***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT is made between Square-X Xxxxxx,
Inc., a Delaware corporation ("Square-H") having an address at 0000 Xxxx Xxxxxx,
Xxx Xxxxxxx, XX 00000-0000, and SureBeam Corporation, a Delaware corporation
("SureBeam") having a principal place of business at 0000 Xxxxxxx Xxxx Xxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000.
RECITALS
WHEREAS, SureBeam is engaged in the business of designing,
manufacturing, selling, installing, operating and servicing product
disinfestation, pasteurization and sterilization equipment and systems,
including electron beam and x-ray equipment and systems; and
WHEREAS, Square-H is engaged in the business of manufacturing
meat products.
WHEREAS, Square-H and SureBeam desire to pursue a strategic
alliance arrangement whereby the parties will develop and operate a food
irradiation facility in Vernon, California; and
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, Square-H and SureBeam agree as follows:
ARTICLE I
DEFINITIONS
As used herein:
1.1 "AGREEMENT" shall mean, collectively, this Strategic
Alliance Agreement between Square-H and SureBeam, including the Services
Agreement (as hereafter defined) and any and all written attachments, exhibits
and amendments hereto or thereto.
1.2 "CONFIDENTIAL INFORMATION" shall mean any commercial
or technical information relating to SureBeam, including its subsidiaries and
parent company, or Square-H, which is proprietary to either party and not
generally known to the public. Confidential Information includes, but is not
limited to, know-how, trade secrets, material eligible for copyright protection,
marks, research, development or commercial information, information capable of
being embodied in a patent application, or any international equivalents
thereof. Confidential Information does not include information that the party
receiving that information can establish (a) is in the public domain at the date
of disclosure; (b) becomes public knowledge during the term of this Agreement
through no fault of the receiving party; (c) was in its possession prior to
disclosure by the disclosing party, providing such prior disclosure can be
adequately substantiated by documentary evidence antedating the disclosure by
the other party; (d) was independently developed by the receiving party; or (e)
was obtained from a third party not in breach of any agreement of
confidentiality in favor of SureBeam.
1.3 "INTELLECTUAL PROPERTY RIGHTS" shall mean any and all
intellectual property rights relating to the System or the SureBeam Improvements
including, without limitation, any patents, patent applications, copyrights,
trademarks, service marks, trade secrets, and know-how.
1.4 "SERVICES AGREEMENT" shall mean the SureBeam
Corporation Irradiation Process Services Agreement entered into concurrently
herewith.
ARTICLE II
THE FACILITY
2.1 CONSTRUCTION OF FACILITY. Square-H or, more probably,
an entity to be formed by Square-H (in the alternative, the "Developer") will
construct the "Shell" of a building suitable for containing the shield,
material-handling equipment and other fixtures and equipment to be constructed
by SureBeam, as hereafter provided (the "SureBeam Improvements" and collectively
with the Shell, the "Facility") on the parcel of land located at 0000 X. Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxx and depicted on Exhibit A hereto (the "Parcel"). The
Facility will offer food irradiation services utilizing SureBeam's patented
e-beam and x-ray technologies and will contain a two-line system capable of
treating approximately 250,000 tons of product annually (collectively, the
"System").
2.1.1 PLANS AND SPECIFICATIONS. Square-H shall
cause the plans and specifications for the Shell to be prepared by the Developer
in conjunction with the plans and specifications for the SureBeam Improvements
and such plans and specifications shall be subject to SureBeam's approval. The
plans
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and specifications for the SureBeam Improvements will be prepared by SureBeam,
in conjunction with the plans and specifications for the Shell and such plans
and specifications shall be subject to the Developer's approval. In that
context, SureBeam shall provide to Square-H as soon as practicable its
preliminary plans and specifications for the SureBeam Improvements to assist
Square-H in determining what should constitute the Shell and what should
constitute the remainder of the Facility. Neither SureBeam nor the Developer
will unreasonably withhold or delay its approval of the other's plans and
specifications.
