PARTNERSHIP AGREEMENT
OF
DRS MEDICAL SYSTEMS
THIS AGREEMENT, dated as of the 6th day of February,
1996, is by and between DRS/MS, Inc., a Delaware corporation
("DRS/MS"), and UNIVERSAL SONICS CORPORATION, a New Jersey
corporation ("USC").
RECITALS
A. USC and DRS/XX xxxxxx to form a general partnership
(the "Partnership") for the purpose of developing, manufacturing
and marketing low cost, high performance ultrasound medical
imaging equipment and products that perform three-dimensional
ultrasound medical imaging (the "Business") and engaging in other
such related activities necessary or appropriate to effect the
Business.
B. In connection with the formation of the
Partnership, USC and DRS/MS wish to set forth their respective
rights and obligations as partners thereof.
NOW, THEREFORE, in consideration of the mutual covenants
set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, USC
and DRS/MS agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Terms. When used in this Agreement, the following
terms will have the meaning set forth below:
(a) "Act" shall mean the New Jersey Uniform
Partnership Law, N.J.S.A. 42: 1-1 et seq., as amended from time
to time.
(b) "Affiliate" shall mean, when used with
reference to a specified Person, (i) any Person that directly or
indirectly through one or more intermediaries controls or is
controlled by or is under common control with the specified
Person or (ii) any Person that is an executive officer or
director of, partner in, or trustee of, or serves in a similar
capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with
respect to which the specified Person serves in a similar
capacity; and, (iii) when used with reference to a natural
Person, any Person that is related to the specified Person by
blood or marriage in the first degree of consanguinity;
provided, however, that no natural Person shall be deemed to be
controlled by any other Person.
(c) "Agreement" shall mean this Partnership
Agreement entered into between USC and DRS/MS, as amended from
time to time.
(d) "Bank" shall have the meaning specified in
Section 6.2 to this Agreement.
(e) "Business" shall have the meaning specified in
the recitals to this Agreement.
(f) "Capital Account" shall have the meaning
specified in Section 4.3 to this Agreement.
(g) "Capital Contributions" shall have the meaning
specified in Sections 4.1 and 4.2 of this Agreement.
(h) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(i) "Documents" shall have the meaning specified
in Section 6.1 to this Agreement.
(j) "Document Holding Period" shall have the
meaning specified in Section 8.6 to this Agreement.
(k) "Executive Committee" shall have the meaning
specified in Section 3.1 of this Agreement.
(l) "Fiscal Year" shall mean the twelve-month
period ending March 31 of each year.
(m) "Joint Venture Agreement" shall mean that
certain Joint Venture Agreement dated as of February 6, 1996 by
and among USC, Xxx Xxxxxx, Xxxxxx Xxxxx, and Xxxxxx Xxxxxx on the
one hand and DRS/MS on the other, as the same may be amended from
time to time in accordance with the terms thereof.
(n) "Partner" shall mean USC or DRS/MS.
(o) "Partnership" shall have the meaning specified
in the recitals to this Agreement.
(p) "Partnership Account" shall mean a detailed
statement of receipts, disbursements, costs, assets, liabilities
and all other relevant financial matters of the Partnership
prepared in accordance with generally accepted accounting
principles.
(q) "Person" shall mean any individual, firm,
partnership, corporation, trustee or other entity.
(r) "Partnership Percentage Interest" shall have
the meaning specified in Section 2.2 of this Agreement.
(s) "United States Partnership Tax Returns" shall
have the meaning specified in Section 6.3 to this Agreement.
ARTICLE 2.
FORMATION OF THE PARTNERSHIP
2.1 Formation. USC and DRS/MS hereby enter into and
form a general partnership pursuant to the Act for the specific
purposes and scope set forth herein. Except as set forth herein,
the rights and obligations of the parties hereto and the
Partnership shall be governed by the Act. To the maximum extent
permitted by law, if there is a conflict between the Act and the
provisions hereof, this Agreement shall control.
2.2 Partners. Each Partner shall contribute cash or
assets to the capital of the Partnership in accordance with
Article 4 hereof. Each of the Partner's interest in the
Partnership (the "Partnership Percentage Interest") shall be:
DRS/MS 90%
USC 10%
2.3 Name. The name of the business and the affairs of
the Partnership shall be conducted under the name DRS Medical
Systems or under such other name or names as the Executive
Committee may from time to time determine.
2.4 Principal Place of Business. The principal place
of business of the Partnership shall be located at 00 Xxxxxxxxxx
Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000, or such particular place or
places as the Executive Committee may from time to time designate
or establish.
2.5 Purposes and Scope. Subject to the provisions of
this Agreement, the purpose of the Partnership is to form a
general partnership between USC and DRS/MS for the purposes of
conducting the Business of the Partnership and engaging in such
other related activities necessary or appropriate to effect the
Business.
2.6 Formation Documents. The Partnership shall execute
and file any assumed or fictitious name certificate or
certificates and any other documents required by law, including
without limitation an application for a federal employer
identification number, to be filed in connection with the
formation and operation of the Partnership.
2.7 No Individual Authority. No Partner, acting alone,
shall have any authority to act for, or to undertake or assume
any obligation, debt, duty or responsibility on behalf of, any
other Partner except as expressly otherwise provided in this
Agreement, nor shall any Partner, acting alone, have the power to
bind the Partnership except as expressly provided in this
Agreement.
2.8 Property Interests. A Partner's interest in the
Partnership shall be personal property for all purposes. All
real and other tangible and intangible property owned by the
Partnership shall be deemed to be owned by the Partnership as an
entity and no Partner individually shall have any ownership
interest in or possessory right to any of such property.
2.9 Limits of the Partnership. The relationship
between and among the parties to this Agreement shall be limited
to the specific purposes of the Partnership described herein.
Except as otherwise contemplated by the Joint Venture Agreement,
this Agreement has no relation to any operations conducted by
either of the parties as separate corporate entities or to the
joint operations of either with other parties or to any other
joint operations, if any, between the parties.
ARTICLE 3.
MANAGEMENT OF THE PARTNERSHIP
3.1 Executive Committee. (a) In order to facilitate
the disposition of all matters and questions in connection with
the administration and performance of the Business on behalf of
the Partnership, an Executive Committee shall be created. Except
as otherwise expressly provided herein, the management of the
Partnership shall be the obligation of and rest exclusively with
the Executive Committee, which shall have all the rights and
powers as are necessary, advisable, or convenient to the
management of the business and affairs of the Partnership.
