuant to this paragraph, the Controlling
Party shall pay to the Indemnitor any amounts paid or advanced by the Indemnitor
with respect to such Claim (other than amounts payable by the Indemnitor in
connection with a settlement offer pursuant to Section 5.3(b)), plus interest
attributable to such amounts.

 

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ARTICLE VI

COOPERATION

6.1  General. Titan and SureBeam shall cooperate with each other in the filing
of any Tax Returns and the conduct of any audit or other proceeding and each
shall execute and deliver such powers of attorney and make available such other
documents as are reasonably necessary to carry out the intent of this Agreement.
Each party agrees to notify the other party in writing of any audit adjustments
that do not result in Tax liability but can be reasonably expected to affect Tax
Returns of the other party, or any of its Subsidiaries, for a Post-Distribution
Period. Each party agrees to treat the Recapitalization , the Conversion and the
Distribution for all income Tax purposes as not causing the recognition of any
income, gain or loss (except with respect to the payment of cash in lieu of
fractional shares).  Each party agrees to prepare and file their Tax Returns for
all periods on a basis consistent with the positions taken on the Tax Returns
filed by Titan during the period SureBeam was a member of the Titan Affiliated
Group.  Further, each party agrees to cooperate with the other to promptly
provide such Representation Letters as shall be reasonably requested.

6.2  Cooperation With Respect To Tax Return Filings, Examinations And Tax
Related Controversies.

(a)           In addition to any obligations imposed pursuant to the
Reorganization Agreement, each member of the Titan Group shall fully cooperate
with SureBeam and its representatives, in a prompt and timely manner, in
connection with (i) the preparation and filing of and (ii) any inquiry, audit,
examination, investigation, dispute, or litigation involving, any Tax Return
required to be filed by SureBeam pursuant to this Agreement, by or for any
member of the SureBeam Group.

(b)           SureBeam shall fully cooperate with Titan and its representatives,
in a prompt and timely manner, in connection with (i) the preparation and filing
of and (ii) any inquiry, audit, examination, investigation, dispute, or
litigation involving, any Tax Return required to be filed by Titan pursuant to
this Agreement. Such cooperation shall include, but not be limited to, (x) the
execution and delivery to Titan by SureBeam of any power of attorney required to
allow Titan and its counsel to participate in or control any inquiry, audit or
other administrative proceeding and to assume the defense or prosecution, as the
case may be, of any suit, action or proceeding pursuant to the terms of and
subject to the conditions set forth in Article V of this Agreement, and (y)
making available to Titan, during normal business hours, and within fifteen (15)
days of any written request therefor, all books, records and information, and
the assistance of all officers and employees, necessary or useful in connection
with any Tax inquiry, audit, examination, investigation, dispute, litigation or
any other matter.

 

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ARTICLE VII

RETENTION OF RECORDS; ACCESS

The Titan Group and the SureBeam Group shall:

7.1  retain (for a minimum of five (5) years) records, documents, accounting
data and other information (including computer data) necessary for the
preparation and filing of all Tax Returns in respect of Taxes of the Titan Group
or the SureBeam Group or for the audit of such Tax Returns; and

7.2  give to the other reasonable access to such records, documents, accounting
data and other information (including computer data) and to its personnel
(insuring their cooperation) and premises, for the purpose of the current or
potential review or audit of such Tax Returns to the extent relevant to an
obligation or liability of a party under this Agreement or applicable law. At
any time after the Distribution Date if either the SureBeam Group or the Titan
Group proposes to destroy such records, documents, accounting data or other
information, the party proposing to destroy documents shall first notify the
other party in writing and such party shall be entitled to receive such records,
documents, accounting data or other information proposed to be destroyed.

ARTICLE VIII

DISPUTES

If Titan and SureBeam cannot agree on any calculation of any liabilities under
this Agreement, such calculation shall be made by any independent public
accounting firm acceptable to both Titan and SureBeam. The decision of such firm
shall be final and binding. The fees and expenses incurred in connection with
such calculation shall be borne by the party that such independent public
accounting firm determines has lost the dispute.

ARTICLE IX

TERMINATION OF LIABILITIES

Notwithstanding any other provision in this Agreement, any liabilities
determined under this Agreement shall survive indefinitely.

ARTICLE X

MISCELLANEOUS PROVISIONS

10.1                        Co-ordination With Existing Agreement.  It is
acknowledged that, the Tax Allocation Agreement shall continue in effect with
respect to any tax year for which consolidated federal income tax returns are
filed by the Titan Consolidated Group and for state income tax purposes with
respect to any tax year for which combined, consolidated or unitary tax returns
are filed by the Titan Consolidated Group, as those terms are defined in such
Tax Allocation Agreement.

 

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10.2        Governing Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California as such laws are
applied to agreements between California residents entered into and performed
entirely in California.

10.3        Entire Agreement; Amendment.  This Agreement, including any and all
attachments or exhibits hereto, constitutes the entire, final and exclusive
understanding and agreement between the parties with respect to the subject
matter hereof.  This Agreement may be amended, waived, discharged or terminated
only by written agreement of the parties.

10.4        Severability  In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the parties intend that (a) in lieu of such
provision there be added as part of this Agreement a provision as similar in
terms to such invalid, illegal or unenforceable provision as may be possible and
be valid, legal and enforceable and (b) the validity, legality and
enforceability of the remaining provisions, or any subsequent applications
thereof, shall not in any way be affected or impaired thereby.

10.5        Binding Effect, Assignment, Etc.  This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their permitted
assigns and successors in interest.  No party may assign any right, or delegate
any obligation hereunder without the express prior written consent of Titan.

10.6        Delays or Omissions.  It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
breach, default or noncompliance, or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring.  All remedies,
either under this Agreement, by law, or otherwise afforded to any party, shall
be cumulative and not alternative.

10.7        Captions.  Titles or captions of Sections and paragraphs contained
in this Agreement are inserted only as a matter of convenience and for
reference, and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provision hereto.

10.8        Number and Gender.  Whenever required by the context, the singular
number shall include the plural, the plural number shall include the singular,
and the gender of any pronoun shall include all genders.

10.9        Notices.  Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified; (b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; or (c) upon deposit
with the United States Post Office, by registered or certified mail, postage
prepaid and addressed to the party to be notified parties; or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt at the address indicated for
such party on the signature page hereof, or at such other address as such party
may designate by ten (10) days’ advance written notice to the other.

 

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10.10      Cooperation.  Each party hereby covenants and agrees that it shall
execute and deliver all materials including, but not limited to, returns,
supporting schedules, workpapers, correspondence and other documents relating to
the consolidated return to any party to this Agreement during regular business
hours.

10.11      Counterparts.  This Agreement may be executed in multiple copies,
each of which shall for all purposes constitute an Agreement, binding on the
parties, and each partner hereby covenants and agrees to execute all duplicates
or replacement counterparts of this Agreement as may be required.

10.12      Computation of Time.  Whenever the last day for the exercise of any
privilege or the discharge of any duty hereunder shall fall on a Saturday,
Sunday or any public or legal holiday, whether local or national, the person
having such privilege or duty shall have until 5:00 p.m. Pacific Standard Time
on the next business day to exercise such privilege, or to discharge such duty.

10.13      Costs and Expenses.  Unless otherwise provided in this Agreement,
each party shall bear all fees and expenses incurred in performing its
obligations under this Agreement.

10.14      Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

 

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In Witness Whereof, the parties hereto have duly executed this Agreement as of
the day and year first above written.

                                                                                               
The Titan Corporation

By

 

Name:

 

Title:

 

SureBeam Corporation

By

 

Name:

 

Title:

 

 

 

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