JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT is made as of February 6,
1996 ("Agreement") by and among DRS/MS, INC. ("DRS/MS"), a
Delaware corporation, UNIVERSAL SONICS CORPORATION ("USC"), a New
Jersey corporation, XXX XXXXXX, an individual residing at 0000
Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 ("Hadani"),
XXXXXX XXXXX, an individual residing at 00 Xxxxx Xxxxx,
Xxxxxxxxx, Xxx Xxxx, 00000 ("Xxxxx"), and XXXXXX X. XXXXXX, an
individual residing at 0000 Xxxx Xxxxxx, Xxx. 00 X, Xxx Xxxx, Xxx
Xxxx 00000 ("Soulos") (collectively, Xxxxxx, Xxxxx and Xxxxxx
shall hereinafter be referred to as the "Shareholders").
A. Diagnostic/Retrieval Systems, Inc. ("DRS"), a
Delaware corporation, and USC have entered into a nonbinding
letter of intent describing their interest in forming a joint
venture 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.
B. Each of DRS/MS and USC desires to make an
investment in the business operated by the joint venture.
C. To accomplish such investment, DRS/MS, on the one
hand, and USC, on the other hand, desire to associate themselves
as partners, and desire to form a partnership ("Partnership")
under the laws of the State of New Jersey for the purposes
described in and on the terms of a Partnership Agreement of DRS
Medical Systems substantially in the form of Exhibit A hereto
("Partnership Agreement").
D. DRS/MS desires to contribute $400,000 to the
Partnership as well as certain managerial expertise and
manufacturing capabilities as more specifically set forth herein.
E. USC desires to contribute to the capital of the
Partnership all of the assets, net of certain Royalties (as
defined below), of USC, subject only to certain liabilities of
USC, such liabilities being no greater than such net assets.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements and on the terms and conditions contained herein,
and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Accounts Receivable" means all of the accounts
receivable of USC due from customers which are contributed to
the Partnership pursuant to the terms of the Partnership
Agreement.
"Affiliate" means, 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.
"Applicable Law" has the meaning specified in Section
4.05(a).
"Assumed Liabilities" shall mean the liabilities of USC
to be assumed by the Partnership pursuant to the Partnership
Agreement as set forth in Schedule 4.04 hereof.
"Closing" has the meaning specified in Section 2.03.
"Closing Date" shall have the meaning specified in
Section 2.03.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Contracts" means all contracts, subcontracts,
agreements, options, guarantees, orders, commitments,
undertakings and arrangements, whether written or oral.
"DRS/MS Capital Contribution" means the contribution by
DRS/MS to the capital of the Partnership determined pursuant to
the provisions of Section 2.02(i).
"Employment Agreements" means collectively the
employment agreements with the Partnership to be individually
executed substantially in the form attached hereto as Exhibit B
by each of the Shareholders.
"Environmental Damages" means all claims, judgments,
damages, losses, penalties, fines, liabilities (including
strict liability), costs and expenses, including costs and
expenses of defense of any claim and of any settlement of claims,
including, without limitation, reasonable attorneys' fees and
consultants' fees, which are incurred at any time as a result of
the existence of Hazardous Material upon, about or beneath the
Premises or migrating or threatening to migrate to or from the
Premises, or arising in any manner whatsoever out of any
violation of Environmental Requirements pertaining to the
Premises and the activities thereon or to the past, present or
future operations of USC, including without limitation:
(i) damages for personal injury, or injury to
property or natural resources, including but not limited to
claims brought by or on behalf of employees of USC, occurring
upon or off of the Premises, whether foreseeable or
unforeseeable, including, without limitation, lost profits,
consequential damages, interest and penalties;
(ii) diminution in the value of the Premises and
damages for the loss of or restriction on the use of or adverse
impact on the marketing of rentable or usable space or of any
amenity of the real property containing the Premises;
(iii) fees incurred for the services of attorneys,
consultants, contractors, experts, laboratories and all other
costs and liabilities (including liabilities to
indemnify any Person for costs) incurred in connection with the
investigation or remediation of such Hazardous Materials or
violation of Environmental Requirements including, but not
limited to, the preparation of any feasibility studies or
reports or the performance of any cleanup, remedial, removal,
containment, restoration or monitoring work required by any
Governmental Authority, or reasonably necessary to make full
economic use of the Premises or any other property or otherwise
expended in connection with such conditions; and
(iv) damages and claims resulting from the off-site
disposal of Hazardous Materials which derived from the use,
generation, storage, treatment, transportation or disposal of
Hazardous Materials by USC.
"Environmental Requirements" means all Applicable Laws
relating to the protection of human health or the environment,
including, without limitation:
(i) all requirements pertaining to reporting,
licensing, permitting, investigation or remediation of emissions,
discharges, releases or threatened releases of Hazardous
Materials into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials; and
(ii) all requirements pertaining to the protection
of the health and safety of employees or the public.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended (P.L. 93-406).
"GAAP" means generally accepted accounting principles in
the United States of America in effect from time to time, applied
consistently throughout the periods involved.
"Governmental Approval" means an authorization,
consent, approval, permit, license or exemption of, registration
or filing with, or report or notice to, any Governmental
Authority, including, without limitation, federal and New
Jersey environmental authorities.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, including, without limitation, any government
authority, agency, department, board, commission or
instrumentality of the United States, any State of the United
States or any political subdivision thereof and any tribunal or
arbitrator(s) of competent jurisdiction.
"Hazardous Materials" means any chemical substance:
(i) the presence of which requires investigation,
removal or remediation under any Applicable Law; or
(ii) which is or becomes defined as a "hazardous
waste" or "hazardous substance" under any Applicable Law,
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) or the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.); or
(iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is or becomes regulated by any
Governmental Authority or Applicable Law; or
(iv) the presence of which causes or threatens to
cause a nuisance upon the Premises or to adjacent properties or
poses or threatens to pose a hazard to the Premises or to the
health or safety of any Person on or about the Premises; or
(v) without limitation which contains gasoline,
diesel fuel or other petroleum hydrocarbons; or
(vi) without limitation which contains PCBs or
asbestos.
