Exhibit 10.38

 

*

Confidential Treatment Requested Under

 

17 C.F.R. §§ 200.80(b)(4),

 

200.83 and 240.24b-2

 

JOINT VENTURE AGREEMENT

 

THIS JOINT VENTURE AGREEMENT (hereinafter referred to as the “Agreement”), made
and entered into this 30th day of April 2002, by and between:

 

1.             RESAL Saudi Corp., a sole proprietorship organized under the laws
of the Kingdom of Saudi Arabia with commercial registration no. 1010040184,
owned by Mr. Ghassan Alamdar and having an office at Al-Rosais Commercial
Center, Olaya Main Road, Riyadh 11482, Kingdom of Saudi Arabia (hereinafter
referred to as “RESAL”); and

 

2.             SUREBEAM Corporation, a corporation organized and existing under
the laws of the state of Delaware in the United States of America, having an
office at 3033 Science Park Road, San Diego, California 92121, USA (hereinafter
referred to as “SUREBEAM”).

 

WITNESSETH THAT:

 

WHEREAS, RESAL is experienced in the business of construction and in investments
within the Kingdom of Saudi Arabia and the Middle East region;

 

WHEREAS, SUREBEAM is engaged in the business of designing, manufacturing,
selling, installing, operating and servicing food irradiation or pasteurization
systems, including electron beam and x-ray equipment and systems; and

 

WHEREAS, RESAL and SUREBEAM intend to cooperate in the field of irradiation and
electronic pasteurization of food products by establishing a Company in the
Kingdom of Saudi Arabia which shall engage in the business of proving
irradiation and electronic pasteurization of food products and animal hides and
flowers using SUREBEAM’s patented electron beam and x-ray technology on an
exclusive basis in the Kingdom of Saudi Arabia and other specified countries in
the Middle East as more fully set forth below,

 

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

 

1.     Interpretation

 

1.1                                 Whenever used herein and written in initial
capital letters, the following terms shall have the meanings respectively
defined:

 

“Affiliate” shall mean, in relation to either party, any entity which Controls
or, is directly or indirectly Controlled by or under common Control with, such
Party.

 

“Approved Accounting Firm” shall mean the Saudi Arabian accounting firms
affiliated with one of the four (4) following international accounting firms,
namely Deloitte & Touche, Ernst & Young, KPMG, and Price Waterhouse Coopers, or
the legal successors of any of the foregoing;

 

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“Business” shall mean the operation of the Equipment and other SUREBEAM
irradiation and electronic pasteurization equipment, for the treatment of food
products, animal hides and flowers only;

 

“Control” means in relation to any person (the “First Person”) the power of
another person to secure: (a) by means of the holding of shares or other
ownership interests or the exercise of voting rights in or in relation to the
First Person or any other person; or (b) by virtue of any powers conferred by
the constitutive documents of the First Person or any other person that the
affairs of the First Person are conducted in accordance with the wishes or
directions of that other person, and the expressions “Controls” or “Controlled”
shall be constructed accordingly;

 

“Company” shall mean the company in the form of a joint venture limited
liability company to be established by RESAL and SUREBEAM under the laws of
Saudi Arabia and the terms and conditions of this Joint Venture Agreement;

 

“Effective Date” shall have the meaning as described in Article 21;

 

“Equipment” shall mean the linear accelerator equipment and related equipment,
material handling equipment, safety equipment, dosimetry system, and a real-time
information and control systems manufactured and supplied by SUREBEAM;

 

“Expansion Countries” shall include any of the following countries: Egypt,
Lebanon, Syria, Iraq, Iran, Libya, Tunisia and Algeria, subject to compliance
with United States laws or regulations, including but not limited to the United
States Export Administration Regulations (“EAR”) and the Commerce Control List
(“CCL”);

 

“Intellectual Property Rights” shall mean any how known or hereafter existing
(a) rights associated with works of authorship throughout the universe,
including exclusive exploitation rights, copyrights, moral rights and mask
works, (b) trademark and trade name rights and similar rights, (c) trade secret
rights, (d) patents, designs, algorithms and other industrial property rights,
(e) other intellectual and industrial property and proprietary rights of every
kind and nature throughout the universe, whether arising by operation of law, by
contract or license, or otherwise, and (f) all registrations, applications,
renewals, extensions, combinations, divisions or reissues of the foregoing;

 

“Kingdom” shall mean the Kingdom of Saudi Arabia;

 

“Parties” shall mean RESAL, SUREBEAM and any other person that may become a
party to this Agreement, and Party shall mean any of the foregoing;

 

“Processing Facilities” shall mean the processing facilities to be constructed
by the Company in the Territory for the operation of the Business within the
Territory and Processing Facility shall mean any of the foregoing;

 

“Territory” shall mean the Kingdom of Saudi Arabia, Kuwait, Bahrain, United Arab
Emirates, Qatar, Oman, and Yemen;

 

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“Year”, “Month”, “Week” and “Day” shall mean a calendar year, calendar week,
calendar month and a calendar day of the Gregorian calendar;

 

1.2                                 Except where the context otherwise requires,
references to statutory provisions shall be construed as references to those
provisions as respectively amended or re-enacted or as their application is
modified from time to time by other provisions (whether before or after the date
hereof).

 

1.3                                 References in this Agreement to Recitals,
Articles, Clauses, paragraphs, Exhibits and Schedules are to Recitals, Clauses
and paragraphs in, and to Exhibits and Schedules to, this Agreement. The
Recitals, Exhibits and Schedules to this Agreement shall be deemed to form part
of this Agreement.

 

1.4                                 Headings are inserted for convenience only
and shall not affect the construction of this Agreement.

 

1.5                                 References to the Parties and to the
shareholders include their respective successors and permitted assigns.

 

1.6                                 References to persons shall include any
individual, any form of body corporate, sole proprietorship, business,
unincorporated association, firm, partnership, joint venture, consortium,
association, organization, trust or any other legal entity (in each case whether
or not having a separate legal personality).

 

1.7                                 The masculine gender shall include the
feminine and neuter and the singular number shall include the plural and vice
versa.

 

2.     Establishment and Organization of the Company

 

2.1                                 Subject to the terms and conditions of this
Agreement, the Parties agree that they shall cooperate and use their best
endeavors to cause the licensing, formation, registration, and qualification of
the Company in accordance with the Articles of Association set forth as Exhibit
A to this Agreement (hereinafter referred to as the “Articles of Association”)
and the laws of the Kingdom of Saudi Arabia.

 

2.2                                 The purpose of the Company shall be to
establish and operate Processing Facilities using SUREBEAM’s patented electron
beam and x-ray technology in the Territory solely for the purpose of exclusively
conducting the Business in the Territory, subject to the terms and conditions of
this Agreement.

 

2.3                                 The name of the Company shall be “SureBeam
Middle East, LLC” or such other name as the Parties may subsequently agree.

 

2.4                                 The registered office of the Company shall
be in Riyadh, Kingdom of Saudi Arabia.

 

2.5                                 The Parties will use commercially reasonable
efforts to cause the Company after its formation to lease land suitable for the
Processing Facilities in Riyadh in the Kingdom of

 

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Saudi Arabia. RESAL shall assist the Company to finalize the lease agreement and
have access to important utilities and site services on terms that are as
favorable as possible.

 

2.6                                 As soon as reasonably practicable after the
execution of this Agreement, SUREBEAM shall prepare and submit an application to
the Saudi Arabian General Investment Authority for an investment license.

