Document:

Exhibit

10.40

FORM

OF

TAX

SHARING AND DISAFFILIATION AGREEMENT

Tax Sharing And Disaffiliation

Agreement dated

as of August 2, 2002, by and between The Titan Corporation,

a Delaware corporation (“Titan”),

and SureBeam Corporation, a Delaware corporation (“SureBeam”).

Recitals

Whereas, SureBeam is a first tier subsidiary of

Titan;

Whereas, Titan is the common parent of an

affiliated group of corporations within the meaning of Section 1504(a) of the

Code, which currently files consolidated federal income Tax Returns and which

includes SureBeam as a member of that consolidated group;

Whereas, pursuant to the Exchange Agreement dated

as of December 31, 2001 and the Exchange Agreement dated February 1, 2002

by and between Titan and SureBeam Titan has recapitalized its debt in SureBeam

into equity (the “Recapitalization”),

and it is contemplated that Titan will convert its Class B Common Stock into

Class A Common Stock (the “Conversion”),

and it is further contemplated that, following receipt of a favorable ruling from

the Internal Revenue Service or tax opinions from Titan’s tax advisors, Titan

will distribute to the holders of Titan Common Stock all of the outstanding

shares of SureBeam Common Stock owned by Titan, with cash distributed in lieu

of fractional shares of SureBeam Common Stock (the “Distribution”);

Whereas, Titan and SureBeam intend that the

Recapitalization and the Conversion will qualify as one or more reorganizations

within the meaning of Section 368(a) of the Code, and the Distribution will

qualify as a distribution described in Section 355 of the Code, and none of the

Recapitalization, the Conversion or the Distribution will result in the

recognition of any taxable gain or income to Titan or any shareholder of Titan

(except to the extent of cash received in lieu of any fractional shares of

SureBeam Common Stock);

Whereas, after the Distribution Date, SureBeam

will cease to be a member of the Titan Affiliated Group for federal income Tax

purposes;

Whereas, members of the SureBeam Group and

members of the Titan Group desire on behalf of themselves and their successors

to set forth their rights and obligations with respect to Taxes for periods on

and after the Distribution Date; and

Whereas, Titan and SureBeam are parties to a Tax Allocation

Agreement dated August 4, 2002, that is not amended or modified in any respect

by this Agreement.

Now, Therefore, for good and valuable consideration,

the receipt and sufficiency of which are hereby acknowledged, the parties

hereto agree as follows:

 

1

 

ARTICLE I

DEFINITIONS

1.1  For the purposes of this Agreement:

“Acquisition Proposal” shall mean any proposal, plan, agreement

or arrangement contemplating (i) any merger, consolidation, reorganization,

recapitalization or similar transaction involving SureBeam, or (ii) any

transfer of or issuance of stock or other securities of SureBeam.  For the purposes of this paragraph, “stock”

shall have the meaning given to that term in Section 355(e) of the Code.

“Agreement” shall mean this Tax Sharing and

Disaffiliation Agreement as the same may be amended from time to time.

“Applicable Federal Rate” shall have the meaning set forth in

Section 1274(d) of the Code, compounded quarterly.

“Claim” shall have the meaning set forth in Section

5.3(a) of this Agreement.

“Code” shall mean the Internal Revenue Code of

1986, as amended from time to time.

“Controlling Party” shall have the meaning set forth in

Section 5.1 of this Agreement.

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

recital.

“Distribution” shall have the meaning set forth in the

third recital.

“Distribution Date” shall mean the date of the Distribution

of SureBeam common stock to the holders of Titan common stock.

“Equity Transaction” shall mean (a) the grant, offer for

sale, sale or issuance of (i) any stock of SureBeam, (ii) any debt security of

SureBeam convertible or exchangeable into stock of SureBeam, (iii) any option,

warrant, or other right to subscribe for any stock of SureBeam, provided,

however, that Equity Transaction shall not include the grant, offer, sale or

issuance of compensatory equity arrangements that meet the criteria set forth

in Temporary Treasury Regulation §1.355-7T(g)(3)(ii), or any successor

regulation thereto; (b) any redemption, retirement, repurchase, cancellation or

other transaction that reduces the number of shares of SureBeam Common Stock

outstanding; or (c) any consideration, discussions, negotiations, provision of

confidential information relating to SureBeam or the SureBeam Business to any

party regarding, or the solicitation of or encouragement of any Acquisition

Proposal.  For the purposes of this

paragraph, “stock” shall have the meaning given to that term in Section 355(e)

of the Code.

“Filing Party” shall have the meaning set forth in

Section 4.1 of this Agreement.

 

2

 

“Final Determination” shall mean with respect to any issue (i)

a decision, judgment, decree or other order by any court of competent

jurisdiction, which decision, judgment, decree or other order has become final

and not subject to further appeal, (ii) a closing agreement (whether or not

entered into under Section 7121 of the Code) or any other binding settlement

agreement (whether or not with the IRS) entered into in connection with or in

contemplation of an administrative or judicial proceeding, or (iii) the

completion of the highest level of administrative proceedings if a judicial

contest is not or is no longer available.

“Indemnitor” shall have the meaning set forth in

Section 5.2 of this Agreement.

“IRS” shall mean the Internal Revenue Service

of the United States.

“Liable Party” shall have the meaning set forth in

Section 4.1 of this Agreement.

“Post-Distribution Period” shall mean any taxable year or other taxable

period beginning after the Distribution Date and, in the case of any taxable

year or other taxable period that begins before and ends after the Distribution

Date, that part of the taxable year or other taxable period that begins at the

beginning of the day after the Distribution Date.

“Pre-Distribution Period” shall mean any taxable year or other

taxable period that ends on or before the Distribution Date and, in the case of

any taxable year or other taxable period that begins before and ends after the

Distribution Date, that part of the taxable year or other taxable period

through the close of the Distribution Date.

“Recapitalization” shall have the meaning set forth in the

third recital.

“Representation Letters” shall mean the representation letters and

any other materials (including, without limitation, the ruling request and the

supplemental submissions to the IRS) delivered or deliverable by Titan and

others in connection with the issuance by the IRS of the Tax Rulings or in

connection with any tax opinions requested by Titan from its tax advisors

relating to the Tax Rulings, the Recapitalization, the Conversion, the

Distribution, or any event occurring during the period SureBeam was a member of

the Titan Affiliated Group.

“Restructuring Taxes” shall mean any Taxes and other

liabilities, including, without limitation, liability to stockholders of Titan

and the costs of defending against the imposition of such taxes and other

liabilities, imposed as a result of a Final Determination that (i) the Recapitalization

and/or the Conversion failed to qualify as a reorganization within the meaning

of Section 368 (a) of the Code; (ii) the Distribution failed to qualify as a

distribution described in Section 355 of the Code, or (iii) any stock or

securities of SureBeam failed to qualify as “qualified property” within the

meaning of Section 355(c)(2) of the Code because of the application of Section

355(d) or Section 355(e) of the Code to the Distribution.

“Retained Business” shall mean the business conducted by Titan,

excluding only the SureBeam Business.

“SureBeam” shall have the meaning set forth in the

preamble to this Agreement.

 

3

 

“SureBeam Business” shall mean the business conducted by

SureBeam and any direct or indirect subsidiary of SureBeam.

“SureBeam Group” shall mean, for any period, the

affiliated group of corporations as defined in Section 1504(a) of the Code, or

similar group of entities as defined under corresponding provisions of the laws

of other jurisdictions, of which SureBeam would be the common parent

corporation if it were not a subsidiary of Titan, and any corporation or other

entity which may be, may have been or may become a member of such group from

time to time.

