**Exhibit 10.38**

 
| *      | Confidential  Treatment Requested Under |
|--------|-----------------------------------------|
|   | 17 C.F.R. §§ 200.80(b)(4),    |
|   | 200.83 and 240.24b-2                    |

 

**JOINT VENTURE AGREEMENT**

** **

**THISJOINT VENTURE AGREEMENT** (hereinafter referred to asthe “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 Arabiawith commercial registration no. 1010040184, owned by Mr. Ghassan Alamdar andhaving 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 inthe United States of America, having an office at 3033 Science Park Road, SanDiego, California 92121, USA (hereinafter referred to as “SUREBEAM”).

 

**WITNESSETH THAT**:

 

WHEREAS, RESAL is experiencedin the business of construction and in investments within the Kingdom of SaudiArabia and the Middle East region;

 

WHEREAS, SUREBEAM is engaged inthe business of designing, manufacturing, selling, installing, operating andservicing food irradiation or pasteurization systems, including electron beamand x-ray equipment and systems; and

 

WHEREAS, RESAL and SUREBEAMintend to cooperate in the field of irradiation and electronic pasteurizationof food products by establishing a Company in the Kingdom of Saudi Arabia whichshall engage in the business of proving irradiation and electronicpasteurization of food products and animal hides and flowers using SUREBEAM’spatented electron beam and x-ray technology on an exclusive basis in theKingdom of Saudi Arabia and other specified countries in the Middle East asmore fully set forth below,

 

NOW, THEREFORE, inconsideration of the covenants contained herein, the parties hereto agree asfollows:

 

**1.     Interpretation**

 

1.1                                 Wheneverused herein and written in initial capital letters, the following terms shallhave the meanings respectively defined:

 

“Affiliate” shall mean, inrelation to either party, any entity which Controls or, is directly orindirectly 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 successorsof any of the foregoing;

 

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

 

“Control” means in relation toany person (the “First Person”) the power of another person to secure: (a) bymeans of the holding of shares or other ownership interests or the exercise ofvoting 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 FirstPerson or any other person that the affairs of the First Person are conductedin accordance with the wishes or directions of that other person, and theexpressions “Controls” or “Controlled” shall be constructed accordingly;

 

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

 

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

 

“Equipment” shall mean thelinear accelerator equipment and related equipment, material handlingequipment, safety equipment, dosimetry system, and a real-time information andcontrol systems manufactured and supplied by SUREBEAM;

 

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

 

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

 

“Kingdom” shall mean theKingdom of Saudi Arabia;

 

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

 

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

 

“Territory” shall mean theKingdom 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 calendarday of the Gregorian calendar;

 

1.2                                 Exceptwhere the context otherwise requires, references to statutory provisions shallbe construed as references to those provisions as respectively amended orre-enacted or as their application is modified from time to time by otherprovisions (whether before or after the date hereof).

 

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

 

1.4                                 Headingsare inserted for convenience only and shall not affect the construction of thisAgreement.

 

1.5                                 Referencesto the Parties and to the shareholders include their respective successors andpermitted assigns.

 

1.6                                 Referencesto 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 eachcase whether or not having a separate legal personality).

 

1.7                                 Themasculine gender shall include the feminine and neuter and the singular numbershall include the plural and vice versa.

 

**2.     Establishment andOrganization of the Company**

 

2.1                                 Subjectto the terms and conditions of this Agreement, the Parties agree that theyshall cooperate and use their best endeavors to cause the licensing, formation,registration, and qualification of the Company in accordance with the Articlesof Association set forth as Exhibit A to this Agreement (hereinafter referredto as the “Articles of Association”) and the laws of the Kingdom of SaudiArabia.

 

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

 

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

 

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

 

2.5                                 TheParties will use commercially reasonable efforts to cause the Company after itsformation to lease land suitable for the Processing Facilities in Riyadh in theKingdom of

 

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Saudi Arabia. RESAL shall assist the Company to finalize the leaseagreement and have access to important utilities and site services on termsthat are as favorable as possible.

 

2.6                                 Assoon as reasonably practicable after the execution of this Agreement, SUREBEAMshall prepare and submit an application to the Saudi Arabian General InvestmentAuthority for an investment license.

 

2.7                                 Assoon as possible after receipt of a foreign capital investment license, theArticles of Association shall be submitted to the Ministry of Commerce. If anychanges to the Articles of Association are required by the Ministry, they shallonly be amended and re-submitted to the Ministry if all of the Parties approvethe changes in writing, which approval shall not be unreasonably withheld ordelayed. Each Party shall cause its duly authorized representative to executethe Articles of Association, in the form agreed by the Parties and approved bythe Ministry, before a Notary Public in the Kingdom and to take such furtheractions as necessary to form, register and qualify the Company as soon asreasonably practicable thereafter.

 

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

 

2.9                                 Assoon as possible following the issuance of the Company’s commercialregistration, the Parties shall cause the Company to enter into the followingagreements:

 

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

 

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

** **

**3.     Share Capital**

 

3.1                                 TheCompany shall have an initial share capital of five million Saudi Riyals (SR5,000,000).

 

3.2                                 Thecapital shall be divided into five thousand (5,000) cash shares, each having avalue of one thousand Saudi Riyals (SR 1,000).