 

2.7                                 As soon as possible after receipt of a
foreign capital investment license, the Articles of Association shall be
submitted to the Ministry of Commerce. If any changes to the Articles of
Association are required by the Ministry, they shall only be amended and
re-submitted to the Ministry if all of the Parties approve the changes in
writing, which approval shall not be unreasonably withheld or delayed. Each
Party shall cause its duly authorized representative to execute the Articles of
Association, in the form agreed by the Parties and approved by the Ministry,
before a Notary Public in the Kingdom and to take such further actions as
necessary to form, register and qualify the Company as soon as reasonably
practicable thereafter.

 

2.8                                 The Parties hereby agree to execute and
deliver all powers of attorney, consents, and additional instruments which may
reasonably be required in order to consummate the transactions stipulated above.

 

2.9                                 As soon as possible following the issuance
of the Company’s commercial registration, the Parties shall cause the Company to
enter into the following agreements:

 

(a)                                  A license agreement with SUREBEAM,
providing for the license in the Territory of SUREBEAM’s patented electron beam
and x-ray technology, and related know-how solely for the purpose of exclusively
conducting the Business in the Territory, as more fully set forth in the License
Agreement, attached hereto as Exhibit B and incorporated herein (“License
Agreement”); and

 

(b)                                 A technical services agreement with
SUREBEAM, providing for the terms of SUREBEAM’s ongoing support for Equipment
purchased and operated by the Company in the Territory, as more fully set forth
in the Technical Services Agreement, attached hereto as Exhibit C and
incorporated herein (“Technical Services Agreement”).

 

3.     Share Capital

 

3.1                                 The Company shall have an initial share
capital of five million Saudi Riyals (SR 5,000,000).

 

3.2                                 The capital shall be divided into five
thousand (5,000) cash shares, each having a value of one thousand Saudi Riyals
(SR 1,000).

 

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3.3                                 The capital of the Company, expressed as
cash shares, will be appropriated among the Parties as follows:

 

Party

 

Percentage

 

# Cash Shares

 

Value (SR)

 

Resel

 

80.1

%

4005

 

4,005,000

 

Surebeam

 

19.9

%

995

 

995,000

 

Total

 

100

%

5000

 

5,000,000

 

 

3.4                                 Each Party shall deposit in cash the full
value of its cash contribution for the cash shares apportioned to it at one of
the approved banks in the Kingdom in the name of the Company, as a limited
liability company under formation, promptly following the signature of the
Articles of Association before a Notary Public in the Kingdom.

 

3.5                                 The transfer, assignment, encumbrance or
other disposal of shares shall be governed by the terms and conditions of this
Agreement and the Articles of Association related thereto.

 

3.6                                 The initial capital of the Company may be
increased or decreased in accordance with the terms and conditions of this
Agreement and the Articles of Association related thereto.

 

3.7                                 A Party may not pledge its shares (or
interest) in the Company or otherwise use such shares (or interest) as security,
unless it first obtains the prior written consent of all other Parties.

 

3.8                                 All items of income, distributions,
deduction, gain, loss and credit shall be allocated to the Parties in accordance
with their percentage interests in the Company, as set forth above.

 

4.     Financial Requirements

 

4.1                                 The Parties intend that the initial capital
of the Company will be sufficient for its initial developmental and promotional
work. The Parties acknowledge and agree, however, that additional capital
contributions and financing will be necessary to develop and establish the
Processing Facilities in the Territory.

 

4.2                                 In order to finance the costs related to the
construction and establishment of the Processing Facilities in the Kingdom, the
Parties agree that they shall use their best efforts to obtain for the Company
equity and debt financing from the following sources: (a) increase of the
capital of the company in accordance with the terms of this Agreement and the
Articles of Association, (b) loans from the Saudi Industrial Development Fund,
and (c) credit and other banking facilities from one or more individuals and
commercial banks.

 

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4.3                                 RESAL will seek new investors for the
Company. The Parties may agree to increase the capital of the Company through
issuing new shares to such new investors and/or RESAL selling part of its shares
to new investors and increasing the value of all of the shares of the Company.
Notwithstanding anything else to the contrary in this Agreement, SUREBEAM’s
percentage interest in the Company shall never exceed nineteen and nine-tenths
percent (19.9%) of the entire outstanding capital shares of the Company.

 

4.4                                 All banking and credit facilities, whether
obtained in the Kingdom or abroad, shall be arranged in accordance with normal
and sound business principles and the terms and conditions of any such
facilities shall require prior written approval of the Board of Managers.

 

5.     Distribution of Profits; Taxes

 

5.1                                 The annual net profits of the Company and
any retained profits from previous years shall be distributed in the following
manner:

 

(a)                                  The Company shall set aside ten percent
(10%) of its annual net profits as a statutory reserve (before distribution of
profits to the shareholders) until the accumulate reserve equals one half (1/2)
of the Company’s capital.

 

(b)                                 The balance of the profits shall be
distributed to the shareholders pro rata according to the percentage of the
shares owned by each shareholder, unless the shareholders unanimously resolve to
establish other reserves or carry forward or retain all or a portion of the
profits into the next fiscal year.

 

(c)                                  The Parties undertake to resolve to
establish such reserves and/or carry forward or retain such profits as may be
necessary to enable the Company to comply with the terms of any loan or credit
facilities to which the Company is a party. Any such profits retained from
previous years shall be distributed to the shareholders pro rata according to
the percentage of the shares owned by each shareholder, unless:

 

(i)                                     the shareholders unanimously resolve to
establish other reserves or carry forward or retain all or a portion of the
profits into the next fiscal year; or

 

(ii)                                  otherwise required to enable the Company
to comply with the terms of any loan or credit facilities to which the Company
is a party.

 

5.2                                 If losses are incurred, they shall be
carried over to the next fiscal year and no profits shall be distributed until
the losses are fully covered.

 

5.3                                 Each Party shall be solely responsible for
the payment of any zakat or Saudi Arabian income tax which is imposed on (i) its
respective share of the Company’s profits, or (ii) its respective ownership
interest in the Company. Each Party shall authorize the Company to withhold from
any payments to be made to it any Saudi Arabian income tax or zakat that is due
from it and to pay such amounts directly to the Department of Zakat

 

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& Income Tax (the “DZIT”) in Saudi Arabia for the account of that party so that
the Company can obtain the necessary tax clearance certificate. If at any time
additional amounts are required from a Party to cover any income tax or zakat
for which it is responsible that Party shall pay such amounts to the Company for
payment to the DZIT so as to enable the Company to obtain its tax clearance
certificate, provided however, that if there are insufficient distributions
payable by the Company to a Party to cover any tax or zakat for which that Party
is responsible pursuant to this paragraph 5.3, the Parties will cause the
Company, to the extent permissible under the laws and regulations of Saudi
Arabia and the terms of any loan or credit facilities to which the Company is a
party, to pay the zakat or tax to the DZIT on that Party’s behalf and debit that
Party’s account with the Company. No Party shall be entitled to reimbursement
from any other Party or the Company for any income tax or zakat that it is
obligated to pay.

 

6.     Competition

 

6.1                                 Subject to Article 6.2 below, each of the
Parties hereby covenants to the other Parties hereto that neither such party nor
any Affiliate thereof shall, directly or indirectly engage in, own, manage,
Control or participate in the ownership, management or Control of, provide
financing or other financial or other assistance to, or otherwise affiliate or
associate (as a consultant, independent contractor or otherwise) with, any
person, corporation, partnership, limited liability company, proprietorship,
firm, association, or other business entity (foreign or domestic) that engages
in the Business in the Territory. Notwithstanding the previous sentence, nothing
in this Agreement shall prevent or otherwise restrict any Party from engaging in
the business of irradiation in the Territory not involving the treatment of
food, animal hides and flowers products.

