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CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.8.(B)(4),
200.83 AND 230.406
JOINT
VENTURE ARRANGEMENT
AND
AGREEMENT FOR
PURCHASE OF AN
ELECTRON BEAM SYSTEM
BY AND AMONG
SUREBEAM CORPORATION,
(A WHOLLY OWNED SUBSIDIARY
OF THE TITAN CORPORATION)
AND
ZERO MOUNTAIN, INC.
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GENERAL PRINCIPALS OF THE AGREEMENT
1. ZM and SB will form a separate corporation, Zero Mountain SureBeam ("ZMS".
ZM and SB will each contribute $1M to the new Company and financing will
be obtained for the remaining balance of the project.*
2. ZMS will purchase from SB an electron beam system, ("the E-Beam system" to
include X-Ray) in accordance with SB's technical proposal and the terms and
conditions of SB's Standard Equipment Purchase Agreement, for the purpose
of pasteurizing food products.
3. ZMS will coordinate the various aspects of the E-Beam project with Norman
Aiello.
4. The E-Beam system will be located in Russellville, AR as determined by ZM.
5. Once this Agreement is executed, and the E-Beam project is successfully
completed, as evidenced by ZMS's acceptance thereof, the equity structure
of ZMS will be:
- ZM - 80.1%
- SB or designee - 19.9%
Profit and losses of ZMS along with any distributions made will be
allocated to SB and ZM in accordance with the parties' respective equity
ownership interests.
The ZMS shareholders will be restricted as to any sale or transfers of
their ownership interest in ZMS as follows:
The ZMS owners have the right of first refusal to acquire any equity
interest from another ZMS shareholder who wishes to sell its interest.
The selling ZMS shareholder's equity interest shall be sold equally to the
other ZMS shareholders who wish to acquire such interest. If none of the
ZMS shareholders wish to purchase the selling shareholder's equity
interest, then the selling shareholder may sell its interest to
[...***...].
It is the intent of SureBeam to allow "ZMS" [...***...] to provide Food
Pasteurization services to [...***...].
* SB acknowledges that Zero Mountain, Inc. currently maintains a
financial relationship with Metropolitan Life and all financial
covenants must remain consistent with existing financial
encumbrances.
Under any of the above scenarios, the equity sale price will be
determined as follows:
- Mutual agreement between the buying and selling parties
Or, if that fails
- A valuation will be made by an Independent public accounting
firm, the cost of which valuation will be split by the buying and
selling party.
In the event the selling shareholder sells its shares to [...***...],
the non-participating shareholders must first give consent to such
[...***...] as well as consent to the price of the shares to be sold.
*Confidential Treatment Requested
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6. The estimated cost and the time line for this initial project completion is
contained in SureBeam Equipment Purchase Contract or latest version.
Completion is dependent on both parties. Site costs and all other
operational costs related to the E-Beam system are the responsibility of
ZMS.
7. SB represents that it will use good manufacturing practices in accordance
with applicable FDA and / or USDA regulations, and requirements. SB agrees
to maintain and properly calibrate all equipment and maintain appropriate
records, and SureBeam agrees to use appropriately trained operators for
each aspect of the processing, if so separately engaged to perform this
service by ZMS. Accordingly, SB agrees to operate the E-Beam system, for a
mutually agreed to fee, if so desired by ZM.
8. All patents held by Titan Corporation shall be protected by ZM and ZMS to
the maximum extent possible.
9. ZM and SB agree to work together for the success of ZMS. ZMS will be
responsible for paying all of the costs and expenses related to the E-Beam
project. SB will work with ZM to obtain financing for this joint venture
for the shield and equipment.
10. Upon completion of the E-Beam system for ZMS, SB will acquire a 19.9%
equity interest in ZMS for $1.0 million. The 19.9% equity interest received
by SB will be dilution protected. In other words, in no case will SB's
ownership in ZMS be reduced below 19.9%, unless SB, in its sole discretion,
expressly agrees in writing to such reduction. If additional investment is
required to fund ZMS in the future, thereby changing the equity ownership
percentage, SB will have the option to participate or not. If ZMS issues
additional equity, including, without limitation, warrants and stock
options, to parties other than SB, SB will concurrently be issued
additional equity so that SureBeam's 19.9% ownership interest in ZMS is
preserved. Only in the event of an initial public offering of ZMS stock
would SB be diluted, on an equal basis, pro rata, as ZM. ZM will provide
the land and building where the system will be located for their equity
interest share.
Larry A. Oberkfell Mark Rumsey
President & CEO President & CEO
Titan SureBeam Corporation Zero Mountain, Inc.
Name: /s/ Larry A. Oberkfell Name: /s/ Mark Rumsey
----------------------------- -----------------------------
Date: 8/8/00 Date: 8/8/00
----------------------------- -----------------------------
SureBeam Corporation Zero Mountain, Inc.