 

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3.3                                 Thecapital of the Company, expressed as cash shares, will be appropriated amongthe 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                                 EachParty shall deposit in cash the full value of its cash contribution for thecash shares apportioned to it at one of the approved banks in the Kingdom inthe name of the Company, as a limited liability company under formation,promptly following the signature of the Articles of Association before a NotaryPublic in the Kingdom.

 

3.5                                 Thetransfer, assignment, encumbrance or other disposal of shares shall be governedby the terms and conditions of this Agreement and the Articles of Associationrelated thereto.

 

3.6                                 Theinitial capital of the Company may be increased or decreased in accordance withthe terms and conditions of this Agreement and the Articles of Associationrelated thereto.

 

3.7                                 AParty may not pledge its shares (or interest) in the Company or otherwise usesuch shares (or interest) as security, unless it first obtains the priorwritten consent of all other Parties.

 

3.8                                 Allitems of income, distributions, deduction, gain, loss and credit shall beallocated to the Parties in accordance with their percentage interests in theCompany, as set forth above.

** **

**4.     Financial Requirements**

 

4.1                                 TheParties intend that the initial capital of the Company will be sufficient forits initial developmental and promotional work. The Parties acknowledge andagree, however, that additional capital contributions and financing will benecessary to develop and establish the Processing Facilities in the Territory.

 

4.2                                 Inorder to finance the costs related to the construction and establishment of theProcessing Facilities in the Kingdom, the Parties agree that they shall usetheir best efforts to obtain for the Company equity and debt financing from thefollowing sources: (a) increase of the capital of the company in accordancewith the terms of this Agreement and the Articles of Association, (b) loansfrom the Saudi Industrial Development Fund, and (c) credit and other bankingfacilities from one or more individuals and commercial banks.

 

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4.3                                 RESALwill seek new investors for the Company. The Parties may agree to increase thecapital of the Company through issuing new shares to such new investors and/orRESAL selling part of its shares to new investors and increasing the value ofall of the shares of the Company. Notwithstanding anything else to the contraryin this Agreement, SUREBEAM’s percentage interest in the Company shall neverexceed nineteen and nine-tenths percent (19.9%) of the entire outstandingcapital shares of the Company.

 

4.4                                 Allbanking and credit facilities, whether obtained in the Kingdom or abroad, shallbe arranged in accordance with normal and sound business principles and theterms and conditions of any such facilities shall require prior writtenapproval of the Board of Managers.

** **

**5.     Distribution of Profits;Taxes**

 

5.1                                 Theannual net profits of the Company and any retained profits from previous yearsshall be distributed in the following manner:

 

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

 

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

 

(c)                                  TheParties undertake to resolve to establish such reserves and/or carry forward orretain such profits as may be necessary to enable the Company to comply withthe terms of any loan or credit facilities to which the Company is a party. Anysuch profits retained from previous years shall be distributed to theshareholders pro rata according to the percentage of the shares owned by eachshareholder, unless:

 

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

 

(ii)                                  otherwiserequired to enable the Company to comply with the terms of any loan or creditfacilities to which the Company is a party.

 

5.2                                 Iflosses are incurred, they shall be carried over to the next fiscal year and noprofits shall be distributed until the losses are fully covered.

 

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

 

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& Income Tax (the “DZIT”) in Saudi Arabia for the account of thatparty 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 incometax or zakat for which it is responsible that Party shall pay such amounts tothe Company for payment to the DZIT so as to enable the Company to obtain itstax clearance certificate, provided however, that if there are insufficientdistributions payable by the Company to a Party to cover any tax or zakat forwhich that Party is responsible pursuant to this paragraph 5.3, the Partieswill cause the Company, to the extent permissible under the laws andregulations of Saudi Arabia and the terms of any loan or credit facilities towhich the Company is a party, to pay the zakat or tax to the DZIT on thatParty’s behalf and debit that Party’s account with the Company. No Party shallbe entitled to reimbursement from any other Party or the Company for any incometax or zakat that it is obligated to pay.

** **

**6.     Competition**

 

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

 

6.2                                 TheParties expressly agree that if the Company fails to complete the building andstart the operation of three (3) plants within the Territory within five (5)years from the date of issuance of the Commercial Registration, then SUREBEAMshall have the right to, directly or indirectly engage in, own, manage, Controlor participate in the ownership, management or Control of, provide financing orother financial or other assistance to, or otherwise affiliate or associate (asa 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 theBusiness in the Territory.

** **

**7.     Sale or Transfer ofShares**

 

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

 

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(a)                                  Ashareholder may after giving prior written notice to each other Party andsatisfying the following conditions, transfer all or part of its shares to anAffiliate, provided that the transferring Party provides a guarantee of thecontractual obligations of the Affiliate under this Agreement in the formattached hereto as Exhibit E and the Affiliate agrees to be bound by all termsand conditions of this Agreement by executing a deed of adherence in the formattached hereto as Exhibit D.

 

(b)                                 Ashareholder wishing to transfer part or all of its shares to a party other thanan Affiliate pursuant to Article 7.1(a) above shall notify the othershareholder(s) of this in writing, through the Chairman of the Board ofManagers, mentioning the name of the purchaser and (for information purposesonly) the offer price and terms of transfer. The Chairman shall forthwithnotify the other shareholder(s) and the following shall apply:

 

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

 

(ii)                                  Theshareholders hereby agree that the value of shares over which the pre-emptiveright is to be exercised shall be the actual value, which actual value theshareholders from now agree shall be calculated on the basis of the fair marketvalue of the shareholding which is being sold, determined in accordance withArticle 16 hereof.