DRS/MS shall appoint two representatives to serve on the
Executive Committee to act in its interests with full and
complete authority and to act on its behalf in all matters
connected with, arising out of or related to the Partnership,
and to act for and bind DRS/MS in any and all matters involving
the Business of the Partnership. USC shall appoint one
representative (the "USC Representative") to serve on the
Executive Committee to act in its interests with
full and complete authority and to act on its behalf in all
matters connected with, arising out of or related to the
Partnership, and to act for and bind USC in any and all matters
involving the Business of the Partnership. USC shall also
appoint one ex officio representative to serve on the Executive
Committee. Such ex officio representative shall have no
authority to act on behalf of USC in any matters connected
with, arising out of or related to the Partnership, and shall
have no authority to act for and bind USC in any matters
involving the Business of the Partnership, provided, however,
that such ex officio representative will act in place and in
stead of the USC Representative with all the authority of the USC
Representative, including without limitation the authority to
bind USC, when the USC Representative is absent from, or
otherwise not represented at, any meeting of the Executive
Committee. The appointed representatives for each Partner shall
be as follows:
DRS/MS
Xxxx Xxxxxxxx
Xxxx Xxxxxx
USC
Xxx Xxxxxx, the USC Representative
Xxxxxx Xxxxx, ex officio representative
Either party may at any time and from time to time
change its representative(s) by notifying the other party, in
writing, of the appointment of a new representative or
representatives, but until such appointment and notice, the
actions of the respective representatives shall be conclusively
binding on that party to the Partnership.
(b) The representatives on the Executive Committee
shall meet from time to time as may be necessary or desirable to
act on matters pertaining to the Business and the management of
the Partnership. The representatives of either party shall have
the power to call such meetings (which may be by telephone) when
necessary in their opinion to conduct the affairs of the
Partnership, or when requested by the other party. The
representative who calls the meeting shall give the other
representatives three (3) days written notice of said meeting
unless the other representatives waive such notice requirement.
The presence of at least a majority of the members of the
Executive Committee shall constitute a quorum of the Executive
Committee authorized to transact the business thereof. Whenever
the USC Representative is present at any meeting, whether in
person, by telephone or by proxy, the ex officio representative
shall not be counted in determining the presence of a quorum,
shall not have the power to vote and is not considered a member of the
Executive Committee for any purpose. Each member of the Executive Committee
shall have one vote. Action by the Executive Committee shall be taken
upon the affirmative vote of not less than a majority of the
members of the Executive Committee then in office, except as
required under Section 4.2 of this Agreement. Any member of the
Executive Committee may participate in and be present at a
meeting either in person or by conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear one another. Any action
which is required or permitted hereunder to be taken at a meeting
of the Executive Committee may be taken without a meeting,
without prior written notice and without a vote, if a consent in
writing, specifying the action so taken, shall be signed by not
fewer than the minimum number of members of the Executive
Committee necessary to authorize or take such action at a
meeting at which all members of the Executive Committee were
present and voted.
(c) The Executive Committee shall have the right
to delegate all or any of its duties hereunder and, in
furtherance of any such delegation, to appoint, employ, or
contract with any Person it may in its sole discretion deem
necessary or desirable for the transaction of the Business of
the Partnership which Persons may, under the supervision of the
Executive Committee, administer the day-to-day operations of the
Partnership; may serve as the Partnership's advisors and
consultants in connection with decisions made by the Executive
Committee; may act as consultants, accountants, correspondents,
attorneys, brokers, escrow agents, or in any other capacity
deemed by the Executive Committee necessary or desirable; may
investigate, select, and, on behalf of the Partnership, conduct
relations with Persons acting in such capacities and may pay
appropriate reasonable fees to, and enter into appropriate
contracts with, or employ, or retain services performed or to be
performed by, any of them in connection with the business of the
Partnership; may perform or assist in the performance of such
administrative or managerial functions necessary in the
management of the Partnership as may be agreed upon by the
Executive Committee; and may perform such other acts or services
for the Partnership as the Executive Committee may approve.
3.2 Indemnification. The Partnership shall indemnify
and hold harmless each member of the Executive Committee against
all losses, costs and expenses (including court costs and
reasonable attorneys' fees) arising out of or incurred as a
result of any act or omission performed or omitted by any member
of the Executive Committee in connection with the performance of
its obligations under, or pursuant to the authority granted to it
by, this Agreement and by the provisions of the Joint Venture
Agreement, except for any such loss, cost or expense which
arises out of or results from the Executive Committee's or such
member's gross negligence, willfully fraudulent or dishonest
conduct, bad faith or breach of an express provision of this
Agreement (under circumstances in which such breach has not been
consented to in writing by the Partners). Said indemnification shall extend
only to the value of the Partnership's assets and neither Partner
shall be jointly or severally liable for the indemnification of
any loss, cost or expense that exceeds the value of the
Partnership's assets at that time. Neither Partner shall be
required to make Additional Capital Contributions pursuant to
Section 4.4 for the purposes of indemnification.
3.3 Officers. The following persons shall serve as the
initial senior management (the "Officers") of the Partnership:
Xxxx Xxxxxxxx
Xxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxxxxx
The Officers shall be responsible for implementing the
decisions of the Executive Committee and for conducting the
ordinary and usual business and affairs of the Partnership. The
Officers shall be subject to the direction of the Executive
Committee.
ARTICLE 4.
CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contribution of the Partners.
(a) Upon and subject to the terms and conditions
hereof, the Partners shall contribute to the Partnership at
formation the cash, assets and liabilities shown in respect of
each on Schedule 4.1. Each shall have such amount credited to
its Capital Account.
(b) As to the initial capital contribution of USC, in
the event, in accordance with Section 5.05 of the Joint Venture
Agreement, that the Final Pro Forma Net Worth Statement reflects
that Assumed Liabilities are greater than Transferred Assets (a
"deficit"), as all of such terms are defined under the Joint
Venture Agreement, then for each dollar of such deficit, the
Partnership shall have the option of either reducing on a
dollar-for-dollar basis the Assumed Liabilities, or reducing any
monetary payments, whether or not then due, to the Shareholders
(as defined in the Joint Venture Agreement) and/or to USC on a
present value basis, or may choose any combination of such two
options so as to eliminate such deficit.
4.2 Additional Capital Contributions. The Executive
Committee, after discussion of the advisability of so doing, may
from time to time require additional capital contributions from
the Partners in connection with the reasonable business needs of
the Partnership, provided, however, that no such capital
contributions shall be required or made by any Partner or its
Affiliates during the first four years of this Agreement without
the consent of all the parties hereto. In the event capital
contributions are so required and appropriately consented to, the
Executive Committee shall provide written notice (which notice
shall set forth the aggregate additional capital
contributions called for, the amount to be contributed by each
Partner (which shall be proportional to each Partner's
Partnership Percentage Interest), the bank account in which such
contribution is to be deposited and the date on which the capital
contribution is to be made) to each Partner no less than 30 days
prior to the date on which such additional capital contribution
is to be made. Thereupon, each Partner shall, on the date on
which such additional capital contributions are to be
made as set forth in such notice, make the additional capital
contribution to the Partnership required to be made by such
Partner. If either Partner shall fail to timely make such
additional capital contribution, then the other Partner shall
either make its capital contribution in the form of a loan or may
seek additional capital from a third party or an Affiliate.
