Amendment to Strategic Alliance Agreement among X H Partners, Square-H Brands, Inc., and SureBeam Corporation
Contract Categories:
Business Operations
›
Collaboration Agreements
Summary
This amendment updates a previous agreement between X H Partners, Square-H Brands, Inc., and SureBeam Corporation regarding the development and operation of a food irradiation facility in Vernon, California. X H Partners is now designated as the developer, taking over certain responsibilities from Square-H. The amendment outlines construction timelines, responsibilities for design changes, and penalties for construction delays. SureBeam is responsible for specific improvements, and both parties must coordinate their construction activities. The agreement also specifies how delays and additional costs will be handled.
EX-10.3 5 a2052373zex-10_3.txt EXHIBIT 10.3 ***TEXT OMITTED AND FILED SEPARATELY CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. Sections 200.80(b)(4), 200.83 and 240.24b-2 AMENDMENT TO STRATEGIC ALLIANCE AGREEMENT THIS AMENDMENT TO STRATEGIC ALLIANCE AGREEMENT is made effective as of March 28, 2001, between X H Partners, a California limited partnership having an address at 5675 East Telegraph Road, 4th floor, Commerce, CA 90040; Square-H Brands, Inc., a Delaware corporation ("Square-H") having an address at 2731 Soto Street, Los Angeles, CA 90023-4270; and SureBeam Corporation, a Delaware corporation ("SureBeam") having a principal place of business at 3033 Science Park Road, San Diego, California 92121. RECITALS WHEREAS, effective as of November 29, 2000, Square-H and SureBeam entered into a Strategic Alliance Agreement pursuant to which the Developer and SureBeam would develop, and SureBeam would operate, a food irradiation facility in Vernon, California; WHEREAS, Square-H has now identified X H Partners as the Developer under the Agreement; and WHEREAS, the Developer and SureBeam have now agreed on the remaining terms and conditions pursuant to which the Facility will be constructed and leased; NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, Developer, Square-H and SureBeam agree as follows: AMENDMENT ARTICLE I As additional definitions: 1.1 "ARCHITECT" shall mean Delphy/Gerdes Engineering, Inc. 1.2 "ORIGINAL AGREEMENT" shall mean the original Strategic Alliance Agreement without regard to the within Amendment. 1.3 "SUBSTANTIAL COMPLETION" shall mean the completion of the Shell generally in accordance with the plans and specifications therefor, as revised from time to time hereunder, except for punch list items and other work which (i) will not materially interfere with the completion of the SureBeam Improvements; or (ii) following prudent construction practices, should not be completed until the completion of the SureBeam Improvements. Substantial Completion, as defined herein, shall be established by a certificate to that effect issued by the Architect. 1 1.4 "TENANT DELAY" shall mean any delay in reaching the Commencement Date attributable to SureBeam, including any delay attributable to a request by SureBeam for a change in the plans and specifications for the Shell; the interference by SureBeam or persons acting by, through or under SureBeam with the construction of the Shell, whether in connection with SureBeam's construction of the SureBeam Improvements or otherwise; or the failure of SureBeam to obtain, or a delay in SureBeam obtaining, any entitlements for which it is responsible hereunder and which are required for the construction of the Shell although not otherwise applicable to the Shell. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Original Agreement. ARTICLE II THE DEVELOPER 2.1 DEVELOPER AS PARTY. Developer has been formed to serve as the Developer and Square-H has assigned to Developer all of its right, title and interest in and to the Original Agreement, except for Article III thereof and the Services Agreement. Developer hereby agrees, for the benefit of SureBeam, to be bound by all of the terms and conditions of the Original Agreement, except for Article III thereof and the Services Agreement, as though the Developer was an original party thereto. SureBeam hereby consents to the substitution of the Developer for Square-H with respect to Article II of the Original Agreement and Square-H and SureBeam agree that all of the other provisions of the Original Agreement remain applicable to, and binding upon, Square-H. 2.2 REPRESENTATIONS AND WARRANTIES BY DEVELOPER. Developer represents and warrants that (i) through its general partner, it is familiar with the requirements of developing the Shell and has the resources and expertise necessary to effect the development of the Shell and perform the other obligations of Developer under the Agreement; and (ii) the Shell will be completed in substantial conformity with the plans and specifications therefor in a good and workmanlike fashion in accordance with sound construction practices and shall be free of defects for a period of [...***...] following Substantial Completion. ARTICLE III THE FACILITY 3.1 PLANS AND SPECIFICATIONS. In lieu of the applicable provisions of paragraph 2.1.1 of the Original Agreement: 3.1.1 DEVELOPER'S PLANS. Developer shall construct the Shell generally in accordance with the preliminary plans and specifications therefor identified on Exhibit A-1 hereto with such changes thereto as may be (i) made by Developer and consented to 2 * Confidential Treatment Requested by SureBeam, which such consent shall not be unreasonably withheld or delayed as long as such changes do not either (y) materially increase the cost to SureBeam of constructing the SureBeam Improvements or (z) materially delay the Commencement Date; or (ii) requested by SureBeam and consented to by Developer, which such consent shall not be unreasonably withheld or delayed; provided, however, that with respect to any such change requested by SureBeam, SureBeam shall pay the additional costs, if any, attributable thereto and any delay in achieving the Commencement Date attributable to any such change shall be a Tenant Delay hereunder. 