“SureBeam Indemnified

Parties”

shall mean each member of the SureBeam Group and their respective directors,

officers and employees.

“SureBeam Tainting Act” shall mean:

(a)           any inaccuracy or breach of any representation,

warranty, or covenant that is made by SureBeam pursuant to Section 2.1 of this

Agreement.

(b)           any action (or failure to take any reasonably

available action) by any member of the SureBeam Group; or

(c)           any acquisition or other transaction involving the

capital stock of SureBeam (other than the Recapitalization, Conversion or

Distribution).

“SureBeam Taxes” shall mean (i) any Taxes that are

attributable to the SureBeam Group, (ii) Restructuring Taxes allocable to

SureBeam under Section 3.4, and (iii) an amount equal to the product of (x) any

Restructuring Taxes allocable to SureBeam payable under (ii) hereof plus any

amount payable by SureBeam under this (iii), and (y) the highest marginal

effective federal and California state income tax rates applicable to a

corporation.

“Tax” (and with correlative meaning, “Taxes” and “Taxable”)

shall mean any federal, state, local or foreign net income, gross income, gross

receipts, windfall profit, severance, property, production, sales, use,

license, excise, franchise, employment, payroll, withholding, alternative or

add-on minimum, ad valorum, value-added, transfer, stamp, or environmental tax,

or any other tax, custom, duty, governmental fee or other like assessment or

charge of any kind whatsoever, together with any interest or penalty, addition

to tax or additional amount imposed by any governmental authority.

“Tax Allocation Agreement” shall mean the Tax Allocation Agreement

dated as of August 4, 2000 by and between Titan and SureBeam.

“Tax Benefits” shall mean benefits taken into account

in computing the tax liability of a member of either the SureBeam Group or the

Titan Group, including the benefit of the graduated tax rates of Section 11 of

the Code, as well as any similar or corresponding benefits under state or local

tax law.

“Tax Item” shall mean any item of income, gain, loss,

deduction, credit, provisions for reserves, recapture of credit, receipt,

proceeds or any other item or event that increases or 

 

4

 

decreases Taxes

paid or payable, including an adjustment under Section 481 of the Code

resulting from a change in accounting method.

“Tax Return” shall mean any return, report or similar

statement required to be filed with respect to any Tax (including any attached

schedules), including, without limitation, any information return, claim for

refund, amended return or declaration of estimated Tax.

“Tax Rulings” shall mean the rulings by the IRS

requested by Titan in connection with the Distribution.

“Titan” shall have the meaning set forth in the

preamble to this Agreement.

“Titan Affiliated Group” shall mean the corporations included in

the affiliated group, as defined in Section 1504 of the Code, of which Titan is

the common parent, and any successor group.

“Titan Group” shall mean, for any period, the

affiliated group of corporations as defined in Section 1504(a) of the Code, or

similar groups of entities as defined under corresponding provisions of the

laws of other jurisdictions, of which Titan is the common parent corporation,

and any corporation or other entity which may be, may have been or may become a

member of such group from time to time, but excluding any member of the

SureBeam Group.

“Titan Indemnified Parties” shall mean each member of the Titan

Group and their respective directors, officers and employees.

“Titan Tainting Act” shall mean:

(a)           any inaccuracy or breach of any representation,

warranty, or covenant that is made by Titan pursuant to Section 2.2 of this

Agreement;

(b)           any action (or failure to take any reasonably

available action) by any member of the Titan Group;

(c)           any acquisition or other transaction involving the

capital stock of Titan (other than the Distribution).

“Titan Taxes” shall mean (i) any Taxes that are

attributable to the Titan Group and (ii) Restructuring Taxes allocable to Titan

under Section 3.4.

ARTICLE

II

REPRESENTATIONS

AND WARRANTIES

2.1  Surebeam.

SureBeam

hereby represents and warrants that: (i) it has examined the Tax Rulings and

the Representation Letters, and (ii) the facts set forth therein, and the

representations made therein, to the extent descriptive of the SureBeam Group

or the SureBeam Business and not descriptive of the Titan Group (including,

without limitation, the facts and representations in the Representation Letters

and the Tax Rulings or tax opinions, as applicable, 

 

5

 

to the extent that

they relate to the SureBeam Group or the SureBeam Business, and the plans,

proposals, intentions and policies of the SureBeam Group and the SureBeam

Business) were true, correct and complete in all material respects when the Tax

Rulings were issued, and will be true, correct and complete in all material

respects on the Distribution Date.

2.2  Titan. Titan hereby represents and warrants

that (i) it has examined the Tax Rulings and the Representation Letters, and

(ii) the facts set forth therein, and the representations made therein, to the

extent descriptive of the Titan Group or the Retained Business and not

descriptive of the SureBeam Group or the SureBeam Business (including, without limitation,

the facts and representations in the Representation Letters and the Tax Rulings

or tax opinions, as applicable, to the extent that they relate to the Titan

Group or the Retained Business and do not relate to the SureBeam Group or the

SureBeam Business, and the plans, proposals, intentions and policies of the

Titan Group and the Retained Business, and not of the SureBeam Group or the

SureBeam Business) were true, correct and complete in all material respects

when the Tax Rulings were issued, and will be true, correct and complete in all

material respects on the Distribution Date.

ARTICLE

III

TAX

RETURNS, TAX PAYMENTS AND TAX SHARING OBLIGATIONS

3.1  Obligations

To File Tax Returns.

(a)           Titan shall timely file or cause to be filed all Tax

Returns with respect to the SureBeam Group that (i) are due on or before the

Distribution Date or (ii) are for any Pre-Distribution Period and are filed on

a consolidated, combined or unitary basis and include any member of the

SureBeam Group, on one hand, and any member of the Titan Group, on the other

hand (except, in all cases, with respect to any member of the SureBeam Group

for which Titan would not have filed or cause to be filed a Tax Return in

accordance with past practice). SureBeam shall timely file or cause to be

timely filed any other Tax Return with respect to the SureBeam Group.

(b)           Titan shall timely file or cause to be timely filed

all Tax Returns with respect to the Titan Group.

3.2  Obligation

To Remit Taxes. Titan and SureBeam shall each remit or cause to be remitted any Taxes

due in respect of any Tax Return it is required to file or cause to be filed

pursuant to Section 3.1, and shall be entitled to reimbursement for such

payments to the extent provided in Section 3.3.

3.3  Tax

Sharing Obligations.

(a)           SureBeam shall be liable for and pay, and shall

indemnify, defend, and hold harmless Titan and the Titan Indemnified Parties

from and against, any and all loss, cost, damage or expense, including

reasonable attorneys’ fees and costs incurred or suffered by Titan or one or

more of the Titan Indemnified Parties in connection with, relating to, arising

out of or due to, directly or indirectly (i) any SureBeam Taxes and (ii) any

amount determined to be SureBeam’s liability under Section 3.4. SureBeam shall be

entitled to any refund of or credit for Taxes for which SureBeam is responsible

under this Section 3.3(a).

 

6

 

(b)           Titan shall be liable for and pay, and shall

indemnify, defend, and hold harmless SureBeam and the SureBeam Indemnified

Parties from and against, any and all loss, cost, damage or expense, including

reasonable attorneys’ fees and costs incurred or suffered by SureBeam or one or

more of the SureBeam Indemnified Parties in connection with, relating to,

arising out of, or due to, directly or indirectly (i) any Titan Taxes and

Titan shall be entitled to any refund of or credit for Taxes for which Titan is

responsible under this Section 3.3(b).