4.3 Capital Accounts. Except as provided in the
Transaction Documents (as defined in the Joint Venture Agreement)
to the contrary, the Partnership shall maintain a Capital Account
(so defined) for each Partner pursuant to the provisions of
Treasury regulations promulgated pursuant to Section 704(b) of
the Code.
ARTICLE 5.
ALLOCATIONS, DISTRIBUTIONS AND INTERESTS
5.1 Allocation of Net Income or Net Loss. (a) For each
Fiscal Year of the Partnership, except as provided in Section
5.1(c) below, any net income or any net loss of the Partnership
shall be allocated among the Partners in accordance
with the Partnership Percentage Interests then in effect.
(b) All determinations of "net income" and "net
loss" shall be made on the basis described in the Treasury
Regulations promulgated pursuant to Section 704(b) of the Code.
(c) Notwithstanding Section 5.1(a) above, any
amortization or depreciation deduction attributable to the assets
purchased from USC, pursuant to Section 2.02 of the Joint Venture
Agreement, shall be allocated one hundred (100%) percent to
DRS/MS.
5.2 Distributions. The Executive Committee may, in its
sole discretion and from time to time, make distributions to the
Partners in proportion to their Partnership Percentage Interests.
A Partner may request a distribution to satisfy federal and/or
state tax liabilities by certifying to the Partnership the amount
of such Partner's actual tax liability.
5.3 DRS/MS Management Services. DRS/MS shall provide
certain management and administrative services to the Partnership
pursuant to a Management Agreement. Subject to the determination
of the Executive Committee, the Partnership will reimburse DRS/MS
for these management and administrative services provided to the
Partnership. The Partnership will compensate DRS/MS for such
services in the manner set forth in such Management Agreement.
ARTICLE 6.
BOOKS AND RECORDS; BANK ACCOUNTS; TAX RETURNS; LOANS
6.1 Books and Records. The Executive Committee shall
keep or cause to be kept at the office of the Partnership as
separate Partnership Accounts the books and records of the
Partnership, setting forth a true, accurate and complete account
of all business transactions with respect to the Partnership's
business, as are usually maintained by persons engaged in similar
businesses, including a fair presentation of all income,
expenditures, assets and liabilities thereof. Each Partner and
its authorized representatives shall have the right at all
reasonable times to have access to, inspect, audit and copy the
Partnership's books and records including, but not limited to,
original books, records, files, vouchers, cancelled checks,
employment records, bank statements, bank deposit slips, bank
reconciliations, cash receipts and disbursement records, and
other documents (the "Documents").
6.2 Bank Accounts. All funds of the Partnership shall
be deposited into such general account at a bank determined by
the Executive Committee (the "Bank") in the name of the
Partnership, to be maintained by the Executive Committee. The
Bank shall be authorized to make payments against checks
executed by persons authorized to make payments against checks
drawn on said account. All income arising from operations of the
Partnership shall be deposited in said general account, and all
payments and disbursements shall be made from said general
account; provided, that the Executive Committee may establish
other bank accounts with such banks as it determines shall be
necessary and proper for the efficient operation and management
of the Partnership's activities. Idle funds in the various bank
accounts of the Partnership shall be invested in interest bearing
short term certificates of deposit, bank repurchase agreements
(REPOs), government securities and similar instruments or such
other instruments as may be approved from time to time by the
Executive Committee; interest earned shall be for the benefit of
the Partnership.
6.3 Tax Returns. At the end of each fiscal year, or as
soon thereafter as practicable, the Executive Committee shall
prepare or cause to be prepared on behalf of the Partnership a
United States Partnership Information Tax Return and such other
tax returns as are required of partnerships under the applicable
federal, state and local laws, ordinances and/or regulations,
and, upon the Executive Committee's review and approval, such tax
returns shall be filed on a timely basis with the appropriate
governmental authorities.
6.4 Loans. Subject to the provisions of Sections 4.2
and 7.7, any Partner may lend money to the Partnership or
otherwise transact business with the Partnership under terms and
conditions approved by the Executive Committee.
ARTICLE 7.
TRANSFERS OF INTERESTS IN PARTNERSHIP
7.1 Prohibited Transfers. Except (i) as agreed to by
the parties hereto, (ii) as permitted by this Article 7 or the
Transaction Documents, (iii) pursuant to the provisions of the
Joint Venture Agreement, or (iv) when sold, transferred,
assigned, or conveyed to a DRS/MS Affiliate, no
Partner may sell, transfer, assign, convey, or subject to a
security interest or otherwise charge or encumber all or any part
of its Partnership Percentage Interest in the Partnership (either
voluntarily or by operation of law, including the sale or
transfer of a controlling interest in the Partner (or its direct
or ultimate parent) in question) unless approved by the Executive
Committee, and any act in violation of this Article 7 shall be
null and void ab initio (a "Prohibited Transfer").
(a) In the event of a Prohibited Transfer, as
defined above, such offending Partner shall be deemed to have
offered its Partnership Percentage Interest in the Partnership to
the other Partner for the Capital Account value of such
Partnership Percentage Interest. The non-offending Partner
shall have twenty (20) days after it learns of a Prohibited
Transfer to elect to purchase such Interest at such Capital
Account value.
(b) In the event the non-offending Partner shall
purchase the Partnership Percentage Interest of an offending
Partner on account of this Section 7.1, the closing of such
transaction of purchase and sale shall take place at 10:00 a.m.
at the Partnership's principal office ten (10) business days
after the option to purchase is exercised by the other Partner.
(c) At the closing, the purchasing Partner shall
pay 10% of the purchase price in cash and the balance in the form
of a promissory note attached as Exhibit A, such note to bear
interest at the prime rate then in effect at the Bank and to be
payable in equal monthly installments over five (5) years.
7.2 USC Affiliate Transfer. USC may sell, transfer,
assign, or convey all or any part of its Partnership Percentage
Interest in the Partnership to Xxx Xxxxxx, Xxxxxx Xxxxx and/or
Xxxxxx Xxxxxx (each a "USC Successor Individual") pro rata in
accordance with their interests in USC and/or to any entity (a
"USC Successor Entity"), provided such USC Successor Entity is
owned wholly by Xxx Xxxxxx, Xxxxxx Xxxxx and/or Xxxxxx Xxxxxx pro
rata in accordance with their interests in USC (each of the above
USC Successor Individual and USC Successor Entity, a "USC
Successor"), provided that any such USC Successor execute this
Agreement pursuant to Section 7.10 hereof. With the prior
written consent of DRS/MS, each of Xxx Xxxxxx, Xxxxxx Xxxxx
and/or Xxxxxx Xxxxxx may transfer all or part of their respective
interests in the Partnership to one another or to entities wholly
owned by them, although not necessarily pro rata in accordance
with their interests in USC.
