Document:

Exhibit 10.48

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and

240.24b-2

 

 

AGREEMENT

FOR PURCHASE OF A

 

SUREBEAM X-RAY SYSTEM

 

 

BETWEEN

 

 

SUREBEAM

CORPORATION

 

AND

 

SON SON

CO., LTD.

 

 

TABLE

OF CONTENTS

 

SECTION

 

	

  1.

  	

  DEFINITIONS

  
	

   

  	

   

  
	

  2.

  	

  EQUIPMENT

  AND SERVICES FURNISHED BY SELLER

  
	

   

  	

   

  
	

  3.

  	

  BUYER FURNISHED

  ITEMS AND SERVICES

  
	

   

  	

   

  
	

  4.

  	

  TIME OF

  PERFORMANCE AND FORCE MAJEURE

  
	

   

  	

   

  
	

  5.

  	

  DELIVERY,

  INSTALLATION AND ACCEPTANCE TEST

  
	

   

  	

   

  
	

  6.

  	

  AGREEMENT PRICE

  AND TAXES

  
	

   

  	

   

  
	

  7.

  	

  PAYMENTS, SECURITY

  INTEREST AND BONDS

  
	

   

  	

   

  
	

  8.

  	

  WARRANTIES

  
	

   

  	

   

  
	

  9.

  	

  LIMITATION OF

  REMEDIES AND LIABILITIES

  
	

   

  	

   

  
	

  10.

  	

  CHANGES

  
	

   

  	

   

  
	

  11.

  	

  COMPLIANCE

  WITH LAWS AND BUYER’S RULES

  
	

   

  	

   

  
	

  12.

  	

  INSURANCE

  
	

   

  	

   

  
	

  13.

  	

  INDEMNIFICATION

  
	

   

  	

   

  
	

  14.

  	

  ACCESS

  
	

   

  	

   

  
	

  15.

  	

  TERMINATION

  FOR DEFAULT

  
	

   

  	

   

  
	

  16.

  	

  TERMINATION

  
	

   

  	

   

  
	

  17.

  	

  OWNERSHIP AND

  LICENSING OF TECHNOLOGY

  
	

   

  	

   

  
	

  18.

  	

  AMENDMENTS

  
	

   

  	

   

  
	

  19.

  	

  ASSIGNMENTS

  AND SUBCONTRACTS

  
	

   

  	

   

  
	

  20.

  	

  NOTICES

  
	

   

  	

   

  
	

  21.

  	

  MISCELLANEOUS

  
	

   

  	

   

  
	

  22.

  	

  CONFIDENTIAL

  INFORMATION

  
	

   

  	

   

  
	

  23.

  	

  ARBITRATION

  
	

   

  	

   

  
	

   

  	

  EXHIBIT  A - SELLER’S PROPOSAL

  
	

   

  	

  EXHIBIT  B - IMPLEMENTATION MILESTONES

  
	

   

  	

  EXHIBIT  C - PAYMENT SCHEDULE

  
	

   

  	

  EXHIBIT  D - LICENSE AGREEMENT

  

 

 

 

2

 

AGREEMENT

FOR PURCHASE OF A

SUREBEAM

ELECTRON BEAM SYSTEM

BETWEEN

SUREBEAM CORPORATION

AND

SON SON

CO., LTD.

 

This Agreement, effective March 27, 2002 (“Effective Date”) is between

SureBeam Corporation, a Delaware corporation with a principal place of business

at 9276 Scranton Road, Suite 600, San Diego, CA 92121, (“Seller”), and Son Son

Co., Ltd., a company incorporated under the laws of the Socialist Republic of

Vietnam, with offices at [...***...]("Buyer").

 

This Agreement is contingent upon Buyer opening a Letter of Credit with

an effective date on or before June 24, 2002. 

If Letter of Credit is denied or delayed beyond June 24, 2002, then

Buyer or Seller may terminate the Agreement as defined in Section 16

Termination.  Seller will not be

authorized to proceed with the work until Buyer obtains Government approval.

 

1.             DEFINITIONS

 

1.1                

“Acceptance”

means the customer’s actual or deemed acceptance of the Deliverables under

paragraph 5.0 (“Delivery, Installation and Acceptance Test”).

 

1.2                

“Agreement”

means this document, the statement of work, and the accompanying specifications

and any exhibits including Seller’s Proposal as set forth in Exhibit A, that

constitutes the entire Agreement between the parties and supersedes all other

representations, understandings or communications, whether written or verbal,

with respect to the subject matter hereof. 

This Agreement is expressly limited to its terms and purchase

order.  The provisions of any of Buyer’s

purchase order, invoice or similar documentation are specifically rejected and

shall have no effect.  Any amendment,

modification or waiver of this Agreement, or any part hereof, shall be binding

upon Seller only if designated as an amendment to this Agreement and signed by

a representative of the Seller specifically authorized to execute such binding

amendments.  Waiver of any provision of

this Agreement in one instance shall not preclude future enforcement of it in

future situations.

 

1.3                

“Agreement

Price” means the System Price and the Royalty Fee.

 

*CONFIDENTIAL TREATMENT

REQUESTED

 

3

 

1.4                

“Deliverables”

means all equipment, products, software, services, installation, documentation,

and training, provided under this Agreement by or through the Seller, as

defined in the Proposal.

 

1.5                

“Facility”

or “Facilities” refers to the collective equipment, construction activities,

and services required to support the operation of the System, and includes

electrical power, water cooling (primary), compressed air, heating,

ventilation, ozone ventilation, air conditioning, radiation protection shield,

fencing, building structure, lights, storage areas, and finishes.

 

1.6                

“Information

and Control” refers to the controls equipment provided by Seller to monitor,

control, and display the operating performance of the System as defined in the

Proposal. This equipment includes the SureTrack control system.

 

1.7                

“LINAC”

refers to the linear accelerator equipment provided by Seller as defined in the

“Proposal”. This equipment includes the accelerator, closed loop water-cooling

equipment, air blower for window cooling, AC power distribution, beam stop and

associated controls.

 

1.8                

“Material

Handling” refers to the material handling equipment provided by Seller as

defined in the Proposal.  This equipment

includes the conveyor, closing conveyor, process conveyor and associated

controls.

 

1.9                

“Products”

means the Buyer’s products that are to be processed in the System. Products and

the associated processing volumes and dose requirements are defined in the

Proposal.

 

1.10             

“Project”

refers to the electron beam System project as described in the Proposal, which will

be installed at Buyer’s Ho Chi Minh City, cold storage facility.

 

1.11             

“Proposal”

refers to Seller’s Proposal, which defines Seller’s responsibilities,

scope-of-work, deliverables, and equipment. 

Refer to Exhibit A.

 

1.12             

Royalty

Fee means the royalty fee specified in Exhibit C2.

 

1.13             

“Safety”

refers to the equipment provided by Seller to monitor, control, and display the

safety conditions of the System as defined in the Proposal. This equipment

includes operating status indicators, alarms, beacons, intrusion detection, and

smoke detection equipment.

 

4

 

1.14             

“Site”

refers to the dedicated location where the System will be constructed, at

Buyer’s Ho Chi Minh City cold storage facility.

 

1.15             

“Substantial

Functionality” of a Deliverable means it operates substantially in acceptance

within the specifications, or performance criteria as defined in the Proposal.

 

1.16             

“System”

refers to the collective equipment provided by Buyer and Seller described in

the Proposal, which is required to electron beam process the Products.

 

1.17             

“System

Price” means the price for Seller to provide the Deliverables.

 

1.18             

“Warranty

Period” means the 12-month period commencing upon Acceptance of the

Deliverables.

 

 

2.             EQUIPMENT AND SERVICES FURNISHED BY SELLER

 

2.1                                 Seller shall furnish to Buyer the machines,

equipment, and accessories (Deliverables) as defined in Seller’s Proposal,

Exhibit A, Item 1, “System Equipment and Deliverables,” (excluding items

identified as Buyer furnished items), which include:

 

•       Material

Handling Subsystem

•       LINAC Subsystem

•       Information

and Control Subsystem

•       Safety

Subsystem

 

2.2                

Seller

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

include:

 

•                  Program Management

•                  Operating Manuals & Procedures

•                  Operations & Maintenance Training

•                  Construction Drawings and Bill of Materials

•                  Maintenance & Troubleshooting Guides

•                  Installation, Testing & Start-up

Services

 

2.3                                 Seller shall furnish to Buyer support

services to assist Buyer with Buyer’s tasks defined in the Proposal.

 

5

 

3.             BUYER FURNISHED ITEMS AND SERVICES

 

3.1                                 Buyer shall furnish the following at its own

expense, as defined in Seller’s Proposal, Exhibit A, Item 2, “Son Son Co.,

Ltd., Furnished Items and Services”:

 

3.1.1                                    Design, specification, testing and

development of the Product.

 

3.1.2                                    Determination of the Product processing

requirements (including Product dose, and packaging).

 

3.1.4                                    Design and construction of the Facilities

required to support the operation of the System, as defined in the Proposal,

and other tasks identified as Buyer’s responsibility.

 

3.1.5                                    Definition and implementation of the

procedures required to operate the System (including operating methods, safety

procedures, QA and operator work tasks).

 

3.1.6                                    Management of the overall Project (including

scheduling, budget definition and allocation, requirements definition, review

and approval of the work tasks, and Product Qualification).

 

3.2           Buyer shall provide the following

items, equipment, and services:

 

3.2.1                                    Refer to the Proposal for a definition of

Buyer furnished items, equipment, and services.

 

3.2.2                                    Items shall be provided to Seller (as

required to perform the work) during the execution of this Agreement, at no

cost to Seller.

 

3.2.3                                    SureBeam’s work, cost, and schedule are

predicated upon Buyer providing these items in accordance with the schedule

defined in the Proposal.

 

4.             TIME OF PERFORMANCE AND FORCE MAJEURE

 

4.1                                 Performance under this Agreement by Seller

and Buyer shall be in accordance with the project schedule defined in the

Proposal, and the milestones set forth in Exhibit B.

 

4.2                

Periodically,

Seller shall provide Buyer with a written status report on the progress of the

work.  This report shall summarize the

progress achieved, identify any anticipated delays in the performance of this

Agreement and highlight future schedule milestones.

 

6

 

4.3                                 If Buyer does not meet one or more Buyer

Milestones as defined in Exhibit B, Seller’s work, schedule and cost may be

adjusted accordingly as provided for in Section 10.0 Changes.