3.1.2 SUREBEAM'S PLANS. SureBeam shall construct the SureBeam Improvements generally in accordance with the preliminary plans and specifications therefor identified on Exhibit A-2 hereto with such changes thereto as may be made by SureBeam; provided, however, that SureBeam shall pay the additional costs, if any, attributable thereto and any delay in achieving the Commencement Date attributable to any such change shall be a Tenant Delay hereunder. 3.2 CONSTRUCTION. The Facility shall be constructed on the Parcel and Developer will not include the Facility in the Complex. Accordingly, paragraph 2.1.2 of the Original Agreement is hereby deleted in its entirety and replaced with the following: 3.2.1 CONCURRENT WORK. The parties anticipate that portions of the SureBeam Improvements will be constructed prior to the construction of portions of the Shell. Developer shall endeavor to coordinate the construction in a manner that will enable SureBeam to construct portions of the SureBeam Improvements concurrently with Developer's construction of the Shell. SureBeam will coordinate its construction of the SureBeam Improvements with Developer and shall not materially interfere with Developer's construction of the Shell. Any delay in achieving the Commencement Date attributable to any such interference shall be a Tenant Delay hereunder. Developer shall be the sole arbitrator of whether or not SureBeam's construction is so interfering with Developer's construction. 3.2.2 TIMETABLE. Developer shall endeavor to effect Substantial Completion of the Shell on or before December 31, 2001. Towards that end, Developer shall endeavor to adhere to the following schedule; (i) Demolition and clearing of site - July 15, 2001; (ii) Design drawings complete - June 15, 2001; (iii) Commence construction of the Shell - July 15, 2001; (iv) Allow occupancy of the Parcel and the Shell by SureBeam for the purpose of commencing construction of the SureBeam Improvements - October 1, 2001; and (v) Substantial completion of Shell - December 31, 2001. 3 3.2.3 PENALTY FOR DELAY. To the extent that Developer fails to achieve Substantial Completion by December 31, 2001 PLUS such additional time, if any, as Substantial Completion has been delayed by unusually inclement weather, fire, earthquakes, labor disturbances, moratoria or other matters beyond Developer's reasonable control, SureBeam shall be entitled to one (1) day of free rent for each day of delay; provided, however, that the Commencement Date shall not be affected for purposes of paying rent, and SureBeam shall not be entitled to free rent, to the extent that any delay is attributable to Tenant Delay. 3.2.4 COOPERATION. At SureBeam's request, Developer will cause to be constructed, in addition to the Shell, the SureBeam Improvements or such portion of thereof as may be designated by SureBeam; subject, however, to reaching a mutually satisfactory agreement with SureBeam regarding the costs of such work, the timetable therefor and the effect thereon, if any, of the Completion Date. ARTICLE IV THE LEASE 4.1 TERM. Paragraph 2.2.2 of the Original Agreement shall be amended in its entirety to read as follows: 4.1.1. COMMENCEMENT DATE. The Commencement Date shall be the first to occur of (i) the commencement of business from the Facility and (ii) the Substantial Completion of the Shell; disregarding for such purposes, however, Tenant Delays. 4.1.2 INITIAL TERM. The "Initial Term" of the Lease shall commence on the Commencement Date and shall expire on the twelfth (12th) anniversary of the last day of the calendar month in which the Commencement Date has occurred (or the twelfth (12th) anniversary of the day preceding the Commencement Date if the Commencement Date is the first day of the calendar month). 4.1.3 OPTION TERM. SureBeam shall have one (1) option to extend the Lease for an additional eight (8) years (an "Option Term"), commencing with the expiration of the Initial Term. The option must be exercised, if at all, by written notice to the Developer given at least one (1) year prior to the expiration of the Initial Term. The base rent for the Option Term shall be the base rent in effect for the last year of the Initial Term, increased as of the commencement of the Option Term and annually thereafter in accordance with the provisions of paragraph 4.2(b) hereof. 4.2 RENT. Paragraph 2.2.3 of the Original Agreement shall be amended in its entirety to read as follows: 4.2.1 BASE RENT. The base rent payable as of the Commencement Date shall be Four Hundred Ninety-Two Thousand Dollars ($492,000) per year, payable in 4 equal monthly installments in advance on or before the first day of each calendar month. Base rent shall be net of insurance, taxes and operating expenses with respect to the Facility and the Parcel. 