"IRS" means the United States Internal Revenue Service.
"Intellectual Property Rights" means any and all
copyrights, trademarks, trademark applications, service marks,
service xxxx applications, licensing agreements and similar
Contracts, technology, trade secrets, trade names, division
names and other information, property or rights used in or
relating to the business or operations of the Partnership or the
Transferred Assets, as more specifically set forth in Schedule
4.06 hereof.
"Inventories" means all inventories relating to the
business of the Partnership and contributed to the Partnership
including, without limitation, all finished goods, work in
progress, raw materials, stores, all production, shipping and
packaging supplies and all spare parts.
"Liens" has the meaning specified in Section 4.04.
"Material Adverse Effect" means any loss, liability or
expenditure, whether contingent or not, exceeding $10,000.00.
"Material Contract" shall have the meaning specified in
Section 4.08.
"Net Worth Statement" shall have the meaning specified
in Section 5.05.
"Notice" shall have the meaning specified in
Section 11.09.
"Partnership" has the meaning specified in the Recitals.
"Partnership Agreement" has the meaning specified in the
Recitals.
"Permitted Liens" shall have the meaning specified in
Section 4.04.
"Partnership Percentage Interest" shall have the meaning
specified in the Partnership Agreement.
"Person" means any individual, firm, partnership,
corporation, trust, estate, limited liability company, limited
liability partnership, or other entity.
"Personal Property Leases" shall have the meaning
specified in Section 4.24.
"Plan(s)" shall have the meaning specified in Section
4.11.
"Premises" means those locations leased by USC or
otherwise used thereby for the business operations of USC.
"Return" shall mean all reports, estimates,
declarations, information statements and returns due under all
foreign, federal, state or local laws or regulations, as
appropriate, relating to Taxes.
"Royalties" shall mean the dollar value of certain
royalty payments due and to become due during the six years after
the Closing Date to USC, such dollar value not to exceed
$3,000,000, as more specifically described on Schedule 4.04
hereof.
"Subsidiary" of any Person means any corporation or
other entity of which more than 50% of the outstanding capital
stock or other equity having ordinary voting power to elect a
majority of the Board of Directors or other managers of such
corporation (irrespective of whether at the time capital stock
of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency) or
other entity is at the time directly or indirectly owned by such
Person, by such Person and one or more of such Person's other
Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Taxes" means all federal, state and local taxes,
assessments and governmental charges, of any nature, kind or
description (including, without limitation, all income taxes,
franchise taxes, withholding taxes, estimated taxes,
unemployment insurance, social security taxes, payroll taxes,
sales and use taxes, excise taxes, occupancy taxes, real and
personal property taxes, stamp taxes, transfer taxes, workers'
compensation and withholding taxes) and all interest, additions
to tax and penalties with respect thereto, whether such
interest, additions or penalties arise before or after the
Closing Date.
"Transaction Documents" shall mean the collective
reference to the Partnership Agreement, the Employment
Agreements and all other agreements and documents to be delivered
pursuant hereto or thereto on the Closing Date, in each case
with such changes as may be agreed among the parties.
"Transferred Assets" shall mean all of the assets of
USC, less any Royalties, to be contributed to the capital of the
Partnership and/or sold to the Partnership pursuant to Section
2.02 below, including without limitation the Intellectual
Property Rights, as more specifically set forth on Schedule 4.04
hereof.
"USC Capital Contribution" means the contribution by USC
to the capital of the Partnership described in Section 2.02(ii).
ARTICLE II
FORMATION OF PARTNERSHIP AND EXECUTION OF
TRANSACTION DOCUMENTS
SECTION 2.01 Formation of Partnership and Execution of
Transaction Documents. Subject to the fulfillment of the
conditions specified in Article VI of this Agreement, on the
Closing Date the parties (a) shall form the Partnership under the
terms of the Partnership Agreement, and (b) shall execute, and
cause the Partnership and its Affiliates to execute, the
Transaction Documents to which each of them is a party.
SECTION 2.02 Contributions. Subject to the
fulfillment of the conditions specified in Article VI of this
Agreement and pursuant to and in accordance with the provisions
of the Transaction Documents, on the Closing Date the parties
shall make the following initial contributions to the
Partnerships:
(i) DRS/MS shall transfer or cause to be
transferred to the capital of the Partnership, $400,000 in
readily available funds. DRS/MS shall also contribute certain
managerial expertise and manufacturing capabilities as set forth
in Schedule 2.02. The parties agree to use the aggregate of the
$400,000 contributed by DRS/MS hereunder to purchase from USC
certain assets delineated on Schedule 2.02 hereto. DRS/MS shall
prepare an allocation schedule in accordance with Section 1060 of
the Code, and the parties shall cooperate with each other and
provide such information as either of them shall reasonably
request. The parties shall each report the federal, state, local
and other Tax consequences of the purchase and sale contemplated
hereby in a manner consistent with such allocation schedule.
(ii) USC shall transfer or cause to be transferred
to the capital of the Partnership the Transferred Assets (other
than those assets delineated on Schedule 2.02 hereof), subject
only to the Assumed Liabilities, such Assumed Liabilities being
no greater than the Transferred Assets.
SECTION 2.03 Closing. (a) Upon the terms and subject
to the conditions set forth herein, the execution and delivery of
the Transaction Documents to be executed at closing and the
closing of the transactions contemplated hereby and thereby (the
"Closing") shall take place at the offices of Xxxxxxx Xxxxxxx, a
Professional Corporation, 0 Xxxxxx Xxxx Xxxx, Xxxxxxxx, Xxx
Xxxxxx 00000-0000 (or at such different location as the parties
shall mutually agree) at such time as shall be mutually agreed
upon in writing by the parties hereto no later than February 1,
1996 (the "Closing Date"); provided, however, that all of the
conditions precedent in Article VI of this Agreement shall have
been satisfied or waived, as the case may be. All of the actions
contemplated to be taken pursuant to this Agreement on the
Closing Date and taken or occurring on such date shall be
deemed to occur simultaneously.