(c)           Except as set forth in this Agreement or the Tax Allocation

Agreement and in consideration of the mutual indemnities and other obligations

of this Agreement, any and all prior Tax sharing agreements or practices

between any member of the Titan Group and any member of the SureBeam Group

shall be terminated with respect to the SureBeam Group as of the Distribution

Date.

3.4  Restructuring

Taxes.

(a)           SureBeam and Titan shall each be liable for 50% of

Restructuring Taxes that are imposed as a result of neither a SureBeam Tainting

Act nor a Titan Tainting Act.  In the

case of the imposition of a Restructuring Tax where there is both a SureBeam

Tainting Act and a Titan Tainting Act, and each of the SureBeam Tainting Act

and the Titan Tainting Act would alone be sufficient to result in the

imposition of such Restructuring Tax, SureBeam and Titan shall each be liable

for 50% of such Restructuring Tax.  In

the case of a Restructuring Tax that would not have been imposed but for the

existence of both a SureBeam Tainting Act and a Titan Tainting Act, SureBeam

and Titan shall be liable for such Restructuring Tax to the extent the SureBeam

Tainting Act and the Titan Tainting Act, respectively, contributed to the

imposition of such Restructuring Tax.

(b)           Except as described in Section 3.4(a), SureBeam shall

be liable for Restructuring Taxes imposed as a result of a SureBeam Tainting

Act.

(c)           Except as described in Section 3.4(a), Titan shall be

liable for Restructuring Taxes imposed as a result of a Titan Tainting Act.

3.5  Additional

SureBeam Equity Financing. 

Notwithstanding Section 3.4, (a) any Equity Transaction by SureBeam

during the two year period following the Distribution Date and (b) any

shareholder vote contemplated by Section 6(b)(ii) of the Certificate of

Incorporation of SureBeam; shall be subject to the prior written consent of

Titan, which consent shall not be unreasonably withheld but which consent may

be conditioned upon the receipt by Titan of (i) a legal opinion or tax opinion

in form and substance satisfactory to Titan of a reputable tax counsel or tax

adviser of national reputation reasonably satisfactory to Titan which opinion

has been concurred in by Titan’s tax counsel or advisors or (ii) a favorable

ruling from the Internal Revenue Service, in each case to the effect that the

proposed issuances of stock should not result in the imposition of any

Restructuring Taxes.

3.6  Period

That Includes The Date Of Distribution.

(a)           To the extent permitted by law or administrative

practice, the taxable year of the SureBeam Group shall be treated as closing at

the close of the Distribution Date.

 

7

 

(b)           If it is necessary for purposes of this Agreement to

determine the SureBeam Taxes or Titan Taxes for a taxable year that begins on

or before and ends after the Distribution Date and is not treated under Section

3.6(a) as closing at the close of the Distribution Date, the determination

shall be made by assuming that such taxable year ended on a “closing of the

books” basis at the close of the Distribution Date, except that exemptions,

allowances or deductions that are calculated on an annual basis shall be

apportioned on a time basis.

ARTICLE

IV

PAYMENTS

4.1  General

Tax Payments.

With respect to any Taxes for which one party (the “Liable Party”) is

liable under Section 3.3 and that are to be remitted in connection with Tax

Returns to be filed by the other party (the “Filing Party”) after the Distribution

Date pursuant to Sections 3.1 and 3.2, (i) upon the request of the Filing

Party, the Liable Party shall promptly provide to the Filing Party all

information necessary to enable the Filing Party to file such Tax Returns and

(ii) assuming compliance by the Liable Party with the Liable Party’s

obligations under clause (i) (or written waiver by the Filing Party of such

compliance), the Filing Party shall, not later than ten (10) days prior to the

due date for remitting such Taxes (or, if the due date is within sixty (60)

days after the Distribution Date, as promptly following the Distribution Date

as possible) provide the Liable Party with a written request showing in

reasonable detail the calculation of the amount of such Liable Party’s Taxes

(and any other amounts) owing by the Liable Party to the Filing Party pursuant

to this Agreement.  Subject to Section

4.2 which provides for payments due as a result of a Final Determination, the

Liable Party shall have the right to object in writing to such calculation on

or before sixty (60) days after the date on which such request is provided to

the Liable Party, on the grounds that there is substantial authority that such

calculation is incorrect; provided that if the Liable Party so objects, (i) the

Filing Party and the Liable Party shall promptly submit the dispute to an

independent accounting or law firm acceptable to both the Filing Party and the

Liable Party for prompt resolution, whose decision shall be final and binding

on the Filing Party and the Liable Party, and (ii) the party that such

accounting or law firm determines has lost the dispute shall pay all of the

fees and expenses incurred in connection with submitting such dispute. The

Liable Party shall pay to the Filing Party any amount not in dispute on or

before the thirtieth (30th) day following the receipt of such request by the

Liable Party, with additional amounts to be paid by the Liable Party (together

with interest at the Applicable Federal Rate accruing from the date on which

such Return is filed) promptly upon resolution of any objection.

4.2  Other

Payments.

Other payments due to a party under Section 3.3 shall be due not later than

twenty (20) days after the receipt or crediting of a refund or the receipt of

notice of a Final Determination to the effect that the indemnified party is

liable for an indemnified cost, together with interest at a rate equal to the

Applicable Federal Rate from the date on which the indemnifying party receives

such receipt, credit or notice.

4.3  Notice. Titan and SureBeam shall give each other

prompt written notice of any payment that may be due under this Agreement.

 

8

 

ARTICLE

V

TAX

AUDITS

5.1  General. Except as otherwise provided in this

Agreement, each of SureBeam and Titan (as the case may be, the “Controlling Party”)

shall have sole responsibility for all audits or other proceedings with respect

to Tax Returns that it is required to file under Section 3.1. Except as

provided in Section 5.3, the Controlling Party shall have the sole right to

contest the audit or proceeding and to employ advisors of its choice.

5.2  Indemnified

Claims In General. Titan or SureBeam shall promptly notify the other in writing upon the

receipt of an actual oral or written notice from any relevant Taxing authority

of any proposed adjustment to a Tax Return that may result in liability of the

other party (the “Indemnitor”)

under this Agreement. If the Indemnitor is not also the Controlling Party, the

Controlling Party shall provide the Indemnitor with information about the

nature and amounts of the proposed adjustments and, subject to additional

rights of the Indemnitor in certain circumstances under Section 5.3 of this

Agreement, shall permit the Indemnitor to participate in the proceeding at the

Indemnitor’s own expense; provided, however, that the Controlling Party shall

not be required to indemnify the Indemnitor if the Controlling Party fails to

notify or provide such information to the Indemnitor, unless the Indemnitor is

materially prejudiced thereby. The Indemnitor shall pay all (or, in the case of

Restructuring Taxes for which liability is shared under Section 3.4(a) of this

Agreement, a portion based on the Indemnitor’s share of such Restructuring

Taxes) reasonable expenses (including, but not limited to, legal and accounting

fees) incurred by the Controlling Party in connection with the assessment or

adjustment within seven (7) days after a written request by the Controlling

Party.

5.3  Certain

Federal Income Tax Claims.

