**Exhibit 10.48**

 

*** Confidential Treatment Requested Under**

**17 C.F.R.****§§ 200.80(b)(4), 200.83 and240.24b-2**

 

 

**AGREEMENTFOR PURCHASE OF A**

** **

**SUREBEAM X-RAY SYSTEM**

 

 

**BETWEEN**

 

 

**SUREBEAMCORPORATION**

 

**AND**

 

**SON SONCO., LTD.**

 

----

 

**TABLEOF CONTENTS**

 

**SECTION**

** **
| 1.     | DEFINITIONS                                  |
|--------|----------------------------------------------|
|   |                                         |
| 2.     | EQUIPMENT  AND SERVICES FURNISHED BY SELLER  |
|   |                                         |
| 3.     | BUYER FURNISHED  ITEMS AND SERVICES          |
|   |                                         |
| 4.     | TIME OF  PERFORMANCE AND FORCE MAJEURE       |
|   |                                         |
| 5.     | DELIVERY,  INSTALLATION AND ACCEPTANCE TEST  |
|   |                                         |
| 6.     | AGREEMENT PRICE  AND TAXES                   |
|   |                                         |
| 7.     | PAYMENTS, SECURITY  INTEREST AND BONDS       |
|   |                                         |
| 8.     | WARRANTIES                                   |
|   |                                         |
| 9.     | LIMITATION OF  REMEDIES AND LIABILITIES      |
|   |                                         |
| 10.    | CHANGES                                      |
|   |                                         |
| 11.    | COMPLIANCE  WITH LAWS AND BUYER’S RULES |
|   |                                         |
| 12.    | INSURANCE                                    |
|   |                                         |
| 13.    | INDEMNIFICATION                              |
|   |                                         |
| 14.    | ACCESS                                       |
|   |                                         |
| 15.    | TERMINATION  FOR DEFAULT                     |
|   |                                         |
| 16.    | TERMINATION                                  |
|   |                                         |
| 17.    | OWNERSHIP AND  LICENSING OF TECHNOLOGY       |
|   |                                         |
| 18.    | AMENDMENTS                                   |
|   |                                         |
| 19.    | ASSIGNMENTS  AND SUBCONTRACTS                |
|   |                                         |
| 20.    | NOTICES                                      |
|   |                                         |
| 21.    | MISCELLANEOUS                                |
|   |                                         |
| 22.    | CONFIDENTIAL  INFORMATION                    |
|   |                                         |
| 23.    | ARBITRATION                                  |
|   |                                         |
|   | EXHIBIT  A - SELLER’S PROPOSAL     |
|   | EXHIBIT  B - IMPLEMENTATION MILESTONES  |
|   | EXHIBIT  C - PAYMENT SCHEDULE           |
|   | EXHIBIT  D - LICENSE AGREEMENT          |

 

 

 

2

----

 

**AGREEMENTFOR PURCHASE OF A**

**SUREBEAMELECTRON BEAM SYSTEM**

**BETWEEN**

**SUREBEAM CORPORATION**

**AND**

**SON SONCO., LTD.**

 

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

 

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

 

# **1.**             DEFINITIONS

 

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

 

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

 

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

 

----

***CONFIDENTIAL TREATMENTREQUESTED**

 

3

----

 

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

 

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

 

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

 

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

 

1.8                “MaterialHandling” refers to the material handling equipment provided by Seller asdefined in the Proposal.  This equipmentincludes the conveyor, closing conveyor, process conveyor and associatedcontrols.

 

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

 

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

 

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

 

1.12             RoyaltyFee means the royalty fee specified in Exhibit C2.

 

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

 

4

----

 

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

 

1.15             “SubstantialFunctionality” of a Deliverable means it operates substantially in acceptancewithin the specifications, or performance criteria as defined in the Proposal.

 

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

 

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

 

1.18             “WarrantyPeriod” means the 12-month period commencing upon Acceptance of theDeliverables.

 

 

# **2.**             EQUIPMENT AND SERVICES FURNISHED BY SELLER

 

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

 

•       MaterialHandling Subsystem

•       LINAC Subsystem

•       Informationand Control Subsystem

•       SafetySubsystem

 

2.2                Sellershall furnish to Buyer the services as defined in Seller’s Proposal, whichinclude:

 

•                  Program Management

•                  Operating Manuals & Procedures

•                  Operations & Maintenance Training

•                  Construction Drawings and Bill of Materials

•                  Maintenance & Troubleshooting Guides

•                  Installation, Testing & Start-upServices

 

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

 

5

----

 

# **3.**             BUYER FURNISHED ITEMS AND SERVICES

 

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

 

3.1.1                                    Design, specification, testing anddevelopment of the Product.

 

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

 

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

 

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

 

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

 

3.2           Buyer shall provide the followingitems, equipment, and services:

 

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

 

3.2.2                                    Items shall be provided to Seller (asrequired to perform the work) during the execution of this Agreement, at nocost to Seller.

 

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

 

# **4.**             TIME OF PERFORMANCE AND FORCE MAJEURE

 

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

 

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

 

6

----

 

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

 

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

 

# **5.**             DELIVERY, INSTALLATION ANDACCEPTANCE TEST

 

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

 

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

 

7

----

 

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

 

# ** **

# **6.             AGREEMENT PRICE AND TAXES**

 

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

 

 

# **7.             PAYMENTS, SECURITY INTEREST ANDBONDS**

 

7.1                                 The System Price set forth in Section 6.0(“Agreement Price and Taxes”) shall be due Seller according to the schedule setforth in Exhibit C.  Payment shall bemade by Buyer no later than the 10th day of the month following the month suchmilestone is invoiced by Seller. The entire System Price shall be secured by anirrevocable Letter of Credit in a form acceptable to both Parties. Cost of theLetter of Credit shall be paid by Buyer. Buyer may not withhold or “set-off”any amounts due hereunder and Seller reserves the right to cease work withoutprejudice if amounts are not paid when due. Seller retains a purchase money securityinterest and the right to assert appropriate liens with respect to alldeliverables until all amounts due are paid in full. Any late payment shall besubject to any cost of collection (including reasonable legal fees) and shallbear interest at the rate of one and one-half (1.5%) percent per month, untilpaid.