7.3 Right of Sale and First Refusal.
(a) If any Partner or any liquidator, receiver,
trustee in bankruptcy or similar authority having control over a
Partner or its assets receives a bona fide offer from an
independent, unrelated, non-Affiliated third party person or
entity ("third party") for the purchase of all or any portion of
its Partnership Percentage Interest, which offer must comply with
the provisions of Section 7.3(b) below and which offer the
receiving Partner desires and intends to accept, or if any
Partner (or a representative thereof as aforesaid) desires to
enter into any contract to sell, transfer, assign, or convey all
or any portion of its Partnership Percentage Interest to a third
party, which contemplated contract must comply with the
provisions of Section 7.3(b):
(i) the Partner (or representative thereof)
desiring to accept such offer or enter into such contract
("Movant") shall give written notice to the other Partners other
than Movant or any Affiliate of Movant ("Respondent") of all the
terms, provisions, and conditions with respect to such offer,
including a copy of the proposed offer or contract and the items
required by Section 7.3(b)(iv), and Movant shall offer to sell to
Respondent Movant's Partnership Percentage Interest which is the
subject of such offer or contract (the "Offered Interest") on the
same terms, provisions, and conditions as are set forth in such
offer or contract.
(ii) Respondent shall have a period of
forty-five (45) days from the date of its receipt of the written
notice from Movant to accept such offer on the same terms,
provisions, and conditions stated in such written notice, which
acceptance must be in writing and be received by Movant prior to the
expiration of such forty-five (45) day period. Any purported
acceptance made orally shall be ineffective, and any purported acceptance
which varies the terms of such offer shall be deemed a rejection thereof for
all purposes. If Respondent accepts such offer in accordance with
the foregoing provisions, Respondent shall be bound to purchase
the Offered Interest in accordance with such offer or contract,
and Movant shall be bound to sell the Offered Interest on the
terms and conditions set forth in Movant's written notice except
that the purchase price paid by Respondent to Movant shall be net
of any loans or other indebtedness, including accrued interest,
created under the terms of this Agreement, owed by Movant to
Respondent. In the event there is more than one Respondent,
those desiring to purchase the Offered Interest of Movant, shall
be entitled to purchase a pro rata portion (based on the
respective Partnership Percentage Interests of the Respondents
desiring to purchase) of Movant's Offered Interest. The closing
of the purchase by Respondent shall be held at the time and place
specified in the written notice from Movant, or such later date
as is mutually agreed to by Respondent and Movant, but in no
event shall closing take place earlier than seventy-five (75)
days from the date of receipt by Respondent of the written notice
from Movant.
(iii) In the event Respondent delivers written
notice of rejection to Movant, or in the event Respondent fails
to accept the offer in the manner required by Section 7.3(a)(ii)
hereof, the offer made by Movant shall be deemed to have been
rejected by Respondent, and Movant shall be free to sell,
transfer, assign, or convey such interest in the Partnership to
the third party on the terms, provisions, and conditions set
forth in the written notice to Respondent or other terms and
conditions not less favorable to Movant; provided, however, that
such purchaser, transferee or assignee shall not become a Partner
unless and until it agrees to abide by Section 7.10 hereof.
(iv) In the event that such transaction is not
consummated as provided in Section 7.3(a)(iii) hereof on or
before sixty (60) days after the closing date specified in the
notice from Movant to Respondent, or, in the event any terms and
provisions of such transaction are changed following a
rejection by Respondent in a manner which renders such terms less
favorable to Movant, no sale, transfer, assignment, or conveyance
of such Offered Interest of the Partnership may be made unless
the provisions of this Section 7.3(a) are again complied with.
(v) In the event that such transaction is
consummated as provided in Section 7.3(a)(iii) hereof, the
purchaser shall become a new Partner in the Partnership, under
the terms and provisions of this Agreement, together with all of
the rights, duties, and obligations pertaining thereto and
allocable to the Offered Interest so purchased including the
rights and restrictions contained in this Article 7 with respect
to subsequent sales of any Partnership Percentage Interest.
(b) Movant shall not be entitled to exercise its
rights under Section 7.3(a) above with respect to any offer to
purchase or offer to sell its Partnership Percentage Interest
unless such an offer complies with the following requirements:
(i) the proposed purchase price (which shall
be net of any Partnership debts or liabilities which the proposed
purchaser will assume) is payable solely in lawful money of the
United States and, if not payable in its entirety in cash, under
no circumstances may payment of the deferred portion of the
proposed purchase price be secured by any charge, encumbrance or
hypothecation of a Partnership Percentage Interest or any
property of the Partnership;
(ii) the offer contains provisions whereby the
proposed third party purchaser is obligated to comply with the
provisions of Section 7.3(a)(iii) prior to or at closing;
(iii) it is an offer by or to a principal,
identified in the offer, and not an agent acting on behalf of an
undisclosed principal, and such principal shall not be a Person
with respect to which Movant has any direct or indirect ownership
or control;
(iv) the prospective third party purchaser
shall provide to Respondent (x) reasonable evidence of its
business character, reputation, and financial capacity to carry
out all obligations of a Partner under this Agreement and all
related agreements, which shall include the audited financial
statements of such prospective purchaser for the two (2) most
recent fiscal years of such prospective purchaser, and (y) a
statement signed by such prospective purchaser to the effect that
(1) such purchaser is a principal acting for its own account and
not as an agent acting on behalf of an undisclosed principal and
(2) such principal is not a Person with respect to which Movant
has any direct or indirect ownership or control or is otherwise
an Affiliate of Movant.
7.4 Specific Performance. It is expressly agreed that
the remedy at law for breach of any of the obligations set forth
in Section 7.3 is inadequate in view of (i) the complexities and
uncertainties in measuring the actual damages that would be
sustained by reason of the failure of a Partner to comply fully
with each of said obligations, and (ii) the uniqueness of the
Partnership business and the Partnership relationship.
Accordingly, each of the aforesaid obligations shall be, and is
hereby expressly made, enforceable by specific performance. If
the purchasing Partner is not in default under the obligations
set forth in Section 7.3 and the selling Partner refuses or fails
to consummate the sale to the purchasing Partner the selling
Partner shall have no further rights under this Agreement with
respect to the Offered Interest being so purchased with the exception of the
right to receive the purchase price due and payable under Section
7.3.
7.5 Termination of Obligations. As of the effective
date of any transfer not prohibited hereunder by a Partner of its
Partnership Percentage Interest, such Partner's rights and
obligations hereunder shall terminate as to the Partnership
Percentage Interest transferred, except as to items accrued as of
such date and except as to any indemnity obligations of such
Partner attributable to acts or events occurring prior to such
date. Thereupon, except as limited by the preceding sentence,
this Agreement shall terminate as to the transferring Partner
with respect to the Partnership Percentage Interest transferred.