(a)           Any issues (other than issues relating to

Restructuring Taxes for which liability is shared under Section 3.4(a), which

shall be excluded from the provisions of this Section 5.3) raised by the IRS in

any Tax inquiry, audit, examination, investigation, dispute, litigation or

other proceeding that would result in liability to the Indemnitor under this

Agreement that in the aggregate would equal or exceed $250,000 with respect to

any taxable year are defined as a Claim (a “Claim”). Except as provided in Section

5.3(d) and notwithstanding any other provision of this Agreement that may be

construed to the contrary, the Controlling Party agrees to contest any Claim

and not to settle any Claim without prior written consent of the Indemnitor,

provided that (i) the Controlling Party shall provide notice to Indemnitor

pursuant to Section 5.2 of any Claim, (ii) within thirty (30) days after such

notice is received by the Indemnitor, the Indemnitor shall request in writing

that such Claim be contested and the Indemnitor shall provide an opinion of

independent tax counsel, selected by the Indemnitor and reasonably acceptable

to the Controlling Party, to the effect that it is more likely than not that a

Final Determination will be substantially consistent with the Indemnitor’s

position relating to such Claim, (iii) the Indemnitor shall agree to pay (and

shall pay) on demand all out-of-pocket costs, losses and expenses (including,

but not limited to, reasonable legal and accounting fees) paid or incurred by

the Controlling Party in connection with contesting such Claim, and (iv) the

Controlling Party, after reasonable consultation with the Indemnitor, shall

determine in the Controlling Party’s sole discretion the nature of all actions

to be taken to contest 

 

9

 

such Claim,

including (x) whether any action to contest such Claim shall initially be by

way of judicial or administrative proceeding, or both, (y) whether any such

Claim shall be contested by resisting payment thereof or by paying the same and

seeking a refund thereof, and (z) the court or other judicial body before which

judicial action, if any, shall be commenced. To the extent the Indemnitor is

not participating, the Controlling Party shall keep the Indemnitor (and, upon

request by the Indemnitor, its counsel) informed as to the progress of the

contest.

(b)           If the Indemnitor requests that the Controlling Party

accept a settlement of a Claim offered by the IRS and if such Claim may, in the

reasonable discretion of the Controlling Party, be settled without prejudicing

any claims the IRS may have with respect to matters unrelated to the Claim, the

Controlling Party shall either accept such settlement offer or agree with the

Indemnitor that the Indemnitor’s liability with respect to such Claim shall be

limited to the lesser of (i) an amount calculated on the basis of such

settlement offer plus interest owed to the IRS on the date of eventual payment

or (ii) the amount calculated on the basis of a Final Determination.

(c)           If the Controlling Party shall elect to pay the Tax

claimed and seek a refund, the Indemnitor shall lend sufficient funds on an

interest-free basis to the Controlling Party (with no net after-tax cost to the

Controlling Party), to cover any applicable indemnity obligations of the

Indemnitor. To the extent such refund claim is ultimately disallowed, the loan

or portion thereof equal to the amount of the refund claim so disallowed shall

be applied against the Indemnitor’s obligation to make indemnity payments

pursuant to this Agreement. To the extent such refund claim is allowed, the

Controlling Party shall pay to the Indemnitor all amounts advanced to the

Controlling Party with respect to the indemnity obligation within ten (10) days

of the receipt of such refund (or if the Controlling Party would have received

such refund but for the existence of a counterclaim or other claim not

indemnified by the Indemnitor under this Agreement, within ten (10) days of the

final resolution of the contest), plus an amount equal to any interest received

(or that would have been received) from the IRS that is properly attributable

to such amount.

(d)           Except as provided below, the Controlling Party shall

not settle a Claim that the Indemnitor is entitled to require the Controlling

Party to contest under Section 5.3(a) without the prior written consent of the

Indemnitor. At any time, whether before or after commencing to take any action

pursuant to this Section 5.3 with respect to any Claim, the Controlling Party

may decline to take action with respect to such Claim and may settle such Claim

without the prior written consent of the Indemnitor by notifying the Indemnitor

in writing that the Indemnitor is released from its obligations to indemnify

the Controlling Party with respect to such Claim (which notification shall

release the Indemnitor from such obligations except to the extent the

Indemnitor has agreed in writing that it would be willing to have its liability

calculated on the basis of a settlement offer, as provided in Section 5.3(b),

at that point in the contest) and with respect to any Claim related to such

Claim or based on the outcome of such Claim. If the Controlling Party settles

any Claim or otherwise takes or declines to take any action pursuant to this

paragraph, the Controlling Party shall pay to the Indemnitor any amounts paid

or advanced by the Indemnitor with respect to such Claim (other than amounts

payable by the Indemnitor in connection with a settlement offer pursuant to

Section 5.3(b)), plus interest attributable to such amounts.

 

10

 

ARTICLE

VI

COOPERATION

6.1  General. Titan and SureBeam shall cooperate with

each other in the filing of any Tax Returns and the conduct of any audit or

other proceeding and each shall execute and deliver such powers of attorney and

make available such other documents as are reasonably necessary to carry out

the intent of this Agreement. Each party agrees to notify the other party in

writing of any audit adjustments that do not result in Tax liability but can be

reasonably expected to affect Tax Returns of the other party, or any of its

Subsidiaries, for a Post-Distribution Period. Each party agrees to treat the

Recapitalization , the Conversion and the Distribution for all income Tax

purposes as not causing the recognition of any income, gain or loss (except

with respect to the payment of cash in lieu of fractional shares).  Each party agrees to prepare and file their

Tax Returns for all periods on a basis consistent with the positions taken on

the Tax Returns filed by Titan during the period SureBeam was a member of the

Titan Affiliated Group.  Further, each

party agrees to cooperate with the other to promptly provide such

Representation Letters as shall be reasonably requested.

6.2  Cooperation

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

(a)           In addition to any obligations imposed pursuant to the

Reorganization Agreement, each member of the Titan Group shall fully cooperate

with SureBeam and its representatives, in a prompt and timely manner, in

connection with (i) the preparation and filing of and (ii) any inquiry, audit,

examination, investigation, dispute, or litigation involving, any Tax Return

required to be filed by SureBeam pursuant to this Agreement, by or for any

member of the SureBeam Group.

(b)           SureBeam shall fully cooperate with Titan and its

representatives, in a prompt and timely manner, in connection with (i) the

preparation and filing of and (ii) any inquiry, audit, examination,

investigation, dispute, or litigation involving, any Tax Return required to be

filed by Titan pursuant to this Agreement. Such cooperation shall include, but

not be limited to, (x) the execution and delivery to Titan by SureBeam of any

power of attorney required to allow Titan and its counsel to participate in or

control any inquiry, audit or other administrative proceeding and to assume the

defense or prosecution, as the case may be, of any suit, action or proceeding

pursuant to the terms of and subject to the conditions set forth in Article V

of this Agreement, and (y) making available to Titan, during normal business

hours, and within fifteen (15) days of any written request therefor, all books,

records and information, and the assistance of all officers and employees,

necessary or useful in connection with any Tax inquiry, audit, examination,

investigation, dispute, litigation or any other matter.

 

11

 

ARTICLE

VII

RETENTION

OF RECORDS; ACCESS

The Titan Group and the SureBeam Group shall:

7.1  retain (for a minimum of five (5) years) records,

documents, accounting data and other information (including computer data)

necessary for the preparation and filing of all Tax Returns in respect of Taxes

of the Titan Group or the SureBeam Group or for the audit of such Tax Returns;

and

7.2  give to the other reasonable access to such records,

documents, accounting data and other information (including computer data) and

to its personnel (insuring their cooperation) and premises, for the purpose of

the current or potential review or audit of such Tax Returns to the extent

relevant to an obligation or liability of a party under this Agreement or

applicable law. At any time after the Distribution Date if either the SureBeam

Group or the Titan Group proposes to destroy such records, documents,

accounting data or other information, the party proposing to destroy documents

shall first notify the other party in writing and such party shall be entitled

to receive such records, documents, accounting data or other information

proposed to be destroyed.