 

6.2                                 The Parties expressly agree that if the
Company fails to complete the building and start the operation of three (3)
plants within the Territory within five (5) years from the date of issuance of
the Commercial Registration, then SUREBEAM shall have the right to, directly or
indirectly engage in, own, manage, Control or participate in the ownership,
management or Control of, provide financing or other financial or other
assistance to, or otherwise affiliate or associate (as a consultant, independent
contractor or otherwise) with, any person, corporation, partnership, limited
liability company, proprietorship, firm, association, or other business entity
(foreign or domestic) that engages in the Business in the Territory.

 

7.     Sale or Transfer of Shares

 

7.1                                 Subject to obtaining SUREBEAM’s prior
written approval, which shall not be unreasonably withheld, RESAL shall be
entitled to transfer its shares in the Company to new investors until such time
the Company opens its first Processing Facility in the Kingdom. Without
prejudice to the foregoing, no shareholder shall be entitled to transfer all or
part of its interest in the Company, whether with or without consideration,
either to another shareholder or to a third party, except after complying with
the pre-requisites detailed in the following paragraphs of this Article 7:

 

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(a)                                  A shareholder may after giving prior
written notice to each other Party and satisfying the following conditions,
transfer all or part of its shares to an Affiliate, provided that the
transferring Party provides a guarantee of the contractual obligations of the
Affiliate under this Agreement in the form attached hereto as Exhibit E and the
Affiliate agrees to be bound by all terms and conditions of this Agreement by
executing a deed of adherence in the form attached hereto as Exhibit D.

 

(b)                                 A shareholder wishing to transfer part or
all of its shares to a party other than an Affiliate pursuant to Article 7.1(a)
above shall notify the other shareholder(s) of this in writing, through the
Chairman of the Board of Managers, mentioning the name of the purchaser and (for
information purposes only) the offer price and terms of transfer. The Chairman
shall forthwith notify the other shareholder(s) and the following shall apply:

 

(i)                                     Each other shareholder shall have a
pre-emptive right to purchase the shares to be sold, which right shall be
exercisable at the value specified in sub-paragraph (b)(ii) of this Article,
provided that such right is exercised within forty five (45) days from the date
of receipt of the Chairman’s notification referred to above. Each shareholder
wishing to exercise this pre-emptive right must offer to purchase all of the
shares to be sold. However, if this right is exercised by more than one
shareholder, the shares shall be divided pro-rata in proportion to the level of
equity held by each shareholder at the date of redemption.

 

(ii)                                  The shareholders hereby agree that the
value of shares over which the pre-emptive right is to be exercised shall be the
actual value, which actual value the shareholders from now agree shall be
calculated on the basis of the fair market value of the shareholding which is
being sold, determined in accordance with Article 16 hereof.

 

(iii)                               Should the said forty five (45) day interval
elapse and no shareholder has exercised its right of pre-emption, the
shareholder wishing to transfer shall transfer those shares not taken up by the
other shareholder(s), provided that the transfer is completed within one hundred
eighty (180) day starting from the day following the end of the aforesaid forty
five (45) day interval given to the shareholders pursuant to subparagraph (b)(i)
of this Article, and further provided the sale is made to the same party and on
the same price and terms and conditions mentioned in the notification.

 

(iv)                              Irrespective of the foregoing, neither
SUREBEAM nor RESAL shall transfer its shares in the Company to a third party if
such transfer causes its shareholding in the Company to become less than
[...***...] in the case of SUREBEAM or [...***...] percent in the case of RESAL.

 

* Confidential Treatment Requested

 

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(c)                                  All transfers shall be subject to obtaining
any approvals required from the competent authorities and to the execution by
the transferee of a deed of adherence to this Agreement in the form attached
hereto as Exhibit D.

 

7.2                                 Without prejudice to the provisions of
Article 7.1(b) above, if the holders of the majority of the then outstanding
shares (the “Majority Sellers”) receive an outside offer from any third party to
purchase their shares in the Company and the Majority Sellers intend to accept
such offer they shall promptly give the other shareholders (individually
referred to as a “Minority Seller” and collectively as the “Minority Sellers”)
written notice accordingly (an “Outside Offer Notice”) setting out the full name
and address of the proposed purchaser and the terms and conditions of the
proposed offer. Each of the Minority Sellers shall be entitled at any time
within forty five (45) days after receipt of an Outside Offer Notice to serve a
notice on the Majority Sellers (a “Take Along Notice”) requiring the Majority
Sellers to procure the purchase by, or transfer to, the third party purchaser or
transferee of all of the shares in the Company held by the Minority Seller or
Sellers, as the case may be. If the Majority Sellers cannot procure the purchase
by the third party purchaser of all of the shares held by the Minority Seller or
Sellers, the Majority Sellers shall themselves purchase, or arrange for the
purchase of, such shares. In either case, the purchase of the shares held by the
Minority Sellers shall be effected on the same terms and conditions as are
specified in the Outside Offer Notice, except that the price payable for the
Minority Sellers’ shares shall be the greater of (a) the fair market value (as
determined pursuant to Article 16), (b) the par value, (c) the book value (as
determined according to Article 17.6) of such shares, or (d) or the price stated
in the Outside Offer Notice. A Take Along Notice shall have no effect if the
acquisition by the third party of shares from the Majority Sellers is not
completed.

 

7.3                                 The Parties shall take such action as may
reasonably be required to give effect to any transfer of shares permitted or
required pursuant to this Article 7. If a Party that is entitled or required to
acquire shares pursuant to this Article 7 would, as a result of such
acquisition, become the only shareholder in the Company, such Party shall have
the right to designate a third party to acquire a portion of the shares which
such Party is entitled or required to acquire.

 

8.     Shareholder’s Meetings

 

8.1                                 The shareholders shall act through general
meetings and resolutions duly held and adopted in accordance with the terms and
conditions of the Articles of Association.

 

8.2                                 A resolution adopted with the affirmative
unanimous vote of all shareholders is required to authorize any of the following
major business decisions:

 

(a)                                  any change in the nationality of the
Company;

 

(b)                                 any increase in the financial burdens of the
shareholders;

 

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(c)                                  any amendment of the Articles of
Association, including without limitation any change in the capital or objects
of the Company;

 

(d)                                 acquisition or disposition of shares or
partnership interests in other companies or partnerships;

 

(e)                                  declaration of less than all the profits of
the Company as dividends and establishment of reserves out of earnings
(including capitalization or disposition of such reserves);

 

(f)                                    sale or other disposition of all or a
substantial part of the Company’s business;

 

(g)                                 acquisition or disposition of real estate
assets; or

 

(h)                                 the dissolution of the Company; and

 

(i)                                     a decision on any of the matters
referred to in Article 9.2 if the Board of Managers fails to issue a decision by
the requisite majority.

 

8.3                                 The Shareholders shall appoint the Company’s
auditor who shall be an Approved Accounting Firm through a resolution to be
approved with a majority representing Shareholders holding fifty one (51%) of
the Company’s capital.

 

8.4                                 The resolutions of the Meeting of
Shareholders shall be laid down in writing in the Arabic and English languages.
Meetings of the Shareholders shall be conducted in the English language.

 

9.     Board of Managers

 

9.1                                 Except in relation to those matters referred
to the shareholders, the Company shall be managed by a Board of Managers
appointed as provided in the Articles of Association. The Board of Managers
shall have full authority to act on behalf of the Company as provided in the
Articles of Association. The Board of Managers shall consist of four (4) members
appointed as provided in the Articles of Association. In connection with any
change of shareholding, the Parties agree to amend the Articles of Association
in accordance with the following rules. Each Shareholder shall have the right to
appoint one member for each twenty-five percent (25%) block of shares held by
that Shareholder, except that SUREBEAM and RESAL shall each have the right to
appoint one member of the Board of Managers as long as its shareholding in the
Company is not less than ten (10%) in the case of SUREBEAM or fifteen (15%)
percent in the case of RESAL. Shareholders holding less than twenty-five percent
(25%) or a percentage that is not divisible by twenty-five percent (25%) may
agree to combine their shareholdings (or parts of shareholdings), and if such
aggregate sum of their shareholding in twenty-five percent (25%) or greater such
Shareholders may jointly appoint a member of the Board, provided that no
Shareholder’s shareholding shall be counted twice for this purpose.