2.1.2 CONSTRUCTION. SureBeam acknowledges that the
Developer may construct the Shell as a part of a larger complex that would also
be suitable for the development and operation of a related business. (All such
improvements, together with the Parcel, are sometimes hereafter referred to as
the "Complex.") In that context, the plans and specifications for the Shell and
for the Facility would be reviewed and approved in conjunction with the
anticipated ingress, egress, parking and other circulation elements of the
Complex to be used by SureBeam, an operator of the related business and the
customers and invitees of each, and the Developer and SureBeam would cooperate
with each other in order to insure that the Complex would be built in a manner
designed to minimize the aggregate costs of construction. In any event, the
parties may well agree that portions of the SureBeam Improvements will be
constructed prior to the construction of portions of the Shell. The Developer
shall, at SureBeam's request and at SureBeam's sole cost and expense through
contracts among SureBeam, the Developer and third-party contractors and
suppliers, including Xxxxxxxx Construction Services, Inc., an affiliate of the
probable Developer, construct the SureBeam Improvements concurrently with the
construction of the remainder of the Facility.
2.1.3 ENTITLEMENTS. Square-H will obtain all
entitlements for the construction of the Shell and construct the Shell in
accordance with all applicable regulations. SureBeam will obtain all
entitlements for the construction and operation of the Facility, as a whole,
and, unless SureBeam has commissioned the Developer to do so as contemplated
in paragraph 2.1.2, above, construct the SureBeam Improvements and, in any
event, operate the Facility, in each instance in accordance with all
applicable regulations.
2.2 LEASE. The Developer and SureBeam will enter into,
and the obligations of Square-H and SureBeam hereunder are conditioned upon the
Developer and SureBeam entering into, a lease of the SureBeam Facility on the
following terms and conditions:
2.2.1 PARTIES. The Developer, as lessor, and
SureBeam, as tenant, and their respective successors and assigns; provided,
however, that the
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Lease will contain customary restrictions on the right of the tenant to assign
the Lease or sublease the Facility.
2.2.2 TERM. The term of the Lease shall
commence on the "Commencement Date" which shall be the first to occur of (i)
the commencement of business from the Facility and (ii) an outside date which
will be negotiated to incentivize each party to fulfill its construction and
development obligations as soon as practicable and which will presumptively
be based upon the date on which the Developer obtains a building permit for
the construction of the Shell. The term shall run for such time as may be
necessary to amortize the initial financing for the Complex, currently
estimated to be ten (10) years. SureBeam will have an option to extend the
term for ten (10) years at the then fair market value of the SureBeam
Facility and the Parcel or, if applicable, the right to use the common areas
of the Complex, exclusive, however, in either instance of the SureBeam
Improvements.
2.2.3 RENT.
(A) The rent shall be negotiated and
may be based upon the costs to the Developer of acquiring the Parcel and
developing the SureBeam Facility and, if applicable, giving effect to the
costs attributable to the related business. Rent shall be net of insurance,
taxes and operating expenses with respect to the Shell, the Facility and,
unless the Complex is constructed, the Parcel.
(B) If applicable, SureBeam shall pay,
as additional rent, the costs and expenses of the Developer relating to the
common areas of the Complex which are used or usable by SureBeam in the
operation of the Facility. Examples of such expenses are property taxes
attributable to the Parcel, the costs of maintaining, repairing and operating
the common areas of the Complex, management fees and the costs of providing
security services to the Complex. SureBeam acknowledges some or all of such
services may be provided by Square-H in conjunction with its operation of an
adjacent facility. In essence, the Lease will contain appropriate provisions
providing for the identification and allocation of all costs and expenses
properly attributable to the construction and/or operation of the Facility.
2.3.4 OTHER TERMS AND CONDITIONS. The Lease will
contain other terms and conditions consistent with an arm's length "build to
suit" lease between an institutional investor as the lessor and an industrial
operator as the tenant.