ARTICLE

VIII

DISPUTES

If Titan and SureBeam

cannot agree on any calculation of any liabilities under this Agreement, such

calculation shall be made by any independent public accounting firm acceptable

to both Titan and SureBeam. The decision of such firm shall be final and

binding. The fees and expenses incurred in connection with such calculation

shall be borne by the party that such independent public accounting firm

determines has lost the dispute.

ARTICLE

IX

TERMINATION

OF LIABILITIES

Notwithstanding any other

provision in this Agreement, any liabilities determined under this Agreement

shall survive indefinitely.

ARTICLE X

MISCELLANEOUS PROVISIONS

10.1                        Co-ordination With

Existing Agreement.  It is acknowledged that, the Tax Allocation

Agreement shall continue in effect with respect to any tax year for which

consolidated federal income tax returns are filed by the Titan Consolidated

Group and for state income tax purposes with respect to any tax year for which

combined, consolidated or unitary tax returns are filed by the Titan

Consolidated Group, as those terms are defined in such Tax Allocation

Agreement.

 

12

 

10.2        Governing Law. 

This Agreement shall be governed by and construed in accordance with the

internal laws of the State of California as such laws are applied to agreements

between California residents entered into and performed entirely in California.

10.3        Entire Agreement; Amendment. 

This Agreement, including any and all attachments or exhibits hereto,

constitutes the entire, final and exclusive understanding and agreement between

the parties with respect to the subject matter hereof.  This Agreement may be amended, waived,

discharged or terminated only by written agreement of the parties.

10.4        Severability 

In case any provision of this Agreement shall be invalid, illegal or unenforceable,

the parties intend that (a) in lieu of such provision there be added as part of

this Agreement a provision as similar in terms to such invalid, illegal or

unenforceable provision as may be possible and be valid, legal and enforceable

and (b) the validity, legality and enforceability of the remaining provisions,

or any subsequent applications thereof, shall not in any way be affected or

impaired thereby.

10.5        Binding Effect, Assignment, Etc. 

This Agreement shall be binding upon, and shall inure to the benefit of,

the parties hereto and their permitted assigns and successors in interest.  No party may assign any right, or delegate

any obligation hereunder without the express prior written consent of Titan.

10.6        Delays or Omissions.  It is agreed that no delay or omission to exercise any right,

power or remedy accruing to any party, upon any breach, default or

noncompliance by another party under this Agreement shall impair any such

right, power or remedy, nor shall it be construed to be a waiver of any breach,

default or noncompliance, or any acquiescence therein, or of or in any similar

breach, default or noncompliance thereafter occurring.  All remedies, either under this Agreement,

by law, or otherwise afforded to any party, shall be cumulative and not

alternative.

10.7        Captions.  Titles or

captions of Sections and paragraphs contained in this Agreement are inserted

only as a matter of convenience and for reference, and in no way define, limit,

extend, or describe the scope of this Agreement or the intent of any provision

hereto.

10.8        Number and Gender. 

Whenever required by the context, the singular number shall include the

plural, the plural number shall include the singular, and the gender of any

pronoun shall include all genders.

10.9        Notices.  Unless

otherwise provided, any notice required or permitted under this Agreement shall

be given in writing and shall be deemed effectively given: (a) upon personal

delivery to the party to be notified; (b) when sent by confirmed telex or

facsimile if sent during normal business hours of the recipient, if not, then

on the next business day; or (c) upon deposit with the United States Post

Office, by registered or certified mail, postage prepaid and addressed to the

party to be notified parties; or (d) one (1) day after deposit with a

nationally recognized overnight courier, specifying next day delivery, with

written verification of receipt at the address indicated for such party on the

signature page hereof, or at such other address as such party may designate by

ten (10) days’ advance written notice to the other.

 

13

 

10.10      Cooperation. 

Each party hereby covenants and agrees that it shall execute and deliver

all materials including, but not limited to, returns, supporting schedules,

workpapers, correspondence and other documents relating to the consolidated

return to any party to this Agreement during regular business hours.

10.11      Counterparts. 

This Agreement may be executed in multiple copies, each of which shall

for all purposes constitute an Agreement, binding on the parties, and each

partner hereby covenants and agrees to execute all duplicates or replacement

counterparts of this Agreement as may be required.

10.12      Computation of Time. 

Whenever the last day for the exercise of any privilege or the discharge

of any duty hereunder shall fall on a Saturday, Sunday or any public or legal

holiday, whether local or national, the person having such privilege or duty

shall have until 5:00 p.m. Pacific Standard Time on the next business day to

exercise such privilege, or to discharge such duty.

10.13      Costs and Expenses. 

Unless otherwise provided in this Agreement, each party shall bear all

fees and expenses incurred in performing its obligations under this Agreement.

10.14      Counterparts.  This Agreement may be executed in any number of counterparts, each

of which shall be an original, but all of which together shall constitute one

instrument.

 

14

 

In Witness Whereof, the parties hereto have duly executed

this Agreement as of the day and year first above written.

                                                                                                The Titan Corporation

	

  By

  	

   

  
	

  Name:

  	

   

  
	

  Title:

  	

   

  

SureBeam Corporation

	

  By

  	

   

  
	

  Name:

  	

   

  
	

  Title:

  	

   

  

 

 

15EMPLOYEE BENEFITS AGREEMENT

 

BETWEEN

 

THE TITAN CORPORATION

 

AND

 

SUREBEAM CORPORATION

 

August 5, 2002

 

 

 

EMPLOYEE BENEFITS AGREEMENT

 

 

THIS

EMPLOYEE BENEFITS AGREEMENT (“Agreement”), dated as of August 5,, 2002, is by and

between THE TITAN CORPORATION (“TITAN”)

and SUREBEAM CORPORATION

(“SUREBEAM”).

WHEREAS, TITAN and SUREBEAM have entered into

certain other agreements that will govern certain matters relating to the

tax-free spin-off of SUREBEAM Class A Common Stock from TITAN (the “Spin-off”)

and the distribution of the SUREBEAM stock to TITAN stockholders

(“Distribution”), and the relationship of TITAN and SUREBEAM and their

respective Subsidiaries following such Spin-Off and Distribution; and

WHEREAS, prior to the Distribution, SUREBEAM has

operated as a separate company with its own employees who have participated in

TITAN health and welfare plans.

WHEREAS, TITAN and SUREBEAM have agreed to enter

into this Agreement allocating assets, liabilities and responsibilities with

respect to certain employee compensation and benefit plans and programs between

them.

NOW,

THEREFORE, the

parties, intending to be legally bound, agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this

Agreement the following terms shall have the following meanings:

1.1          Affiliate means with respect to any other Person,

a Person that controls, is controlled by, or is under common control with, such

other Person.

1.2          Close Of The Distribution Date means 11:59:59 P.M., Pacific Standard

Time or Pacific Daylight Time (whichever shall then be in effect), on the

Distribution Date.

1.3          COBRA means the continuation coverage requirements for

“group health plans” under Title X of the Consolidated Omnibus Budget

Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B

and ERISA Sections 601 through 608.

1.4          Code means the Internal Revenue Code of 1986, as amended,

or any successor federal income tax law. Reference to a specific Code provision

also includes any proposed, temporary, or final regulation in force under that

provision.

1.5          Distribution Date means August 5, 2002.

1.6          DOL means the United States Department of Labor.

 

1

 

1.7          ERISA means the Employee Retirement Income Security Act of

1974, as amended. Reference to a specific provision of ERISA also includes any

proposed, temporary, or final regulation in force under that provision.