 

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9.2                                 The Board of Managers shall adopt its
resolutions with the affirmative vote of the majority of the members being
present, provided, however, that the following matters shall be subject to the
affirmative unanimous vote of the members of the Board.

 

(a)                                  entering into any purchase, service or
other contract or commitment with an obligation in any one year of more than two
hundred fifty thousand Saudi Riyals (SR 250,000) or having a term of more than
two (2) years;

 

(b)                                 entry into or amendment of any loan or
financial facility as borrower;

 

(c)                                  entry into or amendment of any agreements
between the Company and one of its shareholders or their Affiliates or any of
the officers, directors or employees of one of its shareholders or their
Affiliates;

 

(d)                                 appointment and remuneration of the
Executive Manager who shall be responsible for the day-to-day business
activities and the implementation of the decisions and resolutions of the Board
of Managers;

 

(e)                                  approving capital expenditures (either
singly or a series of related expenditures) exceeding two hundred fifty thousand
Saudi Riyals (SR 250,000);

 

(f)                                    issuance of any guarantees or bonds;

 

(g)                                 transfer or other disposal of the Company’s
assets in excess of two hundred fifty thousand Saudi Riyal (SR 250,000);

 

(h)                                 the remuneration of the Chairman of the
Board; and

 

(i)                                     creating or granting any encumbrance
against the property of the Company if the indebtedness secured by such
encumbrance exceeds two hundred fifty thousand Saudi Riyals (SR 250,000).

 

9.3                                 The resolutions of the Board of Managers
shall be laid down in writing in the Arabic and English languages. Meetings of
the Board of Managers shall be conducted in the English language.

 

9.4                                 All members of the Board of Managers shall
have the right to examine or have examined all financial, technical and
commercial matters of the Company.

 

9.5                                 The Parties agree that the initial chairman
of the Board of Managers of the Company will be Mr. Ghassan Alamdar, to serve in
such capacity pursuant to the terms of the Articles of Association. The Parties
agree that the Chairman of the Board of Managers shall be entitled to
remuneration for his service as the Chairman of the Board in an amount that
would be determined by the Board.

 

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10.  Accounting System, Books and Budgets

 

10.1                           The Company shall keep and maintain a clear
accounting and cost accounting system allowing efficient control and allocation
of all costs involved, and shall regularly report in English to the Parties in
accordance with a system acceptable to the Board of Managers, based on generally
accepted accounting practices applied in Saudi Arabia, and in the absence of a
Saudi Arabian accounting practice with respect to the particular matter under
consideration, generally accepted accounting practices applied in the United
States of America.

 

10.2                           Cash flow projections will be prepared quarterly
and will include one (1) calendar month forward projections and will be sent to
SUREBEAM via courier mail. Quarterly and annual statements of account are to be
made in English and Arabic.

 

10.3                           SUREBEAM will make periodic visits to the Company
to perform internal quality control audits. Accordingly, SUREBEAM personnel will
be granted full access to plant facilities and personnel.

 

10.4                           The accounting books prepared by the Company
shall be in conformity with Article 10.1 above, and shall be recorded in the
English and Arabic languages. The books are to be prepared on the basis of the
Gregorian calendar and the fiscal year of the Company will coincide with
SUREBEAM’s fiscal year. Each Shareholder is entitled to inspect and conduct an
audit of the books of the Company at its own expense to verify the other
Parties’ compliance with this Agreement and/or the Company’s compliance with the
License Agreement, the Technical Services Agreement or any other related
agreements, either:

 

(a)                                  through an agent acceptable to the other
Shareholders; or

 

(b)                                 through any Approved Accounting Firm;

 

provided that it gives the Chairman of the Board of Managers thirty (30) days
prior notice in writing and provided further that no shareholder shall be
entitled to inspect and conduct an audit of the books of the Company more than
once every calendar quarter.

 

10.5                           Annual Budgets

 

Prior to the Company’s formation, the Shareholders shall jointly prepare a
budget for the Company’s day to day operations (an “Annual Budget”) during the
Company’s first fiscal year as well as a five-year business plan. Thereafter,
the Executive Manager of the Company shall, at least sixty (60) days prior to
the conclusion of each fiscal year, prepare and submit an Annual Budget for the
next fiscal year to the Board of Managers of the Company for their review and
approval, with a copy to each Shareholder.

 

Without otherwise limiting the ultimate content of any Annual Budget, the
Shareholders agree that each Annual Budget shall contain:

 

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(a)                                  the estimated cash disbursements which the
Company will be required to incur for capital expenditures during each month for
the period covered by the Annual Budget and details of the items in respect of
which the disbursements will be made;

 

(b)                                 the estimated cash disbursements which the
Company will be required to incur for its day to day operations during each
month for the period covered by Annual Budget and details of the items in
respect of which the disbursements will be made;

 

(c)                                  the extent to which such disbursements will
be satisfied by cash on hand or income to be received;

 

(d)                                 the extent, if any, to which additional
financing will be required and the proposed source for such financing;

 

(e)                                  if it is expected that Shareholders’ loan
may be required, details of the amounts which may be required during the period
covered by Annual Budget and the anticipated date or dates in each month of that
period in which payments from the Shareholders would be required; and

 

(f)                                    such other information as the Board of
Managers or any Shareholder may reasonably request.

 

The Company shall not, unless specifically so authorized by a resolution of the
Board of Managers or the Shareholders, (i) exceed the budget cost for items or
(ii) incur any expenditures pertaining to an item not included in an Annual
Budget.

 

10.6                           Processing Facilities Budget

 

Prior to the Company undertaking the development of any Processing Facility, the
Board of Managers or the Shareholders shall approve a budget for the development
of such Processing Facility (a “Processing Facility Budget”). At the end of the
fiscal year in which a Processing Facility Budget is approved, and at the end of
each subsequent fiscal year, the Board of Managers shall instruct the Executive
Manager either (a) to prepare and submit to the Board of Managers for their
review and approval, with a copy to each Shareholder, an updated Processing
Facility Budget for the relevant Processing Facility or (b) not to maintain a
separate Processing Facility Budget for such Processing Facility, in which case
expenditures relating to the Processing Facility during the next fiscal year
will be governed only by the Annual Budget for that year. In all cases, the
Annual Budget for a given fiscal year will reflect all anticipated expenditures
on Processing Facilities during such year.

 

Without otherwise limiting the ultimate content of any Processing Facility
Budget, the Shareholders agree that each Processing Facility Budget shall
contain:

 

13

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(a)                                  the estimated cash disbursements which the
Company will required to incur for capital expenditures during each month for
the period covered by the Processing Facility Budget and details of the items in
respect of which the disbursements will be made;

 

(b)                                 the estimated cash disbursements which the
Company will be required to incur for its day to day operations per month for
the period covered by the Processing Facility Budget, and explicit itemized
details in respect of which such anticipated disbursements will be made;

 

(c)                                  the extent to which such disbursements will
be satisfied by cash on hand or income to be received;

 

(d)                                 the extent, if any, to which additional
financial will be required and the proposed source for such financing;

 

(e)                                  if it is expected that Shareholders’ loans
may be required, details of the amounts which may be required during the period
covered by the Processing Facility Budget and the anticipated date or dates in
each month of that period in which payments from the Shareholders would be
required; and

 

(f)                                    such other information as the Board of
Managers or any Shareholders may reasonably request.