(b) At the Closing, the following Transaction
Documents associated with the transfer of the Transferred Assets
shall be delivered by each of the parties thereto (such
Transaction Documents hereinafter referred to as the "Asset
Transfer Documents"):
(i) Assignments substantially in the form
attached hereto as Exhibit C;
(ii) assignments and, as required, consents to
such assignments of USC's right, title and interest
under each Contract to be assigned under this Agreement
and the Partnership Agreement;
(iii) assignment in recordable form of USC's
right, title and interest in, or licenses for the use
of, the Intellectual Property Rights to be assigned or
licensed;
(iv) such other instruments of assignment or
conveyance as DRS/MS may reasonably request as
necessary or appropriate to vest in the Partnership
good and marketable title to the Transferred Assets
being contributed to the Partnership.
SECTION 2.04 Method of Payment. All payments to be
made under this Agreement and under the Transaction Documents
shall, unless otherwise specified herein or therein, be made in
lawful money of the United States and in funds immediately
available by wire transfer to the account specified by the party
to receive such payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DRS/MS
Representations and Warranties of DRS/MS. DRS/MS
represents and warrants to USC as follows:
SECTION 3.01 Corporate Existence. DRS/MS is (or will
be, prior to the Closing Date) a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware; has all requisite power and authority to enter into
this Agreement and each Transaction Document to which it is a
party and to perform its obligations hereunder and thereunder;
and has all requisite corporate power and authority to own its
properties and assets and conduct its business as it is now being
conducted. DRS/MS is (or will be prior to the Closing Date) duly
qualified as a foreign corporation in each jurisdiction where the
nature of its activities makes such qualification necessary.
SECTION 3.02 Authority Relative to this Agreement and
Transaction Documents. The execution, delivery and performance
by DRS/MS of this Agreement and each Transaction Document to
which it is, or on the Closing Date will be, a party and the
consummation of the transactions contemplated hereby and thereby
have been duly authorized and approved by all requisite corporate
action, and no other corporate action on the part of DRS/MS is
necessary for the execution, delivery and performance by DRS/MS
of this Agreement or any Transaction Document to which it is, or
on the Closing Date will be, a party and the consummation by
DRS/MS of the transactions contemplated hereby and thereby.
Neither the execution nor the delivery by DRS/MS of this
Agreement or any Transaction Document to which it is, or on the
Closing Date will be, a party, nor the consummation by DRS/MS of
the transactions contemplated hereby or thereby, nor compliance
with nor fulfillment by DRS/MS of the terms and provisions
hereof or thereof, will (i) conflict with or result in a breach
of the terms, conditions or provisions of or constitute a default
under (A) the Certificate of Incorporation or Bylaws of DRS/MS or
(B) any lease, Contract, instrument, mortgage, deed of trust,
trust deed or deed to secure debt evidencing or securing
indebtedness for borrowed money, any financing lease, any law,
rule, regulation, judgment, order, award, decree or other
restriction of any kind to which DRS/MS is, or on the Closing
Date will be, a party or by which it is bound, (ii) require
DRS/MS to obtain the consent, approval, authorization or other
order or action of, or filing with, any court, Governmental
Authority or regulatory body, (iii) require the consent,
approval, authorization or order of any Person under, and will
not conflict with, or result in the breach, lapse or termination
of, or constitute a default under, or result in the acceleration
of the performance by DRS/MS or any Affiliate thereof under any
material lease, permit, license, Contract, mortgage, deed of
trust, trust deed, deed to secure debt, other lease, indenture or
other instrument to which DRS/MS or any Affiliate thereof is a
party or by which any of them or any of their properties are
subject, (iv) give any party with rights under any instrument,
Contract, lease, mortgage, deed of trust, trust deed, deed to
secure debt, judgment, order, award, decree or other restriction
of any kind to which DRS/MS is bound the right to terminate,
modify or otherwise change the rights or obligations of any
party under such instrument, Contract, lease, mortgage, deed of
trust, trust deed, deed to secure debt, judgment, order, award,
decree or other restriction, causing a Material Adverse Effect,
(v) require any declaration, filing or registration with any
governmental or regulatory authority by DRS/MS, or (vi) otherwise
cause a Material Adverse Effect. This Agreement has been duly
executed and delivered by DRS/MS and, together with each other
Transaction Document and other agreement and instrument required
to be delivered hereunder or thereunder by DRS/MS, when duly
executed and delivered by DRS/MS, is or will
be, as the case may be, a legal, valid and binding obligation of
DRS/MS, enforceable against DRS/MS in accordance with its
respective terms, subject as to enforcement of remedies only to
any applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general application at the time
in effect and general principles of equity.
SECTION 3.03 No Litigation. There is no action,
lawsuit, claim, counterclaim, proceeding, or investigation (or
group of related actions, lawsuits, claims, proceedings or
investigations) pending or, to the knowledge of DRS/MS,
threatened against or affecting DRS/MS that seeks to restrain or
enjoin the consummation of the transactions contemplated by
this Agreement or any Transaction Document.
SECTION 3.04 Full Disclosure; Materiality. No
representation or warranty by DRS/MS herein, nor any statement or
certificate furnished to USC pursuant hereto, or in connection
with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits to state a material fact
necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made not materially
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF USC AND THE SHAREHOLDERS
Representations and Warranties of USC. USC and each of
the Shareholders jointly and severally represent and warrant to
DRS/MS that:
SECTION 4.01 Corporate Existence. USC is a
corporation duly organized, validly existing and in good
standing under the laws of New Jersey and has all requisite power
and authority to enter into this Agreement and each Transaction
Document to which it is a party and to perform its obligations
hereunder and thereunder; and has all requisite corporate power
and authority to own its properties and assets and conduct its
business as it is now being conducted. USC is duly qualified
as a foreign corporation in each jurisdiction where the nature
of its activities makes such qualification necessary, or where
the failure to so qualify gives rise to a reasonable possibility
of a material adverse effect.