1.8          FMLA means the Family and Medical Leave Act of 1993, as

amended.

1.9          Health and Welfare Plans, when immediately preceded by “TITAN,”

means the health and welfare plans established and maintained by TITAN for the

benefit of employees of TITAN and certain TITAN Entities, and such other health

and welfare plans or programs as may apply to such employees as of the

Distribution Date. When immediately preceded by “SUREBEAM,” Health and Welfare

Plans means the health and welfare plans to be established by SUREBEAM

effective July 1, 2002 as set forth in this Agreement.

1.10        IRS means the Internal Revenue Service.

1.11        SUREBEAM 401(k) Plan means the SUREBEAM CORPORATION 401(k)

Plan to be established by SUREBEAM effective on August 1, 2002, as a qualified

defined contribution plan under ERISA and the Code.

1.12        SUREBEAM Entity means any Person that is, at the

relevant time, an Affiliate of SUREBEAM, except that the term SUREBEAM Entity

shall not include TITAN or a TITAN Entity.

1.13        SUREBEAM Individual means any individual who was

an employee of SUREBEAM on or before the Distribution Date or is an employee of

TITAN or a TITAN Entity who receives an offer of employment from SUREBEAM or a

SUREBEAM Entity on or before the Distribution Date with employment to commence

after the Distribution Date and who accepts such offer.

1.14        Medical Plan, when immediately preceded by “TITAN,”

means the TITAN Flexible Benefits Plan for Employees. When immediately preceded

by “SUREBEAM,” Medical Plan means the medical plan to be established by

SUREBEAM effective no later than July 1, 2002 as identified on Exhibit A

hereto.

1.15        Non-Employee Director, when immediately preceded by “TITAN,”

means a member of TITAN’s Board of Directors who is not an employee of TITAN or

a TITAN Entity. When immediately preceded by “SUREBEAM,” Non- Employee Director

means a member of SUREBEAM’s Board of Directors who is not an employee of SUREBEAM

or a SUREBEAM Entity.

1.16        Person means any individual or legal entity.

1.17        Plan, when immediately preceded by “TITAN” or “SUREBEAM,”

means any plan, policy, program (including, without limitation, any workers

compensation program), payroll practice, bonus, ongoing arrangement, contract,

trust, insurance policy or other agreement or funding vehicle providing

benefits to employees or Non-Employee Directors of TITAN or a TITAN Entity, or

SUREBEAM or a SUREBEAM Entity, as applicable. The term 

 

2

 

“Plan” includes, but is

not limited to, any Health and Welfare Plans and Medical Plans as further

specified herein.  The SUREBEAM Plans

other than the SUREBEAM 401(K) Plan are identified on Exhibit A to this Agreement.

1.18        TITAN 401(k) Plan means the TITAN 401(k) Plan, as in

effect from time to time.

1.19        TITAN Entity means any Person that is, at the

relevant time, an Affiliate of TITAN, except that the term “TITAN Entity” shall

not include SUREBEAM or a SUREBEAM Entity.

1.20        TITAN WCP means the TITAN Workers’ Compensation

Program, comprised of the various arrangements established by TITAN or a TITAN

Entity to comply with the workers’ compensation requirements of the states in

which TITAN or a TITAN Entity conducts business.

1.21        SEC means the United States Securities and Exchange

Commission.

1.22        LIABILITIES means any benefits payable to SUREBEAM

Individuals under a SUREBEAM Plan, and their dependents and beneficiaries, on

or after August 1, 2002 (July 1, 2002 with respect to the SUREBEAM Plans other

than the SUREBEAM 401(k) Plan), provided, however, Liabilities shall not

include any benefits or amounts payable to such individuals after the

Distribution Date as a result of the failure of TITAN (or any third party designated

by TITAN to provide services under the TITAN Plans) to comply with the terms of

the TITAN plans or applicable laws, regulations or agreements (including,

without limitation, the failure of the TITAN 401(k) Plan to be a “qualified

plan” under the Code.)

ARTICLE

2

GENERAL PRINCIPLES

2.1          No Change in Legal Responsibility. 

This Agreement is not intended to change SUREBEAM’s legal obligations

with respect to its present, future or former employees.

2.2          Assumption of Liabilities. 

SUREBEAM hereby assumes and agrees to pay, perform, fulfill and

discharge all Liabilities.

2.3          Retention of Liabilities. To the extent that SUREBEAM does not

assume a Liability, Titan will retain, discharge and pay such Liabilities.

2.4          Establishment of SUREBEAM Plans. Effective no later August 1, 2002,

SUREBEAM shall adopt, or cause to be adopted, for the benefit of current and

future employees of SUREBEAM, including SUREBEAM Individuals, the SUREBEAM

401(k) Plan.  Effective July 1, 2002, SUREBEAM

shall adopt the SUREBEAM Plans, excluding the SureBeam 401(k) Plan, for the

benefit of current and future employees of SUREBEAM and the SUREBEAM Entities,

including SUREBEAM Individuals.  Such

Plans are set forth on Exhibit A to this Agreement.

 

3

 

2.5          Terms of Participation in SUREBEAM Plans. The SUREBEAM Plans shall not provide

benefits that duplicate benefits already provided by the corresponding TITAN

Plans.  TITAN and SUREBEAM shall agree

on methods and procedures, including amending the respective Plan documents, to

prevent SUREBEAM Individuals from receiving duplicative benefits from the TITAN

Plans and the SUREBEAM Plans. With respect to SUREBEAM Individuals, each

SUREBEAM Plan shall provide that all service determinations that, as of the

date that such SUREBEAM Plan becomes effective, were recognized under each

corresponding TITAN Plan, if any, shall, as of such effective date and

thereafter, receive full recognition, credit, and validity and be taken into

account under such SUREBEAM Plan to the same extent as if such determinations

had occurred under such SUREBEAM Plan, except to the extent that duplication of

benefits would result. Nothing in this Section 2.4, or any other provision of

this Agreement, however, shall require SUREBEAM to adopt all of the types of

Plans sponsored by TITAN on the Distribution Date, or to provide that the terms

of a SUREBEAM Plan shall be the same or similar to the terms of any

corresponding TITAN Plan, or limit the ability of SUREBEAM to amend, modify or

terminate any SUREBEAM Plan

2.6          Termination of Participation. 

Effective as of the Distribution Date, SUREBEAM shall automatically

cease to be a participating company in all TITAN Plans.

ARTICLE

3

HEALTH AND WELFARE PLANS

3.1          COBRA.  Effective

Immediately as of July 1, 2002, SUREBEAM shall solely be responsible for

administering compliance with the health care continuation coverage

requirements of COBRA for the SUREBEAM Health and Welfare Plans.  SUREBEAM Individuals shall be permitted to

timely elect health care continuation coverage in accordance with the terms of

the SUREBEAM Health and Welfare Plans, and SUREBEAM and the SUREBEAM Health and

Welfare Plans shall accept and honor such timely and properly-made elections,

to the fullest extent required under the provisions of COBRA.

3.2          FMLA.

(a)           Effective Immediately as of July 1, 2002:

(i) SUREBEAM shall honor, and shall cause each SUREBEAM Entity to honor, all

terms and conditions of leaves of absence which have been granted to any

SUREBEAM Individual and all other employees of SUREBEAM and the SUREBEAM

Entities under the FMLA before July 1, 2002 by TITAN, SUREBEAM, or a SUREBEAM

Entity, including such leaves that are to commence after July 1, 2002; (ii)

SUREBEAM and each SUREBEAM Entity shall be solely responsible for administering

compliance with the FMLA with respect to their employees; and (iii) SUREBEAM

and each SUREBEAM Entity shall recognize all periods of service of SUREBEAM

Individuals and all other employees of SUREBEAM and the SUREBEAM Entities with

TITAN or a TITAN Entity, as applicable, to the extent such service is

recognized by TITAN for the purpose of eligibility for leave entitlement under

the FMLA; provided, that no duplication of benefits shall be required by the

foregoing.