4.2.2 CPI INCREASES. The base rent shall be adjusted on each anniversary of the first day of the month following the end of the month in which the Commencement Date occurred (or the Commencement Date if the Commencement Date is the first day of a calendar month) in an amount equal to the greater of (i) one hundred two percent (102%) of the base rent in effect for the preceding lease year; and (ii) the amount of such base rent increased in proportion to any increase in the "Core" Consumer Price Index (defined as the Consumer Price Index, Urban Wage Earners and Clerical Workers (Los Angeles - Anaheim - Riverside Area, All items, Base Period 1982-1984 = 100); excluding food and energy prices) or similar index if such Index is no longer available; provided, however, that in no event shall the base rent be increased to an amount which would exceed one hundred five percent (105%) of the base rent in effect during the preceding lease year. 4.3 LEASE TERMINATION. Paragraph 4.3 of the Original Agreement is amended in its entirety to read as follows: "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, including the Shield, restore the Facility to a general purpose refrigerated Building and repair any damage to the Facility caused by such removal or restoration; provided, however, that SureBeam shall not be obligated to remove the SureBeam Improvements or restore the Facility to a general purpose refrigerated building if SureBeam exercises its option to extend the term of the Lease for the Option Term and thereafter fulfills its obligations thereunder. Nothing contained herein shall prohibit SureBeam from removing from the Facility its trade fixtures and equipment provided that SureBeam shall repair any damage to the Facility caused by such removal." ARTICLE V MISCELLANEOUS 5.1 NOTICES. All notices and other communications given or made to the Developer pursuant to the Agreement 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) at the address set forth above (or at such other address as shall be specified by like changes of address). 5.2 ENTIRE AGREEMENT. Except as specifically amended hereby, the Original Agreement shall remain in full force and effect. 5 5.3 COUNTERPARTS. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. 5.4 GUARANTIES. Titan Corporation hereby acknowledges that its guaranty, and its obligation to execute and deliver any further guaranty, as set forth in paragraph 10.11 of the Original Agreement, remain in full force and effect with respect to the Agreement, as amended hereby. 6 *** CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. Sections 200.80(b)(4), 200.83 and 240.24b-2 IN WITNESS WHEREOF, The parties hereto have caused this Amendment to Strategic Alliance Agreement to be executed as of the date first-above written. SUREBEAM CORPORATION By: /s/ Larry A. Oberkfell --------------------------------------- Title: President & CEO ------------------------------------- THE TITAN CORPORATION By: /s/ Larry A. Oberkfell --------------------------------------- Title: Sr. Vice President ------------------------------------- SQUARE-H BRANDS, INC. By: /s/ Henry Haskell --------------------------------------- Title: President ------------------------------------- XH PARTNERS, a California limited partnership By: Xebec Development Company, a California corporation, its sole general partner By: /s/ John Lehr ------------------------------- John Lehr President Signature Page to Amendment to Strategic Alliance Agreement S-1. SUREBEAM EXHIBIT "A"-1 VERNON, CA. OUTLINE SPECIFICATION FOR SHELL BUILDING PREPARED BY: KENDRICK CONSTRUCTION SERVICES, INC. Project Owner & Landlord: XH Partners Project Tenant: Surebeam Corporation (Titan Corp) Address: Vernon Avenue Vernon, CA Estimate Date: March 26, 2001
COMMENTS: This specification is intended to define the shell building and site work to be provided by Landlord for the basic lease to SureBeam per the Amendment to Strategic Alliance Agreement. It is subject to change based upon final design and city requirements. Page #1 * Confidential Treatment Requested
Page #5 * Confidential Treatment Requested TENANT IMPROVEMENTS Tenant shall provide and contract for at Tenant's sole expense all Tenant Improvements including but not limited to office, mezzanine, dock leveler package, demising wall and all improvements related to the irradiation shields and any other improvements to convert the proposed general purpose refrigerated building into a facility acceptable for Tenant's intended use. Landlord will generate construction documents for the general-purpose building described herein, and Tenant will contract and oversee the production of all other plans related to the Tenant Improvements. Page #6. SUREBEAM CORPORATION EXHIBIT "A-2" VERNON, CA SERVICE CENTER OUTLINE SPECIFICATION FOR SUREBEAM TENANT IMPROVEMENTS Prepared by: SureBeam Corporation Date: April 11, 2001 COMMENT: This document is not all-inclusive and is provided to list out and identify major tenant improvements that SureBeam is responsible for under the terms of the Amendment to Strategic Alliance Agreement. It is subject to change based upon final design and city, county and/or state requirements.
1 * Confidential Treatment Requested
ELECTRICAL SureBeam will provide all electrical hardware, equipment and systems necessary for the office areas, modulator roams, control rooms, dosimetry labs, and to support operation of the linear accelerators and ancillary equipment. 2 Outline Specification for SureBeam Tenant Improvements Mechanical/Other ---------------- Plumbing: Floor drains (# tbd) Water Heaters Fire Protection in office areas Insulation: [...***...] insulated wall panels separating refrigerated treatment area from non-refrigerated shield area. Miscellaneous ------------- Dock Hardware: Dock Levelers (4) Door seals Truck locks (need tbd) Other: Treatment area fencing Safety curbs * Confidential Treatment Requested
