EXHIBIT 10.33
CONTRACT FOR PURCHASE AND SALE OF EQUIPMENT AND SERVICES
This CONTRACT FOR PURCHASE AND SALE OF EQUIPMENT AND SERVICES (the
"CONTRACT") is made and entered into as of February 11, 2002 (the "EFFECTIVE
DATE") by and between THE TITAN CORPORATION, a Delaware corporation (the
"BUYER"), and SUREBEAM CORPORATION, a Delaware corporation (the "SELLER").
RECITALS:
A. Seller is engaged in the business of designing, manufacturing,
selling, installing, operating and servicing food irradiation or pasteurization
systems, including electron beam and x-ray equipment and systems.
B. Buyer's Affiliate, Titan Scan Technologies Corporation is engaged in
the business of selling, operating and servicing medical equipment sterilization
systems and providing medical equipment sterilization services (the "TITAN SCAN
BUSINESS").
C. Buyer is engaged in the business of selling, operating and servicing
systems for irradiating mail to kill anthrax and other biological agents for the
United States Postal Service and for other customers (the "MAIL BUSINESS").
D. Buyer either directly or through one or more Affiliates may establish
one or more other businesses that use electron beam and x-ray equipment and
systems in applications other than treatment of food, flowers or animal hides
(the "OTHER BUSINESSES").
E. Buyer or its Affiliates have agreed to purchase from Seller, and
Seller has agreed to sell to Buyer or its Affiliates, linear accelerator
equipment and related equipment, material handling equipment, safety equipment,
dosimetry system, and a real-time information and control systems as more
particularly described on EXHIBIT A hereto configured as specified in each
Statement of Work, as such equipment and systems may be improved or enhanced by
Seller from time to time, including through the introduction of new models,
(collectively, "SYSTEMS") and specified services to be used by Buyer or its
Affiliates in connection with the Titan Scan Business, Mail Business or Other
Businesses on the terms and conditions contained in this Contract.
NOW, THEREFORE, in consideration of the foregoing recitals, which .are
hereby incorporated by reference herein, the covenants and conditions contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
(a) "AFFILIATE" means any entity that directly or indirectly Owns, is
Owned by or is under common Ownership, with a party to this Contract, where
"Owns" or "Ownership" means direct or indirect possession of at least fifty
percent of the outstanding voting securities of a corporation or a comparable
equity interest in any other type of entity; provided, however, that
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Affiliates shall only include those entities that have expressly accepted this
Contract and that have agreed to be bound by all terms and conditions of this
Contract. Seller shall not be required to sell Systems or Integration Services
to any Affiliate of Buyer that does not manifest such acceptance of all
obligations applicable to Buyer in a writing reasonably satisfactory to Seller.
(b) "CHANGE ORDER" shall have the meaning ascribed to it in Section 2(d).
(c) "CHANGES" shall have the meaning ascribed to it in Section 2(d).
(d) "CONFIDENTIAL AND PROPRIETARY INFORMATION" means confidential
information of a party relating to any designs, know-how, inventions, technical
data, ideas, uses, processes, methods, formulae, research and development
activities, work in process, or any scientific, engineering, manufacturing,
marketing, business plan, financial or personnel matter relating to the
disclosing party, its present or future products, sales, suppliers, customers,
employees, investors or business, whether in oral, written, graphic or
electronic form (which is marked confidential or acknowledged as being
confidential prior to disclosure). If the Confidential and Proprietary
Information is disclosed orally or visually, it shall be identified as such at
the time of disclosure and confirmed in writing by the disclosing party within
thirty (30) days of disclosure. Confidential and Proprietary Information shall
also include any other information in oral, written, graphic or electronic form
which, given the circumstances surrounding such disclosure, would be considered
confidential.
(e) "COST OF SERVICES" means Seller's actual direct cost of providing
Services under this Contract or any Statement of Work as determined under GAAP,
PLUS Seller's direct cost of complying with Buyer's compliance standards as set
forth in Section 10 below that are applicable to the particular Service, PLUS
Seller's Insurance Costs (as defined in Section 14) allocated for each Statement
of Work between Cost of Services and Cost of Manufacturing based upon the
relative direct cost incurred for each such Statement of Work and allocated
among Statements of Work on a monthly basis in proportion to total direct costs
on all projects for such month, PLUS (i) in the case of Services related
specifically to medical sterilization equipment, an allocation of Seller's
general and administrative expenses (other than selling, marketing, accounting,
finance, or advertising expenses or expenses of the office of the chief
executive officer of Seller) directly attributable to performing such Services
under this Contract or any Statement of Work, as determined under GAAP, or (ii)
in the case of Services related specifically to all Systems other than medical
sterilization equipment, an allocation of Seller's general and administrative
expenses (other than selling, marketing, or advertising expenses or expenses of
the office of the chief executive officer of Seller) directly attributable to
performing such Services under this Contract or any Statement of Work, as
determined under GAAP. In no event shall any item of Seller's cost be counted
more than once in determining Seller's Cost of Services.
(f) "DELIVERY LOCATION" shall have the meaning ascribed to it in
Section 4(a).
(g) "DESIGN SERVICES" shall have the meaning ascribed to it in
Section 2(a)(iv).
(h) "EXCLUSIVE INTEGRATION SERVICES PERIOD" shall have the meaning
ascribed to it in Section 2(a)(iii).
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(i) "EXCLUSIVE SYSTEM PERIOD" shall have the meaning ascribed to it in
Section 2(a)(i).
(j) "FORCE MAJEURE" means storms, floods, earthquakes, acts of God, acts
of civil or military authority, quarantine restrictions, riots, fires,
lock-outs, commercial impossibility, explosions and bombings, acts of war and
terrorism or any other cause or causes beyond the reasonable control of the
party seeking to be excused from performance.
(k) "GAAP" shall mean U.S. generally accepted accounting principles.
(l) "INSPECTION PERIOD" shall have the meaning ascribed to it in
Section 5(e).
(m) "INTELLECTUAL PROPERTY RIGHTS" means any now known or hereafter
existing (a) rights associated with works of authorship throughout the universe,
including exclusive exploitation rights, copyrights, moral rights and mask
works, (b) trademark and trade name rights and similar rights, (c) trade secret
rights, (d) patents, designs, algorithms and other industrial property rights,
(e) other intellectual and industrial property and proprietary rights of every
kind and nature throughout the universe, whether arising by operation of law, by
contract or license, or otherwise, and (f) all registrations, applications,
renewals, extensions, combinations, divisions or reissues of the foregoing.
(n) "INTEGRATION SERVICES" means the integration and installation
services together with Service Levels specified on EXHIBIT B hereto together
with such additional installation services that are specified in a separate
Statement of Work.
(o) "LICENSE AGREEMENT" means the Amended and Restated License Agreement
effective as of October 17, 2001, between SB OperatingCo., Inc. and The Titan
Corporation.
(p) "LIMITED WARRANTY" shall have the meaning ascribed to it in
Section 8(a).
(q) "MAIL BUSINESS" shall have the meaning ascribed to it in Recital C.
(r) "MAINTENANCE AND SUPPORT SERVICES" means those maintenance and
support services together with Service Levels specified on EXHIBIT C hereto
together with such additional maintenance and support services that are
specified in a separate Statement of Work.
(s) "MANUFACTURING COST" means Seller's actual direct cost of
manufacturing and assembling the Systems, for Buyer or its Affiliate, including
parts and labor determined under GAAP, plus Seller's direct cost of complying
with Buyer's compliance standards as set forth in Section 10 below that are
applicable to the particular System, PLUS Seller's Insurance Costs (as defined
in Section 14) allocated for each Statement of Work between Cost of Services and
Cost of Manufacturing based upon the relative direct cost incurred for each
within such Statement of Work and allocated among Statements of Work on a
monthly basis in proportion to the relative total direct costs on all projects
for such month PLUS Buyer's allocated share of Seller's overhead costs for its
manufacturing facility (excluding any cost of complying with Buyer's compliance
standards as set forth in Section 10 or Insurance Costs), allocated based on the
ratio of the total systems being produced for the Buyer Statement of Work to the
total of all systems being produced by the Seller for the Buyer Statement of
Work period. Notwithstanding the above,
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unless otherwise agreed in given Statement of Work, the overhead allocated to
Buyer for all systems under Statements of Work in 2002, are to bear a direct
relationship to the proportion of the estimated number of systems to be produced
for the Buyer under all Statements of Work in 2002 to the total 17 budgeted
units to be produced by Seller for all customers in 2002, in such facility, plus
(i) in the case of medical sterilization Systems, an allocation of Seller's
general and administrative expenses (other than selling, marketing, accounting,
finance, or advertising expenses or expenses of the office of the chief
executive officer of Seller) directly attributable to manufacturing and
assembling the Systems, as determined under GAAP, or (ii) in the case of all
Systems other than medical sterilization Systems, an allocation of Seller's
general and administrative expenses (other than selling, marketing, or
advertising expenses or expenses of the office of the chief executive officer of
Seller) directly attributable to manufacturing and assembling the Systems, as
determined under GAAP. In no event shall any item of Seller's cost be counted
more than once in determining Seller's Manufacturing Cost.