 

4.4                                 Neither Seller nor Buyer shall be liable for

delivery by it of any item on any specific date to the extent such delivery is

delayed for causes beyond its control, such as acts of God or the public enemy,

governmental orders or restrictions, fires, extremely severe weather, floods,

earthquakes, material shortages, strikes or other work stoppages, accidents,

catastrophes, war conditions, riot or civil commotion, labor disputes,

embargoes, or other actions or inaction by the other, which render performance

or timely delivery extremely difficult or impossible.  Provided however, the delayed party shall not be excused for any

such delay unless it furnished the other party with written notice of the cause

and likely extent of the delay within fifteen (15) days after the delayed party

becomes aware of the events causing the delay. 

Also, the delayed party shall be responsible for using its best efforts

to mitigate the delay and shall not be excused for any delay that could have

been avoided by the exercise of such efforts.

 

5.             DELIVERY, INSTALLATION AND

ACCEPTANCE TEST

 

5.1                                 Seller shall properly package the System,

for shipment C.I.F. Buyer’s Port of destination, Ho Chih Minh City, Vietnam, at

which time “Risk of Loss” shall pass from Seller to Buyer.

 

5.2                                 After the equipment is received at Buyer’s

designated facility, Seller will supply qualified personnel to inspect and

install the System. Buyer shall provide reasonable access to its premises,

proper environmental and site conditions, and the full and complete cooperation

of its staff and any other contractors to assist Seller during installation and

testing of deliverables. During this start-up period, an acceptance test

(“Acceptance Test”) shall be performed by Seller in the presence of Buyer’s

personnel. To pass the test, the System must meet the applicable requirements

under this Agreement, as defined in the Proposal. When the System passes the

Acceptance Test, and all items and services to be furnished by Seller under

Section 2.0 and the exhibits of this Agreement are so furnished, then the

System shall be considered completed and fully accepted by Buyer

(“Acceptance”). On-site acceptance testing shall be conducted by reference to a

written “test procedure” approved by the Seller and Buyer in advance of the

commencement of such testing. Buyer shall provide to Seller contemporaneous

“sign-offs” as each function on the test procedure is demonstrated by the

Seller. Except for losses to the System covered under Seller’s warranty and

indemnification obligations under this Agreement, risk of

 

7

 

loss to the System shall

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

 

 

6.             AGREEMENT PRICE AND TAXES

 

6.1                                 Seller shall furnish the System and all

documents, services, and other items required under this Agreement and shall

meet all its other obligations under this Agreement for the sum of US$ 5,250,000.00 (Five Million Two Hundred

and Fifty Thousand US Dollars), the “System Price” and a Royalty Fee of

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

 

 

7.             PAYMENTS, SECURITY INTEREST AND

BONDS

 

7.1                                 The System Price set forth in Section 6.0

(“Agreement Price and Taxes”) shall be due Seller according to the schedule set

forth in Exhibit C.  Payment shall be

made by Buyer no later than the 10th day of the month following the month such

milestone is invoiced by Seller. The entire System Price shall be secured by an

irrevocable Letter of Credit in a form acceptable to both Parties. Cost of the

Letter of Credit shall be paid by Buyer. Buyer may not withhold or “set-off”

any amounts due hereunder and Seller reserves the right to cease work without

prejudice if amounts are not paid when due. Seller retains a purchase money security

interest and the right to assert appropriate liens with respect to all

deliverables until all amounts due are paid in full. Any late payment shall be

subject to any cost of collection (including reasonable legal fees) and shall

bear interest at the rate of one and one-half (1.5%) percent per month, until

paid.

 

7.2                                 Buyer shall have a security interest in the

System to secure any payments made by Buyer to Seller prior to the transfer to

Buyer of title to the System. Seller authorizes Buyer to prepare, sign on

Seller’s behalf, and file all necessary financing statements (UCC-1 forms) to

perfect this security interest.

 

 

8.             WARRANTIES

 

8.1                                 During the Warranty Period, as defined

below, Seller warrants that equipment provided by Seller is:

 

8.1.1                        Free from defects in design, materials, and

workmanship.

8.1.2                        In compliance with the specifications set

forth in the Proposal.

 

* CONFIDENTIAL TREATMENT REQUESTED

 

8

 

8.1.3                        Free from all security interests, and title

to system is good and transferable to Buyer.

 

8.2                                 The Warranty Period shall start with the

substantial completion of the System Acceptance Test or beneficial use by

Buyer, whichever occurs first, and shall continue for 12 months.  If the System Acceptance Test cannot be

completed because of reasons beyond Seller’s control or responsibilities, then

the Warranty Period will commence immediately and extend for 12 months.

 

8.3                                 Seller’s total liability for breach of

warranty shall be limited to the following:

 

8.3.1                        Equipment manufactured by Seller — repair or

replacement, at Seller’s option, of defective components that have been

manufactured by Seller.  Parts only —

labor to install, test, or calibrate provided by Buyer.

8.3.2                        Equipment not manufactured by Seller —

manufacturers pass through warranty.

8.3.3                        Software developed by Seller — for defects

that can be specifically traced to Seller’s software, Seller will repair the

defect.

8.3.4                        Software not developed by Seller —

developer’s pass through warranty.

8.3.5                        Exclusions:

•                  Items that have been damaged because of

improper use, maintenance, handling or operation.

•                  Items that are replaced during normal

preventative maintenance.

•                  Consumables or items with a value less than

$250 (IC chips, resistors, light bulbs, gaskets, oil, limit switches, actuator

brackets, etc.).

8.3.6                        Nonconforming components shall be returned

to Seller for repair or replacement at Seller’s option.

 

8.4                                 System Performance Warranty - Seller

represents and warrants that during the Warranty Period, the Deliverables shall

operate at a level of Substantial Functionality as defined in the Proposal if

the System is properly operated, maintained, and used as defined in Seller’s

Proposal, final documentation, and maintenance instructions.  The foregoing warranty is subject to the

following conditions: (i) all Deliverables are installed, and implemented by

Seller or the applicable vendor;  (ii)

Buyer notifies Seller of any defect within ten (10) calendar days after the

appearance thereof and provides supporting data according to Seller’s standard

“trouble report” procedures; (iii) Buyer has properly installed and paid all

applicable fees for all updates made available with respect to Deliverables and

any updates recommended by Seller with respect to any other equipment or

software that materially affects the performance of the Deliverable; (iv) Buyer

has properly installed, maintained and operated all associated equipment,

software and has maintained all environmental conditions in

 

9

 

accordance with applicable

specifications and industry standards; (v) Buyer has not introduced other

equipment or software, or made changes to the system, that create an adverse

impact on the Deliverables; (vi) Buyer has paid all amounts due hereunder and

is not in default of any provision of this Agreement; (vii) any functional or

technical design of the system provided by or approved by Buyer is an accurate

and complete rendering of the system, applicable interfaces and associated

operating environment, and (viii) Buyer has made no changes (nor permitted any

changes to be made other than by or with the express approval of Seller) to the

System or to the source code of any Deliverable.  ANY UNAUTHORIZED CHANGES TO THE SYSTEM OR TO THE SOURCE CODE OF

ANY DELIVERABLE WILL VOID THE WARRANTY PROVIDED UNDER THIS SUBSECTION.

 

8.5                                 Warranty Disclaimer - EXCEPT AS SPECIFICALLY

PROVIDED IN THIS SECTION (“WARRANTIES”) THE SELLER HEREBY DISCLAIMS WITH

RESPECT TO ALL DELIVERABLES PROVIDED HEREUNDER, ALL EXPRESS AND IMPLIED

WARRANTIES, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANT-ABILITY, OR FITNESS

FOR A PARTICULAR PURPOSE.  SUREBEAM

REPRESENTS AND WARRANTS THAT NONE OF THE THIRD PARTY SOFTWARE PRODUCTS,

STANDARD SOFTWARE PRODUCTS, CUSTOM WORK PRODUCT, EMBEDDED SOFTWARE OR OTHER

DELIVERABLES PROVIDED HEREUNDER CONSTITUTE “CONSUMER PRODUCTS” WITHIN THE

MEANING OF THE MAGNUSON-MOSS WARRANTY ACT AND THAT IF ANY WARRANTY IS

NEVERTHELESS IMPOSED UNDER THAT ACT IT SHALL BE LIMITED TO A PERIOD OF THIRTY

(30) DAYS FROM THE DATE OF DELIVERY.

 

8.6                                 Disclaimer Regarding Governmental Laws and

Regulations - THE PARTIES HEREBY AGREE THAT, TO THE EXTENT ANY DELIVERABLE

HEREUNDER IS USED FOR THE PURPOSE OF GENERATING OUTPUT USED IN COMPLYING WITH

GOVERNMENTAL LAWS AND REGULATIONS (INCLUDING TAX LAWS AND REGULATIONS), BUYER

SHALL ASSUME ALL RESPONSIBILITY FOR COMPLIANCE WITH ANY SUCH GOVERNMENTAL LAWS

AND REGULATIONS.

 

 

9.             LIMITATION OF REMEDIES AND

LIABILITIES

 

The parties acknowledge that the following provisions have been

negotiated by them and reflect a fair allocation of risk:

 

9.1           Remedies

- Except for certain injunctive relief authorized under Section 22.0

(“Confidential Information”), Buyer’s sole and exclusive remedies for Seller’s

default hereunder shall be (i) to obtain the repair, replacement or correction

of

 

10

 

the defective Deliverable

or, if Seller reasonably determines that such remedy is not economically or

technically feasible, (ii) to obtain in accordance with the specific provisions

of this Agreement an equitable partial refund of amounts paid with respect to

the defective Deliverable.

 

9.2                                 Liabilities - EXCEPT FOR DAMAGES ARISING

FROM BODILY INJURY CAUSED SOLELY BY THE NEGLIGENCE OF SELLER, SELLER SHALL NOT

BE LIABLE FOR ANY AMOUNT EXCEEDING THE PORTION OF THE TOTAL CONTRACT PRICE

ACTUALLY PAID BY BUYER.  IN NO EVENT

SHALL SELLER BE LIABLE, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR

OTHERWISE, FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL

DAMAGES (INCLUDING LOST PROFIT OR BUSINESS INTERRUPTION) EVEN IF SELLER IS

NOTIFIED IN ADVANCE OF SUCH POSSIBILITY ARISING OUT OF OR PERTAINING TO THE

SUBJECT MATTER OF THIS AGREEMENT.

 

 

10.          CHANGES

 

10.1                           Changes in the Agreement Price or

performance schedule may result from changes in the requirements for the System

or in other related items of Seller’s work ordered in writing by Buyer.  Extensions of one or more deadlines in the

performance schedule may result from an excusable delay authorized pursuant to

the terms of Section 4.3.  Each such

change in time or price shall be determined by mutual agreement of the parties

and confirmed in an amendment to this Agreement, which conforms to the requirements

of Section 18.0 Amendments, prior to implementation of any such changes.