 

(iii)                               Shouldthe said forty five (45) day interval elapse and no shareholder has exercisedits right of pre-emption, the shareholder wishing to transfer shall transferthose shares not taken up by the other shareholder(s), provided that thetransfer is completed within one hundred eighty (180) day starting from the dayfollowing the end of the aforesaid forty five (45) day interval given to theshareholders pursuant to subparagraph (b)(i) of this Article, and furtherprovided the sale is made to the same party and on the same price and terms andconditions mentioned in the notification.

 

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

 

* Confidential Treatment Requested

 

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

 

7.2                                 Withoutprejudice to the provisions of Article 7.1(b) above, if the holders of themajority of the then outstanding shares (the “Majority Sellers”) receive anoutside offer from any third party to purchase their shares in the Company andthe Majority Sellers intend to accept such offer they shall promptly give theother shareholders (individually referred to as a “Minority Seller” andcollectively as the “Minority Sellers”) written notice accordingly (an “OutsideOffer Notice”) setting out the full name and address of the proposed purchaserand the terms and conditions of the proposed offer. Each of the MinoritySellers shall be entitled at any time within forty five (45) days after receiptof an Outside Offer Notice to serve a notice on the Majority Sellers (a “TakeAlong Notice”) requiring the Majority Sellers to procure the purchase by, ortransfer to, the third party purchaser or transferee of all of the shares inthe Company held by the Minority Seller or Sellers, as the case may be. If theMajority Sellers cannot procure the purchase by the third party purchaser ofall of the shares held by the Minority Seller or Sellers, the Majority Sellersshall themselves purchase, or arrange for the purchase of, such shares. Ineither case, the purchase of the shares held by the Minority Sellers shall beeffected on the same terms and conditions as are specified in the Outside OfferNotice, except that the price payable for the Minority Sellers’ shares shall bethe greater of (a) the fair market value (as determined pursuant to Article16), (b) the par value, (c) the book value (as determined according to Article17.6) of such shares, or (d) or the price stated in the Outside Offer Notice. ATake Along Notice shall have no effect if the acquisition by the third party ofshares from the Majority Sellers is not completed.

 

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

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**8.     Shareholder’s Meetings**

 

8.1                                 Theshareholders shall act through general meetings and resolutions duly held andadopted in accordance with the terms and conditions of the Articles ofAssociation.

 

8.2                                 Aresolution adopted with the affirmative unanimous vote of all shareholders isrequired to authorize any of the following major business decisions:

 

(a)                                  anychange in the nationality of the Company;

 

(b)                                 anyincrease in the financial burdens of the shareholders;

 

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(c)                                  anyamendment of the Articles of Association, including without limitation anychange in the capital or objects of the Company;

 

(d)                                 acquisitionor disposition of shares or partnership interests in other companies orpartnerships;

 

(e)                                  declarationof less than all the profits of the Company as dividends and establishment ofreserves out of earnings (including capitalization or disposition of suchreserves);

 

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

 

(g)                                 acquisitionor disposition of real estate assets; or

 

(h)                                 thedissolution of the Company; and

 

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

 

8.3                                 TheShareholders shall appoint the Company’s auditor who shall be an ApprovedAccounting Firm through a resolution to be approved with a majorityrepresenting Shareholders holding fifty one (51%) of the Company’s capital.

 

8.4                                 Theresolutions of the Meeting of Shareholders shall be laid down in writing in theArabic and English languages. Meetings of the Shareholders shall be conductedin the English language.

** **

**9.     Board of Managers**

 

9.1                                 Exceptin relation to those matters referred to the shareholders, the Company shall bemanaged by a Board of Managers appointed as provided in the Articles ofAssociation. The Board of Managers shall have full authority to act on behalfof the Company as provided in the Articles of Association. The Board ofManagers shall consist of four (4) members appointed as provided in theArticles of Association. In connection with any change of shareholding, theParties agree to amend the Articles of Association in accordance with thefollowing rules. Each Shareholder shall have the right to appoint one memberfor 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 memberof the Board of Managers as long as its shareholding in the Company is not lessthan ten (10%) in the case of SUREBEAM or fifteen (15%) percent in the case ofRESAL. Shareholders holding less than twenty-five percent (25%) or a percentagethat is not divisible by twenty-five percent (25%) may agree to combine theirshareholdings (or parts of shareholdings), and if such aggregate sum of theirshareholding in twenty-five percent (25%) or greater such Shareholders mayjointly appoint a member of the Board, provided that no Shareholder’sshareholding shall be counted twice for this purpose.

 

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9.2                                 TheBoard of Managers shall adopt its resolutions with the affirmative vote of themajority of the members being present, provided, however, that the followingmatters shall be subject to the affirmative unanimous vote of the members ofthe Board.