(t) "MILESTONE SCHEDULE" means the production, delivery and payment
schedule for the System or Services as set forth in the applicable Statement of
Work.
(u) "OTHER BUSINESSES" shall have the meaning ascribed to it in
Recital D.
(v) "PURCHASE PRICE" shall have the meaning ascribed to it in Section 3.
(w) "SERVICES" means collectively, the Maintenance and Support Services,
the Integration Services and the Design Services or individually, as context
requires, any one of such services required under any Statement of Work.
(x) "SPECIFICATIONS" shall have the meaning ascribed to it in
Section 2(b).
(y) "STATEMENT OF WORK" shall have the meaning ascribed to it in
Section 2(b).
(z) "SYSTEM DOCUMENTATION" shall have the meaning ascribed to it in
Section 2(c).
(aa) "SYSTEMS" shall have the meaning ascribed to it in Recital E.
(bb) "TERM" shall have the meaning ascribed to it in Section 6.
(cc) "TITAN SCAN BUSINESS" shall have the meaning ascribed to it in
Recital.
(dd) "WARRANTY PERIOD" shall have the meaning ascribed to it in
Section 8(a).
2. SYSTEMS PURCHASED AND DOCUMENTATION PROVIDED
(a) EXCLUSIVE SUPPLY.
(i) For the period beginning with the Effective Date and
ending on December 31, 2003 (the "EXCLUSIVE SYSTEM PERIOD"), Buyer shall
purchase all of Buyer's and its Affiliates' requirements for new Systems
(excluding electron beam or x ray accelerators with power of 150 kilowatts or
more) from Seller, and Seller shall supply all of Buyer or its Affiliates'
requirements for such systems, unless Seller either (A) approves in writing a
specific purchase of Systems by
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Buyer from a third party, or (B) provides written notice to Buyer that (y) it is
unable to supply a System or Systems within the delivery window specified by
Buyer or its Affiliate's applicable Statement of Work so long as the specified
delivery window is within Seller's published lead times for its customers, or
(z) it will be unable to comply with the Specifications in any prospective
Statement of Work, in any of which case Buyer shall be free to purchase such
specific System only, subject of Seller's written notice under this clause (B),
from a third party or manufacture the System for itself. Any notice from Seller
under Clause (B) hereof shall not affect the continuing obligation of Buyer to
purchase all of Buyer's and its Affiliates' requirements for new Systems from
Seller during the remainder of the Exclusive System Period other than any
Systems covered by such notice.
(ii) During the Exclusive System Period, Buyer shall only
purchase Maintenance and Support Services for Buyer's and its Affiliates'
Systems, including spare parts, from Seller, unless Seller either (A) approves
in writing a specific purchase of specific maintenance and support services by
Buyer from a third party, or (B) provides written notice to Buyer that it is
unable to supply Maintenance and Support Services to Buyer, in which case Buyer
shall be free to purchase such specific Maintenance and Support Services only,
subject of Seller's written notice under this clause (B), from a third party.
Any notice from Seller under Clause (B) hereof shall not affect the continuing
obligation of Buyer to purchase all of Buyer's and its Affiliates' requirements
for Maintenance and Support Services for the remainder of the Exclusive System
Period other than the Maintenance and Support Services covered by such notice.
(iii) For the period beginning with the Effective Date and
ending on December 31, 2002 (the "EXCLUSIVE INTEGRATION SERVICES PERIOD"), Buyer
shall only purchase Integration Services from Seller, unless Seller either (A)
approves in writing a specific purchase of Integration Services by Buyer from a
third party, (B) provides written notice to Buyer that (y) it is unable to
supply a specific Integration Service within the delivery deadlines specified by
Buyer or its Affiliate's applicable Statement of Work, or (z) it will be unable
to comply with the Specifications in any prospective Statement of Work
applicable to the Integration Service, in any of which case Buyer shall be free
to purchase such specific Integration Service only, subject of Seller's written
notice under this clause (B), from a third party. Any notice from Seller under
Clause (B) hereof shall not affect the continuing obligation of Buyer to
purchase all of Buyer's and its Affiliates' requirements for Integration
Services from Seller during the remainder of the Exclusive Integration Services
Period other than the Integration Services covered by such notice.
(iv) To the extent requested by Buyer or an Affiliate and
agreed by Seller, Seller shall provide to Buyer or its Affiliate system
engineering, proposal perparation, sales support, professional design and
engineering services or other services as requested by Buyer or an Affiliate in
connection with proposal presentation and sales, site analysis and System
specification as well as system engineering modifying and configuring the
Systems or any components of the Systems, including, without limitation, the
information and control system as necessary to use the System for its intended
application or to otherwise comply with the specifications of a customer of
Buyer or its Affiliates ("DESIGN SERVICES"). Seller shall perform Design
Services professionally and in accordance with established business standards
and ethics. All Design Services shall conform to the specifications and
performance standards set forth in the Statement of Work.
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(v) Buyer and its Affiliates shall have no obligation to
generate any requirements for Systems or Services or otherwise market the
Systems.
(b) SYSTEMS AND STATEMENTS OF WORK. Subject to Section 1(a) above, and
upon the terms and subject to the conditions set forth in this Contract and in
statements of work to be subsequently agreed upon in writing by both parties
hereto (each, a "STATEMENT OF WORK"), Seller shall sell Systems and provide
Maintenance and Support Services and Integration Services to Buyer or its
Affiliates, and Buyer or its Affiliates shall purchase Systems, Maintenance and
Support Services and Integration Services from Seller, for the Purchase Prices
specified in Section 3 below. Each purchase transaction shall be set forth in a
separate Statement of Work. Once a given Statement of Work has been fully
executed by the parties, it shall be incorporated into and governed by the terms
and conditions of this Contract. Each Statement of Work shall set forth at a
minimum (i) design specifications and feature sets for the System being
supplied, including the configuration of the System, (the "SPECIFICATIONS"),
(ii) scope of the Services being provided, if any, (iii) a Milestone Schedule
for the System and/or Services being provided; (iv) the Purchase Prices for the
specified Systems and Services and Milestone Schedule payment schedule; and (v)
in the case of a Statement of Work executed by an Affiliate of Buyer, a
statement, reasonably satisfactory to Seller, that such Affiliate expressly
accepts this Contract and agrees to be bound by all terms and conditions herein
applicable to Buyer.
(c) SYSTEM DOCUMENTATION. In connection with each System sold to Buyer,
Seller shall also provide to Buyer the written or electronic materials published
or otherwise made available by Seller with respect to the System, including
without limitation, recommended spare parts lists, service and maintenance
schedules, as-built drawings and schematics and such operations, training,
service and repair manuals, including user manuals for the monitoring and
control systems, as may be necessary or convenient to operate such System
(collectively, the "SYSTEM DOCUMENTATION").
(d) CHANGE ORDERS. No additions, changes or modifications to any of
Statement of Work by either party (each "CHANGES") will be considered by the
other party unless such proposed Changes are first submitted in writing to the
other party and shall not have an effect until a Change Order (as defined below)
is executed by both parties. The parties acknowledge and agree that any Changes
may affect or delay the delivery and/or the Purchase Price for the products or
services set forth therein. Promptly after a requested Change has been submitted
for approval to Seller, or to Buyer (if Seller requests a Change), Seller shall
prepare and deliver to Buyer an estimate of the anticipated impact, if any, on
the delivery schedule and/or the Purchase Price. After Buyer has received such
information, Buyer shall indicate in writing whether it approves such Changes.