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ARTICLE III
STRATEGIC ALLIANCE
3.1 STRATEGIC ALLIANCE. The parties will use their
respective best efforts, consistent with the terms, covenants and conditions of
this Agreement, to maximize the profitability and success of the SureBeam
Facility.
3.2 PRODUCTS. All products currently or hereafter
marketed directly by Square-H which (i) have been approved by the FDA for
electronic pasteurization and (ii) have been successfully tested by SureBeam
shall be treated at the Facility. This volume is currently estimated to be
[...***...] pounds per year. All such products shall be treated as soon as
possible following the delivery thereof to the Facility and in any event
within [...***...] following such delivery. Square-H shall use reasonable
commercial efforts to comply with such procedures as SureBeam may establish,
with Square-H's prior approval, which such approval shall not be unreasonably
withheld or delayed, for scheduling and delivery of products to be treated at
the Facility.
3.3 TERM. The term of this Agreement shall commence as of
the commencement of business from the facility and shall thereafter be
commensurate with the term of the Lease, including any extension thereof through
the exercise of the option provided in Section 2.2.2 hereof; subject, however,
to technological obsolescence.
3.4 PRICING. Square-H shall pay [...***...] percent
([...***...]%) of the [...***...] price per pound charged by SureBeam for
treating comparable products at any service facility operated by SureBeam in
the United States, including the Facility, during the [...***...] of
operation; [...***...] percent ([...***...]%) of such price during [...***...]
; and [...***...] percent ([...***...]%) of such price thereafter. SureBeam's
pricing shall include all rebates and discounts and shall be based upon
products F.O.B. at the Facility. If at any time there is no comparable price,
the parties shall negotiate in good faith an appropriate price, taking into
account the discount vis-a-vis SureBeam's other pricing otherwise applicable
hereunder. Payment terms for processing shall be net thirty (30) days from
receipt of an invoice from SureBeam.
3.5 ROYALTY. Through its entry into this Agreement, and
in particular, its commitment to have its products treated at the Facility,
Square-H has assisted SureBeam in its marketing efforts. Square-H shall
otherwise use reasonable commercial efforts to further SureBeam's efforts to
maximize the volume of products processed at the SureBeam Facility. SureBeam
will pay to Square-H [...***...] ($[...***...]) per pound on all products
of [...***...] processed from the Facility and such royalty shall be paid
regardless of whether or not, or the volume of, products currently or hereafter
marketed by Square-H are
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* Confidential Treatment Requested
processed at the Facility. The royalty shall be paid within thirty (30) days
following the expiration of each calendar month of the term.
3.6 TESTING. Treatment of Square-H products is subject to
SureBeam testing each such product and demonstrating to the reasonable
satisfaction of Square-H that the irradiation treatment will not result in the
degradation, over the anticipated shelf life of the particular product, of the
color, texture, taste or any other sensory characteristic of each such product.
The time frames and procedures used by SureBeam for such testing shall be
established pursuant to the Services Agreement. Each product successfully tested
to Square-H's satisfaction shall thereafter be treated in accordance with the
specifications and procedures used in such testing. Such specifications and
procedures shall not be altered with respect to any product to be treated
hereunder without the prior written consent of Square-H.
ARTICLE IV
SYSTEM OPERATION AND MAINTENANCE
4.1 OPERATION OF THE SYSTEM. SureBeam will be solely
responsible for operating the System during the term of this Agreement. Such
operation shall be conducted in accordance with the Services Agreement and in
accordance with all applicable regulations and in a manner consistent with good
manufacturing practices. Without limiting the generality of the foregoing,
SureBeam shall properly calibrate all equipment and maintain complete and
accurate records of all of its treatments at the Facility. SureBeam shall accept
packaged product into the facility labeled as having been electronically
pasteurized and, in addition to any requirements of any applicable regulation,
certify to Square-H and/or any customers of Square-H designated by Square-H that
the product has in fact been electronically pasteurized in accordance with all
applicable regulations and the specifications and procedures applicable thereto
and approved by Square-H hereunder.