 

(a)                                  enteringinto any purchase, service or other contract or commitment with an obligationin any one year of more than two hundred fifty thousand Saudi Riyals (SR250,000) or having a term of more than two (2) years;

 

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

 

(c)                                  entryinto or amendment of any agreements between the Company and one of itsshareholders or their Affiliates or any of the officers, directors or employeesof one of its shareholders or their Affiliates;

 

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

 

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

 

(f)                                    issuanceof any guarantees or bonds;

 

(g)                                 transferor other disposal of the Company’s assets in excess of two hundred fiftythousand Saudi Riyal (SR 250,000);

 

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

 

(i)                                     creatingor granting any encumbrance against the property of the Company if theindebtedness secured by such encumbrance exceeds two hundred fifty thousand SaudiRiyals (SR 250,000).

 

9.3                                 Theresolutions of the Board of Managers shall be laid down in writing in theArabic and English languages. Meetings of the Board of Managers shall beconducted in the English language.

 

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

 

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

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**10.  Accounting System, Booksand Budgets**

 

10.1                           TheCompany shall keep and maintain a clear accounting and cost accounting systemallowing efficient control and allocation of all costs involved, and shallregularly report in English to the Parties in accordance with a systemacceptable to the Board of Managers, based on generally accepted accountingpractices applied in Saudi Arabia, and in the absence of a Saudi Arabianaccounting practice with respect to the particular matter under consideration,generally accepted accounting practices applied in the United States ofAmerica.

 

10.2                           Cashflow projections will be prepared quarterly and will include one (1) calendarmonth forward projections and will be sent to SUREBEAM via courier mail.Quarterly and annual statements of account are to be made in English andArabic.

 

10.3                           SUREBEAMwill make periodic visits to the Company to perform internal quality controlaudits. Accordingly, SUREBEAM personnel will be granted full access to plantfacilities and personnel.

 

10.4                           Theaccounting books prepared by the Company shall be in conformity with Article10.1 above, and shall be recorded in the English and Arabic languages. Thebooks are to be prepared on the basis of the Gregorian calendar and the fiscalyear of the Company will coincide with SUREBEAM’s fiscal year. Each Shareholderis entitled to inspect and conduct an audit of the books of the Company at itsown expense to verify the other Parties’ compliance with this Agreement and/orthe Company’s compliance with the License Agreement, the Technical ServicesAgreement or any other related agreements, either:

 

(a)                                  throughan agent acceptable to the other Shareholders; or

 

(b)                                 throughany Approved Accounting Firm;

 

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

 

10.5                           AnnualBudgets

 

Prior to the Company’s formation, the Shareholders shall jointlyprepare 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 AnnualBudget for the next fiscal year to the Board of Managers of the Company fortheir 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)                                  theestimated cash disbursements which the Company will be required to incur forcapital expenditures during each month for the period covered by the AnnualBudget and details of the items in respect of which the disbursements will bemade;

 

(b)                                 theestimated cash disbursements which the Company will be required to incur forits day to day operations during each month for the period covered by AnnualBudget and details of the items in respect of which the disbursements will bemade;

 

(c)                                  theextent to which such disbursements will be satisfied by cash on hand or incometo be received;

 

(d)                                 theextent, if any, to which additional financing will be required and the proposedsource for such financing;

 

(e)                                  ifit is expected that Shareholders’ loan may be required, details of the amountswhich may be required during the period covered by Annual Budget and theanticipated date or dates in each month of that period in which payments fromthe Shareholders would be required; and

 

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

 

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

 

10.6                           ProcessingFacilities Budget

 

Prior to the Company undertaking the development of any ProcessingFacility, the Board of Managers or the Shareholders shall approve a budget forthe development of such Processing Facility (a “Processing Facility Budget”). Atthe 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 shallinstruct the Executive Manager either (a) to prepare and submit to the Board ofManagers for their review and approval, with a copy to each Shareholder, anupdated Processing Facility Budget for the relevant Processing Facility or (b)not to maintain a separate Processing Facility Budget for such ProcessingFacility, in which case expenditures relating to the Processing Facility duringthe 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 allanticipated expenditures on Processing Facilities during such year.

 

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

 

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

 

(b)                                 theestimated cash disbursements which the Company will be required to incur forits day to day operations per month for the period covered by the ProcessingFacility Budget, and explicit itemized details in respect of which suchanticipated disbursements will be made;

 

(c)                                  theextent to which such disbursements will be satisfied by cash on hand or incometo be received;

 

(d)                                 theextent, if any, to which additional financial will be required and the proposedsource for such financing;

 

(e)                                  ifit is expected that Shareholders’ loans may be required, details of the amountswhich may be required during the period covered by the Processing FacilityBudget and the anticipated date or dates in each month of that period in whichpayments from the Shareholders would be required; and

 

(f)                                    suchother information as the Board of Managers or any Shareholders may reasonablyrequest.

 

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

** **

**11.  Transfer of Technology**

 

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

 

11.2                           TheCompany shall pay SUREBEAM an annual License Fee as more fully set forth in theLicense Agreement.