Thereafter, the parties shall mutually revise the applicable Statement of Work
upon mutual execution of a written order detailing the Changes to be made
(each, a "CHANGE ORDER"). Seller shall not be obligated to implement any Changes
specified in a Change Order until Buyer has executed and returned such Change
Order to Buyer. Each Change Order shall state (i) a detailed description of the
Change to the System(s) or services to be provided under the Statement of Work,
(ii) the amount of the fixed adjustment to the fixed Purchase Price or estimated
change to any cost plus Purchase Price, if any, due to increases in
Manufacturing Cost or Cost of Services, and (iii) the extent of the adjustment,
if any, in the delivery schedule. For all purposes under this Contract, each
Change Order will be fully incorporated into the
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Statement of Work to which such Change Order applies. Seller shall not be liable
for any delays that occur in the delivery schedule due to Changes requested by
Buyer.
3. PURCHASE PRICE
This purchase price to be paid by Buyer to Seller for each System and
Services, if applicable, (the "PURCHASE PRICE") shall be a fixed price specified
below payable as follows:
(a) SYSTEMS. The Purchase Price for Systems and all spare parts shall be
F.O.B. Delivery Location and shall equal Seller's estimated Manufacturing Cost
for manufacturing such System plus a markup of twenty percent (20%), unless the
parties negotiate a different pricing approach as reflected in the applicable
Statement of Work. The parties' shall negotiate in good faith a fixed Purchase
Price for each System based upon the estimated Manufacturing Cost for such
System for each Statement of Work prior to commencement of construction of any
System under such Statement of Work and shall specify the fixed Purchase Price
in the Statement of Work.
(b) SERVICES. Seller shall supply all Services for Seller's Cost of
Services plus a markup of twenty percent (20%) unless the parties negotiate a
different pricing approach as reflected in the applicable Statement of Work.
Notwithstanding the previous sentence, Buyer may engage Seller, from time to
time, to perform specified Design Services under an interim Statement of Work in
order to develop the scope of a final Statement of Work. Buyer shall pay Seller
for any Design Services performed under an interim Statement of Work that does
not result in a final Statement of Work at Seller's Cost of Services for the
Design Services plus a markup of twenty percent (20%), unless the parties agree
to a different pricing approach as reflected in such interim Statement of Work.
If an interim Statement of Work leads to a final Statement of Work, then the
cost of the Design Services shall be included in the Cost of Services in the
applicable Statement of Work. In addition, Buyer or it Affiliate shall reimburse
Seller for reasonable out-of-pocket expenses incurred for travel, food and
accommodation in connection with the performance of Integration Services,
including installation services, at Buyer or its Affiliate's customer site
outside of San Diego County, California.
(c) TAXES. Buyer will pay all non-U.S. export charges, import duties, any
and all sales, use, excise, value added or other taxes or assessments imposed by
any governmental authority upon or applicable to any sale to Buyer or its
Affiliates of Systems or Services under this Contract (unless Buyer provides
Seller with an applicable resale certificate that exempts a sale from such
taxes), and all costs and charges for transportation, brokerage, handling and
insurance of the System from the point of shipment.
(d) PAYMENT OF PURCHASE PRICE. The Purchase Price for all Systems and
Services supplied under this Contract shall be payable in accordance with the
Milestone Schedule set forth in the applicable Statement of Work; provided
however, if a supplier or subcontractor of Seller requires Seller to make
advance payments or deposits prior to commencing work on parts or components for
Systems and Buyer approves of the use of such supplier or subcontractor with
respect to such Statement of Work in its discretion, then Buyer shall make
payments to Seller in the same amount required by the supplier or subcontractor
at the time the advance or deposit is required to be made by Seller as an
advance against the Milestone Schedule payments that are
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otherwise payable under the Statement of Work. Such advances shall be applied
against the Purchase Price, beginning with the first Milestone Schedule payment
that is payable for each Statement of Work. Seller shall send Buyer an invoice
for each Milestone Schedule payment, together with a report supporting
achievement of the applicable milestone covered by the invoice. Buyer shall pay
the full amount of each invoice, in cash in US dollars, on net ten (10) business
day terms following Buyer's acceptance of the deliverable or milestone
associated with such invoice under the applicable Milestone Schedule pursuant to
Section 5(a) below.
(e) RECORDS AND AUDIT. Seller shall maintain records with respect to
Manufacturing Costs, Cost of Services and expenses under this Contract during
the Term of this Contract and for three years following the completion of each
Statement of Work unless a longer record retention period is specified in an
applicable Statement of Work. Such records shall be made available by Seller
upon reasonable advance notice during reasonable business hours for examination
at Buyer's expense by a Buyer's independent public accountants, for the sole
purpose of verifying for Buyer or its Affiliates the correctness of calculations
of Manufacturing Costs, Cost of Services, and other expenses or payments under
this Contract, including under any specific Statement of Work. In the absence of
material discrepancies (defined as discrepancies of in excess of five percent
(5%)) in any request for reimbursement resulting from such audit, the accounting
expense shall be paid by Buyer. If material discrepancies do result, Seller
shall bear the accounting expense. Any records or accounting information
received from Seller shall be Confidential and Proprietary Information. The
terms of this Section 3(e) shall survive any termination or expiration of this
Contract for a period of the three years.
4. DELIVERY OF SYSTEM
(a) DELIVERY LOCATION. If not specified in the applicable Statement of
Work, prior to the date Seller has completed the manufacture of each System,
Buyer or its Affiliate shall specify to Seller, in writing, the location to
which Seller shall deliver such System (a "DELIVERY LOCATION").
(b) PACKING AND SHIPPING. All Systems shall be packed for shipment and
storage in accordance with Seller's standard commercial practices. Seller shall
ship all Systems, F.O.B. Delivery Location.
5. INSTALLATION AND ACCEPTANCE OF SYSTEM
(a) MILESTONE ACCEPTANCE. Seller will manufacture and deliver to Buyer
the System, or in the case of Services, will perform the Services, in accordance
with the dates set forth in the Milestone Schedule and will demonstrate as a
material part of each delivery that the relevant deliverable is complete, and
complies with the applicable Statement of Work and Specifications. Buyer shall
accept each deliverable supplied under this Contract that complies with the
relevant Statement of Work and the Specifications applicable to such System.
Except with respect to the final milestone which shall be governed by
Sections 5(e) through (g) inclusive, Buyer shall inspect each deliverable within
ten (10) business days of the latter of (i) its delivery to the Delivery
Location or (ii) the completion of Seller's Services relating to such
deliverable, if applicable (the "MILESTONE ACCEPTANCE PERIOD"). Seller shall
provide Buyer written notice of its acceptance or rejection within such
Milestone Acceptance Period. Any notice of rejection shall
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specify in reasonable detail the reasons such deliverable or Services does not
[materially] comply with the relevant Statement of Work and the Specifications
applicable to such deliverable. If Buyer rejects any deliverable or Services
during a Milestone Acceptance Period, and if Seller confirms such
non-compliance, then Seller shall, at no additional charge and as soon as
reasonably practicable, use commercially reasonable efforts to cause the
rejected deliverable or Services to comply with the relevant Statement of Work
and the Specifications or replace the rejected deliverable with a conforming
deliverable. If Buyer fails to provide Seller with written notice of its
acceptance or rejection within the applicable Milestone Acceptance Period, then
the deliverable or Services shall be deemed to have been accepted by Buyer on
the latter of the tenth (10th) business day after the receipt of such
deliverable by Buyer, or the completion of Seller's Services, if applicable.
Upon acceptance of any deliverable or Services under a Milestone Schedule, Buyer
shall pay Seller the payment applicable to such deliverable or Services as set
forth in the Milestone Schedule pursuant to Section 3(d) above.
(b) INSTALLATION. Upon delivery of all deliverables applicable to a
System to Buyer at the applicable Delivery Location, such System shall be
installed by Seller if during the Exclusive Integration Services Period or may
be installed by Seller if Integration Services are specified in the applicable
Statement of Work after the Exclusive Integration Services Period. Integration
Services, including installation services, and any other Services provided
hereunder shall be performed by Seller solely as an independent contractor.