SECTION 4.02 Authority Relative to this Agreement and
Transaction Documents; Consents. The execution, delivery and
performance by USC of this Agreement and each Transaction
Document to which it is, or on the Closing Date will be, a party
and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate
action, and no other corporate action on the part of USC is
necessary for the execution, delivery and performance by USC of
this Agreement or any Transaction Document to which it is, or on
the Closing Date will be, a party and the consummation by it of
the transactions contemplated hereby and thereby. Except as
disclosed on Schedule 4.02, neither the execution nor the
delivery by USC of this Agreement or any Transaction Document to
which it is, or on the Closing Date will be, a party, nor the
consummation by USC of the transactions contemplated hereby or
thereby, nor compliance with nor fulfillment by USC of the terms
and provisions hereof or thereof, will, (i) conflict with or
result in a breach of the terms, conditions or provisions of or
constitute a default under (A) the Certificate of Incorporation
or Bylaws of USC, or (B) any lease, Contract, instrument,
mortgage, deed of trust, trust deed or deed to secure debt
evidencing or securing indebtedness for borrowed money, any
financing lease, any law, rule, regulation, judgment, order,
award, decree or other restriction of any kind to which USC is a
party, or on the Closing Date will be, or by which it is bound,
(ii) require USC to obtain the consent, approval, authorization
or other order or action of, or filing with, any court,
Governmental Authority or regulatory body, (iii) require the
consent, approval, authorization or order of any Person under,
and will not conflict with, or result in the breach, lapse or
termination of, or constitute a default under, or result in the
acceleration of the performance by USC or any Affiliate thereof
under any material lease, permit, license, Contract, mortgage,
deed of trust, trust deed, deed to secure debt, other lease,
indenture or other instrument to which USC or any Affiliate
thereof is a party or by which any of them or any of their
properties are subject, (iv) give any party with rights under any
instrument, Contract, lease, mortgage, deed of trust, trust deed,
deed to secure debt, judgment, order, award, decree or other
restriction of any kind to which USC is bound the right to
terminate, modify or otherwise change the rights or obligations
of any party under such instrument, Contract, lease, mortgage,
deed of trust, trust deed, deed to secure debt, judgment, order,
award, decree or other restriction, causing a Material Adverse
Effect, (v) require any declaration, filing or registration with
any governmental or regulatory authority by USC, or (vi)
otherwise cause a Material Adverse Effect. This Agreement has
been duly executed and delivered by USC and, together with each
other Transaction Document and other agreement and instrument
required to be delivered hereunder or thereunder by USC, when
duly executed and delivered by USC, is or will be, as the case
may be, a legal, valid and binding obligation of USC,
enforceable against USC in accordance with its respective
terms, subject as to enforcement of remedies only to any applicable
bankruptcy, insolvency, reorganization, moratorium, and similar
laws of general application at the time in effect and general
principles of equity.
SECTION 4.03 No Litigation. There is no action,
lawsuit, claim, counterclaim, proceeding or investigation (or
group of related actions, lawsuits, claims, proceedings or
investigations) pending or, to the knowledge of USC, threatened
against or affecting USC that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement
or any Transaction Document.
SECTION 4.04 Title to Transferred Assets; Assumed
Liabilities. USC owns or has the legal right to use all of the
Transferred Assets. Schedule 4.04 hereof lists all of the
machinery, equipment, Intellectual Property Rights, furniture,
fixtures, personalty, and other items constituting the
Transferred Assets of USC. USC has good and marketable title to
all of the Transferred Assets being transferred by it, free and
clear of all liens (including environmental liens), mortgages,
deeds of trust, trust deeds, deeds to secure debt, pledges,
encumbrances, defects, security interests, restrictions,
conditional and installment sale agreements, options, easements
and other legal or equitable encumbrances and claims or charges
of any kind (collectively, "Liens"), except (a) as disclosed in
Schedule 4.04 and (b) liens for current taxes, assessments or
governmental charges not yet due and payable (the Liens referred
to in clauses (a) through (b) being "Permitted Liens"). At the
Closing, USC will deliver or cause to be delivered to the
Partnership good title to the Transferred Assets, except as
permitted or disclosed in this Section, free and clear of any
Liens. Schedule 4.04 hereof lists all of the liabilities
constituting the Assumed Liabilities of USC. Such list of
Assumed Liabilities presents fairly the nature of the liability
to be assumed by the Partnership. In the event that the general
representations and warranties contained in this Section 4.04
conflict with or render ambiguous specific representations or
warranties contained in other provisions of Article IV of this
Agreement, each other more specific provision shall govern.
SECTION 4.05 Compliance with Laws; Permits and
Licenses. (a) Except as disclosed in Schedule 4.05(a), to the best of
its knowledge USC is in compliance with all applicable statutes,
orders, rules and regulations promulgated by Governmental
Authorities (collectively, "Applicable Law") relating
to the Transferred Assets, or the operation or conduct of the
business of USC, or the use of the properties of the business of
USC, including, without limitation, any applicable statute,
order, rule or regulation relating to (i) wages, hours, hiring,
non-discrimination, promotion, retirement, benefits, pensions
and working conditions, (ii) health and safety, (iii) zoning and
building codes or municipal ordinances, violation of which would
substantially interfere with the ability of USC to operate, (iv)
the production, storage, processing, advertising, sale,
transportation, distribution, disposal, use and warranty of
products of the business of USC, (v) obligations of USC to
disabled persons, or (vi) trade and antitrust regulations, and
USC has not received any notice of alleged violation of any such
statute, order, rule or regulation. Except as disclosed in
Schedule 4.05(a), USC has not received any notice that it is in
default and is unaware of any default under or in violation of,
any applicable franchise, permit or license, its Certificate of
Incorporation or other charter document, Bylaws, any promissory
note, indenture or any evidence of indebtedness or security
therefor, lease, Contract or any other instrument to which it is
a party or by which it or any of its properties or assets is or
may be bound.