 

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

 

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arising from the technology being licensed pursuant to the LicenseAgreement, the Equipment, any documentation related thereto, and to allmodifications, enhancements and derivative works thereof, and to allIntellectual Property Rights related thereto (collectively “SUREBEAMMaterials”). In the event, through operation of local law or other law oradministrative practice, that Company and/or RESAL and/or any Party obtain anyproprietary or intellectual property rights regarding any of the SUREBEAMMaterials, then as additional consideration for the favorable terms of thisAgreement, 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 SUREBEAMall right, title and interest in and to the SUREBEAM Materials, and to allmodifications, enhancements and derivative works thereof, and to allIntellectual Property Rights related thereto. Neither RESAL nor the Company norany Party shall challenge, contest or otherwise impair SUREBEAM’s ownership ofthe SUREBEAM Materials or the validity or enforceability of SUREBEAM’sIntellectual Property Rights related thereto. Nothing in this Agreement or inthe License Agreement will be deemed to grant, by implication, estoppel, orotherwise, a license to any of the foregoing under any of SUREBEAM’s existingor future Intellectual Property Rights, except as explicitly set forth in theLicense Agreement.

** **

**12.  Systems and Contracts**

 

12.1                           Systems

 

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

 

(b)                                 TheParties understand and agree that, subject to the execution of the PaymentAgreement, RESAL’s purchase order dated June 6, 2001, as amended, (“PurchaseOrder”) that was issued from RESAL to SUREBEAM for the purchase of e-beam andx-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 thefollowing:

 

(i)                                     Atsuch time as the Company has received sufficient funds from investors, theSaudi Industrial Development Fund, commercial banks and/or other individuallenders to finance the first Processing Facility, part of RESAL’s obligationsunder the Purchase Order in an amount equivalent to the Company’s obligationunder the Payment Agreement in relation to the first Processing Facility shallbe assigned to the Company; and

 

(ii)                                  Atsuch time as the Company has received adequate funding to finance the secondProcessing Facility, RESAL’s obligations under the Purchase Order shall beassigned to the Company.

 

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

 

12.2                           Contracts

 

(a)                                  TheParties agree that all Processing Facilities contracts shall be negotiated ingood faith, on an arm’s length basis and shall contain competitive and fairmarket rate conditions and customary terms as would be expected for processingfacilities such as the Processing Facilities.

 

(b)                                 Subjectto the provisions of this Article 12.2, the Parties agree that RESAL or any ofits Affiliates, should be engaged as the construction contractor to eachProcessing Facility established by the Company pursuant to this Agreement inrespect of the main construction work for the designated Processing Facility inthe Kingdom and, if possible, in the Territory. The Parties agree to cause theCompany to engage RESAL as construction contractor to build the ProcessingFacilities, as RESAL has the required knowledge to construct such buildingstructures.

 

(c)                                  Allengagements without competitive bidding must proceed on an “open book” basisincorporating a fully transparent process sufficient to satisfy the Parties andall third party financiers that the terms and conditions of the constructioncontract are as favorable as would be the case were the contract to have been awardedafter a competitive tender process.

** **

**13.  TerritoryExpansion/Opportunities within Territory**

 

13.1                           TheParties further acknowledge that they intend to develop and implementProcessing Facilities in other countries in the Territory (each a “New Project”).Prior to establishing and implementing a New Project, the Parties shall causethe Company to budget sufficient funds to research and study the market of thecountry in the Territory. The Company shall evaluate and undertake thenecessary activities to ascertain the commercial and financial feasibility ofthe New Project. Such activities shall include a legal and structural analysis,financial analysis, the development of proposed tariff structures, apreliminary program information package for financial institutions and all suchother tasks required by the Parties to allow the Parties to make adetermination about the commercial and financial feasibility of the New Projectand 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 worktogether to perform all other tasks necessary to establish the ProcessingFacility and secure the additional financing necessary thereto.

 

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13.2                           SUREBEAMshall not itself undertake, and shall not subscribe equity in any person whoundertakes, the construction and operation of a New Project or other ProcessingFacility within the Territory without the prior written consent of RESAL.

 

13.3                           SUREBEAMgrants the Company, during the five (5) year period following the issuance ofthe Company’s commercial registration, a right of first negotiation tonegotiate and enter into an agreement to exclusively conduct the Business inthe Expansion Countries. SUREBEAM shall notify the Company of any third partyoffers to conduct the Business or of SUREBEAM’s intent to conduct the Businessin any of the Expansion Countries (“SUREBEAM Notice”). The Company mustexercise its option by providing SUREBEAM, within the ten (10) day periodimmediately following the date of the SUREBEAM Notice, written notice of itsdesire to negotiate a mutually acceptable agreement with regard to conductingthe Business in the specific Expansion Countries listed in the SUREBEAMNotice.  In the event a mutuallyacceptable agreement is not executed within sixty (60) days following the dateof the Company’s notice, SUREBEAM is free to offer and license any other thirdparty or is free itself to conduct the Business in the specific ExpansionCountries listed in the SUREBEAM Notice and the right of first negotiation setforth in this Article 13.3 shall expire and have no further effect with respectto the general subject matter contained in the SUREBEAM Notice and applicableExpansion Countries.  Nothing in thisAgreement shall require SUREBEAM or the Company to invest in a country orexpand in the Expansion Countries if it would cause SUREBEAM or the Company tobe in violation of EAR or CCL.  Shouldthe construction or operation of a Processing Facility in any of the ExpansionCountries violate any United States laws or regulations, including but notlimited to the EAR and CCL, then (a) to the extent that the Processing Facilityhas not been built, Company shall abandon all plans to construct such afacility and shall cease to conduct any business in such Expansion Country thatwould violate any United States laws or regulations, and (b) Should aProcessing Facility have already been built in the applicable ExpansionCountry, then Company shall terminate operations at such Processing Facilityand shall cease to conduct any business in such Expansion Country that wouldviolate any United States laws or regulations.