 

 

11.          COMPLIANCE WITH BUYER’S RULES

 

11.1                           During the performance of services at

Buyer’s facilities, Seller’s personnel and others acting on Seller’s behalf

shall comply with Buyer’s rules, specifications, guidelines, policies and

customary practices regarding safety, security, sanitation and other contractor

and personnel activities provided Seller has been informed in advance of such

rules, specifications, guidelines, policies and practices.

 

 

12.          INSURANCE

 

12.1                           Seller shall obtain, pay for, and maintain

the following insurance covering the performance of work under this Agreement:

 

12.1.1                       Comprehensive General Liability Insurance

for each occurrence of bodily injury and property damage, in an amount of not

less than One Million US Dollars (US$1,000,000.00) combined single limit, for

each occurrence of

 

11

 

bodily injury and property damage, covering

Buyer as an additional insured and containing endorsements providing coverage

for the following:

 

•       Personal

Injury Liability;

•       Premises

- Operations Liability, including “XCU” coverage;

•       Blanket

Contractual Liability; and

•      Broad Form Property Damage

 

12.1.2                       Comprehensive Automobile Liability Insurance

for owned, hired, and non–owned motor vehicles, if any, used for the

performance of the services under this Agreement.  This insurance shall have the same minimum coverage limits as

specified above the Comprehensive General Liability Insurance.

 

12.1.3                       Worker’s Compensation Insurance,

Occupational Disease Insurance, and Disability Benefits Insurance, in

accordance with applicable statutory requirements.

 

12.1.4                       Employers’ Liability Insurance in an amount

not less than Five Hundred Thousand US Dollars (US$500,000).

 

12.1.5                       All Risk Installation Floater Property

Insurance covering properly damage arising out of the installation, assembly,

and testing of the System at Buyer’s designated facility prior to Final

Acceptance.

 

12.2                           The insurance specified above shall cover

all work to be provided under this Agreement by Seller and all of its agents,

employees, representatives, and subcontractors.

 

12.3                           Prior to Seller’s commencement of any

services on Buyer’s premises, Seller shall furnish valid certificates of

insurance to Buyer showing that Seller has obtained insurance coverage as

required under this Section 12.0 (“Insurance”).  The certificate required for the insurance under Section 12.1.1

shall specifically reference the endorsements required.  The insurance policies and certificates

shall also state that at least thirty (30) days’ written notice shall be

provided to Buyer prior to any cancellation, expiration, non­renewal or

material change in the insurance coverage which occurs during the term of this

Agreement.

 

 

13.          INDEMNIFICATION

 

13.1                           Buyer shall indemnify and hold Seller

harmless and will, upon request, defend Seller against all actions,

proceedings, claims, demands, suits, outlays,

 

12

 

damages or expenses,

including reasonable attorneys’ fees and other costs that may be assessed

against Seller, arising out of the negligent acts or omissions of Buyer, its

representatives, agents or employees.

 

13.2                           Seller shall indemnify and hold Buyer

harmless and will, upon request, defend Buyer against all actions, proceedings,

claims, demands, suits, outlays, damages, or expenses, including reasonable

attorneys fees and other costs that may be assessed against Buyer arising out

of the negligent acts or omissions of Seller, its representatives, agents or

employees.

 

 

14.          ACCESS

 

14.1                           Seller shall furnish or arrange Buyer’s

reasonable access to the System and its components at the site of their

manufacture and storage.  Buyer shall

furnish or arrange Seller’s reasonable access to the System during and after

installation at Buyer’s Site.

 

 

15.          TERMINATION FOR DEFAULT

 

15.1                           Either party may be declared in default of

this Agreement if it breaches any material provision hereof and fails within

ten (10) days after receipt of notice of default to correct such default or to

commence corrective action reasonably acceptable to the other party and proceed

with due diligence to completion. 

Either party shall be in default hereof if it becomes insolvent, makes an

assignment for the benefit of creditors, a receiver is appointed or a petition

for bankruptcy is filed with respect to it and such proceeding is not dismissed

within thirty (30) days.  Any notice of

default shall be sent in accordance with Section 21.0 (“Notices”) and shall

identify the contract provision at issue and describe in reasonable factual

detail how the other party has materially violated the provision.  If timely corrective action is not

forthcoming, the aggrieved party may then terminate the Agreement pursuant to

Section 16.0 (“Termination”) and pursue all other available remedies.

 

 

16.          TERMINATION

 

16.1                           This Agreement shall terminate when the

term, as defined in the Proposal, expires or, if earlier, upon one party’s

giving written notice of termination after following the procedures in Section

15.0 (Termination for Default).  In

addition, Buyer may terminate this Agreement for its convenience and without

cause upon thirty (30) days notice and payment to Seller in accordance with

Section 7.0 (Payments, Security Interest and Bonds), of an equitable portion of

the Agreement Price to reflect partial completion of the project and financial

commitments made by Seller.  Termination

shall have no effect upon the parties’

 

13

 

rights and obligations:  (i) under Section 22.0 Confidential

Information, or (ii) under Section 17.0 Ownership and Licensing of Technology,

so long as Buyer has paid all amounts due with respect to such technology and

is otherwise not in default of any provision of Section 15.0 Termination for

Default.

 

 

17.          OWNERSHIP AND LICENSING OF TECHNOLOGY

 

17.1                           Third Party Software Products - In the case

of third party software products, Buyer hereby agrees to be bound and governed

by the terms and conditions of the original vendor’s license agreement

accompanying such products or, if no such license agreement is included, by the

vendor’s standard license terms generally applicable to the particular product.

 

17.2                           Seller’s System Deliverables - Seller agrees

to license, under the License Agreement attached in Exhibit D, the use of its

System Deliverables to Buyer for a single use license at the defined Site.

Seller will at all times maintain ownership of all licensable Deliverables and

derivative works. Buyer will not copy, use, or distribute the licensed

Deliverables for any purpose except as required to operate and maintain the

System at the Site without Seller’s explicit written approval.

 

 

18.          AMENDMENTS

 

18.1                           This Agreement represents the entire

agreement between Buyer and Seller concerning the purchase of the System and

items relating to it and supersedes all prior negotiations, representations,

and agreements, whether written or oral.

 

18.2                           This Agreement, including the attachments to

it, may be amended or modified only by a written instrument signed by an

authorized representative of each party.

 

 

19.          ASSIGNMENTS AND SUBCONTRACTS

 

19.1                           Neither party shall assign this Agreement

without the written consent of the other, except that each party may assign it

to any of such party’s subsidiaries, affiliates, or other related companies

without the consent of the other party. 

Seller shall not assign any money due or to become due it under this

Agreement without the prior written consent of Buyer and any such assignment to

the contrary shall be void.

 

14

 

 

20.          NOTICES

 

20.1                           All notices to be given to Buyer shall be

sufficient if delivered personally to the Buyer’s representatives indicated

below or sent to the representative by telegram, telex, fax, or express or

regular mail, postage prepaid, at the following address:

 

Son

Son Co., Ltd.

[...***...]

 

 

with copies of correspondence to:

 

ANLAC

Co. Ltd.

[...***...]

 

20.2                           All notices to be given to Seller shall be

sufficient if delivered personally to the Seller’s representative indicated

below or sent to the representative by telegram, telex, fax or express or

regular mail, postage prepaid, at the following address:

 

Seller:

 

SureBeam Corporation

Attn: 

Martha M. Cashman

9276 Scranton Rd., Suite 600

San Diego, CA 92121

 

with copies of correspondence to:

 

SureBeam Corporation

Attn:  

Thomas Allen

9276 Scranton Road, Suite 600

San Diego, CA 92121

 

20.3         A divisional or corporate office of a

party may change that party’s designated representative under this Section 21.0

Notices, by serving proper notice of the change to the other party.

 

* CONFIDENTIAL TREATMENT REQUESTED

 

15

 

21           MISCELLANEOUS

 

21.1                           Except where remedies are designated under

this Agreement as exclusive, the remedies and rights available under this

Agreement and the duties and obligations imposed by it shall be in addition to,

and not a limitation of, the remedies, rights, duties, and obligations

otherwise available or imposed by law.

 

21.2                           No action or failure to act by Buyer or

Seller shall constitute a waiver of any right or duty afforded either of them

under this Agreement nor shall any such action or failure to act constitute an

approval of, or acquiescence in, any breach under this Agreement, except as may

be specifically agreed in writing.

 

21.3                           If any provision of this Agreement or any

remedy provided in it is declared invalid, illegal, or unenforceable under law

such provision shall be deemed omitted from this Agreement the remaining provisions

shall continue in full effect.

 

21.4                           The following sections of this Agreement

shall survive the completion or termination of Seller’s work under this

Agreement 13.0, 17.0 and 22.0.

 

21.5                           Independent Contractor Status - Each party

and its people are independent contractors in relation to the other party with

respect to all matters arising under this Agreement.  Nothing herein shall be deemed to establish a partnership, joint

venture, association or employment relationship between the parties.  Each party shall remain responsible for and

shall indemnify and hold harmless the other party for the withholding and

payment of all federal, state and local personal income, wage, earnings,

occupation, social security, unemployment, sickness and disability insurance

taxes, payroll levies or employee benefit requirements (under ERISA, state law

or otherwise) now existing or hereafter enacted and attributable to themselves

and their respective people.

 

21.6             

Non-solicitation

- During the term of this Agreement and for a period of one (1) year

thereafter, Buyer and Seller agree not to hire, solicit, nor attempt to

solicit, the services of any employee or subcontractor of Buyer or Seller

without the prior written consent of Buyer or Seller.

 

21.7             

Compliance

with Export Regulations. Buyer has, or shall obtain in a timely manner, all

necessary or appropriate licenses, permits or other governmental authorizations

or approvals; shall indemnify and hold Seller harmless from, and bear all

expense of, complying with all foreign or domestic laws, regulations or

requirements pertaining to the importation, exportation, or use of the

technology to be developed or provided herein. Buyer shall take no action, nor

omit to take

 

16

 

any required action, which would cause

either party to violate the Foreign Corrupt Practices Act of 1977 or the U.S.

Export Administration Regulations.

 

21.8             

The

Agreement, including any change orders thereto, takes priority over any other

document. In the event of a conflict in any document referred to in this

Agreement, the later version of any document takes precedence over the earlier

document.

 

21.9             

All

Agreement Deliverables will be provided in the English language. Any

translations required will be provided by Buyer at Buyer’s expense.