 

4

 

(b)           As soon as administratively possible

after July 1, 2002, TITAN shall provide to SUREBEAM copies of all records

pertaining to the FMLA with respect to all SUREBEAM Individuals and all other

employees of SUREBEAM and the SUREBEAM Entities to the extent such records have

not been provided previously to SUREBEAM or a SUREBEAM Entity.

3.3          Workers’ Compensation Programs. 

TITAN and the TITAN WCP shall retain, discharge and pay all Liabilities

arising under the TITAN WCP, including, without limitation, all Liabilities

relating to claims that are, or have been, incurred under the TITAN WCP before

August 5, 2002 by SUREBEAM Individuals. 

SUREBEAM and the SUREBEAM WCP shall retain, discharge and pay all

Liabilities arising under the SUREBEAM WCP. 

Each party shall fully cooperate with the other with respect to the

administration and reporting of claims under the TITAN WCP and the SUREBEAM

WCP, to the extent that such cooperation is permitted under applicable law and

does not otherwise have a material adverse effect on the TITAN WCP or the

SUREBEAM WCP.

3.4          SureBeam Health and Welfare Plans. 

As of July 1, 2002, SUREBEAM shall have established SUREBEAM Health and

Welfare Plans listed on Exhibit A, and correspondingly, SUREBEAM shall have

ceased to be a participating company in Titan Health and Welfare Plans.  SUREBEAM shall be solely responsible for the

administration of the SUREBEAM Health and Welfare Plans, including the payment

of all employer-related costs in establishing and maintaining the SUREBEAM

Health and Welfare Plans, and for the collection and remittance of employee

premiums.  SUREBEAM acknowledges that it

will be billed for premiums attributable to its employees in accordance with

the Corporate Services Agreement dated August 4, 2000 until July 1, 2002.  No SUREBEAM employee may participate in any

TITAN Health and Welfare Plan after the Distribution Date.

On and after the

Distribution Date, SUREBEAM shall cause the SUREBEAM Health and Welfare Plans

to recognize and give credit for (A) all amounts applied to deductibles,

out-of-pocket maximums, co-payments and other applicable benefit coverage

limits with respect to which such expenses have been incurred by SUREBEAM

Individuals under the Titan health plans for the remainder of the calendar year

in which the Distribution Date occurs, and (B) all benefits paid to SUREBEAM

Individuals under the Titan health plans for purposes of determining when such

persons have reached their lifetime maximum benefits under the SUREBEAM Health

Plans.

ARTICLE

4

DEFINED CONTRIBUTION PLANS

4.1          SUREBEAM 401(k) Plan.

(a)           Plan Trust. 

Immediately as of August 1, 2002 or prior to that time, SUREBEAM shall

establish, or cause to be established, a trust qualified under Code Section

401(a), exempt from taxation under Code Section 501(a)(1), and forming part of

the SUREBEAM 401(k) Plan.  The TITAN

401(k) Plan and the SUREBEAM 401(k) Plan shall 

 

5

 

provide that no

distribution of account balances shall be made on account of SUREBEAM ceasing

to be an Affiliate of TITAN as of the Distribution Date.

(b)           Assumption of Liabilities and Transfer of

Assets.  On or before August 5, 2002: (i) the

SUREBEAM 401(k) Plan shall assume and be solely responsible for all Liabilities

to or relating to SUREBEAM Individuals under the TITAN 401(k) Plan other than

Liabilities arising prior to the transfer of assets described in the following

clause (ii) relating to breach of the trust or plan or failure of TITAN (or any

third party designated by TITAN to provide services under the TITAN PLANS) to

comply with applicable laws, regulations or agreements or the terms of a plan

(including, without limitation, the failure of the TITAN 401(k) Plan to be a

“qualified plan” under the Code); and (ii) TITAN shall cause the accounts of

the SUREBEAM Individuals under the TITAN 401(k) Plan, and the assets in such

accounts, which are held in trust as of August 2, 2002 to be transferred in

kind to the SUREBEAM 401(k) Plan, and the related trust, with the TITAN stock

to be transferred in kind and the remaining Plan assets to be liquidated and

transferred in cash,  and SUREBEAM shall

cause such transferred accounts and assets to be accepted in kind by such plan

and trust.  Both TITAN and SUREBEAM shall

use their reasonable best efforts to enter into such mutually satisfactory

agreements to accomplish such assumptions and transfers, and SUREBEAM shall use

its reasonable best efforts to enter into such agreements satisfactory to

SUREBEAM to provide for the maintenance of the necessary participant records,

the appointment of an initial trustee under the SUREBEAM 401(k) Plan, the

engagement of an initial recordkeeper under such plans, and the selection of

one or more investment managers to manage the assets of the SUREBEAM 401(k)

Plan.

(c)           Notice of Events Requiring Shareholder Vote. 

SUREBEAM will notify TITAN in advance of any events requiring a

shareholder vote or shareholder action with respect to a tender and provide

TITAN with a sufficient number of information packets to provide to all TITAN

Plan participants who hold SUREBEAM stock in their accounts.

ARTICLE

5

GENERAL AND ADMINISTRATIVE

5.1          Accounting Methodologies and Assumptions. For purposes of this Agreement, unless

specifically indicated otherwise, the value of the assets of a Plan shall be

the value established for purposes of relevant audited or unaudited financial

statements for the period ending on the date as of which the valuation is to be

made.

5.2          Sharing of Participant Information. TITAN and SUREBEAM shall share with

each all participant information reasonably necessary to effectuate the

transfers and other transactions hereunder.

5.3          Non-Termination of Employment; No Third-Party

Beneficiaries.

Except as expressly provided in this Agreement, no provision of this Agreement

or any other agreements entered into between TITAN or a TITAN Entity and

SUREBEAM or a SUREBEAM Entity relating to this Agreement shall be construed to

create any right, or accelerate entitlement, to any compensation or benefit

whatsoever on the part of any SUREBEAM Individual or other future, 

 

6

 

present or former

employee of TITAN, a TITAN Entity, SUREBEAM, or a SUREBEAM Entity under any

TITAN Plan or SUREBEAM Plan or otherwise; or to continue to be employed by or

return to employment with TITAN or a TITAN Entity, or SUREBEAM or a SUREBEAM

Entity.  Without limiting the generality

of the foregoing: (i) the Distribution shall not cause any employee to be

deemed to have incurred a termination of employment which entitles such

individual to the commencement of benefits under any of the TITAN Plans, with

the exception of the TITAN Deferred Compensation Plan, or any of the SUREBEAM

Plans; and (ii) except as expressly provided in this Agreement, nothing in this

Agreement shall preclude SUREBEAM, at any time after the Close of the

Distribution Date, from amending, merging, modifying, terminating, eliminating,

reducing, or otherwise altering in any respect any SUREBEAM Plan, any benefit

under any SUREBEAM Plan or any trust, insurance policy or funding vehicle

related to any SUREBEAM Plan.

5.4          Beneficiary Designations. 

As of July 1, 2002, SUREBEAM shall be responsible for ensuring that all

SUREBEAM Individuals complete all of the applicable beneficiary designation

forms for the SUREBEAM Plans.