Seller shall provide all necessary supervision, labor, materials, construction
equipment and machinery, tools, utilities and permits necessary for the proper
installation of each System. All personnel furnished by Seller to provide such
Services shall at all times be the employees or independent contractors of
Seller or Seller's subcontractors and shall not be deemed to be the employees or
agents of Buyer or its Affiliates. Seller shall have sole and exclusive control
over its employees and independent contractors who provide services to Buyer and
over policies relating to labor and employee relations, wages, hours and working
conditions of its employees. Seller shall have the sole and exclusive right to
hire, transfer, suspend, lay-off, recall, promote, assign, discipline, adjust
grievances and discharge said employees or contractors. Seller shall be solely
responsible for payment of wages, overtime, benefits, worker's compensation,
sick leave, vacation and other payments or benefits due to said employees or
contractors.
(c) PROTECTIVE MEASURES AND SAFETY. Without limiting the generality of
Section 15 of this Contract, each of Seller and Buyer shall be responsible for
all injury or damages to individuals or property that may occur as a result of
its fault or negligence or, in the case of Seller, that as of its subcontractors
or suppliers in connection with the performance of the Services. Seller shall be
responsible for the proper care and protection of all equipment and materials
furnished by Buyer, its Affiliate or its customers to Seller until final
acceptance of the Services. Seller shall take all necessary precautions for the
safety of Seller's employees or independent contractors on the job site and
prevent accidents or injury to individuals on, about or adjacent to the job
site. In addition, Seller shall erect and properly maintain at all times, as
required by the conditions and progress of the Integration Services, all
necessary safeguards and warnings for the protection of Seller's employees and
independent contractors, Buyer or its Affiliate's employees or Buyer or its
Affiliate's customer's employees and the general public. Seller shall furnish to
Buyer copies of all accident reports, promptly upon the occurrence of any
accident or injury at any job site. Seller agrees to employ labor in accordance
with all applicable safety codes. Seller shall furnish to Buyer current Material
Safety Data Sheets for any hazardous
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materials Seller needs to use in connection with any Integration Services prior
to delivery of such hazardous materials to a job site.
(d) CLEAN-UP. At all times during the course of performing the Services,
Seller shall perform such Services, including any necessary clean-up of Seller's
materials and work-in-progress, so as to maintain the job site in a clean, safe
and orderly condition. Upon completion of the Services, Seller shall clean all
surfaces, fixtures, equipment and other items which are part of the Systems that
were installed or may have been soiled by Seller, and remove from the job site
and legally dispose of all temporary structures, tools, equipment, machinery and
other items that were installed or fabricated by Seller, including all hazardous
materials stored and used by Seller. Buyer shall be entitled to back charge
Seller for any costs of clean-up if Seller fails to clean-up Seller's portion of
the job site within 48 hours after demand by Buyer.
(e) INSPECTION. Buyer shall inspect each System delivered hereunder
within fifteen (15) business days of the latter of (i) the final delivery of all
deliverables applicable to such System to the applicable Delivery Location, or
(ii) the completion of Seller's Integration Services, if applicable
(the "INSPECTION PERIOD"). Buyer shall accept any System that complies with the
relevant Statement of Work and Specifications applicable to such System. Seller
shall provide Buyer written notice of its acceptance or rejection within such
Inspection Period. Any notice of rejection shall specify in reasonable detail
the reasons such System does not comply with the relevant Statement of Work and
the Specifications applicable to such System.
(f) REJECTION. If Buyer notifies Seller during the applicable Inspection
Period that any System delivered hereunder is rejected for failure to comply
with the relevant Statement of Work and the Specifications applicable to such
System, and if Seller confirms such non-compliance, then, Seller shall, at no
additional charge and as soon as reasonably practicable, use commercially
reasonable efforts to cause the rejected System to comply to the relevant
Statement of Work and the Specifications applicable to such System or replace
the rejected System with a conforming System.
(g) DEEMED ACCEPTANCE. Except in the event of any investigation,
corrective action or retesting of a System under this Section 5, should Buyer
fail to provide Seller with written notice of its acceptance or rejection within
the applicable Inspection Period, then the System shall be deemed to have been
accepted by Buyer on the fifteenth (15th) business day after the latter of (i)
receipt of such System at the applicable Delivery Location, or (ii) the
completion of Seller's Integration Services, if applicable.
6. TERM
The term of this Contract (the "TERM") shall commence on the Effective Date
and terminate on December 31, 2003, unless terminated earlier in accordance with
Section 9 below. The parties may extend the Term for additional two-year periods
by mutual written agreement. Such additional two-year periods, shall also be
considered the "Term," as applicable.
7. TITLE AND RISK OF LOSS
Title to, and the risk of loss, injury or destruction of any System, from
any cause whatsoever shall pass to Buyer upon the delivery of such Systems to
the Delivery Location.
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8. WARRANTIES AND REMEDIES
(a) LIMITED WARRANTY. Seller warrants that each System sold to Buyer
pursuant to this Contract will be free from any material defects in design,
materials and workmanship ("LIMITED WARRANTY") for the first to occur of a
period of twelve (12) months from the date of final acceptance of the System by
Buyer in accordance with Section 5(e), or fifteen (15) months from the date of
installation of the System (the "WARRANTY PERIOD"). If, during the Warranty
Period, Buyer notifies Seller in writing that the Limited Warranty is breached
with respect to a System, and demonstrates material defect(s) in design,
materials and workmanship, and none of the exceptions specified below exist,
then Seller shall, at its expense, repair or replace defective equipment or
components and use commercially reasonable efforts to correct any other material
defect(s) in designs, materials and workmanship identified in writing by Buyer.
This Limited Warranty shall not apply: (i) if the System has been modified,
changed or altered by anyone other than Seller; (ii) if the System is improperly
installed and Seller did not provide the installation services, (iii) if the
System is being improperly operated and/or used in any way other than as
contemplated by its Specifications or the applicable Statement of Work; or
(iv) if the damage or defect is caused by fire, flood, wind, lightning or
similar occurrences. If any of Buyer's warranty claims fall within any of the
above exceptions, then the Limited Warranty shall become immediately null and
void and shall be of no further force or effect with respect to such System and
Buyer shall pay Seller's costs of investigating and identifying the problem, and
Seller's expenses to repair or correct the problem, based on Seller's
then-current charges.
(b) LIMITED PERFORMANCE WARRANTY. Seller further warrants that as of the
latter of (i) the delivery of a System to Buyer at the applicable Delivery
Location, or (ii) the completion of Seller's Integration Services, if
applicable, and for the duration of the Inspection Period applicable to such
System, each such System supplied hereunder shall materially comply the relevant
Statement of Work and the Specifications applicable to such System and will
perform and operate substantially in accordance with the Specifications
applicable to such System and the performance criteria set forth in Buyer's
applicable Statement of Work. If, during the Inspection Period, any System does
not comply with the relevant Statement of Work and the Specifications applicable
to such System or does not perform or operate substantially in accordance with
the Specifications applicable to such System and performance criteria in the
relevant Statement of Work, then Seller shall, at its expense, repair or replace
nonconforming components of the System and shall use commercially reasonable
efforts to correct any other defects in the System.
(c) COMPLIANCE WITH LAW. Seller further warrants, provided installation
of a System is performed by Seller, that as of the completion of Seller's
Integration Services with respect to such System, such System will substantially
conform in all material respects to the then-in-effect requirements of any
federal, state or local governmental rule, regulation or standard governing the
operation or use of such System on such date.
(d) SERVICES WARRANTY. Seller warrants that the Services will be
performed only by personnel who are trained and qualified to perform such
Services and that all Services shall be performed professionally and in
compliance with the specifications and performance standards set forth in the
applicable Statement of Work.