 

 

22           CONFIDENTIAL INFORMATION

 

22.1                           Acknowledgment of Confidentiality - Each

party hereby acknowledges that it may be exposed to confidential and

proprietary information of the other party including, without limitation, the

System and Deliverables and other technical information (including functional

and technical specifications, designs, drawings, analysis, research, processes,

computer programs, algorithms, methods, ideas, “know how” and the like)

business information (sales and marketing research, materials, plans,

accounting and financial information, personnel records and the like) and other

information that has been clearly designated in writing as confidential

(“Confidential Information”).  Confidential

Information does not include (i) information already known or independently

developed by the recipient; (ii) information in the public domain through no

wrongful act of the recipient, or (iii) information received by the recipient

from a third party who was free to disclose it.

 

22.2                           Covenant Not to Disclose - With respect to

the other party’s Confidential Information, the recipient hereby agrees that

during the Term and at all times thereafter it shall not use, commercialize or

disclose such Confidential Information to any person or entity, except to its

own employees having a “need to know” (and who are themselves bound by similar

nondisclosure restrictions), and to such other recipients as the other party

may approve in a signed writing; provided that all such recipients shall have

first executed a confidentiality agreement in a form acceptable to the owner of

such information.  Each party shall use

at least the same degree of care in safeguarding the other party’s Confidential

Information as it uses in safeguarding its own confidential information.  Neither party nor any recipient may alter or

remove from any software or associated documentation owned or provided by the

other party hereunder, any proprietary, copyright, trademark or trade secret

legend, nor may it attempt to decompile or reverse engineer the System.  The provisions of this Section 22.0

(“Confidential Information”) shall survive termination of this Agreement.

 

17

 

22.3                           Remedies for Breach of Confidentiality -

Each party acknowledges that the unauthorized use, commercialization or

disclosure of the other party’s Confidential Information would cause

irreparable harm to such other party. 

The parties acknowledge that remedies at law would be inadequate to

redress the actual or threatened unauthorized use, commercialization or

disclosure of such Confidential Information and that the foregoing restrictions

may be enforced by temporary and permanent injunctive relief.  In addition, any award of injunctive relief

shall include recovery of associated costs and expenses (including reasonable

attorneys’ fees).

 

 

23.          ARBITRATION

 

23.1         The parties hereby submit all

controversies, claims and matters of difference arising out of or relating to

this Agreement, or the breach thereof, to arbitration in San Diego, California,

USA, according to the rules and practices of the American Arbitration

Association from time to time in force. 

This submission and agreement to arbitrate shall be specifically

enforceable.  Without limiting the

generality of the foregoing, the controversies to be arbitrated hereunder

include all questions as to whether the right to arbitrate any question

exists.  A panel of three arbitrators

shall conduct the arbitration unless otherwise agreed, and the decision of the

majority thereof shall be the decision of the panel.  One arbitrator shall be selected by each party, and the two so

selected shall select a third arbitrator. 

Arbitration may proceed in the absence of any party if notice of the

proceedings has been given to such party. 

The parties agree to abide by all awards rendered in such

proceedings.  Such awards shall be final

and binding on all parties to the extent and in the manner provided by the

California Rules of Civil Procedure. 

All awards may be filed with the Clerk of the District Court for the

County of San Diego, California, USA, as a basis of declaratory or other

judgment and, at the election of the party making such filing, with the clerk

of one or more courts, state or federal, having jurisdiction over the party

against whom such an award is rendered or its property.  The prevailing party shall be awarded its

costs, expenses and fees’, including reasonable attorneys’ fees, and the panel

is hereby authorized to apportion such fees, costs and expenses in the event it

deems it fair and equitable to do so.

 

18

 

This Agreement shall be governed by the laws of the State of California,

United States of America.

 

 

Agreed,

 

	

  SON SON CO., LTD.

  	

  SUREBEAM CORPORATION

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Signed:

  	

  /s/ Tram Be

  	

   

  	

  Signed:

  	

  /s/ Larry Oberkfell

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Name:

  	

  Mr. Trâm Bê

  	

  Name:

  	

  Mr. Larry Oberkfell

  
	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  President

  	

  Title:

  	

  President & CEO

  
	

   

  	

   

  	

   

  	

   

  
	

  Date:

  	

  6/17/2002

  	

  Date:

  	

  6/11/2002

  
						

 

 

 

	

  Witnessed by:

  
	

   

  
	

   

  
	

    /s/ William Hsu

  	

   

  
	

   

  
	

  William Hsu

  

 

19

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and

240.24b-2

 

EXHIBIT A

SELLER’S PROPOSAL

 

 

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

FOR A

SUREBEAM  X-RAY

PASTEURIZATION SYSTEM

 

 

Prepared for:

 

SON SON

CO., LTD.

 

Ho Chi

Minh City, Vietnam

 

 

February 9, 2002

 

 

Submitted by:

SureBeam

Corporation

9276 Scranton Road, Suite 600

San Diego, CA 

92121

 

 

This document contains SureBeam Proprietary Information

to be used solely for evaluating this Proposal and may not be disclosed to any

outside 3rd party.

 

 

February 9, 2002

 

 

Mr.

Trâm Bê

Son

Son Co., Ltd.

[...***...]

 

 

Subject:

                                                  SureBeam Proposal #P###-##-####.A1

SureBeam X-Ray

Pasteurization System

 

 

Dear Mr. Bê:

 

Thank you for the

opportunity to work with Son Son Co., Ltd., to develop a SureBeam Proposal

(#P###-##-####.A1) for the implementation of a SureBeam On-Siteâ System to electronically pasteurize food products at your processing

facility in Ho Chi Minh City, Vietnam.

 

Purpose of the Proposal

 

This proposal defines our recommendations to effectively implement x-ray

pasteurization technology at the Son Son Co., Ltd., Vietnam facility, to meet

the following objectives:

 

ý      Eliminate Potential Pathogens

ý      Minimize the Processing Cost

per Pound

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

ý      Achieve System Availability

> 95%

ý      Minimize Capital Expenditures

ý      Minimize Logistics Expenses

 

The purpose of this

Proposal is to provide Son Son Co., Ltd. (hereto referred to as “Buyer”), with

a price, schedule, and scope-of-work for a SureBeam System to meet Buyer’s

requirements for processing shrimp, fish, and frog legs and other food

products. At this point in time, a specific site has not been selected and

hence the recommended concept has not been tailored to site-specific

conditions. In addition, the specific processing requirements for individual

products have not been defined. Once these items

 

*CONFIDENTIAL

TREATMENT REQUESTED 

 

 

 

2

 

have been defined, this

Proposal will become the basis for continued discussions to refine the concept

to achieve the “best processing concept.”

 

Requirements Definition

 

The Buyer’s requirements to be addressed by the System include the

following key points:

 

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

storage operations.

 

•                  [...***...]

 

•                  Deliver an average treatment dose of 1.0 -

1.50 kGy, and maintain the overall Max/Min ratio <1.8. A higher Max/Min

ratio (>1.8) may be acceptable to some products depending on specific test

results.

 

•                  Meet the required quality, process

integrity, and regulatory requirements defined by Buyer, ISO-11137, and USDA

guidelines.

 

•                  Develop an operating concept that meets the

production, processing, and operating requirements defined in this Proposal.

 

•                  Integrate the equipment subsystems,

procedures, and process into an overall operating “System”, which will meet the

performance requirements.

 

•                  Define a System concept that provides >

95% system availability, and maintains the overall integrity, safety and

security of the process at 100%.

 

•                  Provide on-site maintenance and operations

support.

 

•                  Guarantee the performance of the system.

 

Proposal Summary

 

To meet Buyer’s requirements, we are proposing to implement a SureBeamÒ X-Ray Pasteurization System (see attached

system isometrics and layout drawings) using our x-ray technology and patented

system concepts. The system design is based upon field proven concepts and

utilizes equipment with a demonstrated track record. The design uses a simple

“flow through” concept — products are continuously moved through the x-ray

field at a defined processing rate and scan height.

 

Carriers are introduced into the process on an overhead track. Double

sided processing is accomplished by rotating the carrier and processing it

through the x-ray field a second time. Carriers move through the x-ray field in

a precisely controlled manner on a process conveyor with “close packing” of the

carriers accomplished using a closing conveyor.

 

*CONFIDENTIAL TREATMENT REQUESTED

3

 

Based upon equipment set-points in the pre-defined processing protocol,

the desired treatment dose is uniformly delivered to the products.

 

What are X-rays and how are they generated? X-rays (or Bremsstrahlung) are photons emitted when a rapidly moving

charged particle (normally an electron) is decelerated by an atom. X-rays are generated when an electron beam

strikes any object, but they are most efficiently

generated when using high energy electrons (5 MeV) and a dense object or target

- like tungsten.  The conversion

efficiency from electrons to X-rays is low (5-7%), hence high power is needed

to make up for the low conversion efficiency. In the SureBeam system

electrons generated from a linear accelerator with 5 MeV energy and 100 kW

power are used to generate X-rays. Once the X-rays are created, product is

moved through the x-ray field in a precisely controlled manner with the goal of

distributing the x-rays throughout the product. When x-rays penetrate the

product they occasionally strike electrons in the outer rings of atoms at the

molecular level of the product. When the collision occurs the photon imparts

part of its kinetic energy into the electron in the same manner as a cue ball

would break a rack of billiard balls in a pool game. This process is referred

to as the Compton Effect. It is these secondary electrons that damage the DNA

molecules in living organisms such as E. Coli and Listeria and produce the

desire effect of “killing” the pathogen. The amount of energy or “dose”

required to reduce a population of organisms by 1/10th (or one log)

is readily known and quantifiable (for example, Listeria with a dose from 0.4

to 0.6 kGy will reduce a population by 1 log). A typical dose of 1.75 kGy will

reduce the population by 3 to 4 log (4 x 0.4 kGy = 1.60 kGy), or 99.99%.

 

How are products processed using x-ray technology? Because x-rays are

electromagnetic energy with no mass they have a greater depth of penetration

into the product than electrons. When cases are processed in the system,

multiple passes and double sided processing will achieve a more uniform

application of the dose into the case, but there will always be some regions

where the dose is higher or lower. Dose mapping the case(s) in the desired

production configuration will determine where regions of high (Dmax) and low

(Dmin) dose are located. The system processing parameters are then selected to

ensure that the delivered dose in the low dose region (Dmin) is always higher

than the target dose needed to accomplish the “kill”, and the delivered dose in

the high dose region (Dmax) is always lower than the highest dose the product

will tolerate and not sustain any changes in product quality (i.e., color,

odor, taste, etc.). The highest dose the product will tolerate is

experimentally determined by delivering a variety of doses to the product and

determining the highest level that detrimentally affects the product quality

(i.e., taste, color, smell, texture, etc.). Once the characteristics of how the

product processes in the x-ray field are known the processing efficiency can be

addressed. If the dose mapping tests indicate the Dmax is comfortably below the

highest dose, then there is a good chance that more product cases can be added

to the processing configuration increasing the thickness of 

 

 

4

 

the product in the x-ray. This second or third case essentially “rides

through the process free”. Because of this it is very important to optimize the

amount of product processed wherever possible. To summarize, the amount of

product (lbs./hour) which can be processed is a function of many variables

including the available accelerator power, target dose, product density,

highest dose (or the highest Max/Min ratio for the specific product), packaging

configuration, product loading configuration, and processing efficiency of the

system design (i.e., ability to close pack, lot changeover times, etc.). Each

product processed will be dose mapped to determine the impact of these

variables on the throughput of the system.