 

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

 

 

# **8.             WARRANTIES**

 

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

 

8.1.1                        Free from defects in design, materials, andworkmanship.

8.1.2                        In compliance with the specifications setforth in the Proposal.

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

8

----

 

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

 

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

 

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

 

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

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

8.3.3                        Software developed by Seller — for defectsthat can be specifically traced to Seller’s software, Seller will repair thedefect.

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

8.3.5                        Exclusions:

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

•                  Items that are replaced during normalpreventative maintenance.

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

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

 

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

 

9

----

 

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

 

8.5                                 Warranty Disclaimer - EXCEPT AS SPECIFICALLYPROVIDED IN THIS SECTION (“WARRANTIES”) THE SELLER HEREBY DISCLAIMS WITHRESPECT TO ALL DELIVERABLES PROVIDED HEREUNDER, ALL EXPRESS AND IMPLIEDWARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANT-ABILITY, OR FITNESSFOR A PARTICULAR PURPOSE.  SUREBEAMREPRESENTS AND WARRANTS THAT NONE OF THE THIRD PARTY SOFTWARE PRODUCTS,STANDARD SOFTWARE PRODUCTS, CUSTOM WORK PRODUCT, EMBEDDED SOFTWARE OR OTHERDELIVERABLES PROVIDED HEREUNDER CONSTITUTE “CONSUMER PRODUCTS” WITHIN THEMEANING OF THE MAGNUSON-MOSS WARRANTY ACT AND THAT IF ANY WARRANTY ISNEVERTHELESS IMPOSED UNDER THAT ACT IT SHALL BE LIMITED TO A PERIOD OF THIRTY(30) DAYS FROM THE DATE OF DELIVERY.

 

8.6                                 Disclaimer Regarding Governmental Laws andRegulations - THE PARTIES HEREBY AGREE THAT, TO THE EXTENT ANY DELIVERABLEHEREUNDER IS USED FOR THE PURPOSE OF GENERATING OUTPUT USED IN COMPLYING WITHGOVERNMENTAL LAWS AND REGULATIONS (INCLUDING TAX LAWS AND REGULATIONS), BUYERSHALL ASSUME ALL RESPONSIBILITY FOR COMPLIANCE WITH ANY SUCH GOVERNMENTAL LAWSAND REGULATIONS.

 

 

# **9.             LIMITATION OF REMEDIES ANDLIABILITIES**

 

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

 

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

 

10

----

 

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

 

9.2                                 Liabilities - EXCEPT FOR DAMAGES ARISINGFROM BODILY INJURY CAUSED SOLELY BY THE NEGLIGENCE OF SELLER, SELLER SHALL NOTBE LIABLE FOR ANY AMOUNT EXCEEDING THE PORTION OF THE TOTAL CONTRACT PRICEACTUALLY PAID BY BUYER.  IN NO EVENTSHALL SELLER BE LIABLE, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OROTHERWISE, FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIALDAMAGES (INCLUDING LOST PROFIT OR BUSINESS INTERRUPTION) EVEN IF SELLER ISNOTIFIED IN ADVANCE OF SUCH POSSIBILITY ARISING OUT OF OR PERTAINING TO THESUBJECT MATTER OF THIS AGREEMENT.

 

 

# **10.          CHANGES**

 

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

 

 

# **11.          COMPLIANCE WITH BUYER’S RULES**

 

11.1                           During the performance of services atBuyer’s facilities, Seller’s personnel and others acting on Seller’s behalfshall comply with Buyer’s rules, specifications, guidelines, policies andcustomary practices regarding safety, security, sanitation and other contractorand personnel activities provided Seller has been informed in advance of suchrules, specifications, guidelines, policies and practices.

 

# ** **

# **12.          INSURANCE**

 

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

 

12.1.1                       Comprehensive General Liability Insurancefor each occurrence of bodily injury and property damage, in an amount of notless than One Million US Dollars (US$1,000,000.00) combined single limit, foreach occurrence of

 

11

----

 

bodily injury and property damage, coveringBuyer as an additional insured and containing endorsements providing coveragefor the following:

 

•       PersonalInjury Liability;

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

•       BlanketContractual Liability; and

•      Broad Form Property Damage

 

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

 

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

 

12.1.4                       Employers’ Liability Insurance in an amountnot less than Five Hundred Thousand US Dollars (US$500,000).

 

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

 

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

 

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

 

# ** **

# **13.          INDEMNIFICATION**

 

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

 

12

----

 

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

 

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

 

 

# **14.          ACCESS**

 

14.1                           Seller shall furnish or arrange Buyer’sreasonable access to the System and its components at the site of theirmanufacture and storage.  Buyer shallfurnish or arrange Seller’s reasonable access to the System during and afterinstallation at Buyer’s Site.