(b) Schedule 4.05(b) lists all governmental
licenses, permits, product registrations, authorizations,
approvals and indicia of authority and any pending applications
for any thereof material to the conduct of the business of USC.
Except as disclosed in Schedule 4.05(b), such licenses, permits,
product registration, authorizations, approvals and indicia of
authority are (i) all the governmental licenses, permits, product
registrations, authorizations, approvals and indicia of
authority necessary to conduct the business of USC or to use the
Transferred Assets as currently conducted or used and (ii) valid
and in full force and effect and, assuming the related consents
referenced in Section 5.02(f) have been obtained prior to the
Closing, are transferable by USC to the Partnership.
SECTION 4.06 Intellectual Property. (a) Schedule 4.06
hereof sets forth a true and complete list of all Intellectual
Property Rights for USC. The Intellectual Property Rights
constitute all such property forming a part of the business of
USC and, except as disclosed in Schedule 4.06, to the knowledge
of USC, do not conflict with or, to the knowledge of USC,
infringe on the rights of others. There is no Intellectual
Property Right necessary to operate the business of the
Partnership which is not included in the Transferred Assets.
(b) Except as disclosed in Schedule 4.06: (i) all
the Intellectual Property Rights are owned by USC or are licensed
to USC under licenses or written agreements included in the
Transferred Assets; (ii) no claims have been made and are pending
or, to the knowledge of USC, are currently threatened against USC
alleging that any services provided or products manufactured or
sold by USC, or any Intellectual Property Rights, are being
provided, sold or used in violation of any patents or trademarks,
or any other rights of any Person; (iii) USC has not granted any
license to any Person with respect to any Intellectual Property
Rights; (iv) to the knowledge of USC, no other Person is
infringing on any Intellectual Property Rights; (v) all
Intellectual Property Rights of USC are legal, valid and binding,
in full force and effect and freely and fully assignable to the
Partnership; (vi) USC has duly made punctual payments of all
royalties or fees required to be made by it under or in
connection with any Intellectual Property Right; and (vii) no
event has occurred which (with the passing of time or the giving
of notice) would result in or permit the termination of any
Intellectual Property Right or the acceleration of any obligation
thereunder without the consent of USC.
(c) Except as disclosed in Schedule 4.06, all
rights of USC in each item of the Intellectual Property Rights
are transferable to the Partnership as contemplated herein and in
the Partnership Agreement. Following the transactions
contemplated hereby, the Partnership shall own or possess
adequate and enforceable licenses or other rights to use, without
payment of any fee other than as disclosed in Schedule 4.06, all
Intellectual Property Rights.
SECTION 4.07 Litigation. Except as disclosed in
Schedule 4.07, there is no action, lawsuit, claim, counterclaim,
proceeding, or investigation (or group of related actions,
lawsuits, claims, proceedings or investigations) pending or, to
the knowledge of USC, threatened against or affecting USC in any
court, or before any federal, state, provincial, municipal or
other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, or before any arbitrator
of any kind, and as of the Closing Date USC knows of no
reasonable basis for any such action, lawsuit, claim,
proceeding, or investigation (or group of related actions,
lawsuits, claims, proceedings or investigations). USC is
not in default, and no condition exists that with notice or the
lapse of time or both would constitute a default, with respect to
any judgment, order, writ, injunction or decree of any court or
before any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting or relating to
the business of USC. No condemnation proceeding has been
commenced or, to the knowledge of USC, is threatened to be
commenced against any of the Transferred Assets.
SECTION 4.08 Contracts. Schedule 4.08 contains a
complete and correct list as of the date hereof of all
agreements, contracts and commitments of the following types,
written or oral, to which USC is a party or by which USC or its
properties are bound as of the date hereof: (a) mortgages,
indentures, security agreements, letters of credit, loan
agreements and other agreements, guarantees and instruments
relating to the borrowing of money or extension of credit; (b)
employment, consulting, severance and agency agreements; (c)
collective bargaining agreements; (d) bonus, profit-sharing,
compensation, stock option, pension, retirement, deferred
compensation or other plans, trusts or funds for the benefit of
employees, officers, agents and directors (whether or not legally
binding); (e) sales agency, manufacturer's representative or
distributorship agreements; (f) agreements, orders or
commitments for the purchase of raw materials, supplies or
finished products exceeding $5,000; (g) agreements, orders or
commitments for the sale of its products exceeding $5,000; (h)
licenses of patent, copyright, tradenames, trademark, transfer
of technology or know how and other intellectual property
rights; (i) agreements or commitments for
capital expenditures in excess of $5,000 for any single project
(it being warranted that all undisclosed agreements or
commitments for capital projects do not exceed $10,000 in the
aggregate for all projects); (j) brokerage or finder's
agreements; (k) joint venture, partnership and development
agreements; and (1) other agreements, contracts and
commitments which in any case involve payments or receipts of
more than $5,000. USC has delivered to DRS/MS complete and
correct copies of all such written agreements, contracts and
commitments, together with all amendments thereto, and accurate
descriptions of all oral agreements listed in Schedule 4.08.
No reason exists that would not allow each such oral agreement
to be enforceable against any party to such oral agreement.