** **

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

 

14.1                           SUREBEAMwarrants that it is a duly existing corporation formed and in good standingunder the laws of the State of Delaware, United States of America and that nogovernment official has any interest in SUREBEAM or in its interest herein andthat all corporate and other actions required to authorize the execution andperformance of this Agreement have been taken.

 

14.2                           RESALwarrants that it is a validly existing sole proprietorship duly organized underthe laws of the Kingdom of Saudi Arabia and that no governmental official hasany interest in RESAL or in its interest herein, and that all corporate andother actions required to authorize the execution and performance of thisAgreement have been taken.

 

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14.3                           Eachof the Parties covenants that each of the representations and warranties aboveshall remain true throughout the term of this Agreement.

 

14.4                           Underno circumstances will RESAL take any action or cause the Company to take anyaction if SUREBEAM advises RESAL that the taking of such action would causeSUREBEAM or any person or company affiliated or associated with SUREBEAM to bedeemed in violation of any United States laws or regulations.

 

14.5                           EachParty hereto represents and warrants that it has not and undertakes and agreesthat it shall not, and shall not permit the Company, directly or indirectly, tooffer, pay, promise to pay or authorize the payment or giving of any money, oranything of value (i) to any official of any government or any instrumentalitythereof, or (ii) to any person, while knowing that all or a portion of suchmoney or thing of value will be offered, given or promised, directly orindirectly, to any official of any government or any instrumentality thereof,for the purposes of:

 

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

 

(b)                                 includingsuch official to use his influence with any government or any instrumentalitythereof to affect or influence any act or decision of such government orinstrumentality, in order to obtain or retain business for or with, or directbusiness to, any person.

 

14.6                           Underno circumstance may any Party sign any document, perform any act or make anycommitment, undertaking, warranty or representation on behalf of any otherParty without the express written consent of such other Party. No Party maysign any document, perform any act or make any other commitment, understanding,warranty or representation on behalf of the Company without the express priorwritten consent of the Company pursuant to a duly adopted resolution of theBoard of Managers or the shareholders in accordance with the Articles ofAssociation.

 

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

 

14.8                           EachParty (as an “Indemnifying Party”) shall indemnify, defend (by counselreasonably approved by the Indemnified Party) and hold harmless each otherParty (the “Indemnified Party” for purposes of this Article 14.8) and itsrespective officers, directors, shareholders, agents, employees and otherrepresentatives (each a “Party Indemnitee”) against all damages, claims,liabilities, losses and other expenses, including without limitation reasonableattroneys’ fees and costs, whether or not a lawsuit or other proceeding isfiled, that arise out of the Indemnifying Party’s breach of this Agreement orbreach of any representations, warranties, undertaking or other legalobligations

 

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

 

14.9                           TheParties shall cause the Company to indemnify, defend (by counsel reasonablyapproved by the Indemnified Party) and hold harmless each Party (each an“Indemnified Party” for purposes of this Article 14.9) and each of theirrespective officers, directors, shareholders, agents, employees and other representatives(each a “Party Indemnitee”) against all damages, claims, liabilities, lossesand other expenses, including without limitation reasonable attroneys’ fees andcosts, whether or not a lawsuit or other proceeding is filed, that arise out ofthe 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 promptlyindemnify and defend such claims and/or pay the Indemnified Party’s or a PartyIndemnitee’s expenses, as provided above, such Indemnified Party and PartyIndemnitee shall have the right to defend itself, and in that case, the Companyshall reimburse such Indemnified Party and Party Indeminitee for all of itsreasonable attroneys’ fees, costs and damages incurred in settling or defendingsuch claims within thirty (30) days of each of such Indemnified Party and PartyIndemnitee’s written requests.

 

14.10                     TheBoard of Managers shall cause the Company to maintain, at the Company’s solecost and expense, adequate insurance coverage for comprehensive generalliability and for property as the Board of Managers may determine from time totime.  Said insurance shall bemaintained with a reputable insurance carrier and in such amounts as may bereasonably necessary to protect the Company’s interests and in any event notless than the amounts that would be effected and maintained by an experiencedand reputable company carrying out business similar to that of the Company.  Comprehensive general liability coverageshall name the Parties, their respective Affiliates, managers, and employees asadditional insureds.

** **

**15.  Confidentiality and PublicAnnouncements**

 

15.1                           TheParties agree that during the performance of this Agreement, each Party maydisclose to the other confidential information regarding its business,including financial data, marketing information, methods of doing promotionsand sponsorships, research and development activities and other proprietaryinformation which constitute trade secrets of a Party (collectively“Confidential Information”). Confidential Information shall also include any other information inoral, written, graphic or electronic form which, given the circumstancessurrounding such disclosure, would be considered confidential.  The Parties shall each (i) ensure and shallcause the Company to ensure that any Confidential Information of any otherParty 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 otherParty’s Confidential Information, or any part thereof, to any other person orentity.  The obligations andrestrictions herein shall not apply to Confidential Information that fallswithin any of the following exceptions, provided a receiving Party proves bycredible written evidence that such information:

 

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

 

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

 

(c)                                  wasindependently developed by or for a receiving Party completely apart from thedisclosures hereunder;

 

(d)                                 hasbeen properly received from a third party who is not under any obligation tomaintain the confidentiality of such information, and without breach of thisAgreement by a receiving Party; and/or

 

(e)                                  isreleased pursuant to a court order or otherwise required by law, provided thatthe receiving Party immediately notifies the disclosing Party of such courtorder or legal requirement, and gives the disclosing Party a reasonableopportunity and cooperates with the disclosing Party to contest, limit orcondition the scope of such required disclosure.