 

 

# **15.          TERMINATION FOR DEFAULT**

 

15.1                           Either party may be declared in default ofthis Agreement if it breaches any material provision hereof and fails withinten (10) days after receipt of notice of default to correct such default or tocommence corrective action reasonably acceptable to the other party and proceedwith due diligence to completion. Either party shall be in default hereof if it becomes insolvent, makes anassignment for the benefit of creditors, a receiver is appointed or a petitionfor bankruptcy is filed with respect to it and such proceeding is not dismissedwithin thirty (30) days.  Any notice ofdefault shall be sent in accordance with Section 21.0 (“Notices”) and shallidentify the contract provision at issue and describe in reasonable factualdetail how the other party has materially violated the provision.  If timely corrective action is notforthcoming, the aggrieved party may then terminate the Agreement pursuant toSection 16.0 (“Termination”) and pursue all other available remedies.

 

 

# **16.          TERMINATION**

 

16.1                           This Agreement shall terminate when theterm, as defined in the Proposal, expires or, if earlier, upon one party’sgiving written notice of termination after following the procedures in Section15.0 (Termination for Default).  Inaddition, Buyer may terminate this Agreement for its convenience and withoutcause upon thirty (30) days notice and payment to Seller in accordance withSection 7.0 (Payments, Security Interest and Bonds), of an equitable portion ofthe Agreement Price to reflect partial completion of the project and financialcommitments made by Seller.  Terminationshall have no effect upon the parties’

 

13

----

 

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

 

 

# **17.          OWNERSHIP AND LICENSING OF TECHNOLOGY**

 

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

 

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

 

 

# **18.          AMENDMENTS**

 

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

 

18.2                           This Agreement, including the attachments toit, may be amended or modified only by a written instrument signed by anauthorized representative of each party.

 

 

# **19.          ASSIGNMENTS AND SUBCONTRACTS**

 

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

 

14

----

 

 

# **20.          NOTICES**

 

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

 

SonSon Co., Ltd.

[...***...]

 

 

with copies of correspondence to:

 

ANLACCo. Ltd.

[...***...]

 

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

 

Seller:

 

SureBeam Corporation

Attn: Martha M. Cashman

9276 Scranton Rd., Suite 600

San Diego, CA 92121

 

with copies of correspondence to:

 

SureBeam Corporation

Attn:  Thomas Allen

9276 Scranton Road, Suite 600

San Diego, CA 92121

 

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

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

15

----

 

# **21           MISCELLANEOUS**

 

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

 

21.2                           No action or failure to act by Buyer orSeller shall constitute a waiver of any right or duty afforded either of themunder this Agreement nor shall any such action or failure to act constitute anapproval of, or acquiescence in, any breach under this Agreement, except as maybe specifically agreed in writing.

 

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

 

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

 

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

 

21.6             Non-solicitation- During the term of this Agreement and for a period of one (1) yearthereafter, Buyer and Seller agree not to hire, solicit, nor attempt tosolicit, the services of any employee or subcontractor of Buyer or Sellerwithout the prior written consent of Buyer or Seller.

 

21.7             Compliancewith Export Regulations. Buyer has, or shall obtain in a timely manner, allnecessary or appropriate licenses, permits or other governmental authorizationsor approvals; shall indemnify and hold Seller harmless from, and bear allexpense of, complying with all foreign or domestic laws, regulations orrequirements pertaining to the importation, exportation, or use of thetechnology to be developed or provided herein. Buyer shall take no action, noromit to take

 

16

----

 

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

 

21.8             TheAgreement, including any change orders thereto, takes priority over any otherdocument. In the event of a conflict in any document referred to in thisAgreement, the later version of any document takes precedence over the earlierdocument.

 

21.9             AllAgreement Deliverables will be provided in the English language. Anytranslations required will be provided by Buyer at Buyer’s expense.

 

 

# **22           CONFIDENTIAL INFORMATION**

 

22.1                           Acknowledgment of Confidentiality - Eachparty hereby acknowledges that it may be exposed to confidential andproprietary information of the other party including, without limitation, theSystem and Deliverables and other technical information (including functionaland technical specifications, designs, drawings, analysis, research, processes,computer programs, algorithms, methods, ideas, “know how” and the like)business information (sales and marketing research, materials, plans,accounting and financial information, personnel records and the like) and otherinformation that has been clearly designated in writing as confidential(“Confidential Information”).  ConfidentialInformation does not include (i) information already known or independentlydeveloped by the recipient; (ii) information in the public domain through nowrongful act of the recipient, or (iii) information received by the recipientfrom a third party who was free to disclose it.

 

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

 

17

----

 

22.3                           Remedies for Breach of Confidentiality -Each party acknowledges that the unauthorized use, commercialization ordisclosure of the other party’s Confidential Information would causeirreparable harm to such other party. The parties acknowledge that remedies at law would be inadequate toredress the actual or threatened unauthorized use, commercialization ordisclosure of such Confidential Information and that the foregoing restrictionsmay be enforced by temporary and permanent injunctive relief.  In addition, any award of injunctive reliefshall include recovery of associated costs and expenses (including reasonableattorneys’ fees).

# ** **

 

# **23.          ARBITRATION**

 

23.1         The parties hereby submit allcontroversies, claims and matters of difference arising out of or relating tothis Agreement, or the breach thereof, to arbitration in San Diego, California,USA, according to the rules and practices of the American ArbitrationAssociation from time to time in force. This submission and agreement to arbitrate shall be specificallyenforceable.  Without limiting thegenerality of the foregoing, the controversies to be arbitrated hereunderinclude all questions as to whether the right to arbitrate any questionexists.  A panel of three arbitratorsshall conduct the arbitration unless otherwise agreed, and the decision of themajority thereof shall be the decision of the panel.  One arbitrator shall be selected by each party, and the two soselected shall select a third arbitrator. Arbitration may proceed in the absence of any party if notice of theproceedings has been given to such party. The parties agree to abide by all awards rendered in suchproceedings.  Such awards shall be finaland binding on all parties to the extent and in the manner provided by theCalifornia Rules of Civil Procedure. All awards may be filed with the Clerk of the District Court for theCounty of San Diego, California, USA, as a basis of declaratory or otherjudgment and, at the election of the party making such filing, with the clerkof one or more courts, state or federal, having jurisdiction over the partyagainst whom such an award is rendered or its property.  The prevailing party shall be awarded itscosts, expenses and fees’, including reasonable attorneys’ fees, and the panelis hereby authorized to apportion such fees, costs and expenses in the event itdeems it fair and equitable to do so.