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(e) THE ABOVE WARRANTIES ARE IN LIEU OF ALL OTHER EXPRESS OR IMPLIED
WARRANTIES, EXPRESS OR IMPLIED, AND SELLER SPECIFICALLY DISCLAIMS ALL SUCH OTHER
EXPRESS OR IMPLIED WARRANTIES AND/OR AGREEMENTS INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
EXCEPT FOR DAMAGES ARISING FROM DEATH OR BODILY INJURY TO THE EXTENT CAUSED
DIRECTLY BY THE ACTS OR OMISSIONS OF SELLER, SELLER SHALL NOT BE LIABLE TO BUYER
OR ITS AFFILIATES FOR ANY DAMAGES IN CONNECTION WITH THE SALE OF SYSTEMS OR THE
PERFORMANCE OF SERVICES UNDER THIS CONTRACT, WHETHER ARISING IN CONTRACT, TORT,
STRICT LIABILITY OR OTHERWISE UNDER ANY ONE STATEMENT WORK IN EXCESS OF THE
PURCHASE PRICE FOR THE SYSTEMS AND SERVICES PROVIDED AND PAID TO SELLER BY BUYER
AND RETAINED BY SELLER UNDER THE SPECIFIC STATEMENT OF WORK GIVING RISE TO
BUYER'S CLAIM.
(f) TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, SELLER'S ENTIRE
LIABILITY TO BUYER FOR SERVICES REGARDLESS OF THE FORM OF ACTION SHALL IN NO
EVENT EXCEED TOTAL PURCHASE PRICE PAID TO SELLER BY BUYER AND RETAINED BY SELLER
FOR THE SPECIFIC SERVICE GIVING RISE TO BUYER'S CLAIM.
(g) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NO PARTY SHALL BE
LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY
DAMAGES, WHETHER FORESEEABLE OR NOT, THAT ARE IN ANY WAY RELATED TO THIS
CONTRACT, THE BREACH THEREOF, THE USE OR INABILITY TO USE THE SYSTEMS, THE
RESULTS GENERATED FROM THE USE OF THE SYSTEMS, THE QUALITY OF THE SYSTEMS, ANY
DEFECT IN THE SYSTEMS, FAILURE OF THE SYSTEMS TO PERFORM AS REPRESENTED OR
EXPECTED, THE SERVICES, THE USE OR INABILITY TO USE RESULTS OF THE SERVICES, ANY
TRANSACTIONS RESULTING FROM THIS CONTRACT, LOSS OF GOODWILL OR PROFITS, LOST
BUSINESS HOWEVER CHARACTERIZED AND/OR FROM ANY OTHER CAUSE WHATSOEVER.
(h) THE PARTIES FURTHER AGREE THAT EACH AND EVERY PROVISION OF THIS
CONTRACT THAT PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES
OR EXCLUSION OF DAMAGES IS EXPRESSLY INTENDED TO BE SEVERABLE AND INDEPENDENT OF
ANY OTHER PROVISION SINCE THOSE PROVISIONS REPRESENT SEPARATE ELEMENTS OF RISK
ALLOCATION BETWEEN THE PARTIES AND SHALL BE SEPARATELY ENFORCED.
9. TERMINATION
(a) INSOLVENCY. Either party shall be entitled to terminate this Contract
and any outstanding Statement of Work, and the parties' duties and obligations
hereunder and thereunder, on thirty (30) days prior written notice to the other
party in the event the other party becomes insolvent or seeks protection,
voluntarily or involuntarily, under applicable bankruptcy laws.
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(b) PAYMENT DEFAULT. This Contract, and the parties' duties and
obligations hereunder, may be terminated by Seller upon Buyer's failure to make
payment under any undisputed portion of any invoice on the due date for such
invoice and Buyer's failure to cure such delinquency within ten (10) days
following receipt of written notice thereof from Seller to Buyer. Seller may not
withhold performance or term this Contract if Buyer disputes any invoice or
portion of any invoice in good faith and fails to pay such invoice while the
dispute is pending. Buyer may withhold payment in whole or part of any amount
due or claimed by Seller to such extent as may be necessary to protect Buyer or
its Affiliates from loss on account of defective Systems or Services, third
party claims arising from Seller's performance under this Contract, failure of
Seller to make payments promptly to employees, suppliers and contractors,
exceptions through audits or liabilities of Seller to Buyer under this Contract.
(c) TERMINATION FOR CAUSE. Either party may terminate this Contract at
any time during Term, upon forty-five (45) days prior written notice to the
other party, if the other party materially breaches any term or condition of
this Contract (other than a payment default under Section 9(b)) and fails to
cure such breach within the forty-five (45) day cure period. As used in this
Contract, a "material breach" shall mean a material misstatement or omission in
any representation or warranty of a party, or a breach or default in the
performance of any agreement, covenant or obligations of a party hereto which,
in any such case, deprives the non-breaching party of a material right or
benefits in any material respect.
(d) TERMINATION FOR PATENT CAUSE. If Seller's U.S. Letters Patent Number
5,396,074 is determined to be invalid or unenforceable by a final non-appealable
judgment of a court of competent jurisdiction, then Buyer shall have the right,
but not the obligation, to terminate this Contract upon thirty (30) days'
written notice to Seller.
(e) EFFECT OF TERMINATION. In the event of termination, both parties
shall be liable for all obligations that accrued prior to termination, including
completion of deliveries under any open Statement of Work unless the
non-breaching party elects not to have the open Statement of Work completed, and
for all obligations that survives the termination or expiration of this
Contract.
10. COMPLIANCE WITH LAWS; APPROVALS
(a) COMPLIANCE/MANUFACTURING STANDARDS. Seller and Buyer each shall be
responsible for complying with all applicable legal and regulatory requirements
of the United States and any other national, supranational (e.g., European
Union), state or local regulatory agency, department, bureau, commission,
council or other governmental entity regarding the manufacture and supply of
Systems and performance of Services under this Contract. All Systems supplied in
connection with the Titan Scan Business shall be manufactured in accordance with
good manufacturing practice regulations promulgated by the Food and Drug
Administration from time to time to the extent such regulations apply to the
Systems as used in the Titan Scan Business.
(b) GOVERNMENTAL INSPECTIONS. Seller shall give Buyer or its affected
Affiliate prompt notice of any impending inspections by a governmental agency of
the facility used for or processes involved in the manufacture of the Systems,
and shall provide Buyer and its Affiliate
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an opportunity to observe such inspection. Seller shall provide Buyer with
copies of inspection reports, correspondence and other documents relating to
government inspections. Each party shall promptly notify the other of new
instructions, regulations or specifications of which it becomes aware which are
relevant to the manufacture of the Systems under this Contract and which are
required by the Food and Drug Administration or other U.S. federal agency,
equivalent foreign regulatory agencies, or other applicable laws or governmental
regulations and shall confer with each other with respect to the best means to
comply with such requirements. Seller shall be responsible for obtaining and
maintaining all necessary plan inspection standards and plant licenses,
registrations or permits to enable the manufacture and sale of the Systems. Each
party will promptly notify the other party of any comments, responses or notices
that a party receives from any governmental authorities which relate to the
regulatory status of the Systems in any applications or fields other than the
irradiation of food, flowers or animal hides.
(c) BUYER'S INSPECTIONS. Buyer and its designees and Affiliates shall
have reasonable access to observe and inspect Seller's manufacturing facilities
and procedures, including manufacturing operations, at reasonable intervals and
upon reasonable notice to Seller. Seller shall maintain proper and accurate
records of all manufacturing steps, processes, quality assurance and quality
control procedures and will provide reasonable access to Buyer from time to time
at reasonable intervals and upon Buyer's reasonable request.
11. CONFIDENTIALITY
(a) NON-DISCLOSURE. The parties anticipate that both Buyer and Seller may
learn Confidential and Proprietary Information (as defined below) of the other
as a consequence of the transactions contemplated by this Contract. The parties
therefore agree, on behalf of themselves, their agents, employees, parents,
subsidiaries, officers, directors, and all other persons acting on or for their
behalf, (i) to keep all Confidential and Proprietary Information confidential
and not to disclose such Confidential and Proprietary Information, either
directly or indirectly, to any third party, and (ii) not to use any such
Confidential and Proprietary Information for any purpose other than performance
of this Contract or as otherwise authorized under the License Agreement without
the prior written consent of the non-disclosing party.