In the event of a transfer of all or a portion of its Partnership
Percentage Interest by a Partner to the other Partner, the
Partner to whom such interest is transferred shall indemnify,
defend and hold harmless the transferring Partner from and
against any and all claims, demands, losses, liabilities,
expenses, actions, lawsuits and other proceedings, judgments,
awards, and costs and expenses (including reasonable attorneys'
fees) incurred in or arising, directly or indirectly, in whole or
in part, out of operation of the business of the Partnership and
allocable to the Partnership Percentage Interest transferred,
excluding only those liabilities, if any, accruing prior to the
date of such transfer.
7.6 USC Put.
(a) Notwithstanding anything herein to the contrary, at
any time following the fourth anniversary of the execution of
this Agreement but prior to the sixth anniversary of the
execution of this Agreement, USC or a USC Successor (whether a
USC Successor Individual or a USC Successor Entity) shall have
the right to demand that DRS/MS purchase the entire Partnership
Percentage Interest of USC or such USC Successor at a price
equal to the fair market value of such Partnership Percentage
Interest.
(b) Prior to such fourth anniversary, USC or a USC
Successor Entity shall have the right to demand that DRS/MS
purchase one third (1/3) of the USC initial Partnership
Percentage Interest at a price equal to the fair market value
thereof, and a USC Successor Individual shall have the right to
demand that DRS/MS purchase the Partnership Percentage Interest
he owns, but in no event in excess of a three and one third
percent (3 1/3%) interest in the Partnership, at a price equal
to the fair market value thereof, provided, however, that such
demand correspond with the involuntary termination (including
death or disability) as an employee of the Partnership of any of
Xxx Xxxxxx, Xxxxxx Xxxxx or Xxxxxx Xxxxxx, to whomever of them
such Partnership Percentage Interest relates, any such
termination to be for a reason other than the involuntary
termination for cause under such employee's Employment Agreement
dated of even date herewith.
(c) For purposes of this Section fair market value
shall be determined by an independent appraiser mutually agreed
upon by DRS/MS and the party exercising the put. In the event
the parties cannot agree mutually upon such an appraiser, then
each party shall select an independent appraiser and such
appraisers together shall select a third independent appraiser.
Such third independent appraiser or such mutually agreed upon
independent appraiser shall determine the fair market value of
such Partnership Percentage Interest. The decision of such
appraiser shall be binding on the parties, absent willful
misconduct or negligence by such appraiser.
(d) The written demand by USC (or a USC Successor)
shall also state a proposed date upon which the sale will be
consummated, which proposed date shall be no fewer than 90 days
following receipt of the written demand by the other Partner or
Partners. The other Partner or Partners may change such proposed
date of sale to another date within ten (10) business days of
such USC proposed date. To the extent that the purchase price of
the interest purchased hereunder exceeds $50,000.00, at the
closing the purchasing Partner or Partners shall pay the greater
of $50,000.00 or 10.00% of the purchase price in cash, and the
balance shall be payable, to the extent necessary, in equal
annual installments of the same amount as paid at closing for
each of the next four (4) years. At the fifth anniversary of
such closing, all remaining balances shall be due and payable.
The purchasing Partner or Partners shall have the right to prepay
any and all amounts due hereunder. The obligation of the
purchasing Partner or Partners shall be evidenced in the form of
an unsecured promissory note attached as Exhibit A, such note to
bear interest at the prime rate quoted in the Wall Street Journal
on the business day preceding the day of the closing.
Diagnostic/ Retrieval Systems shall guarantee payment of such
note pursuant to the Guaranty made a part of the Joint Venture
Agreement. In the event that there are any indemnification claim
payments due under Article VIII of the Joint Venture Agreement,
payments due under the Put shall be held in abeyance pending
resolution of the claims and payment of the Loss or Losses as
defined under the Joint Venture Agreement. If the purchase fails
to be consummated due to a failure to surrender such Partnership
Percentage Interest by USC (or a USC Successor), the other
Partner or Partners shall be entitled to buy USC's Partnership
Percentage Interest at a price of 20% less than the value of
USC's fair market value on the original date of demand.
Notwithstanding anything herein to the contrary, the right of USC
to demand purchase of its Partnership Percentage Interest is
personal to USC and is not transferable, saleable, conveyable,
encumberable, or assignable, except to a USC Successor.
7.7 Anti-Dilution. In the event that the Partnership
is in need of additional capital and wants to raise such capital
through the admittance of an additional Partner or Partners which
are unaffiliated with DRS/MS, notwithstanding anything herein to
the contrary, the parties hereby warrant, covenant and agree that
they will not cause the Partnership to sell, transfer, assign, or
otherwise convey any interest in the Partnership prior to the
fourth anniversary of the execution of this Agreement without
first offering such interest to the Partners. Each Partner shall
have the right, but shall not be obligated, to purchase such
portion of the interest as is sufficient to maintain said
Partner's Partnership Percentage Interest, or any lesser amount
that said Partner may choose to purchase, on the same terms
offered to any other party.
7.8 Co-Sale Right In the case of a transfer of any or
all of DRS/MS' Partnership Percentage Interest in the Partnership
by DRS/MS to any third party (as defined in Section 7.3) when
such transfer would result in DRS/MS retaining less than a 50%
interest in the Partnership following such transfer, at least 30
days prior to such transfer, DRS/MS will deliver a written notice
to the other Partner or Partners specifying the identity of the
prospective transferee(s) and disclosing in reasonable detail
the terms and conditions of the proposed transfer. Such other
Partner or Partners may elect to participate in the proposed
transfer by delivering written notice to DRS/MS within such 30
day period. If any Partner elects to participate in such
transfer, each participating Partner will be entitled to sell in
such proposed transfer, at the same price and on the same terms
as DRS/MS, a percentage of its Partnership Percentage Interest
equal to the product of (i) the fraction the numerator of which
is such Partner's Partnership Percentage Interest and the
denominator of which is the aggregate Partnership Percentage
Interests then held by all of the Partners, multiplied by (ii)
the amount of interest in the Partnership proposed to be
transferred.
7.9 Execution of this Agreement. Any purchaser,
transferee, or assignee of an interest hereunder not already a
Partner in the Partnership shall not become a Partner in the
Partnership unless such purchaser, transferee, or assignee
(A) executes and acknowledges this Agreement and such instruments
and amendments to this Agreement as the Executive Committee may
reasonably deem necessary in connection therewith, including the
acceptance and adoption by such Person of the provisions of this
Agreement; and (B) pays a transfer fee to the Partnership which
is sufficient to cover all reasonable expenses connected with
the cost of admitting such Person as a Partner as determined by
the Executive Committee.
7.10 Restraining Order. In the event that any Partner
shall at any time transfer or attempt to transfer its Partnership
Percentage Interest or any portion thereof in violation of the
provisions of this Agreement and any rights hereby granted, then
the other Partners shall, in addition to all rights and remedies
hereunder, at law and in equity, be entitled to seek a decree or
order restraining and enjoining such transfer, and the offending
Partner shall not plead in defense thereto that there would be an
adequate remedy at law; it being hereby expressly acknowledged
and agreed by the parties hereto that damages at law will be an
inadequate remedy for a breach or threatened breach or violation
of the provisions concerning transfer set forth in this
Agreement.