 

SureBeam has developed a very efficient system to accomplish the

“pasteurization” process. For the Buyer system one standard [...***...]

accelerator is integrated into a single system providing the high power

[...***...] needed to process the projected volume [...***...]. Space is

provided for a second accelerator to be added at a later point in time to

accommodate higher throughputs. The x-ray generator is mounted to produce a

horizontal field of x-rays. Depending on the product density, x-rays will

provide the ability to penetrate approximately [...***...]. The material

handling system provides the ability to move and queue carriers or individual

product cases from the load area workstations (2), through the x-ray process,

and back to unload area workstations (2). A “process and closing conveyor” is

used to independently convey products through the x-ray process. This conveyor

is used to achieve precise movement of the products through the x-ray field and

“close pack” carriers for increased processing efficiency. A concrete shield is

used to surround the equipment and protect the operators from x-rays. Concrete

was selected because of its effectiveness, availability, and low cost.

 

* CONFIDENTIAL TREATMENT REQUESTED

 

5

 

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

 

 

Figure 1-1 

System Isometric View

 

The system will be contained in an existing Buyer cold storage and

distribution facility. The building addition is sized to stage in-coming

products (» 7,000 ft2) prior to

pasteurization and out-going products (» 3,000 ft2) after pasteurization

while they are waiting for QA release. These areas are physically separated to

prevent co-mingling of processed and un-processed products, and have been sized

to accommodate the expected product flow direct from manufacturing and loads

from other Buyer manufacturing locations. The system is contained in

approximately 5,000 ft2 which includes the concrete shield and the

load / unload areas. Equipment rooms for the process equipment are located

adjacent to the shield. Additional space for offices, control and dosimetry

labs (» 1,500 ft2) are also required.

The staging areas in and out are refrigerated spaces - other spaces are not.

This configuration has the following advantages:

 

•                  Simplifies the interfaces between Buyer cold storage / distribution

functions and the system, reduced fork truck traffic;

•                  Minimizes the need for new facility

construction;

•                  Provides the ability to expand the staging

areas if required in the future;

•                  Minimizes the disruption and interference

with Buyer operations while construction is in progress.

 

This system concept will permit SureBeam to accomplish the following

business objectives:

•                  Provide an operation that can meet Buyer’s

operating and performance requirements – functionality, throughput,

availability, and quality;

 

6

 

•                  Coordinate an On-Site spares and maintenance program with Buyer to

maintain system reliability > 95%;

•                  Achieve 100% process integrity – process

operation, dose delivery;

•                  Achieve 100% safe operation;

•                  Operation to meet USDA requirements for

validation, and Good Manufacturing Practices;

•                  Guaranteed system performance.

 

 

System Description of Operation

 

To meet Buyer’s

requirements, SureBeam is proposing to implement a SureBeamâ X-ray Sterilization System (refer to attached system layout drawings).

The System concept is based upon the field proven designs of the SureBeam

System. The base system re-applies X-ray processing know-how, designs, and

engineering developed by SureBeam, and integrates the Model [...***...]

accelerator, into the standard SureBeam System.

 

The SureBeam System consists of the following major subsystems:

 

•                  X-ray source or “accelerator”

•                  Material Handling

•                  Information & Control system —

“SureTrack” system

•                  Safety equipment

•                  Radiation shield and support utilities (by

Buyer)

 

The design for each of the above subsystems is based upon field proven

experience in  similar applications.

 

* CONFIDENTIAL TREATMENT REQUESTED

 

7

 

 

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

 

The System design proposed for Buyer consists of a concrete radiation

protection shield sized to contain the accelerator and the material handling

system, and provide protection from ionizing radiation produced from the

interaction of the electrons and materials. The shield’s concrete walls and

roof are between  6 and 12  feet thick, and are graduated down in size

as you reach the entry to the maze. A maze with several 90° turns is used to

 

 

Figure 1-2

System Layout (viewed from behind shield)

 

provide a “torturous” path to limit any ionizing radiation from escaping

(i.e. no direct line of sight path). The size of the shield is approximately

3000 ft2 (65 ft. x 47 ft.).

 

 

8

 

 

Figure 1-5 Loading Area

 

The accelerator is located inside of the shield and protected from

ionizing radiation and ozone by interior walls. The accelerator design

philosophy is to limit variability in the accelerator to one parameter (scan

height). All other operating parameters are fixed at validated set points and

pre-defined high/low limits. The goal is to provide stable equipment operation

that always produces a consistent beam. If the beam characteristics exceed

pre-defined limits, then the system is shutdown.

 

The beam centerline is oriented horizontally and scans the products as

they are moved in front of the scan horn. This horizontal beam orientation is

very advantageous to the processing and generates a more reliable and cost

effective design.

 

Products are conveyed into the shield and through the X-ray process on a

material handling system that was specifically designed to operate in a radiation

and medical device application. Basic transport functions are accomplished

using an overhead power & free conveyor that moves captive carriers into

and out of the shield. This design significantly improves the efficiency of the

processing by permitting products to be stacked multiple layers high and deep,

taking advantage of the accelerator’s selectable scan height and depth of

penetration. In addition, products are oriented in the carriers in the position

that best facilitates X-ray processing, which is generally not the same product

orientation for conveyability.

 

 

9

 

 

Figure 1-6 Loading product into Carrier

 

The use of a captive carrier eliminates conveyability issues and jams,

significantly improving the system reliability. To achieve precise dose

requirements an independent process conveyor is used to control the movement of

carriers through the electron beam. An independent servo controlled conveyor is

used to achieve positioning and speed control of ±0.5% variance from the set

point.

 

Overseeing all information and processing functions is the SureTrack

information and control system. The Suretrack system uses a distributed network

of industrial PLC’s and PC to monitor and control the system functions. The

software modules have been used in similar applications and provide a robust

control system.

 

 

System Description of Operation

 

The system is simple to operate and provides the built-in integrity

checks needed to insure compliance with the processing protocol. The basic

operation is as follows (refer to the system layout drawings):

 

The System operator initiates sterilization “Lot” setup and release by

entering the product code, Lot information, and selecting the pre-defined processing

instructions.

 

 

10

 

 

Figure 1-7 Operator at I&CS Computer

 

The SureTrack control system checks the information to insure the

validity of the data and schedules the Lot for processing. The scheduled Lot is

then moved into the load area and the first carrier processed. The control

system checks the integrity of the data and downloads to the accelerator and

material handling controllers the predetermined processing set points for the

key parameters including processing rate, beam scan height, number of passes

(single or double sided processing), dosimeter placement criteria, key high/low

limit settings, and error recovery directions. The controls system checks that

these parameters are set correctly, the equipment is operating within

specifications, and that the system validation parameters are initialized to

the previously validated settings — this insures the integrity of the process.

 

 

11

 

          

 

Figure 1-8 Placing a Dosimeter on Product

 

Products to be processed

are manually loaded into the captive carriers in the orientation defined by the

processing protocol. Dosimeters are placed on selected carriers as an

independent means of monitoring the integrity of the delivered dose. In

general, dosimeters are placed on the first and last carriers in a Lot, and on

a periodic basis (every 10-15 carriers) while the Lot is being processed, to

verify that the Lot has received the defined dose. Current regulatory

guidelines recommend placement of dosimeters at the beginning, middle, and end

of the Lot (at a minimum). The quantity/frequency of dosimeters periodically

processed within the Lot will be determined by QA, and input into the system as

part of the Lot processing instructions.

 

The SureTrack information

and control system guides the system operator and material loaders through the

overall process checking for the completion of each task and verifying the

integrity of the process. (As an option, bar code scanners can be used to

verify that the correct product code has been loaded onto the carrier). In

addition, the control system verifies that the operating parameters and

variables are correctly set and operating within the pre-defined limits before

the carrier is released into the system.

 

Released carriers are

moved into the shield on an overhead Power & Free conveyor. The Power &

Free conveyor is the primary means of transporting the carrier through the

sterilization process and load/unload areas. The conveyor consists of two

overhead tracks made up of a power section containing a drive chain and a free

section. Products are loaded into the carrier suspended from the free section.

The power section will engage the carrier and drive the carrier along the fixed

overhead track. Mechanical drive dogs on the power section are designed to

disengage from the carrier to allow carriers to accumulate or interface with

the automated equipment. The power and free control system manages the traffic

flow and accumulation of carriers through the system.

 

 

12

 

Prior to entry into the

beam area, an automatic closing conveyor is used to move carriers from the

Power & Free conveyor to the precisely controlled “Process Conveyor”. The

closing conveyor engages the carrier and moves it to within inches of the

preceding carrier, minimizing the “gap” or non-productive space between

carriers, and precisely matches the speed of the preceding carrier. In this

manner, carriers are “closed packed” to maximize the productive utilization of

the electron beam. Carriers may “touch” in order to achieve close packing, but

not in a manner that would be detrimental to the integrity of the delivered

dose.

 

An independent, servo

driven “Process Conveyor” is used to precisely control the movement and

positioning of the carrier through the electron beam. The speed of the conveyor

is selectable to a predetermined set-point which permits a variety of dose

levels to be delivered. The conveyor speed is monitored constantly by 2

independent sensors to verify accuracy.

 

 

Figure 1-9 Process Conveyor

 

The X-ray field is

horizontally scanned over the products as the carrier moves through the beam.

The scan height is adjustable to match the height of the products in the

carrier providing an efficient utilization of the beam.

 

Carriers move through the

beam at a pre-defined speed that is adjustable between  1.00 and 15.00 feet/minute. This means that

products are “in the beam” only for a few seconds. The control system

continuously monitors the X-ray key parameters to insure the process is within

the operating limits. Any out of limits condition will be cause a coordinated

shutdown of the equipment generally within 250 msec.

 

 

13

 

Because of this level of

control, and the design of the beam scanning system, the integrity of the

process is maintained on a restart of the process with product in the beam. A

positive transition dose is generated in the region where the interrupt

occurred and eliminates the need to discard products that were in the beam.

 

Carriers exiting from the

beam are re-engaged on the Power & Free conveyor and transported to either

the rotate mechanism where the carrier is rotated 180° and recirculated through

the X-ray process for double sided irradiation or diverted to exit the chamber.