 

18

----

 

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

 

 

Agreed,

 
| **SON SON CO., LTD.** | **SUREBEAM CORPORATION** |
|-----------------------|--------------------------|
|                  |                     |   |   |
|                  |                     |   |   |
| Signed:               | /s/ Tram Be              |   | Signed: | /s/ Larry Oberkfell |   |
|                  |                     |   |   |
| Name:                 | Mr. Trâm Bê    | Name: | Mr. Larry Oberkfell |
|                  |                     |   |   |
| Title:                | President                | Title: | President & CEO |
|                  |                     |   |   |
| Date:                 | 6/17/2002                | Date: | 6/11/2002 |
|                       |                          |  |  |  |  |

 

 

 
| Witnessed by:          |
|------------------------|
|                   |
|                   |
|   /s/ William Hsu |   |
|                   |
| William Hsu            |

 

19

----

 

*** Confidential Treatment Requested Under**

**17 C.F.R.****§§ 200.80(b)(4), 200.83 and240.24b-2**

 

**EXHIBIT A**

**SELLER’S PROPOSAL**

 

 

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

**FOR A**

**SUREBEAM  X-RAYPASTEURIZATION SYSTEM**

 

 

Prepared for:

 

**SON SONCO., LTD.**

 

**Ho ChiMinh City, Vietnam**

 

 

February 9, 2002

 

 

Submitted by:

**SureBeamCorporation**

9276 Scranton Road, Suite 600

San Diego, CA 92121

 

 

**This document contains SureBeam Proprietary Informationto be used solely for evaluating this Proposal and may not be disclosed to anyoutside 3rd party.**

 

----

 

February 9, 2002

 

 

Mr.Trâm Bê

SonSon Co., Ltd.

[...***...]

 

 

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

SureBeam X-RayPasteurization System

 

 

Dear Mr. Bê:

 

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

 

**Purpose of the Proposal**

 

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

 

ý      Eliminate Potential Pathogens

ý      Minimize the Processing Costper Pound

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

ý      Achieve System Availability> 95%

ý      Minimize Capital Expenditures

ý      Minimize Logistics Expenses

 

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

 

----

***CONFIDENTIALTREATMENT REQUESTED**

 

 

 

2

----

 

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

 

**Requirements Definition**

 

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

 

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

 

•                  [...***...]

 

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

 

•                  Meet the required quality, processintegrity, and regulatory requirements defined by Buyer, ISO-11137, and USDAguidelines.

 

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

 

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

 

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

 

•                  Provide on-site maintenance and operationssupport.

 

•                  Guarantee the performance of the system.

 

**Proposal Summary**

 

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

 

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

 

----

***CONFIDENTIAL TREATMENT REQUESTED**

3

----

 

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

 

What are X-rays and how are they generated? X-rays (or Bremsstrahlung) are photons emitted when a rapidly movingcharged particle (normally an electron) is decelerated by an atom. X-rays are generated when an electron beamstrikes any object, but they are most efficientlygenerated when using high energy electrons (5 MeV) and a dense object or target- like tungsten.****The conversionefficiency from electrons to X-rays is low (5-7%), hence high power is neededto make up for the low conversion efficiency. In the SureBeam systemelectrons generated from a linear accelerator with 5 MeV energy and 100 kWpower are used to generate X-rays. Once the X-rays are created, product ismoved through the x-ray field in a precisely controlled manner with the goal ofdistributing the x-rays throughout the product. When x-rays penetrate theproduct they occasionally strike electrons in the outer rings of atoms at themolecular level of the product. When the collision occurs the photon impartspart of its kinetic energy into the electron in the same manner as a cue ballwould break a rack of billiard balls in a pool game. This process is referredto as the Compton Effect. It is these secondary electrons that damage the DNAmolecules in living organisms such as E. Coli and Listeria and produce thedesire effect of “killing” the pathogen. The amount of energy or “dose”required to reduce a population of organisms by 1/10th (or one log)is readily known and quantifiable (for example, Listeria with a dose from 0.4to 0.6 kGy will reduce a population by 1 log). A typical dose of 1.75 kGy willreduce the population by 3 to 4 log (4 x 0.4 kGy = 1.60 kGy), or 99.99%.

 

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

 

 

4

----

 

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

 

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

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

5

----

 

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

 

** **

**Figure 1-1 System Isometric View**

 

The system will be contained in an existing Buyer cold storage anddistribution facility. The building addition is sized to stage in-comingproducts (» 7,000 ft2) prior topasteurization and out-going products (» 3,000 ft2) after pasteurizationwhile they are waiting for QA release. These areas are physically separated toprevent co-mingling of processed and un-processed products, and have been sizedto accommodate the expected product flow direct from manufacturing and loadsfrom other Buyer manufacturing locations. The system is contained inapproximately 5,000 ft2 which includes the concrete shield and theload / unload areas. Equipment rooms for the process equipment are locatedadjacent to the shield. Additional space for offices, control and dosimetrylabs (» 1,500 ft2) are also required.The staging areas in and out are refrigerated spaces - other spaces are not.This configuration has the following advantages:

 

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

•                  Minimizes the need for new facilityconstruction;

•                  Provides the ability to expand the stagingareas if required in the future;

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

 

This system concept will permit SureBeam to accomplish the followingbusiness objectives:

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

 

6

----

 

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

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

•                  Achieve 100% safe operation;

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

•                  Guaranteed system performance.