 

If a receiving Party wises to rely on the exceptions contained insubparagraphs (b), (c) or (d) above, then the receiving Party must demonstrateto the disclosing Party the facts underlying why the exception applies withinninety (90) days of receipt of the Confidential Information from the disclosingParty.

 

15.2                           TheParties have the right to disclose the others’ Confidential Information totheir respective employees who have a specific need to know to perform theobligations hereunder, but such Parties shall be responsible for all of theirrespective employee’s actions.  Exceptas provided above, each Party shall use the other’s Confidential Informationonly to properly fulfill their obligations hereunder, and not for any otherpurpose.  Upon a Party’s request, theother Party shall return to the requesting Party the originals and all copiesof the requesting Party’s Confidential Information within thirty (30) days ofsuch request.  Each Party shall imposeon its directors and employees a corresponding obligation.

 

15.3                           EachParty shall notify each other Party of its intent to issue any press release orother public announcement with respect to the Company and its activities and,except as required by any competent legal or regulatory authority or anyinternationally recognized stock exchange, not issue any such release orannouncement without the prior consent of the other Parties, which consent maynot be unreasonably withheld.  Suchconsent shall not, however, be required in order for a Party to include a referenceto its ownership interest in the Company in its annual reports and similarpublications.

 

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15.4                           TheParties’ obligations under this Article 15 shall survive any termination ofthis Agreement.

** **

**16.  Valuations**

 

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

 

16.2                           Ifthe 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 thematter to any Approved Accounting Firm, such Approved Accounting Firm (or itsaffiliated firm) not being the Company’s auditor or the Party’s principalauditors and, relying upon the principles set forth in Article 16.1 above,request that firm to determine the fair market value, based upon specially auditedaccounts prepared as of the last day of the month preceding the request for adetermination. The relevant firm shall, at the request of either Party, beentitled to take any independent third party outside offer received by suchParty in respect of part or all of its shareholding in the Company into accountin making such determination.  TheParties will require the accounting firm to present its determination to themwithin thirty (30) days and such determination shall be binding upon them.

** **

**17.  Validity and Termination**

 

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

 

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

 

(a)                                  thegranting of an investment license by the Saudi Arabian General InvestmentAuthority in form and substance acceptable to the Parties licensing theestablishment of the Company, and

 

(b)                                 theissuance 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) aParty is in material default of an obligation hereunder and if such defaultingParty does not remedy such default within a period of ninety (90) days afterreceiving written notification of such default from any Party which is not indefault (a “Non-Defaulting Party”), (in each

 

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

 

(a)                                  Providedthat all Non-Defaulting Parties unanimously agree among themselves on theoption to be exercised:

 

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

 

(ii)                                  theNon-Defaulting Party(ies) may require that the Defaulting Party sign whateverresolutions and documents and take whatever action may be necessary to promptlyliquidate the Company, including, without limitation, voting in favor ofliquidation at a general meeting of the shareholders.

 

(b)                                 Shouldthe Non-Defaulting Parties not unanimously agree to exercise one of theremedies set forth in Section 17.3(a) above, any Non-Defaulting Parties thatstill desires to exercise option (a) above shall be entitled to purchase all orany portion of the shares in the Company then held by the Defaulting Party, tobe divided pro-rata equal to the percentage that that purchasing Party’sshareholding comprises of the total shareholders of all purchasing Parties, at[...***...] percent [...***...] of the [...***...] determined pursuant toArticle 17.6, provided that in the aggregate all shares in the Company thenheld by the Defaulting Party are purchased by the Non-Defaulting Parties andthe Defaulting Party is no longer a shareholder in the Company followingconsummation of such purchase.

 

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

 

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

 

The options stated above shall be exercisable by the Non-DefaultingParty(ies) upon written notice to the Defaulting Party within sixty (60) daysof 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 thereaftertake whatever action is necessary and sign whatever documents are necessary inorder to effectuate the appropriate share transfer(s) or liquidation, as thecase may be.  Nothing in this Article17.3 shall be construed to require any Non-Defaulting Party to exercise eitherof the above options.

 

17.4                           AParty shall be deemed to have suffered an event of default if such Party filesa petition seeking adjudication of bankruptcy or insolvency, or any suchpetition is filed against a Party by a third party and that petition is notdismissed within sixty (60) days, or if a Party hereto starts the proceedingsfor dissolution or liquidation, or if a receiver or trustee is appointed for asubstantial portion of the business or assets of such Party.