4.2 MAINTENANCE. The Lease will provide for SureBeam
to maintain the SureBeam Improvements in good condition and repair, including
through upgrades and/or replacements necessary for the System to maintain a
competitive advantage vis-a-vis competing processes, all at SureBeam's sole
cost and expense. The Lease will further provide for the Developer to
maintain the exterior of the Facility and the common areas, with the costs
thereof, including the amortized portion of capital expenditures required to
comply with applicable regulations or which are designed to reduce other
operating costs, apportioned among SureBeam and other users of the Project.
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4.3 SYSTEM OWNERSHIP. SureBeam is and will remain the
owner of the System. Upon the expiration or sooner termination of this
Agreement, SureBeam shall remove the SureBeam Improvements from the Facility and
repair any damage to such Facility caused by such removal; provided, however,
should SureBeam exercise its option to extend the term of the Lease for an
additional ten (10) years, that SureBeam will not be responsible for removing
the SureBeam Improvements from the Facility and will not be responsible for the
repair of any damage to the Facility caused by their removal by anyone.
ARTICLE V
INTELLECTUAL PROPERTY
5.1 OWNERSHIP RIGHTS. The parties acknowledge and agree
that SureBeam is and shall remain the owner of any and all Intellectual Property
Rights prior to and during the term of this Agreement and thereafter. Nothing in
this Agreement shall be construed as a transfer or a license of such
Intellectual Property Rights to Square-H or to any third party under any
circumstances.
ARTICLE VI
CONFIDENTIAL INFORMATION
6.1 NON-DISCLOSURE. During the term of this Agreement,
each party will necessarily disclose some of its Confidential Information to the
other. Square-H and SureBeam, on behalf of itself and its officers, employees,
contractors and agents, agree to keep all such Confidential Information
confidential and not disclose such information directly or indirectly to any
third party or use it for any purpose without prior written authorization from
an authorized representative of the other party. Square-H and SureBeam 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 the respective officers, employees,
contractors and agents of Square-H and SureBeam.
6.2 OWNERSHIP. The property rights in any and all
Confidential Information disclosed from either party to the other pursuant to
this Agreement shall, subject to any rights of any other owner, rest with the
disclosing party.
6.3 REMEDIES. Each of the parties acknowledge and agree
that remedies at law may be inadequate to protect it against any actual or
threatened breach of this Article VI and, without prejudice to any other rights
and remedies otherwise available to them, the panics agree that each of them
shall be entitled to
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equitable relief, including injunction, upon proper application to any court
having jurisdiction over such matters.
ARTICLE VII
TERM AND TERMINATION
7.1 BREACH OR NON-PERFORMANCE. A breach or material lack
of performance under the terms of this Agreement by either party, shall be
sufficient reason for the other party to terminate this Agreement; provided,
however, that a party shall notify the other in writing of any such breach or
non-performance and shall allow that party a reasonable period of time, not to
exceed. thirty (30) days, to remedy such breach or non-performance. If no
satisfactory remedy is forthcoming within such thirty (30) day period, this
Agreement may be terminated by the non-breaching party without further notice as
of the end of such thirty (30) day period. A breach by either party of Article
VI may result in immediate termination by the non-breaching party upon written
notice to the other.
7.2 MUTUAL CONSENT. This Agreement may be terminated at
any time by the mutual written consent of both parties.
7.3 SURVIVING PROVISIONS. The rights and obligations of
the parties with respect to Articles V, VI, VIII and IX shall survive the
expiration or termination of this Agreement.
ARTICLE VIII
LIABILITY
8.1 LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER OR ANY THIRD PARTY UNDER THIS AGREEMENT FOR ANY INDIRECT, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND, UNDER ANY CIRCUMSTANCE, EVEN IF
IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. For purposes of this
Article VIII, loss or degredation of Square-H products attributable to the
failure of SureBeam to timely treat such products in the manner contemplated
hereunder shall be considered direct damages.