Except as disclosed in Schedule 4.08, all such agreements,
contracts and commitments governed by this Section 4.08 are in
full force and effect, are enforceable by USC against the other
parties thereto in accordance with their terms, and, except as
disclosed in Schedule 4.08, there does not exist thereunder any
violation or any default or event or condition or course of
dealing which, after notice or lapse of time or both, would
constitute a default thereunder on the part of USC so as to cause
a Material Adverse Effect or, to the best knowledge of USC after
due inquiry, any other party thereto so as to cause a Material
Adverse Effect or would provide a basis for any creditor of USC,
or any party to such agreements, contracts or commitments, to
challenge the extent, validity or priority of the interest of
any other party to such agreements, contracts or commitments so
as to cause a Material Adverse Effect; consummation of the
transactions contemplated under this Agreement and the
Transaction Documents shall not give rise to any violation or
any default or event or condition or course of dealing which,
after notice or lapse of time or both, would constitute a default
thereunder on the part of USC so as to cause a Material Adverse
Effect or, to the best knowledge of USC after due inquiry, any
other party thereto so as to cause a Material Adverse Effect or
would provide a basis for any creditor of USC, or any party to
such agreements, contracts or commitments to challenge the
extent, validity or priority of the interest of any other party
to such agreements, contracts or commitments so as to cause a
Material Adverse Effect. Except as disclosed in Schedule 4.08,
no agreement, contract or commitment to which USC is a party, or
by which it or any of its properties is bound, materially and
adversely affects or in the future may (so far as USC can now
reasonably foresee) materially and adversely affect the business
of USC. Except as disclosed in Schedule 4.08, no agreement,
contract or commitment to which USC is a party, or by which it or
any of its properties is bound, is in conflict, whether by way
of violation of any term or condition or by way of default, with
any other agreement, contract or commitment to which USC is a
party, or by which it or any of its properties is bound. All
agreements, contracts or commitments with Affiliates of USC to
which USC is a party or by which it or any of its properties is
bound reflect terms no less favorable to USC than could be
obtained from unaffiliated third parties. USC has no outstanding
powers of attorney, except routine powers of attorney relating
to representation before governmental agencies or given in
connection with qualification to conduct business in another
jurisdiction.
SECTION 4.09 Labor Union Contracts. USC is not a party
to any collective bargaining or other labor union Contract
applicable to persons employed by USC. There are no unfair
labor practice complaints or there are no current union
representation questions involving persons employed in the
business of USC. Except as disclosed on Schedule 4.09, USC
knows of no current activities or proceedings of any labor union
(or representatives thereof) to organize any unorganized
employees of USC and of no strikes, slowdowns, work stoppages,
lockouts or threats thereof, by or with respect to any employees
of USC. During the 24-month period preceding the date hereof,
there have not been any formally filed grievances involving
employees of USC.
SECTION 4.10 Employees, Labor Matters, etc.
(a) Schedule 4.10 contains a complete and
correct list of the names of all directors, officers and salaried
employees of USC. There is no payment that has not been paid for
more than 30 days past the date on which such payment would
ordinarily be made in the ordinary course of business that is
owed by USC to any of its directors, officers, employees,
trustees, agents, brokers, representatives or other personnel,
current and former, or any beneficiaries, dependents or
survivors of the foregoing (including, without limitation,
expense reimbursement and severance payments), in accordance
with the terms of their respective employment arrangements or
under their employment, severance or agency agreements, if any.
(b) Except as set forth in Schedule 4.10,
there has not been any (i) unfair labor practice complaint
against USC before the National Labor Relations Board; (ii)
labor strike, dispute, or work stoppage actually pending or, to
the best of USC's knowledge after due inquiry, threatened against
or affecting USC; (iii) representation petition respecting the
employees of USC filed with the National Labor Relations Board;
or (iv) arbitration proceeding arising out of or under
collective bargaining agreements pending against USC.
SECTION 4.11 ERISA. Schedule 4.11 lists (i) all
employee benefit plans (as defined in Section 3(3) of ERISA) and
all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical, disability or
life insurance, supplemental retirement, or severance benefit
plans, programs or arrangements, and all employment, termination,
or severance contracts to which USC is a party, with respect to
which USC has any obligation, or that are maintained, contributed
to or sponsored by USC for the benefit of any current or former
employee, officer or director, (ii) each employee benefit plan
for which USC could incur liability under Section 4069 of ERISA
in the event such plan has been or were to be terminated and
(iii) any plan in respect of which USC or the Partnership could
incur liability under Section 4212(c) of ERISA (collectively, the
"Plans").
(a) Each Plan that is intended to qualify
under Section 401(a) of the Code or similar provision of foreign
law is so qualified. USC has performed all obligations required
to be performed by it by the terms of the Plans and applicable
laws, rules and regulations. USC has complied in all material
respects with all applicable laws, rules and regulations relating
to each Plan.
(b) USC has not and has no knowledge that any
other "party in interest" (as defined in Section 3(14) of ERISA)
to any Plan has engaged in any transaction with respect to any
Plan in connection with which USC or any other party in interest
could be subjected to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code.
(c) No Plan which is a "defined benefit plan"
(as defined in Section 3(35) of ERISA) or any trust created
under any such Plan has been terminated since September 2, 1974.
No material liability to the Pension Benefit Guaranty
Corporation (the "PBGC"), other than annual premium payments, has
been or is expected by USC to be incurred by USC with respect to
any Plan. There has been no reportable event (within the meaning
of Section 4043 of ERISA), which at the time of such event
required notification within 30 days to the PBGC. There has
been no other reportable event with respect to any Plan which
could result in a liability to USC as a result thereof. There
has been no event or condition which presents a risk of
termination of any such Plan by the PBGC.
(d) Full payment has been made of all amounts
which USC is required under the terms of each Plan to have paid
as contributions to such Plan as of the last day of the most
recent fiscal year of such Plan ended prior to the date hereof
or, if later, the most recent date as of which such amount is
required to be paid under such Plan (and, with respect to any
Plan that is subject to Section 412(m) of the Code, all payments
required to be made have been paid on or before each required
installment due date (as defined in Section 412(m) of the Code)
preceding the date hereof), and, with respect to any Plan, no
accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived,
exists. There has been no failure to make any payment due prior
to the date hereof that is or could become a liability of USC
under Section 412(c) of the Code.