(b) EXCEPTIONS. The obligations in this Section 11 shall not apply to
any: (i) information that either party knows about the other prior to the
execution of this Contract except any information which is the subject of
unexpired confidentiality obligations; (ii) information that is publicly known,
or becomes publicly known, through no breach by either party; (iii) information
that is rightfully obtained by either party from any third party who has no duty
of confidentiality under this Contract; (iv) information that is independently
developed by or for a receiving party completely apart from the disclosures
hereunder, (v) information that is released pursuant to a binding court order or
government regulation, provided that the receiving party delivers a copy of such
order or action to the other party and reasonably cooperates with the other
party if it elects to contest such disclosure or seek an appropriate remedy such
as a protective order or (vi) is otherwise necessary to disclose in order to
file or prosecute patent applications, prosecute or defend litigation or comply
with applicable law, including regulatory filings, or otherwise establish rights
or enforce obligations under this Contract, but only to the extent that any such
disclosure is reasonably necessary.
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(c) PRECAUTIONS. The parties mutually agree to take all reasonably
necessary steps, and to prepare and execute all necessary documents, to protect
and prohibit the disclosure of Proprietary and Confidential Information under
this Section 11 using the higher of a reasonable standard of care or the care
used by such party to protect its own confidential or proprietary information.
Each party will immediately notify the other party of any information that comes
to its attention which might indicate that there has been a loss of
confidentiality with respect to such other party's Confidential and Proprietary
Information.
(d) REMEDIES. In the event of a breach or threatened breach by either
party of such party's confidentiality obligations in this Section 11, the
parties acknowledge and agree that it would be difficult to measure the damage
to the non-breaching party from such breach, that injury to such non-breaching
party from such breach would be impossible to calculate and that money damages
would therefore be an inadequate remedy for such breach. Accordingly, the
non-breaching party, in addition to any and all other rights which may be
available, shall have the right of injunctive relief and other appropriate
equitable remedies to restrain any such breach or threatened breach.
(e) RETURN OF PROPERTY. Upon request, each party shall immediately return
to the other party the originals and all copies of any Confidential and
Proprietary Infofll1ation of the other party.
12. OWNERSHIP
The parties agree that the ownership rights of Seller and Buyer with
respect to the patents, patent applications, copyrights, trade secrets and other
Intellectual Property Rights to the Systems is set forth in the License
Agreement. All modifications, enhancements, improvements to and derivative works
of any Systems or components of any System or any other proprietary information,
data, methods, methodologies, templates, software (including source code and
object code), algorithms, libraries, design flows, processes, databases, tools,
processes, interfaces, documentation, mask works, encoding techniques,
electronic components and other trade secrets and other Intellectual Property
Rights, that are developed, conceived or made by any employee or contractor to
Seller in the course of performing its obligations under any Statement of Work
that do not constitute modifications, enhancement or improvements to the core
System for application in the irradiation or pasteurization of food, flowers or
animal hides (collectively, the "WORKS") shall be, to the maximum extent
possible under applicable law, deemed and meet the definition of "works made for
hire" by Seller for Buyer under U.S. copyright law, and Buyer shall be deemed
the exclusive author and owner of all Works and all Intellectual Property Rights
therein. If any Work does not meet the definition of "work made for hire,"
Seller agrees to irrevocably assign, and hereby does irrevocable assign and
transfer, to Buyer all of its Intellectual Property Rights therein, or if such
assignment is not allowed, hereby grants to Buyer and its Affiliates a
worldwide, exclusive, irrevocable, perpetual royalty-free, fully paid license,
with right to sublicense through multiple tiers of sublicenses, to modify or use
the Works for any and all purposes other than the irradiation or pasteurization
of food, flowers or animal hides. All worldwide rights, title and interest in
any and all trade secrets and know-how discovered or developed by any employee
or consultant of Seller in the course of performing its obligations under a
Statement of Work, excluding trade secrets relating to irradiation or
pasteurization of food, flowers or animal hides, shall be held and owned
exclusively by Buyer
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(the "TRADE SECRETS"), and Seller hereby irrevocably assigns and transfers the
Trade Secrets to Buyer. To the extent that any provision regarding Intellectual
Property Right to the Systems delivered under this Contract is contrary in the
License Agreement, the provision of the License Agreement shall control.
13. REMEDIES
The remedies of the parties contained in this Contract are cumulative with
one another and with any other remedies which the parties may have at law, in
equity, under any Contracts of any type or otherwise, and the exercise or
failure to exercise any remedy shall not preclude the exercise of that remedy at
another time or of any other remedy at any time. No waiver of a breach of any
provision of this Contract shall constitute a waiver of any other breach or of
such provision. The invalidity in whole or in part of any condition of this
Contract shall not affect the validity of other conditions.
14. INSURANCE
Without limiting any of the other obligations or liabilities of Seller,
Seller shall, at its own expense, secure and maintain in effect during the Term,
and for a period of four years after acceptance of the final System delivered
under a Statement of Work, on an "occurrence" and not a "claims made" basis,
insurance coverages as described herein, in amounts not less than the minimum
limits specified, to protect Buyer from claims or liabilities in any way arising
out of Seller's performance or non-performance under this Contract: (1) workers
compensation insurance and employers liability insurance in accordance with
statutory requirements and limits, (2) commercial general liability insurance,
including products liability coverage, contractual liability coverage and
automobile liability coverage, with limits of not less than Two Million Dollars
($2,000,000) for each occurrence for bodily injury and property damage combined,
and (3) professional indemnity insurance coverage for claims in connection with
its engineering Services, with limits of coverage of at least Two Million
Dollars ($2,000,000). Seller shall name Buyer and its Affiliates and their
directors, officers and employees as additional insureds on the policies of
insurance and endorsements to the policies in a form approved by Buyer and shall
provide to Buyer certificates evidencing this coverage. Seller agrees that the
insurance provided to Buyer under this Contract shall be primary to any
insurance of Buyer for all purposes, such Buyer insurance to be considered as
excess of and not contributing with Buyer's policies. Seller shall be
responsible solely for any deductible or self-insured retention on such
insurance. All such insurance shall contain a severability of interest or cross
liability clause, shall contain a waiver by the insurer of subrogation in favor
of Buyer, and shall provide that the insurance may not be modified, cancelled or
renewed for any reason, except with the insurer giving thirty (30) days' prior
written notice to Buyer. Buyer understands and acknowledges that Seller's cost
for premiums for any insurance required to be maintained under this Section 14
that exceeds the insurance coverage customarily obtained by similar businesses
facing similar risks and that exceeds the insurance requirements of other
customers of Seller that are not affiliated with Buyer shall be deemed Insurance
Costs and shall be allocated to the Cost of Services and Cost of Manufacturing
in accordance with Sections 1(e) and 1(s).
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15. INDEMNITY
(a) INDEMNITY. As between Buyer and its Affiliates, on the one hand, and
Seller, on the other hand, Seller shall be solely liable for and Seller shall
indemnify, defend and hold Buyer, and its Affiliates, or its or their directors,
officers, employees, agents, representatives, successors and assigns
(collectively "BUYER INDEMNITEES") harmless from and against any and all claims,
actions, suits, proceedings, losses, liabilities, penalties, damages, costs or
expenses, including attorneys' fees and disbursements, of any kind whatsoever
resulting from (1) injuries to or death of any and all individuals, including
members of general public or any employee, agent or independent contractor of
Buyer or its Affiliates, Seller or any customer of Seller arising out of or
connected in any manner with performance of any Services or any defect in the
System(s) or Seller's failure to warn Buyer, its Affiliates or its customers
about risks relating to the System(s) or use of the System(s), whether or not
the conduct of Seller or any subcontractor was tortious and whether any other
party contributed to the injuries or death, (2) damages to, loss, and/or
destruction of property, including loss of use of any property, arising out of
or connected in any manner with performance of any Services or any defect in the
System(s) or Seller's failure to warn Buyer, its Affiliates or its customers
about risks relating to System(s) or the use of the System(s), whether or not
the conduct of Seller or any subcontractor was tortious and whether any other
party contributed to the property damage, (3) third party claims of any kind,
whether based upon negligence, strict liability or otherwise, arising out of or
connected in any manner to Seller's or any of its contractor's acts or omissions
in breach of this Contract or resulting from failure to comply with this
Contract, or (4) actual or alleged infringement or misappropriation by Seller or
any subcontractor of any intellectual property right in connection with the
Systems or Services or violation of any third party license to use intellectual
property rights in connection with the Systems or Services.