 

The Company shall not, unless specifically so authorized by a resolution of the
Board of Managers or the Shareholders, (i) exceed the budgeted costs for any
items in the applicable Processing Facility Budget (if any) or (ii) incur any
expenditure pertaining to an item not in the applicable Processing Facility
Budget (if any).

 

11.  Transfer of Technology

 

11.1                           Pursuant to the License Agreement to be entered
into between SUREBEAM and the Company, SUREBEAM shall grant to the Company a
non-exclusive license for certain SureBeam intellectual property and
technologies, including certain patent rights, under such terms and conditions
as set forth in the License Agreement. Without prejudice to section 6 above,
nothing in this Agreement or the License Agreement shall restrict SUREBEAM or
any other third party from operating product irradiation services not involving
food, animal hides or flowers within the Territory or from selling Equipment for
such purposes.

 

11.2                           The Company shall pay SUREBEAM an annual License
Fee as more fully set forth in the License Agreement.

 

11.3                           As more fully set forth in the License Agreement,
SUREBEAM shall solely own and have exclusive worldwide right, title and interest
in and to designs, know-how, inventions, technical data, ideas, uses,
engineering processes and methods related to or

 

14

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arising from the technology being licensed pursuant to the License Agreement,
the Equipment, any documentation related thereto, and to all modifications,
enhancements and derivative works thereof, and to all Intellectual Property
Rights related thereto (collectively “SUREBEAM Materials”). In the event,
through operation of local law or other law or administrative practice, that
Company and/or RESAL and/or any Party obtain any proprietary or intellectual
property rights regarding any of the SUREBEAM Materials, then as additional
consideration for the favorable terms of this Agreement, the Company and/or
RESAL and/or any Party, as the case may be, hereby assigns and conveys or shall
immediately assign and convey to SUREBEAM all right, title and interest in and
to the SUREBEAM Materials, and to all modifications, enhancements and derivative
works thereof, and to all Intellectual Property Rights related thereto. Neither
RESAL nor the Company nor any Party shall challenge, contest or otherwise impair
SUREBEAM’s ownership of the SUREBEAM Materials or the validity or enforceability
of SUREBEAM’s Intellectual Property Rights related thereto. Nothing in this
Agreement or in the License Agreement will be deemed to grant, by implication,
estoppel, or otherwise, a license to any of the foregoing under any of
SUREBEAM’s existing or future Intellectual Property Rights, except as explicitly
set forth in the License Agreement.

 

12.  Systems and Contracts

 

12.1                           Systems

 

(a)                                  Upon the issuance of the Company’s
Commercial Registration, the Parties shall cause the Company to enter into a
payment agreement with SUREBEAM under such terms and conditions as SUREBEAM and
the Company may agree (“Payment Agreement”).

 

(b)                                 The Parties understand and agree that,
subject to the execution of the Payment Agreement, RESAL’s purchase order dated
June 6, 2001, as amended, (“Purchase Order”) that was issued from RESAL to
SUREBEAM for the purchase of e-beam and x-ray systems for a total of fifty
million United States Dollars ($50,000,000.00 USD) shall be transferred to the
Company in accordance with the following:

 

(i)                                     At such time as the Company has received
sufficient funds from investors, the Saudi Industrial Development Fund,
commercial banks and/or other individual lenders to finance the first Processing
Facility, part of RESAL’s obligations under the Purchase Order in an amount
equivalent to the Company’s obligation under the Payment Agreement in relation
to the first Processing Facility shall be assigned to the Company; and

 

(ii)                                  At such time as the Company has received
adequate funding to finance the second Processing Facility, RESAL’s obligations
under the Purchase Order shall be assigned to the Company.

 

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(c)                                  The Payment Agreement shall set forth the
terms of the Company’s payment for the Equipment under the Purchase Order. The
Parties shall cause the Company to comply with all terms of the Payment
Agreement. Notwithstanding anything to the contrary in this Agreement or in any
other document, SUREBEAM shall not have the obligation to ship or deliver any
system to the Company prior to the payment for such system to SUREBEAM as
required in the Payment Agreement.

 

12.2                           Contracts

 

(a)                                  The Parties agree that all Processing
Facilities contracts shall be negotiated in good faith, on an arm’s length basis
and shall contain competitive and fair market rate conditions and customary
terms as would be expected for processing facilities such as the Processing
Facilities.

 

(b)                                 Subject to the provisions of this Article
12.2, the Parties agree that RESAL or any of its Affiliates, should be engaged
as the construction contractor to each Processing Facility established by the
Company pursuant to this Agreement in respect of the main construction work for
the designated Processing Facility in the Kingdom and, if possible, in the
Territory. The Parties agree to cause the Company to engage RESAL as
construction contractor to build the Processing Facilities, as RESAL has the
required knowledge to construct such building structures.

 

(c)                                  All engagements without competitive bidding
must proceed on an “open book” basis incorporating a fully transparent process
sufficient to satisfy the Parties and all third party financiers that the terms
and conditions of the construction contract are as favorable as would be the
case were the contract to have been awarded after a competitive tender process.

 

13.  Territory Expansion/Opportunities within Territory

 

13.1                           The Parties further acknowledge that they intend
to develop and implement Processing Facilities in other countries in the
Territory (each a “New Project”). Prior to establishing and implementing a New
Project, the Parties shall cause the Company to budget sufficient funds to
research and study the market of the country in the Territory. The Company shall
evaluate and undertake the necessary activities to ascertain the commercial and
financial feasibility of the New Project. Such activities shall include a legal
and structural analysis, financial analysis, the development of proposed tariff
structures, a preliminary program information package for financial institutions
and all such other tasks required by the Parties to allow the Parties to make a
determination about the commercial and financial feasibility of the New Project
and whether to proceed with the implementation of the New Project in question.
If the decision is to proceed, the Parties and all the Company shall work
together to perform all other tasks necessary to establish the Processing
Facility and secure the additional financing necessary thereto.

 

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13.2                           SUREBEAM shall not itself undertake, and shall
not subscribe equity in any person who undertakes, the construction and
operation of a New Project or other Processing Facility within the Territory
without the prior written consent of RESAL.

 

13.3                           SUREBEAM grants the Company, during the five (5)
year period following the issuance of the Company’s commercial registration, a
right of first negotiation to negotiate and enter into an agreement to
exclusively conduct the Business in the Expansion Countries. SUREBEAM shall
notify the Company of any third party offers to conduct the Business or of
SUREBEAM’s intent to conduct the Business in any of the Expansion Countries
(“SUREBEAM Notice”). The Company must exercise its option by providing SUREBEAM,
within the ten (10) day period immediately following the date of the SUREBEAM
Notice, written notice of its desire to negotiate a mutually acceptable
agreement with regard to conducting the Business in the specific Expansion
Countries listed in the SUREBEAM Notice.  In the event a mutually acceptable
agreement is not executed within sixty (60) days following the date of the
Company’s notice, SUREBEAM is free to offer and license any other third party or
is free itself to conduct the Business in the specific Expansion Countries
listed in the SUREBEAM Notice and the right of first negotiation set forth in
this Article 13.3 shall expire and have no further effect with respect to the
general subject matter contained in the SUREBEAM Notice and applicable Expansion
Countries.  Nothing in this Agreement shall require SUREBEAM or the Company to
invest in a country or expand in the Expansion Countries if it would cause
SUREBEAM or the Company to be in violation of EAR or CCL.  Should the
construction or operation of a Processing Facility in any of the Expansion
Countries violate any United States laws or regulations, including but not
limited to the EAR and CCL, then (a) to the extent that the Processing Facility
has not been built, Company shall abandon all plans to construct such a facility
and shall cease to conduct any business in such Expansion Country that would
violate any United States laws or regulations, and (b) Should a Processing
Facility have already been built in the applicable Expansion Country, then
Company shall terminate operations at such Processing Facility and shall cease
to conduct any business in such Expansion Country that would violate any
United States laws or regulations.