(e) The present value as of December 31, 1994
of all accrued benefits under all Plans subject to Section 412
of the Code did not, as of such date, exceed the current value of
the assets of such Plans allocable to such accrued benefits. The
terms "present value," "current value" and "accrued benefit"
have the meanings specified in Section 3 of ERISA.
(f) No Plan is a "multiemployer plan" (as
defined in Sections 3(37) and 4001(3) of ERISA) and USC has not
withdrawn or partially withdrawn from any multiemployer plan
under circumstances giving rise to a withdrawal liability under
ERISA.
(g) Neither USC nor any corporation, trade or
business under common control with USC (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) has engaged in any
transaction since January 1, 1986 described in Section 4069(a) of
ERISA.
(h) No Plan provides for the payment of any
welfare benefit (as described in Section 3(1) of ERISA) to any
former or retired employee of USC or any of its
Affiliates, except as may be required by Section 4980B
of the Code or Section 601 of ERISA.
(i) No Plan provides for the payment of
severance benefits upon termination of employment.
SECTION 4.12 Brokers' or Finders' Fees. USC has not
paid nor will become obligated to pay any fee or commission to
any broker, finder, consultant or other intermediary for or on
account of the transactions provided for in this Agreement.
SECTION 4.13 Financial Information; Undisclosed
Liabilities. (a) Attached hereto as Schedule 4.13 are copies of
the balance sheet of USC (the "USC Balance Sheet") as of December
31, 1995 (the "Balance Sheet Date"). Except as disclosed on
Schedule 4.13, the USC Balance Sheet, together with the books
and records of the business of USC, present fairly and
consistently the financial condition of the business of USC as
of the Balance Sheet Date.
(b) The books of account of USC reflect all items
of income and expense and all assets and liabilities of the
business of USC.
(c) USC has delivered to DRS/MS a copy of its
balance sheets, together with the notes thereto, as of December
31, 1992, 1993 and 1994 and the related statement of operations
and retained earnings and of cash flows for the year then ended.
Except as disclosed on Schedule 4.13, such financial statements,
together with the notes thereto, (i) are in accordance with the
books and records of USC, (ii) present fairly and consistently
the financial condition of USC as of the date thereof, (iii)
present fairly and consistently the result of operations of USC
for the periods covered by such statements, and (iv) include all
adjustments that are necessary for a fair and consistent
presentation of the financial condition of USC and the results of
USC's business operations for the periods covered by such
statements.
(d) There are no material liabilities of USC
relating to or involving any Transferred Asset of any kind
whatsoever, whether or not accrued or fixed, absolute or
contingent, determined or determinable, known or unknown, other
than liabilities (i) that comprise part of the Assumed
Liabilities, (ii) reflected on and adequately provided for in the
USC Balance Sheet attached hereto as Schedule 4.13, (iii) incurred
since the Balance Sheet Date in the ordinary course of the operation
of USC and not as a result of any violation of law or regulation which,
singly or in the aggregate, are likely to have a Material Adverse Effect,
or (iv) disclosed in Schedule 4.13.
SECTION 4.14 Taxes. (a) Except as disclosed in
Schedule 4.14, USC has duly filed all federal, state and local
Returns which are required to be filed by it prior to the date
hereof and has paid all Taxes which are shown thereon to be due
and all other Taxes imposed by law upon it or any of its
properties, assets, income, receipts, payrolls, transactions,
capital, net worth or franchises which have become due and
payable. Except as disclosed in Schedule 4.14, the Taxes
payable set forth in the USC Balance Sheet are adequate to cover
all liabilities for Taxes of USC with respect to all assets
held and activities conducted by USC on or prior to the Closing
Date, other than liabilities for Taxes incurred in the ordinary
course of business subsequent to the date of the USC Balance
Sheet and permitted by this Agreement. No tax liens have been
filed and neither the Internal Revenue Service nor any other
taxing authority is now asserting or, to the best knowledge of
USC after due inquiry, threatening to assert against USC any
deficiency or claim for additional Taxes. Except as provided
in Schedule 4.14, no Return of USC is currently under audit by
the Internal Revenue Service or by the taxing authorities of any
other jurisdiction. USC has not granted any waiver of any
statute of limitations with respect to, or any extension of a
period for the assessment of any federal, state or local Tax.
Without limiting the foregoing, USC has no knowledge of any
actual claim for any additional Tax to be imposed upon USC
for the periods ending on or prior to the Closing Date in excess
of the accruals of USC set forth in the USC Balance Sheet with
respect to Taxes. The federal, state and local tax Returns of
USC have been examined by the appropriate taxing authority, or
the statutes of limitations with respect to the relevant income
or franchise tax liability have expired, for all tax periods
through and including the tax period listed with respect to each
such jurisdiction set forth in Schedule 4.14.
(b) No consent or agreement under Section
341(f) of the Code is in effect with respect to USC.
(c) Except as provided in Schedule 4.14, USC
has not (i) agreed to and is not required to make any adjustment
under Section 481(a) of the Code or Revenue Procedure 87-32 (or
any successor thereto), by reason of a change in method of
accounting or otherwise; (ii) ever been included in a combined
or consolidated income tax return; (iii) ever owned stock
representing 50% or more of the voting power or value of another
corporation; (iv) entered into any agreement or arrangement
that could result, separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Section
280G of the Code; (v) consummated any transaction with another
corporation that is owned, directly or indirectly, by the
Sellers on other than an arms-length basis within the meaning of
Section 482 of the Code and the regulations thereunder; or (vi)
entered into any tax sharing agreements or similar arrangements.
(d) USC's taxable year for federal and state
income and franchise tax purposes has always been a taxable year
beginning January 1 and ending December 31.