5.5          Requests For Agency Rulings and Opinions.

(a)           Cooperation. SUREBEAM shall cooperate fully with

TITAN on any issue relating to the transactions contemplated by this Agreement

for which TITAN elects to seek a determination letter or private letter ruling

from the IRS, an advisory opinion from the DOL, or a no-action letter or other

ruling from the SEC. TITAN shall cooperate fully with SUREBEAM with respect to

any request for a determination letter or private letter ruling from the IRS,

an advisory opinion from the DOL, or a no-action letter or other ruling from

the SEC, with respect to any of the SUREBEAM Plans relating to the transactions

contemplated by this Agreement.

(b)           Life Insurance. To the extent the transfer or

allocation of all or a portion of any life insurance policies results in any

adverse tax or legal consequences, including without limitation (i) any finding

that such transfer results in the creation of a modified endowment contract

within the meaning of Code Section 7702A, a transfer for value within the

meaning of Code Section 101(a), or a lack of insurable interest for either

TITAN or SUREBEAM (or their respective trusts, if any), or (ii) multiple claims

for insurance proceeds, TITAN and SUREBEAM shall take such steps as may be

necessary to contest any such finding and, to the extent of any final

determination that such adverse tax or legal consequences will result, TITAN

and SUREBEAM shall make such further adjustments so as to place both parties in

the proportionate financial position that they each would have been in relative

to the other but for such adverse tax or legal consequences.

5.6          Fiduciary Matters. TITAN and SUREBEAM each acknowledge

that actions required to be taken pursuant to this Agreement may be subject to

fiduciary duties or standards of conduct under ERISA or other applicable law,

and no party shall be deemed to be in violation of this Agreement if it fails

to comply with any provisions hereof based upon its good faith determination

that to do so would violate such a fiduciary duty or standard.

 

7

 

5.7          Consent of Third Parties. If any provision of this Agreement is

dependent on the consent of any third party (such as a vendor or a union) and

such consent is withheld, TITAN and SUREBEAM shall use their reasonable best

efforts to implement the applicable provisions of this Agreement to the full

extent practicable. If any provision of this Agreement cannot be implemented

due to the failure of such third party to consent, TITAN and SUREBEAM shall

negotiate in good faith to implement the provision in a mutually satisfactory

manner. The phrase “reasonable best efforts” as used herein shall not be

construed to require the incurrence of any non-routine or unreasonable expense

or liability or the waiver of any right.

ARTICLE

6

MISCELLANEOUS

6.1          Effect if Distribution Does Not Occur. If the Distribution does not occur,

then all actions and events that are, under this Agreement, to be taken or

occur effective as of the applicable effective date, or otherwise in connection

with the Distribution, shall not be taken or occur except to the extent

specifically agreed by SUREBEAM and TITAN.

6.2          Relationship of Parties. Nothing in this Agreement shall be

deemed or construed by the parties or any third party as creating the

relationship of principal and agent, partnership or joint venture between the

parties, it being understood and agreed that no provision contained herein, and

no act of the parties, shall be deemed to create any relationship between the

parties other than the relationship set forth herein.

6.3          Affiliates. Each of TITAN and SUREBEAM shall cause

to be performed, and hereby guarantees the performance of, all actions,

agreements and obligations set forth in this Agreement to be performed by a

TITAN Entity or a SUREBEAM Entity, respectively.

6.4          Third Party Beneficiaries. The provisions of this Agreement are

solely for the benefit of the parties and are not intended to confer upon any

Person except the parties any rights or remedies hereunder, and there are no

third party beneficiaries of this Agreement and neither this Agreement shall

provide any third person with any remedy, claim, liability, reimbursement,

claim of action or other right in excess of those existing without reference to

this Agreement.

6.5          Notices. All notices or other communications under this

Agreement or any Ancillary Agreement shall be in writing and shall be deemed to

be duly given when (a) delivered in person or (b) deposited in the United

States mail or private express mail, postage prepaid, addressed as follows:

 

8

 

If to TITAN, to:                    THE TITAN CORPORATION .

3033 Science Park Road

San Diego, CA 92121

Attn: President

With a copy to Secretary

at the same address.

 

 

If to SUREBEAM, to:          SUREBEAM Corporation

9276 Scranton Road

San Diego, CA  92121

Attn: President

 

With a copy to Secretary

at the same

address.

 

Either party may, by

notice to the other party, change the address to which such notices are to be

given.

6.6          Severability. If any provision of this Agreement or

the application thereof to any Person or circumstance is determined by a court

of competent jurisdiction to be invalid, void or unenforceable, the remaining

provisions hereof or thereof, or the application of such provision to Persons

or circumstances or in jurisdictions other than those as to which it has been

held invalid or unenforceable, shall remain in full force and effect and shall

in no way be affected, impaired or invalidated thereby, so long as the economic

or legal substance of the transactions contemplated hereby or thereby, as the

case may be, is not affected in any manner adverse to any party. Upon such

determination, the parties shall negotiate in good faith in an effort to agree

upon such a suitable and equitable provision to effect the original intent of

the parties.

6.7          Modification and Amendment; Entire Agreement. This Agreement may not be modified or

amended except in a writing signed by the parties. This Agreement sets forth

the entire agreement of the parties hereto with respect to the subject matter

hereof and supersedes all prior agreements and understandings between the

parties with respect to the subject matter hereof.

6.8          Dispute Resolution. The parties acknowledge and agree that

this Agreement and any dispute hereunder shall be subject to and governed by

the following dispute resolution procedure: If any question shall arise as to

the interpretation of this Agreement as to the rights, duties or liabilities of

either party hereunder or as to any act, matter or thing arising out of or

under this Agreement which cannot be resolved by amicable agreement, the same

shall be referred to final and binding arbitration held in San Diego, California.  American Arbitration Association (“AAA”)

rules relating to commercial arbitration will apply.  The parties will jointly select a single arbitrator from an AAA

panel.  If the parties cannot agree on

an arbitrator, they will each select an arbitrator and the two arbitrators so

selected will pick the arbitrator who will decide the dispute.  The arbitrator will not have the authority

to award punitive, indirect, special or consequential damages. Arbitration awards

are not appealable and may be enforced through any court of competent

jurisdiction.  The arbitrator must apply

California law and has exclusive 

 

9

 

authority to resolve any

dispute relating to the interpretations, applicability or formation of this

Agreement.  Except as to obtaining

injunctive relief, the parties waive all rights to adjudication in a court of

law and to a venue other than San Diego, CA.  

Each party shall be responsible for the payment of its own attorney’s

fees, and the parties shall split equally the costs of the arbitration.

6.9          Governing Law. To the extent not preempted by

applicable federal law, this Agreement shall be governed by, construed and

interpreted in accordance with the laws of the State of California, irrespective

of the choice of laws principles of the State of California, as to all matters,

including matters of validity, construction, effect, enforceability,

performance and remedies.

In Witness Whereof, the parties have caused this Employee

Benefits Agreement to be duly executed as of the day and year first above

written.

	

  THE TITAN CORPORATION:

  
	

   

  
	

  By:

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  
	

  SUREBEAM CORPORATION:

  
	

   

  
	

  By:

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  

 

10

 

EXHIBIT A

 

SUREBEAM BENEFIT PLANS

 

Effective

July 1, 2002

 

Blue Cross HMO/PPO

Fortis Dental

VSP Vision Plan

MHN EAP

Standard Insurance

Life

Supplemental Life

Short-term

Disability

Long-term

Disability

Reliance Standard

Business Travel

Accident

Igoe & Company

Flexible Spending

Accounts

Cobra

Administration

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]