 

14.  Compliance with Laws / Parties Covenants / Warranties and Representations
Indemnification

 

14.1                           SUREBEAM warrants that it is a duly existing
corporation formed and in good standing under the laws of the State of Delaware,
United States of America and that no government official has any interest in
SUREBEAM or in its interest herein and that all corporate and other actions
required to authorize the execution and performance of this Agreement have been
taken.

 

14.2                           RESAL warrants that it is a validly existing sole
proprietorship duly organized under the laws of the Kingdom of Saudi Arabia and
that no governmental official has any interest in RESAL or in its interest
herein, and that all corporate and other actions required to authorize the
execution and performance of this Agreement have been taken.

 

17

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14.3                           Each of the Parties covenants that each of the
representations and warranties above shall remain true throughout the term of
this Agreement.

 

14.4                           Under no circumstances will RESAL take any action
or cause the Company to take any action if SUREBEAM advises RESAL that the
taking of such action would cause SUREBEAM or any person or company affiliated
or associated with SUREBEAM to be deemed in violation of any United States laws
or regulations.

 

14.5                           Each Party hereto represents and warrants that it
has not and undertakes and agrees that it shall not, and shall not permit the
Company, directly or indirectly, to offer, pay, promise to pay or authorize the
payment or giving of any money, or anything of value (i) to any official of any
government or any instrumentality thereof, or (ii) to any person, while knowing
that all or a portion of such money or thing of value will be offered, given or
promised, directly or indirectly, to any official of any government or any
instrumentality thereof, for the purposes of:

 

(a)                                  influencing any act or decision of such
official in his official capacity, including a decision to fail to perform his
official functions; or

 

(b)                                 including such official to use his influence
with any government or any instrumentality thereof to affect or influence any
act or decision of such government or instrumentality, in order to obtain or
retain business for or with, or direct business to, any person.

 

14.6                           Under no circumstance may any Party sign any
document, perform any act or make any commitment, undertaking, warranty or
representation on behalf of any other Party without the express written consent
of such other Party. No Party may sign any document, perform any act or make any
other commitment, understanding, warranty or representation on behalf of the
Company without the express prior written consent of the Company pursuant to a
duly adopted resolution of the Board of Managers or the shareholders in
accordance with the Articles of Association.

 

14.7                           Each Party warrants that its execution of this
Agreement and the exercise of its rights and performance of its obligations
under this Agreement do not constitute and will not result in any breach of any
agreement or, to the best of its knowledge, any law to which it is subject.  For
purposes of this Article 14.7, RESAL shall be deemed to be subject to Saudi law
and SUREBEAM to U.S. law.

 

14.8                           Each Party (as an “Indemnifying Party”) shall
indemnify, defend (by counsel reasonably approved by the Indemnified Party) and
hold harmless each other Party (the “Indemnified Party” for purposes of this
Article 14.8) and its respective officers, directors, shareholders, agents,
employees and other representatives (each a “Party Indemnitee”) against all
damages, claims, liabilities, losses and other expenses, including without
limitation reasonable attroneys’ fees and costs, whether or not a lawsuit or
other proceeding is filed, that arise out of the Indemnifying Party’s breach of
this Agreement or breach of any representations, warranties, undertaking or
other legal obligations

 

18

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applicable to the Indemnifying Party hereunder. In the event the Indemnifying
Party fails to promptly indemnify and defend such claims and/or pay the
Indemnified Party’s or a Party Indemnitee’s expenses, as provided above, such
Indemnified Party and Party Indemnitee shall have the right to defend itself,
and in that case, the Indemnifying Party shall reimburse such Indemnified Party
and Party Indemnitee for all of its reasonable attroneys’ fees, costs and
damages incurred in settling or defending such claims within thirty (30) days of
each of such Indemnified Party and Party Indemnitee’s written requests.

 

14.9                           The Parties shall cause the Company to indemnify,
defend (by counsel reasonably approved by the Indemnified Party) and hold
harmless each Party (each an “Indemnified Party” for purposes of this Article
14.9) and each of their respective officers, directors, shareholders, agents,
employees and other representatives (each a “Party Indemnitee”) against all
damages, claims, liabilities, losses and other expenses, including without
limitation reasonable attroneys’ fees and costs, whether or not a lawsuit or
other proceeding is filed, that arise out of the Company’s breach of this
Agreement or breach of any representations, warranties or undertaking applicable
to the Company hereunder.  In the event the Company fails to promptly indemnify
and defend such claims and/or pay the Indemnified Party’s or a Party
Indemnitee’s expenses, as provided above, such Indemnified Party and Party
Indemnitee shall have the right to defend itself, and in that case, the Company
shall reimburse such Indemnified Party and Party Indeminitee for all of its
reasonable attroneys’ fees, costs and damages incurred in settling or defending
such claims within thirty (30) days of each of such Indemnified Party and Party
Indemnitee’s written requests.

 

14.10                     The Board of Managers shall cause the Company to
maintain, at the Company’s sole cost and expense, adequate insurance coverage
for comprehensive general liability and for property as the Board of Managers
may determine from time to time.  Said insurance shall be maintained with a
reputable insurance carrier and in such amounts as may be reasonably necessary
to protect the Company’s interests and in any event not less than the amounts
that would be effected and maintained by an experienced and reputable company
carrying out business similar to that of the Company.  Comprehensive general
liability coverage shall name the Parties, their respective Affiliates,
managers, and employees as additional insureds.

 

15.  Confidentiality and Public Announcements

 

15.1                           The Parties agree that during the performance of
this Agreement, each Party may disclose to the other confidential information
regarding its business, including financial data, marketing information, methods
of doing promotions and sponsorships, research and development activities and
other proprietary information which constitute trade secrets of a Party
(collectively “Confidential Information”).  Confidential Information shall also
include any other information in oral, written, graphic or electronic form
which, given the circumstances surrounding such disclosure, would be considered
confidential.  The Parties shall each (i) ensure and shall cause the Company to
ensure that any Confidential Information of any other Party which it may learn
in the course of negotiations for, or

 

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carrying out of this Agreement is treated by it in strict confidence, and (ii)
not disclose, copy, modify, distribute or otherwise transfer the other Party’s
Confidential Information, or any part thereof, to any other person or entity. 
The obligations and restrictions herein shall not apply to Confidential
Information that falls within any of the following exceptions, provided a
receiving Party proves by credible written evidence that such information:

 

(a)                                  is or becomes part of the public domain
through no fault of a receiving Party;

 

(b)                                 was known by a receiving Party prior to the
disclosure by the other Party;

 

(c)                                  was independently developed by or for a
receiving Party completely apart from the disclosures hereunder;

 

(d)                                 has been properly received from a third
party who is not under any obligation to maintain the confidentiality of such
information, and without breach of this Agreement by a receiving Party; and/or

 

(e)                                  is released pursuant to a court order or
otherwise required by law, provided that the receiving Party immediately
notifies the disclosing Party of such court order or legal requirement, and
gives the disclosing Party a reasonable opportunity and cooperates with the
disclosing Party to contest, limit or condition the scope of such required
disclosure.

 

If a receiving Party wises to rely on the exceptions contained in subparagraphs
(b), (c) or (d) above, then the receiving Party must demonstrate to the
disclosing Party the facts underlying why the exception applies within ninety
(90) days of receipt of the Confidential Information from the disclosing Party.