 

 

Figure 1-10 Carrier Entering Rotation Mechanism

 

Carriers exiting the

chamber are conveyed to the unload area where an operator manually unloads the

products and places them on a pallet. Carriers containing dosimeters are

identified and the operator removes the dosimeter for subsequent processing.

Empty carriers are re-circulated to the load area and the process is repeated.

The overall cycle time to process a carrier is about 7-10 minutes. Changeover

from one lot to another can be accomplished in 3-5 minutes.

 

At the completion of the

last carrier in a sterilization lot exiting the unload area, the SureTrack

control system checks to insure the Lot processing is complete and

record/archives all processing information required to substantiate successful

completion of the process. QA reviews this information and the independent

dosimetry results to determine if the Lot can be released.

 

 

14

 

System Equipment

and Deliverables

 

The SureBeam

System consists of the following deliverables and services:

 

1.1                                 Engineering

Analysis & Concept Definition.  An

initial engineering effort will be performed prior to the implementation of the

system to develop answers to the following issues:

 

1.1.1                        Define the system concept and

the site specific layout

1.1.2                        Assist Buyer with the qualification

and selection of the facility General Contractor. Buyer will contract directly

with the General Contractor for the construction of the Facility and all

support utilities.

1.1.3                        Assist Buyer resolve site

specific questions (location, local codes, finalize costs, utilities, ozone

ventilation)

1.1.4                        Assist Buyer evaluate carrier

sizes best suited for achieving the processing and production requirements

1.1.5                        Define interfaces to other

operations

 

1.2                                 Linear

Accelerator – the x-ray source consists of one linear accelerator that

generates an electron beam of 100 kW power at 5 MeV energy. The electrons are

converted into x-rays when they strike an x-ray converter. the x-ray source

will include the following equipment:

 

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

1.2.2                        Horizontal accelerator

configuration

1.2.3                        Selectable scan heights (3)

1.2.4                        X-Ray converter and water

cooling system

1.2.5                        Secondary water conditioning

and cooling system for the accelerator

1.2.6                        Equipment provided C.I.F. Port

of Ho Chi Minh City.

 

1.3                                 Material

Handling system - a material handling system is provided to contain, position,

and move product through the pasteurization process. The equipment shall be

capable of conveying a diverse set of product case sizes through the system

providing integrity over the process. The mh system shall include the following

items:

 

1.3.1                        Overhead Power & Free

Conveyor - Heavy duty (500 lb. design) overhead transport conveyor moves the

carriers through the load and unload areas, and irradiation process. The

conveyor uses delatching drive dogs to provide smooth asynchronous flow of the

carriers at 14 m/min through the process. Carrier queuing is provided for line 

 

*CONFIDENTIAL

TREATMENT REQUESTED

15

 

balancing, process equipment interfacing, and local

flow control.

 

1.3.2                        Product Carriers — Fifteen (15)

Aluminum and steel carriers (engineered to be efficient) are used to contain

and position the products through the X-ray process. This method yields the

highest productivity and reliability, providing the capability to stack

products multiple layers high and deep, without the possibility of incurring

product jams.

1.3.3                        Closing Conveyor — An

independent servo driven closing conveyor is provided to “close pack” the

carriers through the beam to within several inches of the preceding carrier.

This increases the processing efficiency.

1.3.4                        Process Conveyor — An

independent servo driven chain conveyor that precisely controls the speed of

the carrier through the beam to ± 0.5 % variance from the set-point. This

provides precise control over the delivery of the dose and maintains the

continuity of the process in the event of a process interruption.

1.3.5                        180° Rotation Device — An

independent rotation device is provided to horizontally rotate the carriers

180°. The mechanism is slave driven from the power & free conveyor thus

synchronizing the rotate mechanism with the power & free conveyor, and

eliminating an extra drive motor and controls. Fail-safe integrity checks are

provided to insure that the rotation is completed correctly.

1.3.6                        Controls – controls are

provided to monitor and control the flow of carriers through the system. All

actions that result in a product movement (such as merge, divert, release,

rotate, and stop) are confirmed independently. Any action that effects the dose

or integrity of the process is redundantly monitored. Errors or out-of-limits

conditions will result in a system shutdown.

1.3.7                        Equipment provided C.I.F. Port

of Ho Chi Minh City.

 

1.4                                 SureTrack

Control System – a real-time information and control system is provided to

monitor and control the overall process. The control system shall provide the

data management, system operating functions, “logical” error detection, and

overall error recovery functions for the entire system, and provide the

following capabilities:

 

1.4.1                        Industrial PC based information

and control computer, Pentium CPU with 

512Mb ram, mirrored hard drives (2), color graphics monitor, and

interface to Allen Bradley PLC.

1.4.2                        Real-time PLC control system

for monitoring, tracking and control of the sterilization process

1.4.3                        Real-time SureTrack information

system to perform the following

 

 

16

 

functions:

 

•                                          System

start-up and shutdown

•                                          Creation,

audit, and scheduling of processing protocols

•                                          Sterilization

lot control

•                                          Real-time

monitor and information display

•                                          Process

integrity checks

•                                          Error

detection and recovery

•                                          Processing

reports, data management, and information archiving

 

1.4.4                        Redundant sensors for all key

process monitors

1.4.5                        Software Validation per

SureBeam Software Development Procedures

 

1.5                                 Safety

System – a safety system is provided that meets the requirements for x-ray

system protection as specified by OSHA, IAEA Safety Series 107, NCRP Report 51

regulatory requirements. Safety system shall be fail-safe, and provide

“defense-in-depth”, redundancy, and independence. all safety system components

shall be fit for the purpose intended and include the following capabilities:

 

1.5.1                        Intrusion alarms to detect

unauthorized access into controlled areas (pressure mats, light curtain,

electronically locked doors).

1.5.2                        Emergency stop(s) and pull

cords.

1.5.3                        Fire / smoke detection.

1.5.4                        System start-up & shutdown.

1.5.5                        Key lockouts.

1.5.6                        Radiation monitors for

out-of-limits conditions.

1.5.7                        Status display (accelerator ON

/ OFF, Access OK / PROHIBITED.

1.5.8                        Start-up alarms and horns.

1.5.9                        Start-up timer.

1.5.10                  Status alarms and beacons (rotating

beacons).

1.5.11                  Ozone exhaust flow monitor.

1.5.12                  Safety signs and markings (Radiation

Hazard, Access Prohibited, High Voltage, etc.).

1.5.13                  Automatic shut-down for out-of-limits

conditions.

1.5.14                  Sequenced start-up.

 

1.6                                 Dosimetry

System — a redundant dosimetry system is provided to independently measure

delivered dose to the products. The system shall conform to applicable ANSI

standards. The following equipment shall be included:

 

 

 

17

 

1.6.1                        Equipment - One (1) Genesys 20

spectrophotometers with accompanying software shall be provided.  Units shall be integrated to a PC for data

processing.

1.6.2                        Dosimeters - Five thousand

(5,000) B3 radiochromic dosimeters that cover a range of doses from 1.0 kGy —

100 kGy shall be provided.

1.6.3        Beam Energy

Measurement Equipment - Two (2) Certified RISO Aluminum Energy Wedges shall be

provided.

1.6.4        Dosimetry Computer

(PC) and associated software and laser printer.

1.6.5        Equipment calibration

and procedures.

 

1.7           Facilities and Utilities

 

1.7.1                        General design and

specification of facility and utility requirements (power, compressed air,

water, ozone exhaust) associated with the X-ray process. Detail design and shop

drawings will be the responsibility of the General Contractor / Buyer.

1.7.2                        General design and

specification of the shielding requirements. SureBeam will be responsible for

the layout and design of the shield. Buyer and the General Contractor will be

responsible for the construction of the shield, building, and all utilities.

Detail design and shop drawings will be the responsibility of the General

Contractor / Buyer.

1.7.3                        Hookup of SureBeam equipment to

Buyer furnished utilities (power, compressed air, water, ozone exhaust).

1.7.4                        Participate in design review(s)

of Buyer furnished equipment

 

1.8           Equipment installation, checkout, and

system validation to ISO-11137, USDA, and ASTM standards

1.8.1                        Installation and checkout of

SureBeam furnished equipment

1.8.2                        Hook-up of Buyer furnished

utilities to SureBeam equipment

1.8.3                        Checkout and testing of

equipment

1.8.4                        System integration and

performance testing

1.8.5                        Validation of the system to

ISO-11137 requirements:

 

•                                 Installation

Qualification

•                                 Irradiator Dose

Mapping

•                                 Certification

 

 

1.9                                 Maintenance

system and support – the following maintenance support is provided to augment

the local site support:

 

1.9.1                        A computerized maintenance

system (MPII) will be used to track and schedule the maintenance activities.

This system will be loaded with

 

 

 

18

 

maintenance instructions and schedules, and maintained to provide a

record of maintenance activities for regulatory reviews.

1.9.2                        On-line link connecting the

site control system to SureBeam support personnel to provide remote diagnostic

capability will be provided.

1.9.3                        Two system check-ups during the

warranty period. SureBeam will check the equipment at the site and perform an

audit of the system. Additional training shall be performed during these site

visits

1.9.4                        An initial complement of spare

parts will be stocked at the site to cover expected component failures during

the warranty period.  At the end of the

warranty period these parts shall be purchased by Buyer or returned to Seller.

1.9.5                        Additional maintenance or

diagnostic support may be provided by Seller at the request of the Buyer on an

as needed basis.  The cost of this

support shall be paid by Buyer on a time and material basis.

 

1.10         Project management, engineering, and

documentation

 

1.10.1                  Structured development methodology

(Project Plan)

1.10.2                  Project management and engineering

1.10.3                  Hazards analysis

1.10.4                  Radiation Survey

1.10.5                  Ozone survey

1.10.6                  Project documentation (Design History

Record)

1.10.7                  Manuals — operating, equipment

1.10.8                  Drawings, schematics, source code,

logic diagrams

 

1.11                           System

Start-up and Operations Support — to ensure proper start-up of the system the

following technical services are provided:

1.11.1                  Operations training (operations,

dosimetry).

1.11.2                  Assist Buyer develop and implement

standard operating procedures (SOPs, and HACCP Plan) for the overall operation

of the System.

1.11.3                  Assist Buyer  perform dose mapping of each product to be

processed — define the processing parameters and protocol.

 

1.12         Equipment warranty — 12 months parts

only; labor to be furnished by Buyer.

 

1.13                           System

warranty and performance guarantee - SureBeam represents and warrants that

during the Warranty Period, the System shall operate at a level of Substantial

Functionality as defined in the Proposal if the System is properly operated,

maintained, and used as defined in the proposal, final documentation, and

maintenance instructions.