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ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. Each party (the Indemnifying Party)
shall indemnify, defend and hold the other (the "Indemnified Party") harmless
from and 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, officers, agents,
contractors or employees.
ARTICLE X
GENERAL PROVISIONS
10.1 RECORDS. Both parties agree to keep books and records
which accurately reflect the activities covered by this Agreement. These records
will be maintained during the term of this Agreement and for a period of three
years thereafter. These records will be open to inspection by the other party,
or independent auditors representing the other party, given a reasonable
notification period. Any expenses resulting from an audit shall be borne by the
party initiating the audit.
10.2 ASSIGNMENT. Neither this Agreement nor any benefits,
rights or obligations derived hereunder shall directly or indirectly be
assigned, transferred, disclosed or shared in whole or in part by either party
without the prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that either party may assign this
Agreement to a subsidiary, parent, or successor company, including a purchaser
of all or substantially all of such party's assets, upon written notice to the
other without such consent.
10.3 PUBLICITY AND DISCLOSURE. Neither party shall publish
or otherwise disclose to any third party the existence or results of any
research specifically funded by SureBeam in connection with the use of the
System without the prior written consent of the other party, which consent shall
not be unreasonably withheld or unless required by applicable regulation. A
minimum notice of thirty (30) calendar days will be required for notification.
The failure of a party to respond to such notification within the thirty (30)
day period shall be deemed consent by such party.
10.4 ENTIRETY AND AMENDMENTS. This Agreement, including
the Services Agreement and any attachments, exhibits or amendments hereto or
thereto, together with the Lease, when executed, and any written attachments,
exhibits or
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amendments thereto, represents the entire understanding between the parties with
respect to the subject matter hereof. No part of this Agreement may be amended,
modified, revoked or waived except by a writing signed by both parties.
10.5 SEVERABILITY. In the event that any term, covenant,
condition, provision or agreement contained in this Agreement is held to be
invalid, void or otherwise unenforceable, the fact that such term, covenant,
condition, provision or agreement is invalid, void, or otherwise unenforceable
shall in no way affect the validity or enforceability of any other term,
covenant, condition, provision or agreement contained in this Agreement.
10.6 FORCE MAJEURE. If either party is unable to carry out
its obligations under this Agreement 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,
fires, 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.
10.7 NOTICES. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
addresses set forth above (or at such other address for a party as shall be
specified by like changes of address).
10.8 GOVERNING LAW. This Agreement shall be governed and
construed in all respects in accordance with the laws of the State of
California.
10.10 ARBITRATION. With the exception of obtaining
injunctive relief, as set forth in Article V, 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 if
initiated by Square-H or the Developer, or Los Angeles County, California, if
initiated by SureBeam. 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
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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, with the exception of granting injunctive relief, as
provided in Article V, has exclusive 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, California or Los Angeles
County, California, as the case may be. 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.
10.11 GUARANTIES. Titan Corporation hereby guaranties each
and all of SureBeam's and its affiliates' obligations under this Agreement and
under the Lease. SureBeam understands and acknowledges that Square-H will
finance the development of the Facility and/or the Complex in partial reliance
upon the Lease and the guaranty thereof by Titan. In furtherance of such
guaranty, Titan Corporation shall, at the request of Square-H, execute and
deliver to the Developer and Square-H a guaranty in the form of Exhibit B hereto
with such changes therein as may reasonably be requested by any first mortgage
lender providing financing for the Facility.
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IN WITNESS WHEREOF, The parties hereto have caused this Strategic
Alliance Agreement to be executed as of the day and year last written below.
SUREBEAM CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------------
Title: President & C.E.O.
---------------------------------------------
Date: 11/28/00
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SQUARE-X XXXXXX, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Title: President/CEO
---------------------------------------------
Date: 29 NOV 2000
----------------------------------------------
THE TITAN CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------------
Title: SR. V.P. Titan Corporation
---------------------------------------------
Date: 11/28/00
----------------------------------------------
Signature Page to Strategic Alliance Agreement
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