 

15.2                           The Parties have the right to disclose the
others’ Confidential Information to their respective employees who have a
specific need to know to perform the obligations hereunder, but such Parties
shall be responsible for all of their respective employee’s actions.  Except as
provided above, each Party shall use the other’s Confidential Information only
to properly fulfill their obligations hereunder, and not for any other purpose. 
Upon a Party’s request, the other Party shall return to the requesting Party the
originals and all copies of the requesting Party’s Confidential Information
within thirty (30) days of such request.  Each Party shall impose on its
directors and employees a corresponding obligation.

 

15.3                           Each Party shall notify each other Party of its
intent to issue any press release or other public announcement with respect to
the Company and its activities and, except as required by any competent legal or
regulatory authority or any internationally recognized stock exchange, not issue
any such release or announcement without the prior consent of the other Parties,
which consent may not be unreasonably withheld.  Such consent shall not,
however, be required in order for a Party to include a reference to its
ownership interest in the Company in its annual reports and similar
publications.

 

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15.4                           The Parties’ obligations under this Article 15
shall survive any termination of this Agreement.

 

16.  Valuations

 

16.1                           Where a provision of this Agreement calls for a
determination of the “fair market value” of a Party’s shareholding, the Parties
shall make a good faith effort to make such determination applying
internationally accepted valuation methods, treating the Company as a
going-concern.

 

16.2                           If the Parties are unable to agree the fair
market value of shares within thirty (30) days of one Party requesting another
to do so, any Party may refer the matter to any Approved Accounting Firm, such
Approved Accounting Firm (or its affiliated firm) not being the Company’s
auditor or the Party’s principal auditors and, relying upon the principles set
forth in Article 16.1 above, request that firm to determine the fair market
value, based upon specially audited accounts prepared as of the last day of the
month preceding the request for a determination. The relevant firm shall, at the
request of either Party, be entitled to take any independent third party outside
offer received by such Party in respect of part or all of its shareholding in
the Company into account in making such determination.  The Parties will require
the accounting firm to present its determination to them within thirty (30) days
and such determination shall be binding upon them.

 

17.  Validity and Termination

 

17.1                           This Agreement shall remain in full force and
effect with respect to each Party until such time as this Agreement is
terminated pursuant to this Article 17 or that Party ceases to have an interest
in the Company or the Company is dissolved and liquidated, whichever occurs
first.  Unless otherwise herein expressly provided, no Party that has
transferred its shares in accordance with the provisions of this Agreement shall
be bound by its terms and conditions after the date of such transfer.

 

17.2                           If any of the following events or matters has not
occurred or has not been completed within the period ending twelve (12) months
after the date of this Agreement, this Agreement may be terminated by any Party
upon written notice to the other Parties:

 

(a)                                  the granting of an investment license by
the Saudi Arabian General Investment Authority in form and substance acceptable
to the Parties licensing the establishment of the Company, and

 

(b)                                 the issuance of the Company’s commercial
registration number.

 

17.3                           If (i) a Party suffers an event of default as
defined in Article 17.4 or (ii) a Party is in material default of an obligation
hereunder and if such defaulting Party does not remedy such default within a
period of ninety (90) days after receiving written notification of such default
from any Party which is not in default (a “Non-Defaulting Party”), (in each

 

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case the party suffering an event of default or in material default of an
obligation hereunder is a “Defaulting Party”), the following shall apply:

 

(a)                                  Provided that all Non-Defaulting Parties
unanimously agree among themselves on the option to be exercised:

 

(i)                                     the Non-Defaulting Party(ies) may
purchase all or any portion of the shares in the Company then held by the
Defaulting Party at [...***...] percent of [...***...] determined pursuant to
Article 17.6, provided that if more than one Non-Defaulting Party wishes to
purchase the Defaulting Party’s shares, each such purchasing Party shall be
entitled to purchase that percentage of the Defaulting Party’s shareholding
which is equal to the percentage that that purchasing Party’s shareholding
comprises of the total shareholdings of all purchasing Parties, or

 

(ii)                                  the Non-Defaulting Party(ies) may require
that the Defaulting Party sign whatever resolutions and documents and take
whatever action may be necessary to promptly liquidate the Company, including,
without limitation, voting in favor of liquidation at a general meeting of the
shareholders.

 

(b)                                 Should the Non-Defaulting Parties not
unanimously agree to exercise one of the remedies set forth in Section 17.3(a)
above, any Non-Defaulting Parties that still desires to exercise option (a)
above shall be entitled to purchase all or any portion of the shares in the
Company then held by the Defaulting Party, to be divided pro-rata equal to the
percentage that that purchasing Party’s shareholding comprises of the total
shareholders of all purchasing Parties, at [...***...] percent [...***...] of
the [...***...] determined pursuant to Article 17.6, provided that in the
aggregate all shares in the Company then held by the Defaulting Party are
purchased by the Non-Defaulting Parties and the Defaulting Party is no longer a
shareholder in the Company following consummation of such purchase.

 

(c)                                  Should the Non-Defaulting Parties not
unanimously agree to exercise one of the remedies set forth in Section 17.3 (a)
above and should none of the Non-Defaulting Parties exercise the remedy
available in Section 17.3(b) above, then the Non-Defaulting Parties may,
separately and individually, require the Defaulting Party to purchase or arrange
for the purchase of all or any portion of the shares in the Company then held by
such Non-Defaulting Party at a price equivalent to the fair market value (as
determined pursuant to Article 16).

 

For the purposes of this Article 17.3, any Party which is Affiliated to a
Defaulting Party shall be deemed to be a Defaulting Party.

 

The options stated above shall be exercisable by the Non-Defaulting Party(ies)
upon written notice to the Defaulting Party within sixty (60) days of the
expiration of the

 

* Confidential Treamtent Requested

 

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aforementioned thirty (30) day cure period.  If an option is exercised, the
Parties shall promptly thereafter take whatever action is necessary and sign
whatever documents are necessary in order to effectuate the appropriate share
transfer(s) or liquidation, as the case may be.  Nothing in this Article 17.3
shall be construed to require any Non-Defaulting Party to exercise either of the
above options.

 

17.4                           A Party shall be deemed to have suffered an event
of default if such Party files a petition seeking adjudication of bankruptcy or
insolvency, or any such petition is filed against a Party by a third party and
that petition is not dismissed within sixty (60) days, or if a Party hereto
starts the proceedings for dissolution or liquidation, or if a receiver or
trustee is appointed for a substantial portion of the business or assets of such
Party.

 

17.5                           The rights as provided for in Article 17.3 shall
be in addition to and not in substitution for any other remedies that may be
available to a Non-Defaulting Party hereunder or by operation of applicable
law.  The exercise of such rights shall not relieve the Defaulting Party from
any obligations accrued prior to the date on which the share transfer(s) or
liquidation, as the case may be, is effected, nor shall the exercise or failure
to exercise such rights relieve the Defaulting Party from any liability for
damages to any Non-Defaulting Party for breach of this Agreement.

 

17.6                           The [...***...] as stipulated in Article 17.3
above shall be [...***...] on the [...***...] of the [...***...] and shall be
[...***...].

 

17.7                           If any Party notifies the other Parties in
accordance with Article 19 of the Articles of Association that it does not wish
to continue the Company, then the Company shall be dissolved and liquidated upon
the expiration of its then-current term, provided, however, that if one or more
Parties wish to continue the Company it or they shall be entitled to purchase or
arrange for the purchase of the shares of the Party or Parties who do not wish
to continue at a price equal to the value of such shares as determined pursuant
to Article 16. If there is more than one purchasing Party each such Party shall
be entitled to purchase a percentage of the shares of the Party(ies) who do not
wish to continue that is equal to the percentage that such purchasing Party’s
shareholding comprises of the total shareholdings of all purchasing Parties.

 

17.8                           If the Company is dissolved and liquidated for
any reason this Agreement shall be terminated automatically.