(b) DEFENSE OF THIRD PARTY CLAIMS. If any claim is brought against any
Buyer Indemnitees, then Seller shall be entitled to participate in, and, unless
in the opinion of counsel for Buyer a conflict of interest between Buyer and
Seller may exist with respect to such claim or the defense thereof, assume the
defense of, such claim, without any reservation of rights, with counsel
reasonably acceptable to Buyer. If Seller does not assume the defense of Buyer
Indemnitees, without any reservation of rights with respect to the indemnity
obligation, or if a conflict precludes Seller from assuming the defense, then
Seller shall reimburse Buyer on a monthly basis for Buyer Indemnitees defense
through separate counsel of Buyer's choice. Even if Seller assumes the defense
of Buyer Indemnitees without any reservation of rights and with acceptable
counsel, Buyer, at its sole option, may participate in the defense, at its own
expense, with counsel of its own choice without relieving Seller of its
obligations hereunder.
16. ASSIGNMENT AND DELEGATION
Neither this Contract nor any right, obligation or duty hereunder of either
party, may be assigned to, or assumed or performed by, any third party, without
the prior written consent of the non-assigning party; provided, however, that a
change in the equity ownership of Seller or Buyer shall be deemed not an
assignment. Any purported assignment or delegation made without compliance with
the requirements of this Section 16 shall be wholly void and ineffective for all
purposes.
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17. INTEGRATION
This Contract, together with each Statement of Work and Change Order issued
hereunder (each of which is incorporated herein by reference), sets forth the
entire agreement and understanding of the parties with respect to transactions
contemplated hereby and thereby and supercedes any and all prior contracts,
agreements and understandings of the parties relating to the subject matter
hereof and thereof. In the event of a conflict between this Contract and any
Statement of Work or Change Order issued with respect to any System hereunder,
the terms of the Statement of Work, as modified by any applicable Change Order
will govern. In the event of a conflict between any Statement of Work and a
related Change Order, the terms of the Change Order will govern.
18. AMENDMENT/WAIVER
This Contract may be amended, modified, superceded or canceled, and any of
the terms, representations, warranties, covenants and conditions herein may be
waived, only by an instrument in writing executed by both parties or, in the
case of a waiver, by the party waiving compliance.
19. FORCE MAJEURE
If either party is unable to carry out its obligations under this Contract
because of Force Majeure (as defined below), the parties agree to suspend
performance until the event creating the Force Majeure is over. The party who is
unable to perform because of a Force Majeure agrees to resume performance of its
obligations under this Contract upon the termination of the Force Majeure.
Neither party shall be liable for any loss or damage by reason of such failure
or delay in performance caused by the Force Majeure.
20. ADVERTISING AND PUBLICITY
(a) Neither Buyer nor Seller shall at any time use the other party or its
Affiliates' names, trademarks or trade names in any advertising or publicity
without the prior written consent of such party.
(b) Neither Buyer nor Seller shall disclose or issue any press release
related to any Statement of Work under this Contract (or the terms hereof), or
the relationship between the parties, without the express prior written consent
of the other party; provided, however, that nothing herein shall be construed to
prevent a party from complying with any state and/or federal laws or regulations
requiring such disclosure; provided, further, however that a party shall provide
to the other party any such press release or other disclosure at a reasonable
time prior to its intended disclosure in order to enable such party to review
all such press releases or disclosures, and Buyer and Seller shall mutually
agree on the wording of any press release or disclosure. In addition, in the
event Seller deems it necessary to file this Contract as an exhibit to any
publicly filed document in accordance with the regulations promulgated by the
Securities and Exchange Commission, Seller shall seek confidential treatment,
within the guidelines of the Securities and Exchange Commission, for the terms
of this Contract. Seller shall provide Buyer the proposed confidential treatment
request submission, including the redacted version of the
18
Contract, at least five (5) business days prior to the proposed filing date and
shall modify any submission as reasonably requested by Seller
21. NOTICES
All notices, requests, demands and other communications which are required
or permitted to be given under this Contract shall be in writing and shall be
deemed to have been duly given (i) upon delivery if delivered personally,
(ii) upon confirmation of receipt if sent by facsimile, (iii) upon delivery if
sent by reputable overnight courier, or (iv) five (5) days after mailing by
registered or certified mail, return receipt requested, postage prepaid, in each
case addressed as follows:
If to Buyer: The Titan Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Facsimile: (____)__________
If to Seller SureBeam Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (____)__________
or to such other person or address as either party shall have specified by
notice in writing to the other party hereto.
22. GOVERNING LAW
This Contract shall be construed in accordance with, and governed in all
respects by, the internal laws of the State of California (without giving effect
to principles of conflicts of laws). Both parties irrevocably submit to the
exclusive jurisdiction of the state and federal courts located in San Diego,
California and both parties waive any right to object to the jurisdiction or
venue of the courts in San Diego, California for such purpose.
23. SEVERABILITY
The invalidity or unenforceability of any provision of this Contract shall
not affect the validity or enforceability of any other provision contained
herein.
24. NO SOLICITATION
During the Term of this Contract and for a period of one (1) year after
termination of this Contract, neither Buyer nor Seller shall not induce,
solicit, assist, or have discussions or any other communications with any
employee of the other party or its Affiliates to influence or cause that
employee to terminate employment with such party, and will not facilitate,
inducement,
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solicitation, discussion or any other communication by a third person of or with
any employee of the other party to influence or cause that employee to terminate
employment with the other party.
25. HEADINGS
The headings used in this Contract are for convenience of reference only,
shall not be deemed to be a part of this Contract and shall not be referred to
in connection with the construction or interpretation of this Contract.
26. CONSTRUCTION
In the interpretation and construction of this Contract, the parties
acknowledge that the terms hereof reflect extensive negotiations between the
parties and that this Contract shall not be deemed, for the purpose of
construction and interpretation, to have been drafted by either party.
27. COUNTERPARTS
This Contract may be executed in several counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page to this Contract by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Contract.
28. SURVIVAL
The provisions of Sections 3(e), 7, 8, 9(e), 11, 12, 13, 14, 15, 22, 23,
24, 28 and 29 shall survive termination of this Contract.
29. DISPUTE RESOLUTION
The parties shall seek to resolve any dispute arising under this Contract
in accordance with the procedure set forth in this Section 29. Prior to
undertaking any legal action to enforce any provision of this Contract, the
party contemplating such enforcement shall provide written notice to the other
party of the contemplated legal action and shall briefly describe the nature of
the dispute between the parties relating to such action. If after negotiating in
good faith the parties are unable to resolve the dispute within twenty (20) days
of the other party's receipt of such written notice, then the dispute will be
referred to the chief executive officer of Seller and Buyer respectively, or
their designees, for good faith resolution for a period of fifteen (15) days. If
the parties fail to resolve the dispute within such fifteen-day period, either
party may pursue any remedies available to under this Contract.
30. AUTHORITY
The parties executing this Contract on behalf of Buyer and Seller represent
and warrant that they have the corporate and other authority to enter into this
Contract and to bind their respective companies to all the terms and conditions
of this Contract.
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31. FURTHER ASSURANCES
Both parties agree to execute such additional documents and perform such
acts as are reasonably necessary to effectuate the intent of this Contract.
32. SUBCONTRACTORS
Seller shall reasonably cooperate with Buyer in connection with the
formulation and execution of any subcontracting plan that Buyer is required to
submit to any governmental agency under a contract between Buyer and such
governmental agency for the Systems or Services so as to cause the same to
comply with small, minority, and women-owned businesses subcontracting
requirements, including without limitation, using suppliers and subcontractors
included within any relevant subcontracting plan in connection with the
performance of the relevant Statement of Work.
33. CONVICT LABOR
In connection with the work under this Contract, Seller agrees not to
employ any person undergoing sentence of imprisonment, except as provided by
Public Law 89-176, September 10, 1965 (18 U.S.C. 4082(c)(2)) and Executive Order
11755, December 29, 1973.