 

 

**System Description of Operation**

 

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

 

The SureBeam System consists of the following major subsystems:

 

•                  X-ray source or “accelerator”

•                  Material Handling

•                  Information & Control system —“SureTrack” system

•                  Safety equipment

•                  Radiation shield and support utilities (byBuyer)

 

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

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

7

----

 

 

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

 

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

 

** **

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

 

provide a “torturous” path to limit any ionizing radiation from escaping(i.e. no direct line of sight path). The size of the shield is approximately3000 ft2 (65 ft. x 47 ft.).

 

 

8

----

 

 

**Figure 1-5 Loading Area**

 

The accelerator is located inside of the shield and protected fromionizing radiation and ozone by interior walls. The accelerator designphilosophy is to limit variability in the accelerator to one parameter (scanheight). All other operating parameters are fixed at validated set points andpre-defined high/low limits. The goal is to provide stable equipment operationthat always produces a consistent beam. If the beam characteristics exceedpre-defined limits, then the system is shutdown.

 

The beam centerline is oriented horizontally and scans the products asthey are moved in front of the scan horn. This horizontal beam orientation isvery advantageous to the processing and generates a more reliable and costeffective design.

 

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

 

 

9

----

 

 

**Figure 1-6 Loading product into Carrier**

 

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

 

Overseeing all information and processing functions is the SureTrackinformation and control system. The Suretrack system uses a distributed networkof industrial PLC’s and PC to monitor and control the system functions. Thesoftware modules have been used in similar applications and provide a robustcontrol system.

 

 

**System Description of Operation**

 

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

 

The System operator initiates sterilization “Lot” setup and release byentering the product code, Lot information, and selecting the pre-defined processinginstructions.

 

 

10

----

 

 

**Figure 1-7 Operator at I&CS Computer**

 

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

 

 

11

----

 

          

 

**Figure 1-8 Placing a Dosimeter on Product**

 

Products to be processedare manually loaded into the captive carriers in the orientation defined by theprocessing protocol. Dosimeters are placed on selected carriers as anindependent means of monitoring the integrity of the delivered dose. Ingeneral, dosimeters are placed on the first and last carriers in a Lot, and ona periodic basis (every 10-15 carriers) while the Lot is being processed, toverify that the Lot has received the defined dose. Current regulatoryguidelines recommend placement of dosimeters at the beginning, middle, and endof the Lot (at a minimum). The quantity/frequency of dosimeters periodicallyprocessed within the Lot will be determined by QA, and input into the system aspart of the Lot processing instructions.

 

The SureTrack informationand control system guides the system operator and material loaders through theoverall process checking for the completion of each task and verifying theintegrity of the process. (As an option, bar code scanners can be used toverify that the correct product code has been loaded onto the carrier). Inaddition, the control system verifies that the operating parameters andvariables are correctly set and operating within the pre-defined limits beforethe carrier is released into the system.

 

Released carriers aremoved into the shield on an overhead Power & Free conveyor. The Power &Free conveyor is the primary means of transporting the carrier through thesterilization process and load/unload areas. The conveyor consists of twooverhead tracks made up of a power section containing a drive chain and a freesection. Products are loaded into the carrier suspended from the free section.The power section will engage the carrier and drive the carrier along the fixedoverhead track. Mechanical drive dogs on the power section are designed todisengage from the carrier to allow carriers to accumulate or interface withthe automated equipment. The power and free control system manages the trafficflow and accumulation of carriers through the system.

 

 

12

----

 

Prior to entry into thebeam area, an automatic closing conveyor is used to move carriers from thePower & Free conveyor to the precisely controlled “Process Conveyor”. Theclosing conveyor engages the carrier and moves it to within inches of thepreceding carrier, minimizing the “gap” or non-productive space betweencarriers, and precisely matches the speed of the preceding carrier. In thismanner, carriers are “closed packed” to maximize the productive utilization ofthe electron beam. Carriers may “touch” in order to achieve close packing, butnot in a manner that would be detrimental to the integrity of the delivereddose.

 

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

 

 

**Figure 1-9 Process Conveyor**

 

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

 

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

 

 

13

----

 

Because of this level ofcontrol, and the design of the beam scanning system, the integrity of theprocess is maintained on a restart of the process with product in the beam. Apositive transition dose is generated in the region where the interruptoccurred and eliminates the need to discard products that were in the beam.

 

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

 

 

**Figure 1-10 Carrier Entering Rotation Mechanism**

 

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

 

At the completion of thelast carrier in a sterilization lot exiting the unload area, the SureTrackcontrol system checks to insure the Lot processing is complete andrecord/archives all processing information required to substantiate successfulcompletion of the process. QA reviews this information and the independentdosimetry results to determine if the Lot can be released.

 

 

14

----

 

System Equipmentand Deliverables

 

The SureBeamSystem consists of the following deliverables and services:

 

1.1                                 EngineeringAnalysis & Concept Definition.  Aninitial engineering effort will be performed prior to the implementation of thesystem to develop answers to the following issues:

 

1.1.1                        Define the system concept andthe site specific layout

1.1.2                        Assist Buyer with the qualificationand selection of the facility General Contractor. Buyer will contract directlywith the General Contractor for the construction of the Facility and allsupport utilities.