 

18.  Pre-Operating Expenses

 

Prior to the formation and capitalization of the Company, the Parties shall each
pay and be responsible for their own expenses incident to the transactions
contemplated by this Agreement, including fees and expenses of legal counsel or
other representatives or consultants.

 

* Confidential Treatment Requested

 

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19.  Governing Law

 

19.1                           This Agreement shall be construed and interpreted
in accordance with the laws of England and Wales.

 

19.2                           Any dispute, controversy, or claim arising out of
or relating to this Agreement, or the breach, termination, or invalidity
thereof, shall be settled by arbitration in accordance with the LCIA Rules then
in effect (the “Rules”).  The number of arbitrators shall be three (3).  The
place of arbitration shall be London, England. The language to be used in the
arbitration proceedings shall be English. The arbitrator will not have the
authority to award punitive, indirect, special or consequential damages.
Arbitration awards are not appealable and may be enforced through any court of
competent jurisdiction. The arbitrator must apply the laws of England and Wales
and, with the exception of granting injunctive relief, has exclusive authority
to resolve any dispute relating to the interpretations, applicability or
formation of this Agreement.  Except as to obtaining injunctive relief, the
parties waive all rights to adjudication in a court of law and to a venue other
than London, England.  Each party shall be responsible for the payment of its
own attorney’s fees, and shall bear its own costs in connection with the
arbitration.

 

20.  Assignment

 

Except as provided in Article 7 or as otherwise agreed by the Parties, no Party
shall have the right to assign its rights and obligations under this Agreement
to any third party.

 

21.  Effective Date

This Agreement shall become effective upon its due execution and delivery by
each of the Parties.

 

22.  Notices

 

22.1                           All notices, approvals, consents or other
communications in connection with this Agreement shall be given in writing by an
authorized officer of the Party providing any such notice, approval, consent of
other communication shall be left at the address of the addressee which is
specified below or sent by reputable international courier to the address of the
addressee specified below or hand delivery to the address of the addressee which
is specified below or if the addressee notifies each other Party of another
address then to such other address.

 

For RESAL:

RESAL SAUDI CORP.

 

Al-Rosais Commercial Center,

 

Olaya Main Road, Riyadh 11482,

 

Kingdom of Saudi Arabia

 

Facsimile: 966-1-461-3304

 

Attn.: President

 

 

 

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For SUREBEAM:

SUREBEAM CORPORATION

 

3033 Science Park Road

 

San Diego, CA 92121

 

Fax: 858-552-9973

 

Attn.: Sr. VP & Chief Financial Officer

 

22.2                           Unless a later time is specified in it, a notice,
approval, consent or other communication takes effect from the time it is
received.

 

22.3                           A couriered letter shall be deemed to have been
received when delivered to the appropriate address.

 

23.  Further Assurances

 

23.1                           Each Party agrees that it shall:

 

(a)                                  assist the Company to carry out its
activities in a way which allows the Company to function for the mutual benefit
and advantage of all Parties;

 

(b)                                 be just and faithful to each other Party and
to the Company and at all times render to each other Party and the Company  true
accounts, full information and truthful explanations regarding all matters
relating to the affairs of the Company;

 

(c)                                  in all cases treat the Company as a
separate and independent profit center and make every reasonable effort to
conduct affairs of the Company and its own dealings with the Company in a manner
which in all cases maximizes the net profits of the Company and gives effect to
this Agreement and all other joint venture documents (including without
limitation any documents referred to in Article 2.9 above) and any other
agreement that a Party or any of its Affiliate entered into with the Company;

 

(d)                                 in its capacity as a shareholder of the
Company, cause its representatives at shareholders’ meetings and its appointees
to the Board of Managers to exercise its voting rights in a manner which gives
full force and effect to the terms and conditions of this Agreement, the
Articles of Association and all other joint venture documents; and

 

(e)                                  not sign any document, perform any act, or
make any commitment, undertaking, warranty or representation on behalf of any
other Party or the Company without the express written consent of such other
Party or the Company, as the case may be.

 

23.2                           Each Party undertakes and agrees to cause the
Company to perform diligently its obligations under each of the agreements
listed in Article 2.9 above.

 

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24.  Governing Language

 

24.1                           This Agreement and the related Agreements are
executed in English.  The English language shall be the governing language
despite translation into any other language(s). No translation, if any, of this
Agreement into any other language shall be of any force or effect in the
interpretation of this Agreement or in a determination of the intent of each of
the parties.

 

24.2                           The English language shall be used and be the
official language for written communications (including, but not limited to, the
reporting of results of operations and forecasts of same) between and among the
Parties and the Company and otherwise under this Agreement.

 

25.  Severability

 

In the event that any provision of this Agreement should be or become incomplete
or ineffective, such invalidity or incompleteness shall not affect the validity
of the remaining provisions hereof.  In such case, the Parties shall
re-negotiate in good faith a valid provision which implements the intent and
purpose of the invalid provision shall be agreed upon by the parties, affords
the same rights and imposes the same obligations on the Parties and has
substantially the same economic effect on both the Parties and the Company.

 

26.  Entire Agreement; Priority

 

26.1                           This Agreement, together with those documents and
agreements attached hereto as exhibits, appendices and schedules, constitutes
the complete and exclusive statement of the terms of the contract between the
parties hereto with reference to the subject matter hereof, and no statements or
agreements, oral or written, made prior to or at the signing hereof shall vary
or modify the written terms hereof; and no Party shall claim any modification or
rescission unless it is in writing, signed by all Parties and specifically
refers to this Agreement. The headings of the Articles and Articles of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.

 

26.2                           In the event of any conflict between this
Agreement and the Articles of Association the terms of this Agreement shall
prevail as between the Parties.

 

27.  Force Majeure

 

If the performance by a Party of any of its obligations referred to herein is
prevented, restricted, or interfered with by reason of any event or cause
whatsoever beyond the reasonable control of the Party (“Force Majeure”) so
affected, such Party shall be excused from performance of such obligation to the
extent of such prevention, restriction, or interference.  If any such case
occurs, the affected party shall give prompt notice in writing thereof to each
other Party and shall use its reasonable efforts to resume full performance
under this Agreement as and when practicable.

 

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For the purpose of this Article 27, Force Majeure shall include, but shall not
be limited to acts of God, fire, flood, strike, hurricane, war, terrorism or
governmental acts.

 

28.  No Third Party Beneficiaries

 

This Agreement shall not be construed as giving any person, other than the
Parties hereto and their successors and permitted assignees, any legal or
equitable right, remedy or claim herein contained, this Agreement and all
provisions and conditions hereof being intended to be, and being, for the sole
and exclusive benefit of the Parties, successors and permitted assignees and for
the benefit of no other person or entity.

 

29.  No Waiver of Rights

 

The rights and remedies of the Parties to this Agreement are cumulative and not
alternative.  None of the conditions or provisions of this Agreement shall be
held to have been waived by any act or knowledge on the part of either Party,
except by an instrument in writing signed by an authorized representative of
such Party.  Neither the failure nor delay by either Party in the exercise of
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude other or further
exercise thereof or of any other right or power.  No waiver by either Party of
any breach hereof shall be deemed a waiver of any preceding, continuing or
succeeding breach of the same or any other term hereof.

 

30.  Counterparts

 

This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
documents.

 

IN WITNESS WHEREOF, each Party has caused this agreement to be executed by its
duly authorized representative as of the date first written above.

 

RESAL SAUDI CORP.

SUREBEAM CORPORATION

 

 

By:

Ghassan Alamdar

By:

David Rane

 

 

 

 

Its:

President

Its:

Sr. VP & Chief Financial Officer

 

 

 

 

Signed:

/s/ Ghassan Alamdar

 

Signed:

/s/ David Rane

 

 

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