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34. EQUAL OPPORTUNITY
If this Contract or any Statement of Work is subject to Executive Order
11246 of September 24, 1965, and relevant orders of the Secretary of Labor,
Section 503 of the Rehabilitation Act of 1973, as amended and relevant orders of
the Secretary of Labor, or the Vietnam Era Veterans' Readjustment Act of 1974 or
any other applicable laws regarding the provision of equal employment
opportunities, then Seller shall comply with the equal employment opportunity
clauses and applicable orders, including those set out at 41 CFR 60-1.4 and
41 CFR 60-250.4 and 60-741.4, which clauses are incorporated herein by reference
with the same force and effect if stated in full text.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as of
the Effective Date.
THE TITAN CORPORATION
By: /s/ Xxxx X. Xxxx
-----------------------------------
Name: Xxxx X. Xxxx
Its: Chief Financial Officer
SUREBEAM CORPORATION
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Its: Chief Financial Officer
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EXHIBIT A
DESCRIPTION OF SYSTEMS
(AS MODIFIED BY THE APPLICABLE STATEMENT OF WORK)
1. Electron Bean Energy Source
- Linear accelerator(s) Model SB 10/18 (generates 18 kW of electron
beam power at 10 MeV energy or SB 5/15 (generates 15 kW of electron
beam power at 5 MeV energy), including modulator, klystron, radio
frequency transmission, beam centerline, scan horns and vacuum system
- Horizontal or Vertical accelerator configuration.
- X-Ray converter (if applicable) -- conversion efficiency is dependent
on specific factory test results
- Beam stop
- real-time control system, with redundant monitors for key process
parameters
- secondary closed loop water conditioning and cooling system.
- Performance specifications: E(50) (average energy) EQUAL TO 10.0 +/-
0.3 MeV, power EQUAL TO set-point +/- 5%, variance in scan uniformity
LESS THAN +/-5%, reliability GREATER THAN OR EQUAL TO 95%, selectable
scan heights equal to 3, overscan LESS THAN 1" top and bottom. All
energy and power measurements shall be performed to Buyer's standard
testing procedures (F###-##-####.A).
2. Material Handling System -- a material handling system for containing,
positioning and moving the product to be processed through the process
- transportation conveyor -- roller , chain, or power and free conveyor
- process conveyor--independent servo driven process conveyor(s)
precisely control the speed of the product through the electron beam.
- other mechanisms required to process material through the system such
as closing conveyors, rotate mechanisms, box flipping, etc.
- Carriers or pallets
- control system -- monitor and control the flow of product through the
system, including actions that result in product movements.
- Performance specifications: design load LESS THAN 500 lbs for power
and free conveyor or LESS THAN 50 lbs for conveyor, process conveyor
speed range 1.00 to 10.00 fpm (base), close packing LESS THAN 3",
process interrupt EQUAL TO positive.
3. SureTrack Control System -- a real-time information and control system to
provide data management systems, operating functions, logical error
detection and overall error recovering functions for the entire system,
including:
- work station computer, mirrored hard drives (2RAID drives), color
graphics, monitor, color printer and interface to Xxxxx Xxxxxxx PLC.
- real-time PLC control system for monitoring, tracking and controlling
the irradiation process.
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- real-time information system to meet applicable regulatory
requirements and provide the following functionality:
-graphical user interface;
-system start-up and shutdown;
-creation, audit and scheduling of processing protocols;
-lot control;
-real-time monitor and information display;
-process integrity checks;
-error detection and recovery; -processing reports, data
management and information archiving;
-data logging and process variable trending;
-alarm monitoring; and
-password and security protection
- redundant sensors for all key process monitors
- software validation per SureBeam Software Development Procedures.
4. Dosimetry System -- a redundant dosimetry system to independently measure
doses of electron beams delivered to products. The system shall conform to
applicable American National Standards Institute standards. The following
equipment shall be included:
- Genesys spectrophotometers with accompanying software integrated to a
PC for data processing;
- 5000 B2 radiochromic dosimeters that cover a range of doses from 1.0
kGy to 100 kGy
- certified RISO Aluminum Energy Wedges or other electron beam
measurement equipment
- PC and associated software and laser printer for running the
dosimetry system.
- equipment calibration and procedures.
5. Safety system -- a safety system that meets the requirements for electron
mean system protection as specified by OSHA, IAEA Safety Series 107, NCRP
Report 51 and applicable state regulatory requirements, including the
following capabilities:
-intrusion detection for unauthorized access to the system
-emergency stops and pull cords
-fire/smoke detection.
-system start-up & shutdown.
-key lockouts.
-radiation monitors for out-of-limits conditions.
-status display.
-start-up alarms and horns.
-start-up timer.
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-status alarms and beacons.
-ozone exhaust flow monitor.
-safety signs and markings (Radiation Hazard, Access Prohibited, High
Voltage etc.).
-automatic shut-down for out-of-limits conditions.
-sequenced start-up.
6. Shielding -- a radiation protection shield (concrete or steel) designed to
protect operators from ionizing energy and meet OSHA and state regulatory
requirements. The shield is designed to provide protection from ionizing
radiation generated from the interaction of the beam and material. The
design requirements for the system require that radiation
measurementslevels in the load and unload areas be GREATER THAN 20 mSv per
2000 hoursyear,; and in areas such as the Equipment Room the levels can be
GREATER THAN 20 mSv per 400 hours. Access to the beam area is strictly
prohibited because the radiation level exceeds 3 mSv per hour. The shield
can be designed as an external building.
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EXHIBIT B
INTEGRATION SERVICES AND SERVICE LEVELS
Site Construction [add descriptions of the services to be delivered in each
area]
Equipment installation -- Seller shall complete the installation of equipment as
defined in the Statement of Work.
Hookup of equipment to utilities furnished by Buyer or its customers.
System integration and performance testing -- the following tasks shall be
performed during system integration:
- Installation and operation of the equipment as a total system
- Interfacing major sub-systems (controls, accelerator, material
handling, safety, and utilities)
- Testing of all normal and error conditions
- Set all operating parameters and high / low limits
- Verify operating performance (energy, power, speeds, etc.)
Validation of System to Statement of Work requirements
- Installation qualification shall be performed as defined in ISO-11137
- Irradiator dose mapping shall be performed as defined in ISO-11137
- Certification
- Validation activities shall be performed to ISO-11137, FDA
guidelines, and Seller's Software Development Procedure, latest
version
System acceptance test & installation qualification -- as part of the system
validation and installation qualification, the following system acceptance test
will be performed:
- Demonstration of key system functionality (start-up, shutdown,
product input, irradiation processing, and output processing).
Criteria for success EQUAL TO meet requirements for major
functionality
- Demonstration of the safety system to Seller test procedures.
Criteria for success EQUAL TO meet requirements for all safety test
procedures
- Perform radiation survey. Criteria for success EQUAL TO meet OSHA and
State protection levels
- Completion of the IQ and OQ tests
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- Demonstration of the system reliability. Criteria for success EQUAL
TO 95% uptime under normal operating conditions (no induced errors)
for a period of 8 hours.
- Minor items not effecting the system integrity, dose, or system safey
may be added to a punchlist for subsequent resolution.
Any other services set forth on the applicable Statement of Work.
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EXHIBIT C
MAINTENANCE AND REPAIR SERVICES AND SERVICE LEVELS
1) The following maintenance support may be provided as specified in the
Statement of Work:
- Full-time maintenance personnel will be provided with primary
responsibility for maintaining the System. These personnel will be
scheduled to provide coverage during the normal hours of operation.
- Normal PM and cleaning will be performed during non-production hours.
- A computerized maintenance system (MPII) will be used to track and
schedule the maintenance activities. This system will be loaded with
maintenance instructions and schedules, and maintained to provide a
record of maintenance activities for regulatory reviews.
- Sufficient spare parts and consumables will be stocked at both the site
and Seller's maintenance depot to ensure that maintenance personnel
have access to replacement parts in a time frame to maintain system
availability GREATER THAN 95%. The cost of all spare parts consumed is
included.
- All special tools needed to maintain the System shall be provided by
Seller. To include vacuum roughing pump, storage oscilloscopes, etc.
- Equipment calibrations traceable to national standards shall be
performed on all equipment used to measure or set the operating
parameters.
- On a periodic basis, Seller will perform an audit of the System to
monitor the status of the following items:
- Process integrity;
- Safety system functionality;
- Operating parameters;
- Radiation protection;
- Ozone ventilation.
- On-line link connecting the site control system to Seller's support
personnel to provide remote diagnostic capability will be provided.
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