1.1.3                        Assist Buyer resolve sitespecific questions (location, local codes, finalize costs, utilities, ozoneventilation)

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

1.1.5                        Define interfaces to otheroperations

 

1.2                                 LinearAccelerator – the x-ray source consists of one linear accelerator thatgenerates an electron beam of 100 kW power at 5 MeV energy. The electrons areconverted into x-rays when they strike an x-ray converter. the x-ray sourcewill include the following equipment:

 

1.2.1                        [...***...]

1.2.2                        Horizontal acceleratorconfiguration

1.2.3                        Selectable scan heights (3)

1.2.4                        X-Ray converter and watercooling system

1.2.5                        Secondary water conditioningand cooling system for the accelerator

1.2.6                        Equipment provided C.I.F. Portof Ho Chi Minh City.

 

1.3                                 MaterialHandling system - a material handling system is provided to contain, position,and move product through the pasteurization process. The equipment shall becapable of conveying a diverse set of product case sizes through the systemproviding integrity over the process. The mh system shall include the followingitems:

 

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

 

----

***CONFIDENTIALTREATMENT REQUESTED**

15

----

 

balancing, process equipment interfacing, and localflow control.

 

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

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

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

1.3.5                        180° Rotation Device — Anindependent rotation device is provided to horizontally rotate the carriers180°. The mechanism is slave driven from the power & free conveyor thussynchronizing the rotate mechanism with the power & free conveyor, andeliminating an extra drive motor and controls. Fail-safe integrity checks areprovided to insure that the rotation is completed correctly.

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

1.3.7                        Equipment provided C.I.F. Portof Ho Chi Minh City.

 

1.4                                 SureTrackControl System – a real-time information and control system is provided tomonitor and control the overall process. The control system shall provide thedata management, system operating functions, “logical” error detection, andoverall error recovery functions for the entire system, and provide thefollowing capabilities:

 

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

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

1.4.3                        Real-time SureTrack informationsystem to perform the following

 

 

16

----

 

functions:

 

•                                          Systemstart-up and shutdown

•                                          Creation,audit, and scheduling of processing protocols

•                                          Sterilizationlot control

•                                          Real-timemonitor and information display

•                                          Processintegrity checks

•                                          Errordetection and recovery

•                                          Processingreports, data management, and information archiving

 

1.4.4                        Redundant sensors for all keyprocess monitors

1.4.5                        Software Validation perSureBeam Software Development Procedures

 

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

 

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

1.5.2                        Emergency stop(s) and pullcords.

1.5.3                        Fire / smoke detection.

1.5.4                        System start-up & shutdown.

1.5.5                        Key lockouts.

1.5.6                        Radiation monitors forout-of-limits conditions.

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

1.5.8                        Start-up alarms and horns.

1.5.9                        Start-up timer.

1.5.10                  Status alarms and beacons (rotatingbeacons).

1.5.11                  Ozone exhaust flow monitor.

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

1.5.13                  Automatic shut-down for out-of-limitsconditions.

1.5.14                  Sequenced start-up.

 

1.6                                 DosimetrySystem — a redundant dosimetry system is provided to independently measuredelivered dose to the products. The system shall conform to applicable ANSIstandards. The following equipment shall be included:

 

 

 

17

----

 

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

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

1.6.3        Beam EnergyMeasurement Equipment - Two (2) Certified RISO Aluminum Energy Wedges shall beprovided.

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

1.6.5        Equipment calibrationand procedures.

 

1.7           Facilities and Utilities

 

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

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

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

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

 

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

1.8.1                        Installation and checkout ofSureBeam furnished equipment

1.8.2                        Hook-up of Buyer furnishedutilities to SureBeam equipment

1.8.3                        Checkout and testing ofequipment

1.8.4                        System integration andperformance testing

1.8.5                        Validation of the system toISO-11137 requirements:

 

•                                 InstallationQualification

•                                 Irradiator DoseMapping

•                                 Certification

 

 

1.9                                 Maintenancesystem and support – the following maintenance support is provided to augmentthe local site support:

 

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

 

 

 

18

----

 

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

1.9.2                        On-line link connecting thesite control system to SureBeam support personnel to provide remote diagnosticcapability will be provided.

1.9.3                        Two system check-ups during thewarranty period. SureBeam will check the equipment at the site and perform anaudit of the system. Additional training shall be performed during these sitevisits

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

1.9.5                        Additional maintenance ordiagnostic support may be provided by Seller at the request of the Buyer on anas needed basis.  The cost of thissupport shall be paid by Buyer on a time and material basis.

 

1.10         Project management, engineering, anddocumentation

 

1.10.1                  Structured development methodology(Project Plan)

1.10.2                  Project management and engineering

1.10.3                  Hazards analysis

1.10.4                  Radiation Survey

1.10.5                  Ozone survey

1.10.6                  Project documentation (Design HistoryRecord)

1.10.7                  Manuals — operating, equipment

1.10.8                  Drawings, schematics, source code,logic diagrams

 

1.11                           SystemStart-up and Operations Support — to ensure proper start-up of the system thefollowing technical services are provided:

1.11.1                  Operations training (operations,dosimetry).

1.11.2                  Assist Buyer develop and implementstandard operating procedures (SOPs, and HACCP Plan) for the overall operationof the System.

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

 

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

 

1.13                           Systemwarranty and performance guarantee - SureBeam represents and warrants thatduring the Warranty Period, the System shall operate at a level of SubstantialFunctionality as defined in the Proposal if the System is properly operated,maintained, and used as defined in the proposal, final documentation, andmaintenance instructions.