As Amended
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STANDARD TERMS AND CONDITIONS
CONFIDENTIALITY
We anticipate Customer, SureBeam and the Titan Corporation may learn
confidential and proprietary information about each other. Customer, SureBeam
and Titan on behalf of itself and its officers, employees and agents, agrees to
keep all such proprietary information confidential and not disclose such
information directly or indirectly to any third party or use it for any other
purpose without prior written authorization from an authorized representative of
other party. These confidentiality requirements will not apply to the following:
(1) information Titan, SureBeam or Customer knew prior to signing this
Agreement; (2) information that is publicly known or becomes publicly known
through no breach of this Agreement, (3) information that rightfully obtained by
Titan, SureBeam or Customer from any third party who has no duty of
confidentiality and (4) information that is independently developed by Customer
without reliance upon the information provided by Titan and/or SureBeam. Titan,
SureBeam and Customer agree to take all necessary steps to protect confidential
information from distribution or disclosure. The obligations of this paragraph
continue in perpetuity after this Agreement terminates and apply to officers,
employees and agents of Titan, SureBeam and Customer.
LIABILITY AND INDEMNIFICATION
Each party (the Indemnifying Party) shall indemnify, defend and hold the other
(the "Indemnified Party") harmless against all actions, proceedings, claims,
demands, suits, outlays, damages, or expenses, including reasonable attorneys
fees and other costs that may be assessed against the Indemnified Party, arising
out of the acts or omissions of the Indemnifying Party, its representatives,
agents or employees. Each party's total liability under this Agreement shall be
the total amount payable under this Agreement.
IN NO EVENT SHALL EITHER PARTY BE RESPONSIBLE TO THE OTHER OR ANY THIRD PARTY
FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ARBITRATION
We will submit all disputes we cannot resolve ourselves to final and binding
arbitration held in San Diego, California. American Arbitration Association
("AAA") rules relating to commercial arbitration will apply. We agree jointly to
select a single arbitrator from an AAA panel. If we cannot agree on an the
arbitrator, we will both select an arbitrator and the two arbitrators so
selected will pick the arbitrator who will decide the dispute. We agree the
arbitrator will not have the authority to award punitive or consequential
damages. Arbitration awards are not appealable. We can each enforce them through
any court of court of competent jurisdiction. The arbitrator must apply Delaware
law and has exclusive authority to resolve any dispute relating to the
interpretations, applicability or formation of this Agreement. We 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.
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WARRANTY
SureBeam warrants that it will perform the Pasteurization services in a
professional manner and the System will deliver tie agreed upon dosage. The
above warranties are in lieu of all other warranties, express or implied.
SureBearn specifically disclaims the implied warranties of merchantability and
fitness for a particular purpose.
FORCE MAJEURE
If either party is unable to carry out its obligations under this Agreement
excluding the obligation to pay money, because of force majeure, the parties
agree to suspend performance until the event creating the force majeure is over.
For this purpose force majeure includes storms, floods, earthquakes, other acts
of God, the acts of civil or military authority, quarantine restrictions, riots,
strikes, fires, lockouts, other labor disputes, commercial impossibility,
explosions and bombings, the inability to obtain permits or other governmental
approvals, or because of any other cause or causes beyond the reasonable control
of the party seeking to be excused from performance. The party unable to perform
agrees to resume performance of its obligations upon the termination of the
event or cause, which excused performance.
MISCELLANEOUS PROVISIONS
We agree we will interpret and enforce this Agreement under Delaware law. We
will interpret it in accordance with its plain meaning and not strictly for or
against either of us. We agree we will not consider any part of this Agreement
waived, amended or modified unless that waiver, amendment or modification is in
writing and signed by both parties. We agree we cannot change the terms of this
letter without written consent of both parties. If there is a discrepancy
between the terms of any purchase order or invoice and any of the terms in this
letter agreement, the terms of this letter agreement will prevail. This
Agreement is binding upon and inures to the benefit of the parties and their
respective successors in interest. If a court or arbitrator determines any
portion of this Agreement is not valid, or enforceable, we agree the remaining
parts of the Agreement remain valid. We agree this Agreement contains our entire
understanding of the matters set forth in this document. It supersedes all other
prior written and oral agreements and understandings of such matters. We both
acknowledge we have the authority to sign this Agreement. In addition, we
acknowledge that we have not relied on any written or oral representations other
than those contained in this Agreement. We agree any notices required under this
Agreement we would make in writing and send by first class certified mail,
personal delivery or expedited overnight carrier. Unless either one of us
notifies the other to the contrary, we will use the addresses at the beginning
of this Agreement for notice purposes.
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