ARTICLE 8.
DISSOLUTION
8.1 Dissolution Events. The Partnership shall be
dissolved upon the first to occur of any of the following:
(a) the occurrence of any event which makes it
unlawful for the business of the Partnership to be carried on or
for the members to carry it on in Partnership;
(b) the Partnership is (A) voluntarily adjudicated
bankrupt or insolvent, (B) seeks consent to or does not contest
the appointment of a receiver or trustee for itself or for all or
any substantial part of its property, (C) files a petition for
bankruptcy or reorganization, (D) makes a general assignment for
the benefit of its creditors, or (E) admits in writing its
inability to pay its debts as they mature;
(c) the affirmative vote of the Executive
Committee as provided in Section 3.1(b) (a "Voluntary
Dissolution");
(d) a court decrees that the Partnership be
dissolved pursuant to any relevant provision of the Act.
8.2 Voluntary Dissolution. (a) In the event the
Executive Committee votes to dissolve the Partnership, the
Executive Committee shall give written notice to all of the
Partners of such decision at least six (6) months prior to the
intended date of dissolution and in such notice shall set forth a
price at which any Partner or Partners may purchase the assets
and liabilities of the Partnership. Any or all of the Partners
shall have the right to accept the offer to purchase the
Partnership on the terms and conditions set forth in the
Executive Committee's notice within thirty (30) days of the date
notice was given by notifying the Executive Committee of such
acceptance by written notice.
(b) In the event the Partnership is dissolved by
Voluntary Dissolution, the Partnership shall assign to USC (or
any USC Successor) any and all rights the Partnership shall have
in and to any and all Royalties as defined in the Joint Venture
Agreement.
8.3 Termination and Winding Up. In the event the
Partnership is dissolved, an accounting of the Partnership's
assets, liabilities and operations through the last day of the
month in which the dissolution occurs shall be made by the
Executive Committee and the affairs of the Partnership shall be
wound up and terminated. The Executive Committee shall serve as
the liquidating trustee of the Partnership. The liquidating
trustee shall be responsible for winding up and terminating the
affairs of the Partnership and shall determine all matters in
connection therewith (including, without limitation, the
arrangements to be made with creditors, the terms of the sale of
any asset of the Partnership, and the amount or necessity of cash
reserves to cover contingent liabilities) as it deems advisable
and proper. The liquidating trustee shall thereafter liquidate
the assets of the Partnership as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom, to
the extent sufficient therefor, shall be applied and distributed
in the following order:
(a) to the payment and discharge of all of the
Partnership's debts and liabilities to persons other than the
Partners and their Affiliates and the expenses of liquidation;
(b) to the payment and discharge of any loans plus
accrued interest and advances made by either Partner to the
Partnership;
(c) to the Partners in accordance with their
positive Capital Accounts;
(d) the balance, if any, shall be distributed to
the Partners in accordance with their respective Partnership
Percentage Interests.
8.4 Work in Progress. If the Partnership is dissolved
for any reason while there is work in progress, winding up of the
affairs and termination of the business of the Partnership may
include completion of the work in progress to the extent the
liquidating trustee may determine such work to be necessary to
bring the matters to a state of completion convenient to permit a
sale of the Partnership's interest in such work, giving due
regard to the interests of the Partners.
8.5 Non-Cash Assets. Every reasonable effort shall be
made to dispose of the assets of the Partnership upon a
dissolution so that the distribution may be made to the Partners
in cash. If at the time of the termination of the Partnership,
the Partnership owns any assets in the form of work in progress,
notes, deeds of trust or other non-cash assets, such assets, if
any, shall be distributed in kind to the Partners, in lieu of
cash, proportionate to their right to receive the assets of the
Partnership on an equitable basis reflecting the book value of
the assets so distributed. For purposes of determining Capital
Accounts, each such non-cash asset shall be treated as having
been sold at book value.
8.6 Disposition of Documents and Records. All
documents and records shall be delivered to DRS/MS upon
termination of the Partnership. Such Partner shall retain such
documents and records for such a period of time ("Document
Holding Period") as may be required by any regulation, decree,
code, ordinance, rule or law of any city, county, state, or
federal government or governmental agency having jurisdiction
(including the requirements of the Internal Revenue Service) and
shall make the documents available during normal business hours
to the other Partner for inspection and copying at the other
Partner's cost and expense. In the event any Partner
("Withdrawing Partner") for any reason ceases to be a Partner at
any time prior to termination of the Partnership, and the
Partnership is continued without the Withdrawing Partner, the
documents for the period prior to the date of the termination of
the Withdrawing Partner's interest shall be maintained by the
non-withdrawing Partner for the Document Holding Period;
provided, however, that if there is an audit or threat of audit,
such documents shall be retained until the audit is completed and
any tax liability finally determined. Said documents shall be
available for inspection, examination and copying by the
Withdrawing Partner in the same manner as provided above in this
Section 8.6 with respect to a termination of the Partnership.
ARTICLE 9.
MISCELLANEOUS
9.1 Resolution of Disputes:
(a) Notice of Dispute. All disputes, without
exception, between the parties to this Agreement arising
hereunder, or under any other agreement between the parties not
expressly disclaiming the use of this process, shall be settled
by means of alternative dispute resolution as provided in the New
Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A.
2A:23A-1, et seq., as in effect on the date of this Agreement,
(the "Act") upon written notice given by any party to the other
(the "Dispute Notice"), and to the umpire hereafter established.
Except to the extent required by law, the proceedings under the
Act shall be confidential and shall not be disclosed or discussed
with persons not parties to this Agreement without the consent of
all parties to the dispute. In the event a party to a dispute
may suffer irreparable harm or injury, such party shall have the
ability to seek provisional remedies, including but not limited
to injunctive relief and other equitable remedies, to the fullest
extent permitted by law pending completion of the process
provided under this Section 9.1.
(b) Umpires.
(i) Within thirty (30) days after the Dispute
Notice is given the parties shall select three (3) umpires from
among the persons listed in Subparagraphs (1) through (4) below
in the order of priority listed below, i.e., if a person meeting
the requirements of Subparagraph (1) is not able or willing to
serve, a person meeting the requirements of Subparagraph (2)
shall be selected, and so forth. In addition to meeting the
requirements of Subparagraph (1), (2), (3) or (4) below, the
umpires must also satisfy the requirements described in
Subparagraphs (b)(ii) and (b)(iv) below. A potential umpire is:
(1) Any retired judge of a United States
District Court or a United States Circuit Court of Appeals;
(2) Any retired judge of any State
Superior, Appellate or Supreme Court;
(3) Any attorney licensed to practice
law for more than fifteen (15) years or certified public
accountant who has been certified for more than fifteen (15) years and,
in either case, who has either directly or indirectly, no conflict of
interest; or
(4) Such other person upon whom the
members of the selecting group agree.