 

 

 

19

----

 

**System Options**

# ** **

# **The following items are includedas options to the base system. Either Buyer or SureBeam may provide theseitems:**

 

•                                 Spare parts

•                                 Operations support

•                                 Permits, Licenses, CEMark

 

**Buyer Furnished Items and Services**

 

The following items orservices are to be provided by Buyer:

 

1.1                                 Landand Facility

1.1.1                        Detail design and constructionof the facility.

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

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

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

1.1.5                        Storage and work areas — sizeto be determined

1.1.6                        Implementation of concreteshield at the site. Design and specification by SureBeam. The shield isdesigned to provide protection from ionizing radiation generated from theinteraction of the beam and material. The design requirements for the systemrequire that radiation levels in the load and unload areas be < 20 mSv peryear; and in areas such as the Equipment Room the levels can be < 20 mSv per400 hours. Access to the beam area is strictly prohibited because the radiationlevel exceeds 3 mSv per hour. The shield can be designed as an externalbuilding.

1.1.7                        Temporary construction offices

1.1.8                        Permits and licenses

 

1.2                                 Utilities– both temporary and permanent utilities

 

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

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

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

 

 

 

20

----

 

disconnect for the following sources:

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

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

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

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

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

•                    Ground Rod, resistance = 1 W to ground

 

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

 

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

 

[...***...]

 

1.2.6                        Ozone ventilation — Buyer shallinstall an Ozone Extraction system to continuously extract ozone from theprocess chamber of the Shield

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

21

----

 

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

 

1.2.7                        Interface Control Panel - Apanel housing the following signals:

•                    Inputs fromBuyer to SureBeam System:

1. One set dry contacts -Ozone Exhaust Flow

2. One set dry contacts -Facility Fire Alarm OK

3. One set dry contacts -HVAC OK

4. One set dry contacts -Chilled Water OK

 

•                    Outputs from SureBeam System to Buyer:

1. 24 VDC relay - E-BeamFire Alarm

2. 24 VDC contactor - RunOzone Exhaust Fan

 

1.2.8                        Lighting – work areas, rooms,inside shield

1.2.9                        Permits, licenses, or CE Marks

 

1.3                                 OtherEquipment

 

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

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

1.3.3                        Stretch wrap equipment

 

1.4                                 Regulatorycompliance (Local Regulatory, US FDA, ISO11137)

 

1.4.1                        Product qualifications

1.4.2                        Process qualifications

1.4.3                        Dose determination and setting

1.4.4                        Regulatory filings

1.4.5                        System modifications requiredto meet local regulatory or building department requirements

 

 

 

22

----

 

1.4.6                        Buyer system operating procedures

 

1.5                                 Otherengineering support

 

1.5.1                        A&E services

1.5.2                        Product development

 

 

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

 

Sincerely,

 

 
| /s/ Larry Oberkfell  |   |
|----------------------|--------|
|                 |
| Mr. Larry Oberkfell  |
| President and CEO    |
| SureBeam Corporation |

 

 

cc:           Tom Allen - SureBeam

Kevin Claudio – SureBeam

Martha M. Cashman - SureBeam

Art Gomez – SureBeam

Michael Gormley - SureBeam

David Rane - SureBeam

George Sullivan – SureBeam

 

 

 

23

----

 

**EXHIBIT B**

**MILESTONES**

 

 

**Implementation Milestones**

The overall implementationof the system will be completed four months after SureBeam receives beneficialaccess and use of the shield, utilities, and facility provided by Buyer. Theoverall project is expected to take [...***...] to complete, and is predicated uponBuyer’s furnishing their deliverables by [...***...]. We expect the majormilestones to approximate the following schedule:

 

 
| **Event**                                                             |   | **Months after****Execution****of Agreement** |
|-----------------------------------------------------------------------|--------|-----------------------------------------------|
|                                                                  |   |                                          |
| Opening of Letter of Credit                                           |   | [...***...]                             |
| Obtain Government approval and removal of all contingencies           |   | [...***...]                             |
| System Design complete (joint SURE and Buyer effort)                  |   | [...***...]                             |
| Shipment of Material Handling & Controls equipment                |   | [...***...]                             |
| Shipment of Accelerator                                               |   | [...***...]                             |
| Substantial completion of shield, facilities, and utilities(by Buyer) |   | [...***...]                             |
| MH & Controls installation complete                               |   | [...***...]                             |
| Accelerator installation complete                                     |   | [...***...]                             |
| System Integration & Test complete                                |   | [...***...]                             |
| Acceptance Test complete                                              |   | [...***...]                             |

 

 

 

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

1

----

 

**EXHIBIT C**

**PAYMENT SCHEDULE**

 

 

 

**C1****    ****SYSTEM PRICE**

 

The price for the systemdefined above is as follows:

 

* *
| System Price (Exhibit A items 1.1 - 1.13) | **US$5,250,000.00**                                     |
|-------------------------------------------|---------------------------------------------------------|
|                                      |                                                    |
| Options (not included in  base price):    |                                                    |
| Tariffs, taxes, and  duties               | To  be defined                                          |
| Freight and handling  to Site             | To  be defined                                          |
| Spare parts                               | To  be defined in maintenance contract (refer to 1.9.4) |

 

 

[...***...]