 

17.5                           Therights as provided for in Article 17.3 shall be in addition to and not insubstitution for any other remedies that may be available to a Non-DefaultingParty hereunder or by operation of applicable law.  The exercise of such rights shall not relieve the DefaultingParty from any obligations accrued prior to the date on which the sharetransfer(s) or liquidation, as the case may be, is effected, nor shall the exerciseor failure to exercise such rights relieve the Defaulting Party from anyliability 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                           Ifany Party notifies the other Parties in accordance with Article 19 of theArticles of Association that it does not wish to continue the Company, then theCompany shall be dissolved and liquidated upon the expiration of itsthen-current term, provided, however, that if one or more Parties wish tocontinue the Company it or they shall be entitled to purchase or arrange forthe purchase of the shares of the Party or Parties who do not wish to continueat a price equal to the value of such shares as determined pursuant to Article16. If there is more than one purchasing Party each such Party shall beentitled to purchase a percentage of the shares of the Party(ies) who do notwish to continue that is equal to the percentage that such purchasing Party’sshareholding comprises of the total shareholdings of all purchasing Parties.

 

17.8                           Ifthe Company is dissolved and liquidated for any reason this Agreement shall beterminated automatically.

** **

**18.  Pre-Operating Expenses**

 

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

** **

* Confidential Treatment Requested

 

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**19.  Governing Law**

 

19.1                           ThisAgreement shall be construed and interpreted in accordance with the laws ofEngland and Wales.

 

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

** **

**21.  Effective Date**

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

** **

**22.  Notices**

 

22.1                           All notices, approvals,consents or other communications in connection with this Agreement shall begiven in writing by an authorized officer of the Party providing any suchnotice, approval, consent of other communication shall be left at the addressof the addressee which is specified below or sent by reputable internationalcourier to the address of the addressee specified below or hand delivery to theaddress of the addressee which is specified below or if the addressee notifieseach 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                           Unlessa later time is specified in it, a notice, approval, consent or othercommunication takes effect from the time it is received.

 

22.3                           Acouriered letter shall be deemed to have been received when delivered to theappropriate address.

** **

**23.  Further Assurances**

 

23.1                           EachParty agrees that it shall:

 

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

 

(b)                                 bejust and faithful to each other Party and to the Company and at all timesrender to each other Party and the Company true accounts, full information and truthful explanations regarding allmatters relating to the affairs of the Company;

 

(c)                                  inall cases treat the Company as a separate and independent profit center andmake every reasonable effort to conduct affairs of the Company and its owndealings with the Company in a manner which in all cases maximizes the netprofits of the Company and gives effect to this Agreement and all other jointventure documents (including without limitation any documents referred to inArticle 2.9 above) and any other agreement that a Party or any of its Affiliateentered into with the Company;

 

(d)                                 inits capacity as a shareholder of the Company, cause its representatives atshareholders’ meetings and its appointees to the Board of Managers to exerciseits voting rights in a manner which gives full force and effect to the termsand conditions of this Agreement, the Articles of Association and all otherjoint venture documents; and

 

(e)                                  notsign any document, perform any act, or make any commitment, undertaking,warranty or representation on behalf of any other Party or the Company withoutthe express written consent of such other Party or the Company, as the case maybe.

 

23.2                           EachParty undertakes and agrees to cause the Company to perform diligently itsobligations under each of the agreements listed in Article 2.9 above.

** **

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**24.  Governing Language**

 

24.1                           ThisAgreement and the related Agreements are executed in English.  The English language shall be the governinglanguage despite translation into any other language(s). No translation, ifany, of this Agreement into any other language shall be of any force or effectin the interpretation of this Agreement or in a determination of the intent ofeach of the parties.

 

24.2                           TheEnglish language shall be used and be the official language for writtencommunications (including, but not limited to, the reporting of results ofoperations and forecasts of same) between and among the Parties and the Companyand otherwise under this Agreement.

** **

**25.  Severability**

 

In the event that any provision of this Agreement should be or becomeincomplete or ineffective, such invalidity or incompleteness shall not affectthe validity of the remaining provisions hereof.  In such case, the Parties shall re-negotiate in good faith avalid provision which implements the intent and purpose of the invalidprovision shall be agreed upon by the parties, affords the same rights andimposes the same obligations on the Parties and has substantially the sameeconomic effect on both the Parties and the Company.

** **

**26.  Entire Agreement; Priority**

 

26.1                           ThisAgreement, together with those documents and agreements attached hereto asexhibits, appendices and schedules, constitutes the complete and exclusivestatement of the terms of the contract between the parties hereto withreference to the subject matter hereof, and no statements or agreements, oralor written, made prior to or at the signing hereof shall vary or modify thewritten terms hereof; and no Party shall claim any modification or rescissionunless it is in writing, signed by all Parties and specifically refers to thisAgreement. The headings of the Articles and Articles of this Agreement areinserted for convenience only and shall not be deemed to constitute a parthereof.

 

26.2                           Inthe event of any conflict between this Agreement and the Articles ofAssociation 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 toherein is prevented, restricted, or interfered with by reason of any event orcause whatsoever beyond the reasonable control of the Party (“Force Majeure”)so affected, such Party shall be excused from performance of such obligation tothe extent of such prevention, restriction, or interference.  If any such case occurs, the affected partyshall give prompt notice in writing thereof to each other Party and shall useits reasonable efforts to resume full performance under this Agreement as andwhen practicable.

 

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

** **

**28.  No Third PartyBeneficiaries**

 

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

** **

**29.  No Waiver of Rights**

 

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

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**30.  Counterparts**

 

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

** **

**INWITNESS WHEREOF**, each Party has caused this agreementto be executed by its duly authorized representative as of the date firstwritten 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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