(ii) In addition to the requirements described
in Section 9.1(b)(i) above, the umpires selected hereunder must:
(1) Be free of any potential for bias or
conflict of interest with respect to either of the parties
hereto, directly or indirectly or by virtue of any direct or
indirect financial interest, family relationship or close
friendship; and
(2) Be in a position to immediately hear
the dispute and thereafter render a resolution within the time
specified in Section 9.1(g) below.
(iii) If the umpires are not selected within
the period of time specified in Section 9.1(b)(i) above, DRS/MS,
on the one hand, and USC on the other hand, each shall promptly
select an umpire which umpires shall select a third umpire who
shall be the sole umpire. If the parties fail to so select
umpires pursuant to the foregoing provisions within twenty (20)
days after the expiration of the period described in Section
9.1(b)(i), the sole umpire shall be selected by the Chief Judge
of the United States District Court for the District of New
Jersey or, if the Chief Judge is unable or unwilling to act, by
the Chief Judge of the Southern District of New York or the
President of the Bar Association of the City of New York. Such
selection shall be in accordance with the requirements of
Sections 9.1(b)(i) and 9.1(ii) above. The umpire to be selected
pursuant to this Section 9.1(b)(iii) must be designated within
thirty (30) days after the expiration of the period described in
Section 9.1(b)(i) above.
(iv) Anything to the contrary herein
notwithstanding, the following persons are not eligible to be an
umpire under this Article: a party to this Agreement or any
affiliate thereof; an employee or co-employee or any party to
the dispute; or any person having material or undisclosed,
financial or personal interests dependent on the success or
failure of any of the parties.
(v) An umpire shall disqualify himself if he
is unable to handle the process promptly so as to render a
resolution within a reasonable time, in no event to exceed
forty-five (45) days after final testimony and/or briefs and in
all events not to extend beyond six months from the date the
umpire is chosen, or such longer period to which the parties to
the dispute and the umpire may agree.
(c) Time and Place of Alternative Resolution. The
alternative resolution shall be held at such place as the umpire
may determine within Essex County, New Jersey or such other
location to which the parties may agree, to commence not later
than ten (10) days after the umpire has been determined in
accordance with Section 9.1(b).
(d) Fees. All fees and expenses (including
transcripts, room rental and fees of the umpire) of alternative
dispute resolution, shall be paid as follows: 25% by the party
or parties served with the Dispute Notice and 25% by the
person(s) serving the Dispute Notice, with the remaining 50%
allocated 10% to the prevailing party (or parties) and 40% to
the non-prevailing party (or parties), as determined by the
umpire (if the umpire does not determine a prevailing party then
pro-rata to each of the material parties to the dispute as
determined by the umpire) provided that the umpire shall have the
right to order that such fees be paid in a different percentage
if any of the parties has acted in bad faith (in which case he
may shift other's shares to the bad faith party(ies)). The fees
payable to the umpire shall be his usual hourly rates for
consulting or dispute resolution services, as the same may be in
effect from time to time. Each party shall pay its own legal
fees, costs and disbursements.
(e) Discovery. Each party shall be entitled to
discovery by way of oral deposition, inspection and copying of
all relevant documents within the care, custody or control of a
party or a witness, and when authorized by the umpire, by way of
interrogatories. All discovery shall be complete within
forty-five (45) days of the appointment of the umpire. All
documents to be relied upon by any party to the proceeding shall
be provided to the others no later than two weeks before the hearing
date for the proceedings. The time periods for discovery may be
extended by the umpire for good cause, provided that he is able
to meet the time requirement of Section 9.1 (g).
(f) Provisional Remedies. When appropriate under
applicable New Jersey substantive and procedural law, the umpire
shall have full and complete authority to award provisional
relief, on an ex parte basis or otherwise.
(g) Time and Method for Resolution. The umpire
shall make the award and serve notice thereof upon all parties
within six (6) months of the date the umpire is designated, or
such longer period to which the parties to the dispute and the
umpire may agree. If the umpire fails to make his decision in
accordance with substantive law, or to properly apply the facts
to the law, the umpire's award will be deemed to have been
procured by "undue means" and "beyond his power." Any party may
apply to court in accordance with the Act to have the umpire's
decision confirmed, reviewed, modified, affirmed or remanded to
the umpire with directions.
(h) Act and Agreement Govern. Except as otherwise
provided herein, the Act shall govern the procedures and methods
for any Alternative Dispute Resolution undertaken pursuant to
this Agreement. Except as expressly provided above, the umpire
may not modify the provisions of this Article. Except as
expressly provided to the contrary above, and to the extent
otherwise not inconsistent with this Agreement and the Act,
proceedings under this Article, including efforts to mediate the
dispute, shall be governed by the "Rules for Non-Administered
Arbitration of Business Disputes" as adopted by the Center for
Public Resources, Inc., New York (originally developed 1989 and
amended 1993).
9.2 Non-Competition.
(a) USC NON-COMPETITION. Neither USC nor its
Affiliates (other than Xxx Xxxxxx, Xxxxxx Xxxxxx and
Xxxxxx Xxxxx, whose non-competition agreements are contained in
the Joint Venture Agreement and in the employment agreement of
each) will own, manage, operate, join or control, or participate
in the ownership, management, operation or control of, or
assist in any manner with, or be connected with or have any
interest in, as a stockholder, agent, consultant, partner or
otherwise, or have any agent as a director, officer, or employee
of, any business which develops, manufactures and markets any
ultrasound medical imaging equipment. Neither USC nor its
Affiliates will own, manage, operate, join or control, or
participate in the ownership, management, operation or control
of, or assist in any manner with, or be connected with or have
any interest in, as a stockholder, agent, consultant, partner or
otherwise, or have any agent as a director, officer, or employee
of, any business which develops, manufactures, markets, sells and/or
introduces technology or technologically based products (whether or not
based on USC's core technology) to the medical imaging field in
general except that either USC or its Affiliates may make
passive investments in a competitive enterprise the shares of
which are publicly traded if such investment constitutes less
than one half of one percent of the equity of such enterprise.
(b) DRS/MS NON-COMPETITION. Neither
Diagnostic/Retrieval Systems ("DRS"), DRS/MS, nor their
Affiliates will own, manage, operate, join or control, or
participate in the ownership, management, operation or control
of, or assist in any manner with, or be connected with or have
any interest in, as a stockholder, agent, consultant, partner or
otherwise, or have any agent as a director, officer, or employee
of, any business which develops, manufactures and/or markets
and/or sells any ultrasound medical imaging equipment (or other
medical imaging products based on the core technology currently
being used by USC) except that either DRS or its Affiliates
or DRS/MS may make passive investments in a competitive
enterprise the shares of which are publicly traded if such
investment constitutes less than one half of one percent of the
equity of such enterprise.
9.3 Interpretation. In the event of any dispute
between the parties as to the meaning and legal effect of this
Agreement, this Agreement shall be interpreted in accordance with
the laws of the State of New Jersey.