 

 

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

 

 

 

----

*** CONFIDENTIAL TREATMENT REQUESTED**

 

1

----

 

**Payment Terms**

TheSystem Price to be paid by Buyer to Seller shall be paid in installments inaccordance with the following payment schedule:

 
| First Payment:  | ***[...***...]*** | [...***...] |   |
|-----------------|-------------------------|-------------------|--------|
|            |                    |              |   |
|            |                    |              |   |
| Second Payment: | ***[...***...]*** | [...***...] |   |
|            |                    |              |   |
|            |                    |              |   |
| Third Payment:  | ***[...***...]*** | [...***...] |

 

 

 

 

----

***CONFIDENTIAL TREATMENT REQUESTED**

 

2

----

 

**C2           ROYALTYFEE**

 

ARoyalty fee shall be paid to Seller based upon gross pounds of productprocessed through the irradiation process to deliver a target dose for theelimination of pathogens in food. The Royalty shall equal [...***...] per pound(gross weight of product) of product processed in a production or testprotocol. To this end, Buyer shall furnish or arrange for Seller’s reasonableaccess to the System during the life of this Agreement for the purpose ofmonitoring the operations of the System, including the pounds of processedProduct, hours of operation and total Royalty Fees due. Buyer agrees to payseller all Royalty Fees Thirty (30) days following receipt of invoice or 30days after the last day of the month in which Product was processed. Paymentwill be deposited in US dollars in a Bank of Seller’s choosing.

 

 

C2.1Royalty will be calculated as follows:

 

C2.1.1[...***...]

 

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

 

 

 

 

----

***CONFIDENTIAL TREATMENT REQUESTED**

 

3

----

 

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

 

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

 

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

 

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

 

C2.1.7[...***...]

 

 

 

 

----

***CONFIDENTIAL TREATMENT REQUESTED**

 

4

----

 

**EXHIBIT D**

**LICENSE AGREEMENT**

 

*** Confidential Treatment Requested Under**

**17 C.F.R.****§§ 200.80(b)(4), 200.83 and240.24b-2**

 

 

# **AGREEMENTFOR SUPPLY OF TECHNOLOGY**

# **ANDLICENSE OF PATENT**

 

 

 

**THISAGREEMENT** made and entered into on March 27, 2002, by andbetween:

 

 

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

 

 

**and**

 

 

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

 

 

**WITNESSETH**

 

 

WHEREAS, Supplierpossesses considerable and valuable know-how and experience useful indesigning, manufacturing, selling, installing, operating and servicing productdisinfestation, pasteurization and sterilization equipment and systems,including its patented electron beam and x-ray equipment and systems(hereinafter the “System”);

 

WHEREAS Recipientdesires to benefit from Supplier’s experience and know-how regarding Supplier’sSystem, and has therefore requested Supplier to render it all possibletechnical assistance in connection with the System,

 

 

----

* **CONFIDENTIAL TREATMENT REQUESTED**

 

1

----

 

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

 

**1.             DEFINITIONS**

 

When used in thisAgreement each of the terms set forth in this Clause 1 shall have the meaningsindicated:

 

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

 

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

 

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

 

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

 

 

**2.             SUPPLYOF TECHNOLOGY**

 

2.1                 Supplier herebyagrees that under the terms and conditions specified herein, it shall furnishto Recipient all Technical Information and/or Technical Data presentlyavailable in connection with the System. Further, Supplier hereby agrees to andduring the term hereof shall promptly disclose to Recipient in theterms and conditions specified herein, all Technical Information and/orTechnical Data it may have during the term hereof, including such information whichmay be developed or created by its employees and which is necessary or suitablefor the System.

 

 

**3.             LICENSEOF PATENT**

 

3.1                 Supplier alsogrants to Recipient an exclusive license to use the Patent in connection withthe System.

 

2

----

 

**4.             NON-DISCLOSURE**

 

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

 

4.2                 The obligationsundertaken by Recipient pursuant to this Clause shall not apply to any suchTechnical Information or Technical Data obtained from Supplier which is orbecomes published or otherwise generally available to the public through nofault of Recipient.

 

 

**5.             PAYMENT**

 

5.1                 The Recipientwill pay the Supplier a royalty fee equal to [...***...] of product processedthrough the System.   Payments will bemade on a monthly basis.

 

 

**6.             TERMAND TERMINATION**

 

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

 

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

 

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

 

6.4                 Upontermination of this Agreement, Recipient shall discontinue immediately all useof the Patent and the Technical Information/ Technical Data.

 

 

----

* **CONFIDENTIAL TREATMENT REQUESTED**

 

3

----

 

**7.             MARKING**

 

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

 

7.2                 Recipient shallinclude in its advertising material, and, if requested by Supplier, on itsinvoices, quotations and other documents, and on the products, labels andcontainers, a statement that the products are manufactured or the services arerendered under patent license from Supplier.

 

 

**8.             OWNERSHIPOF PATENT**

 

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

 

 

**9.             INFRINGEMENTS**

 

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

 

 

**10.          INTERPRETATION**

 

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

 

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

 

4

----

 

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

 

 
| **THE SUREBEAM CORPORATION**                |   | **SON SON  CO., LTD.**              |   |
|---------------------------------------------|--------|-------------------------------------|--------|
|                                        |   |                                |   |
|   /s/ Larry  Oberkfell                 |   | /s/ Tram Be                         |   |
|                                        |   |                                |   |
| Name:  Mr. Larry Oberkfell             |   | Name:  Mr. Trâm  Bê  |   |
| Title:     President and CEO |   | Title:     President |   |

 

5

----

 

**A P P E N D I X     A**

 

 

To the Agreement forthe Supply of Technology and License of Patent by and between **The SureBeam****Corporation** and  **SON SONCO., LTD.**,  executed on March27, 2002.

 

 

**PATENT**

 
| **Title**                                                          |   | **Number of********Application /********Registration** |   | **Date of********Application /********Registration** |   | **Class** |
|--------------------------------------------------------------------|--------|--------------------------------------------------------|--------|------------------------------------------------------|--------|-----------|
| Irradiation  System UtilizingConveyor-Transported Article Carriers |   | *In the process of**Registration in**Vietnam*          |   |                                                 |   |      |
|                                                               |   |                                                   |   |                                                 |   |      |

 

6

----