 

 

 

19

 

System Options

 

The following items are included

as options to the base system. Either Buyer or SureBeam may provide these

items:

 

•                                 Spare parts

•                                 Operations support

•                                 Permits, Licenses, CE

Mark

 

Buyer Furnished Items and Services

 

The following items or

services are to be provided by Buyer:

 

1.1                                 Land

and Facility

1.1.1                        Detail design and construction

of the facility.

1.1.2                        Dosimetry Lab — 10 x 15 ft.;

temperature and humidity controlled with UV filters on fluorescent lights.

1.1.3                        Equipment Room — 15 x 30 ft.;

conditioned air, noise protection. Room to contain modulator equipment and

other LINAC equipment.

1.1.4                        Control Room — 10 x 10 ft.;

temperature controlled; secured access.

1.1.5                        Storage and work areas — size

to be determined

1.1.6                        Implementation of concrete

shield at the site. Design and specification by SureBeam. The shield is

designed to provide protection from ionizing radiation generated from the

interaction of the beam and material. The design requirements for the system

require that radiation levels in the load and unload areas be < 20 mSv per

year; and in areas such as the Equipment Room the levels can be < 20 mSv per

400 hours. Access to the beam area is strictly prohibited because the radiation

level exceeds 3 mSv per hour. The shield can be designed as an external

building.

1.1.7                        Temporary construction offices

1.1.8                        Permits and licenses

 

1.2                                 Utilities

– both temporary and permanent utilities

 

1.2.1                        Compressed air — 10 CFM @

100PSI; two drops

1.2.2                        Electrical power — Seller will

engineer System to accommodate local Power (50Hz, 380 VAC, 3 phase).  The requirements listed in section 1.2.3 will

be modified accordingly.

1.2.3                        Electrical power requirements

listed below. All system voltages are ±10%, 3Φ, 60Hz,

3 wire plus ground for 480VAC and 4 wire plus ground for 208 VAC. A panel

supplying and providing a single point of

 

 

 

20

 

disconnect for the following sources:

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

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

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

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

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

Controls

•                    Ground Rod, resistance = 1 W to ground

 

1.2.4                        Heating, Ventilation, and Air

Conditioning (HVAC) - Conditioned Air 70°F

Non Condensing to be supplied to Equipment Room. Total equipment heat load for

the HVAC system is 36 kW. Air will be drawn from room through cabinets and

exhausted out cabinet top through duct. The heat loads are as follows -

Modulator Cabinet = 15 kW; Control Cabinet = 15 kW; Miscellaneous = 6 kW.

 

1.2.5                        Water cooling (primary) -

Chilled water generated from an overall chilled water system, not greater than

the values listed in the table below nor less than 40o F (4o C) up to the flow

rates listed below, is to be delivered to each SureBeam Water Cooling System

heat exchanger. The chilled water must run through ball valves designed to

throttle water flow to each heat exchanger.  

A flow meter must be provided to monitor the flow of facility water

through each ball valve. The heat exchanger connections size and type are

listed below. Pressure drop across each SureBeam Water Cooling System is less

than 20 PSI (1.4 Bar).  All lines

must  be flushed prior to connection of

system components with a solution of TSP (Tri-Sodium Phosphate, 1 cup to 10

gallons) and then clear water. The overall Chilled Water System shall have the

capability to continuously operate at 25% of rated capacity. Inlet temperature

and flow may vary depending on the system design.

 

[...***...]

 

1.2.6                        Ozone ventilation — Buyer shall

install an Ozone Extraction system to continuously extract ozone from the

process chamber of the Shield

 

* CONFIDENTIAL TREATMENT REQUESTED

 

21

 

Cell. The system shall be designed to maintain a net negative pressure

(> 0.05 Inch. W.C.) inside the cell as compared to outside the cell at the

entrance. The duct system may be installed in or under the concrete floor of

the shield or inside the cell via ductwork running through the labyrinth. If

ductwork inside the cell is chosen, the ductwork must be 100% stainless steel

from the inside of the shield to the ozone exhaust fan as schematically shown

by SureBeam. The fan shall be controlled by a Variable Frequency Drive

Controller that is furnished by SureBeam (max. cap. 5 HP). The fan and ductwork

shall be designed to maintain the minimum net negative pressure in the cell as

specified under a low fan speed setting. It also should be able to provide

exhaust capability of 1 complete air change (approximately 4,000 – 6,000 cfm)

of the cell within 3 minutes or less at the maximum design capacity/speed of

the fan.

 

1.2.7                        Interface Control Panel - A

panel housing the following signals:

•                    Inputs from

Buyer to SureBeam System:

1. One set dry contacts -

Ozone Exhaust Flow

2. One set dry contacts -

Facility Fire Alarm OK

3. One set dry contacts -

HVAC OK

4. One set dry contacts -

Chilled Water OK

 

•                    Outputs from SureBeam System to Buyer:

1. 24 VDC relay - E-Beam

Fire Alarm

2. 24 VDC contactor - Run

Ozone Exhaust Fan

 

1.2.8                        Lighting – work areas, rooms,

inside shield

1.2.9                        Permits, licenses, or CE Marks

 

1.3                                 Other

Equipment

 

1.3.1                        Maintenance Tools –

oscilloscope, vacuum roughing pump, leak detector, etc.

1.3.2                        Fork Trucks, telephones, office

equipment, or other processing equipment

1.3.3                        Stretch wrap equipment

 

1.4                                 Regulatory

compliance (Local Regulatory, US FDA, ISO11137)

 

1.4.1                        Product qualifications

1.4.2                        Process qualifications

1.4.3                        Dose determination and setting

1.4.4                        Regulatory filings

1.4.5                        System modifications required

to meet local regulatory or building department requirements

 

 

 

22

 

1.4.6                        Buyer system operating procedures

 

1.5                                 Other

engineering support

 

1.5.1                        A&E services

1.5.2                        Product development

 

 

I hope this information

will assist you with your evaluation of X-ray technology. We are anxious to

move forward with the “next step”. 

Please let me know how we can assist you further.

 

Sincerely,

 

 

	

  /s/ Larry Oberkfell

  	

   

  
	

   

  
	

  Mr. Larry Oberkfell

  
	

  President and CEO

  
	

  SureBeam Corporation

  

 

 

cc:           Tom Allen - SureBeam

Kevin Claudio – SureBeam

Martha M. Cashman - SureBeam

Art Gomez – SureBeam

Michael Gormley - SureBeam

David Rane - SureBeam

George Sullivan – SureBeam

 

 

 

23

 

EXHIBIT B

MILESTONES

 

 

Implementation Milestones

The overall implementation

of the system will be completed four months after SureBeam receives beneficial

access and use of the shield, utilities, and facility provided by Buyer. The

overall project is expected to take [...***...] to complete, and is predicated upon

Buyer’s furnishing their deliverables by [...***...]. We expect the major

milestones to approximate the following schedule:

 

 

	

  Event

  	

   

  	

  Months after  Execution  of Agreement

  
	

   

  	

   

  	

   

  
	

  Opening of Letter of Credit  

  	

   

  	

  [...***...]

  
	

  Obtain Government approval and removal of all contingencies

  	

   

  	

  [...***...]

  
	

  System Design complete (joint SURE and Buyer effort)

  	

   

  	

  [...***...]

  
	

  Shipment of Material Handling & Controls equipment

  	

   

  	

  [...***...]

  
	

  Shipment of Accelerator

  	

   

  	

  [...***...]

  
	

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

  	

   

  	

  [...***...]

  
	

  MH & Controls installation complete

  	

   

  	

  [...***...]

  
	

  Accelerator installation complete

  	

   

  	

  [...***...]

  
	

  System Integration & Test complete

  	

   

  	

  [...***...]

  
	

  Acceptance Test complete

  	

   

  	

  [...***...]

  

 

 

 

 

* CONFIDENTIAL TREATMENT REQUESTED

 

1

 

EXHIBIT C

PAYMENT SCHEDULE

 

 

 

C1      SYSTEM PRICE

 

The price for the system

defined above is as follows:

 

 

	

  System Price (Exhibit A items 1.1 - 1.13)

  	

  US$5,250,000.00

  
	

   

  	

   

  
	

  Options (not included in

  base price):

  	

   

  
	

  Tariffs, taxes, and

  duties

  	

  To

  be defined

  
	

  Freight and handling

  to Site

  	

  To

  be defined

  
	

  Spare parts

  	

  To

  be defined in maintenance contract (refer to 1.9.4)

  

 

 

[...***...]

 

 

Payments

will be made through an irrevocable letter of credit issued within 30 days of

the Buyer obtaining government approval to build and operate the System, by a

Bank of Seller’s choosing.   The Letter

of Credit will be in a form acceptable to Seller, and based upon the Payment

Terms as outlined below.  Cost of the

Letter of Credit shall be paid by Buyer.

 

 

 

* CONFIDENTIAL TREATMENT REQUESTED

 

1

 

Payment Terms

The

System Price to be paid by Buyer to Seller shall be paid in installments in

accordance with the following payment schedule:

 

	

  First Payment:

  	

  [...***...]

  	

  [...***...]

  	 

	

   

  	

   

  	

   

  	 

	

   

  	

   

  	

   

  	 

	

  Second Payment:

  	

  [...***...]

  	

  [...***...]

  	 

	

   

  	

   

  	

   

  	 

	

   

  	

   

  	

   

  	 

	

  Third Payment:

  	

  [...***...]

  	

  [...***...]

  

 

 

 

 

*

CONFIDENTIAL TREATMENT REQUESTED

 

2

 

C2           ROYALTY

FEE

 

A

Royalty fee shall be paid to Seller based upon gross pounds of product

processed through the irradiation process to deliver a target dose for the

elimination of pathogens in food. The Royalty shall equal [...***...] per pound

(gross weight of product) of product processed in a production or test

protocol. To this end, Buyer shall furnish or arrange for Seller’s reasonable

access to the System during the life of this Agreement for the purpose of

monitoring the operations of the System, including the pounds of processed

Product, hours of operation and total Royalty Fees due. Buyer agrees to pay

seller all Royalty Fees Thirty (30) days following receipt of invoice or 30

days after the last day of the month in which Product was processed. Payment

will be deposited in US dollars in a Bank of Seller’s choosing.

 

 

C2.1

Royalty will be calculated as follows:

 

C2.1.1

[...***...]

 

C2.1.2 All product lots shall be processed

according to “standard operating procedures.”

 

 

 

 

*

CONFIDENTIAL TREATMENT REQUESTED

 

3

 

C2.1.3 For each Lot processed production Lot

information shall be entered into the SureTrack information system defining the

“lot”, i.e., type of product, product code, quantity of cases to be processed.

 

C2.1.4

No product shall be processed unless under the control of the SureTrack system

in the automatic mode of operation.