9.4 Notices. All notices, claims, certificates,
requests, demands and other communications hereunder will be in
writing and will be deemed to have been duly given when
personally delivered, telexed, sent by facsimile transmission
(with telephonic confirmation) or on the date of receipt or
refusal indicated on the return receipt if mailed (registered or
certified mail, postage prepaid, return receipt requested) as
follows:
(a) If to DRS/MS:
DRS/MS, Inc.
000 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attn.: Mr. Xxxx Xxxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx
A Professional Corporation
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn.: Xxxx Xxxxxxxx Xxxx, Esq.
(b) If to USC:
Universal Sonics Corporation
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn.: Xx. Xxx Xxxxxx
with a copy to:
Xxxxx, Danzig, Scherer, Xxxxxx & Xxxxxxxx
Xxxxxxxxxxxx Xxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxxx Xxxxxxx III, Esq.
or to such other address as the person to whom notice is to be
given may have previously furnished to the other in writing in
the manner set forth above.
9.5 Amendment. This Agreement may not be amended,
altered or modified except by written instrument, signed by all
parties.
9.6 Headings. All headings herein are inserted only
for convenience and ease of reference and are not to be
considered in the construction or interpretation of any provision
of this Agreement.
9.7 Severability. If any provision of this Agreement
or the application thereof to any person or circumstances shall
be invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such provisions to other persons
or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
9.8 Complete Agreement. This Agreement and the other
agreements referred to herein constitute the complete and
exclusive statement of the agreement between the Partners with
respect to the subject matter hereof, and replaces and supersedes
all prior agreements by and among the Partners. This Agreement
supersedes any and all prior written or oral statements and no
representation, statement, or condition or warranty not contained
in this Agreement or the Transaction Documents shall be binding
on the Partners or have any force or effect whatsoever.
9.9 Additional Documents and Acts. In connection with
this Agreement, as well as all transactions contemplated by this
Agreement, each Partner agrees to execute and deliver such
additional documents and instruments and to perform such
additional acts as may be reasonably necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions
and conditions of this Agreement, and all such transactions
including, without
limitation, the documents necessary to transfer the Transferred
Assets to the Partnership as described in the Joint Venture
Agreement.
9.10 Terms. Common nouns and pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular, and
plural, as the identity of the person or persons, firm or
corporation may in the context require. Any reference to the
Code or other statutes or laws shall include all amendments,
modifications, or replacements of the specific sections and
provisions concerned.
9.11 References to this Agreement. Numbered or
lettered articles, sections and subsections herein contained
refer to articles, sections and subsections of this Agreement
unless otherwise expressly stated. The words "herein," "hereof,"
"hereunder," "hereby," "this Agreement" and other similar
references shall be construed to mean and include this
Partnership Agreement and all amendments thereof and supplements
thereto unless the context shall clearly indicate or require
otherwise.
9.12 Binding Effect. Subject to the provisions of this
Agreement relating to transferability, this Agreement shall be
binding upon and inure to the benefit of the parties signatory
hereto, and their respective distributees, successors and
permitted assigns.
9.13 Counterparts. This Agreement may be executed in a
number of counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
DRS/MS, INC.
By:_______________________________
Name:__________________________
Title:_________________________
UNIVERSAL SONICS CORPORATION
By: ______________________________
Name:_________________________
Title:________________________
SCHEDULE 4.1
Initial Capital Contribution of DRS/MS:
$400,000 in cash and managerial expertise and manufacturing
capabilities.
SCHEDULE 4.1 - Continued
Initial Capital Contribution of USC:
All of the Transferred Assets (other than those assets delineated
on Schedule 2.02 of the Joint Venture Agreement and net of
Royalties, as such terms are defined in the Joint Venture
Agreement), subject to certain liabilities to be assumed by the
Partnership, as specifically set forth below:
PARTNERSHIP AGREEMENT
OF
DRS MEDICAL SYSTEMS
BY AND BETWEEN
DRS/MS, INC.
AND
UNIVERSAL SONICS CORPORATION
Dated as of February 6, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS
1.1 Terms ................................... 1
ARTICLE 2 FORMATION OF THE PARTNERSHIP
2.1 Formation ............................... 3
2.2 Partners ................................ 3
2.3 Name .................................... 3
2.4 Principal Place of Business ............. 3
2.5 Purposes and Scope ...................... 3
2.6 Formation Documents ..................... 4
2.7 No Individual Authority ................. 4
2.8 Property Interests ...................... 4
2.9 Limits of the Partnership ............... 4
ARTICLE 3 MANAGEMENT OF THE PARTNERSHIP
3.1 Executive Committee ..................... 4
3.2 Indemnification ......................... 6
3.3 Officers ................................ 7
ARTICLE 4 CAPITAL CONTRIBUTIONS
4.1 Initial Capital Contribution of the
Partners ................................ 7
4.2 Additional Capital Contributions ........ 7
4.3 Capital Accounts ........................ 8
ARTICLE 5 ALLOCATIONS, DISTRIBUTIONS AND INTERESTS
5.1 Allocation of Net Income or Net Loss .... 8
5.2 Distributions ........................... 8
5.3 Management Services ..................... 9
ARTICLE 6 BOOKS AND RECORDS; BANK ACCOUNTS;
TAX RETURNS; LOANS
6.1 Books and Records ....................... 9
6.2 Bank Accounts ........................... 9
6.3 Tax Returns ............................. 10
6.4 Loans ................................... 10
ARTICLE 7 TRANSFERS OF INTERESTS IN PARTNERSHIP
7.1 Prohibited Transfers .................... 10
7.2 USC Affiliate Transfer .................. 11
7.3 Right of Sale and First Refusal ......... 11
7.4 Specific Performance .................... 13
7.5 Termination of Obligations .............. 14
7.6 USC Put ................................. 14
7.7 Anti-Dilution ........................... 15
7.8 Co-Sale Right ........................... 16
7.9 Execution of this Agreement ............. 16
7.10 Restraining Order ....................... 16
ARTICLE 8 DISSOLUTION
8.1 Dissolution Events ...................... 17
8.2 Voluntary Termination ................... 17
8.3 Termination and Winding Up .............. 17
8.4 Work in Progress ........................ 18
8.5 Non-Cash Assets ......................... 18
8.6 Disposition of Documents and Records .... 19
ARTICLE 9 MISCELLANEOUS
9.1 Resolution of Disputes .................. 19
9.2 Non-Competition ......................... 22
9.3 Interpretation .......................... 23
9.4 Notices ................................. 23
9.5 Amendment ............................... 24
9.6 Headings ................................ 24
9.7 Severability ............................ 24
9.8 Complete Agreement ...................... 24
9.9 Additional Documents and Acts ........... 24
9.10 Terms ................................... 25
9.11 References to this Agreement ............ 25
9.12 Binding Effect .......................... 25
9.13 Counterparts ............................ 25