 

C2.1.5

At the completion of the Lot, the Lot processing report will be generated,

defining the quantity of carriers processed and the gross weight of the

product.  Empty carriers shall not be

included in the carrier count.

 

C2.1.6

On a monthly basis, all Lot completion reports shall be produced, summarized,

and submitted to Seller as the record of products processed.

 

C2.1.7

[...***...]

 

 

 

 

*

CONFIDENTIAL TREATMENT REQUESTED

 

4

 

EXHIBIT D

LICENSE AGREEMENT

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and

240.24b-2

 

 

AGREEMENT

FOR SUPPLY OF TECHNOLOGY

AND

LICENSE OF PATENT

 

 

 

THIS

AGREEMENT made and entered into on March 27, 2002, by and

between:

 

 

THE

SUREBEAM CORPORATION, a corporation organized and existing under

the laws of the State of Delaware, having executive offices at 9276 Scranton

Road, Suite 600, San Diego, California 

92121, United States of America, in this act represented by its President and

CEO, Mr. Larry A. Oberkfell, hereinafter referred to as

“Supplier,”

 

 

and

 

 

TRIEU

AN LAC CLINIC and SON SON CO., LTD., companies incorporated under the laws of the Socialist Republic of

Vietnam, with offices at [...***...], in this act represented by

its Chief Executive Officer, Mr. Trâm Bê, hereinafter referred to as

“Recipient”,

 

 

WITNESSETH

 

 

WHEREAS, Supplier

possesses considerable and valuable know-how and experience useful in

designing, manufacturing, selling, installing, operating and servicing product

disinfestation, pasteurization and sterilization equipment and systems,

including its patented electron beam and x-ray equipment and systems

(hereinafter the “System”);

 

WHEREAS Recipient

desires to benefit from Supplier’s experience and know-how regarding Supplier’s

System, and has therefore requested Supplier to render it all possible

technical assistance in connection with the System,

 

 

* CONFIDENTIAL TREATMENT REQUESTED

 

1

 

NOW, THEREFORE, in consideration of the premises and the mutual

covenants herein contained, the parties hereto agree as follows:

 

1.             DEFINITIONS

 

When used in this

Agreement each of the terms set forth in this Clause 1 shall have the meanings

indicated:

 

1.1                 “TECHNICAL INFORMATION” - Any

unpatented knowledge or information pertaining to the techniques, rendering,

applications or marketing of the System, or any of them.

 

1.2                 “TECHNICAL DATA” - Documents or

other written or printed materials which embody Technical Information,

including, but not limited to, plans, specifications, material lists,

instruction manuals, quality control procedures and other prepared literature

sufficient to enable competent personnel employing the requisite equipment to

apply effectively the Technical Information in the rendering and marketing of

the System. “TECHNICAL DATA” shall also mean, as the context shall require, any

copies, reprints, extractions, reproductions and translations of any of the

foregoing.

 

1.3                 “PATENT” - shall mean the

patents and/or patent applications listed in Appendix A hereto.

 

1.4                 “EFFECTIVE DATE” - the date of

execution of this Agreement.

 

 

2.             SUPPLY

OF TECHNOLOGY

 

2.1                 Supplier hereby

agrees that under the terms and conditions specified herein, it shall furnish

to Recipient all Technical Information and/or Technical Data presently

available in connection with the System. Further, Supplier hereby agrees to and

during the term hereof shall promptly disclose to Recipient in the

terms and conditions specified herein, all Technical Information and/or

Technical Data it may have during the term hereof, including such information which

may be developed or created by its employees and which is necessary or suitable

for the System.

 

 

3.             LICENSE

OF PATENT

 

3.1                 Supplier also

grants to Recipient an exclusive license to use the Patent in connection with

the System.

 

2

 

4.             NON-DISCLOSURE

 

4.1                 Recipient

agrees that, during the term hereof and for a period of ten (10 ) years after

termination of this Agreement, it will keep in strict confidence all Technical

Information or Technical Data obtained from Supplier pursuant to this Agreement

and will not reveal or disclose such Technical Information or Technical Data to

third parties whether in Vietnam or elsewhere, except as strictly necessary to

enable Recipient to use the System by itself or through a third party.

Recipient further agrees that it will limit the dissemination of Technical

Information or Technical Data to employees who need to know such information or

data and will require such employees to hold such information or data in strict

confidence.

 

4.2                 The obligations

undertaken by Recipient pursuant to this Clause shall not apply to any such

Technical Information or Technical Data obtained from Supplier which is or

becomes published or otherwise generally available to the public through no

fault of Recipient.

 

 

5.             PAYMENT

 

5.1                 The Recipient

will pay the Supplier a royalty fee equal to [...***...] of product processed

through the System.   Payments will be

made on a monthly basis.

 

 

6.             TERM

AND TERMINATION

 

6.1                 This Agreement

shall be in full force and effect from the Effective Date, and shall continue

in force for as long as the Patent is valid.

 

6.2                 In case of

default, by either party, of any of its obligations under this Agreement, the

other party shall notify the defaulting party in writing, and this Agreement

may be terminated immediately if the defaulting party does not correct or take

substantial steps to cure the default within thirty (30) days as of receipt of

the default notification.

 

6.3                 The parties may

terminate this Agreement without case upon prior written notice of 30 (thirty)

days to the other party.

 

6.4                 Upon

termination of this Agreement, Recipient shall discontinue immediately all use

of the Patent and the Technical Information/ Technical Data.

 

 

* CONFIDENTIAL TREATMENT REQUESTED

 

3

 

7.             MARKING

 

7.1                 Recipient shall take whatever steps may be necessary

to comply with the laws of Vietnam with respect to the marking of all products

manufactured or services rendered under the Patent.

 

7.2                 Recipient shall

include in its advertising material, and, if requested by Supplier, on its

invoices, quotations and other documents, and on the products, labels and

containers, a statement that the products are manufactured or the services are

rendered under patent license from Supplier.

 

 

8.             OWNERSHIP

OF PATENT

 

8.1                 Recipient shall

take all reasonable steps to safeguard the right, title and interest of

Supplier in and to the Patent, and shall not, in any manner, challenge or

assist others in challenging, the Patent. It is expressly understood, however,

that Recipient shall not be responsible for the maintenance of the validity of

the Patent in Vietnam and for the payment of the annual fees necessary to such

maintenance.

 

 

9.             INFRINGEMENTS

 

9.1                 Recipient

agrees to give notice in writing to Supplier of any infringement or threatened

infringement of said Patent within Vietnam which shall at any time come to

Recipient’s attention. Supplier retains the right to take proceedings in or out

of a court of law which may be necessary or proper to stop or enjoin

infringement of the Patent by others not licensed by Supplier, provided,

however, that Recipient, in the event Supplier should request such action, take

proceedings consistent with law to stop or enjoin any such infringement,

bringing suit in its own name, if necessary, and in any event, the parties will

cooperate to the fullest extent possible if litigation should be necessary in

order to protect the rights of either party with respect to the Patent.

 

 

10.          INTERPRETATION

 

10.1               This Agreement

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

 

10.2               Any dispute or

controversy arising out of the interpretation of or performance under this

Agreement shall be settled by the Central Courts of the State of California,

United States, with waiver of any other Court, privileged as it may be.

 

4

 

IN WITNESS WHEREOF,

each of the parties have caused this Agreement to be executed by their

respective authorized officers, together with the 2 (two) witnesses below.

 

 

	

  THE SUREBEAM CORPORATION

  	

   

  	

  SON SON

  CO., LTD.

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

    /s/ Larry

  Oberkfell

  	

   

  	

  /s/ Tram Be

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Name:  Mr. Larry Oberkfell

  	

   

  	

  Name:  Mr. Trâm

  Bê

  	

   

  
	

  Title:   

  President and CEO

  	

   

  	

  Title:   

  President

  	

   

  

 

5

 

A P P E N D I X     A

 

 

To the Agreement for

the Supply of Technology and License of Patent by and between The SureBeam  Corporation  and  SON SON

CO., LTD.,  executed on March

27, 2002.

 

 

PATENT

 

	

  Title

  	

   

  	

  Number of

  Application /  

  Registration

  	

   

  	

  Date of

  Application /

  Registration

  	

   

  	

  Class

  
	

  Irradiation

  System Utilizing  Conveyor-Transported Article Carriers

  	

   

  	

  In the process of

  Registration in Vietnam

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

6Exhibit 10.49

 

*

Confidential Treatment Requested Under

17

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

 

 

SON

SON Co., Ltd.

 

October 1, 2002

 

Mr. Tram Be

Son Son

Co., Ltd.

[...***...]

 

 

Re:          Agreement for purchase of a SureBeam

Electron Beam System between SureBeam Corporation and Son Son co., Ltd., dated

as March 27, 2002.

 

 

Mr. Tram Be:

 

Reference is made to the Agreement referenced above

(the “Agreement”), between SureBeam Corporation (“SureBeam”), and Son Son Co.,

Ltd. (“Buyer”).  All capitalized terms

used but not defined herein shall have the respective meanings assigned to them

under the Agreement.

 

SureBeam and Buyer have executed and delivered this

letter for purposes of supplementing the term of Agreement, and hereby agree as

follows:

 

1.               Exhibit C1 to the Agreement is hereby amended

to include the following:

Buyer has the option to purchase a second

accelerator, for a price of  [...***...], to

be installed within this first Facility within [...***...] after the completion of

the Acceptance Test.  This price will

include any additional material handling equipment that may be necessary.  If the utilization of this first

Facility reaches 85% of its capacity during the first 12 months of

operation, then this option will become a binding commitment.

 

Except to the extent expressly amended by this letter, all of the

provisions of the Agreement remain unchanged and shall continue in full force

and effect.

 

 

* CONFIDENTIAL TREATMENT REQUESTED

 

 

Please confirm, by signing in the place indicated below, that the

foregoing reflects our mutual understanding and agreement.

 

Sincerely yours,

 

 

	

  SUREBEAM CORPORATION

  
	

   

  
	

   

  
	

  By: 

  	

  /s/ Martha M. Cashman

  	

   

  
	

   

  
	

  Name:

  	

  Martha M. Cashman

  	

   

  
	

   

  	

   

  
	

  Title:

  	

  Senior Vice President, International Business Development

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  AGREED AND ACCEPTED:

  
	

   

  	

   

  
	

  SON SON CO., LTD.

  
	

   

  
	

   

  	

   

  
	

  By: 

  	

  /s/ Tram Be

  	

   

  
	

   

  	

   

  
	

  Name:

  	

  TRAM BE

  	

   

  
	

   

  	

   

  
	

  Title: 

  	

  Chairman of Management

  	

   

  
	

   

  	

   

  
	

  Date:

  	

  October 1, 2002

  	

   

  
				

 

2

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