SECTION 4.15 Absence of Changes. Since December 31,
1995 except as specified in Schedule 4.15, USC has not:
(a) undergone any adverse change in its
condition (financial or other), properties, assets,
liabilities, business, operations or prospects, other than
changes in the ordinary course of business;
(b) declared, set aside, made or paid any
dividend or other distribution in respect of its capital stock or
otherwise purchased or redeemed, directly or indirectly, any
shares of its capital stock;
(c) issued or sold any shares of its capital
stock of any class or any options, warrants or conversion or
other rights to purchase any such shares or any securities
convertible into or exchangeable for such shares;
(d) other than in the ordinary course of
business, incurred any indebtedness for borrowed money, issued
or sold any debt securities or prepaid any debt outstanding as of
[date];
(e) mortgaged, pledged or subjected to any
Lien any of its properties or assets, tangible or intangible,
except for Permitted Liens;
(f) acquired or disposed of any assets or
properties, or entered into any agreement or other arrangement
for such acquisition or disposition, except in the ordinary
course of business;
(g) forgiven or cancelled any debts or
claims, or waived any rights except in the ordinary course of
business;
(h) entered into any agreement, commitment or
other transaction other than agreements involving an expenditure
of [$5,000] or less in the aggregate and other than agreements in
the ordinary course of business, or entered into any agreement
which, pursuant to its terms, is not cancellable without
penalty on less than 30 days' notice;
(i) paid any bonus to any officer, director
or employee or granted to any officer, director or employee any
other increase in compensation in any form;
(j) adopted or amended in any material
respect, any employment, collective bargaining, bonus,
profitsharing, compensation, stock option, pension, retirement,
deferred compensation or other plan, agreement, trust, fund or
arrangement for the benefit of employees (whether or not legally
binding);
(k) suffered any damage, destruction or loss
(whether or not covered by insurance) which may have had
(individually or in the aggregate) a Material Adverse Effect;
(1) suffered any strike or other
employmentrelated problem which may have had (individually or in
the aggregate) a Material Adverse Effect;
(m) suffered any loss of employees or
customers which may have had (individually or in the aggregate)
a Material Adverse Effect;
(n) amended its certificate of incorporation
or bylaws (or comparable documents);
(o) changed in any respect its accounting
practices, policies or principles;
(p) incurred any liability or obligation
(whether absolute, accrued, contingent or otherwise and whether
direct or as guarantor or otherwise with respect to the
obligations of others), except in the ordinary course of
business;
(q) granted any rights or licenses under any
of its trademarks, tradenames or patents or entered into any
licensing or distributorship agreements; or
(r) made any material changes in policies or
practices relating to selling practices, returns, discounts or
other terms of sale or accounting therefor or in policies of
employment.
SECTION 4.16 Accounts Receivable. Except as disclosed
in Schedule 4.16, the accounts receivable reflected on the USC
Balance Sheet arose from, and the accounts receivable existing on
the Closing Date will have arisen from, the sale of Inventories
or services in the ordinary course of the businesses of USC and
constitute valid, undisputed and subsisting claims and are not
subject to valid claims, counterclaims or setoffs.
SECTION 4.17 Insurance. The business of USC and the
Transferred Assets are covered by valid and currently effective
insurance policies issued in favor of USC. Schedule 4.17
contains a list and brief description (including the name of the
insurer, the type of coverage provided, the amount of the annual
premium for the current policy period, the amount of remaining
coverage and deductibles and the coverage period) of all policies
and Contracts of insurance held by USC and/or the employees
currently or previously employed in the business of USC. Except
as disclosed in Schedule 4.17, all such policies are in full
force and effect and transferable by USC to the Partnership. All
premiums due thereon have been paid and USC and its
Affiliates have complied in all respects with the
provisions of such policies. Such policies (i) are sufficient
for compliance with all requirements of law and are
substantially consistent with all (A) Contracts to which USC is a
party and (B) leases, mortgages, deeds of trust, trust deeds and
deeds to secure debt to which USC is a party, and (ii) are
reasonable in scope and amount, in light of the risks attendant
to the businesses and activities in which USC is or has been
engaged. There is no default with respect to any provision
contained in any such policy and there has not been any failure
to give any notice or present any claim under any such policy in
a timely fashion or in the manner or detail required by the
policy. Except as disclosed in Schedule 4.17, no notice of
cancellation or non-renewal with respect to, or disallowance of
any claim under, any such policy has been received by USC,
neither has USC been refused insurance with respect to its assets
or operations, nor has its coverage been previously cancelled or
materially limited, by any insurer to which it has applied for
such insurance or with which it has held insurance.
SECTION 4.18 Sufficiency of Transferred Assets.
(a) Except as disclosed in Schedule 4.18, all of
the Transferred Assets are suitable for the uses in which they
are currently employed, are in good operating condition and are
free from any defects (subject to normal wear and tear), except
such minor defects as do not interfere with the continued use of
such properties and equipment in the conduct of the normal
operations of the business of USC, and the Transferred Assets
include supplies of spare parts for the equipment and machinery
included in the Transferred Assets in amounts consistent with
past practices of USC.
(b) None of the Transferred Assets is used by USC
or any of its Affiliates in connection with any business or
enterprise other than the business of USC.
SECTION 4.19 Foreign Assets. The Transferred Assets do
not include any interest in any real property or tangible or
intangible personal property or other assets located outside the
continental limits of the United States of America.
SECTION 4.20 Certain Payments. All payments by USC to
agents, consultants and others have been in payment of bona fide
fees and commissions and not as bribes or illegal or improper
payments. USC has complied with the Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder
("FCPA") and, in each case, have not made any payment to or on
behalf of any person with respect to which a deduction could be
disallowed under Section 162(c) of the Code. Neither the IRS nor
any other U.S. federal, state, local or foreign government agency
or entity has initiated or threatened any investigation of any
payment made by USC of, or alleged to be of, the type described
in this Section.
SECTION 4.21 Affiliate Transactions. Schedule 4.21
contains a complete and correct list of all agreements or
arrangements (whether or not written) between USC and any
shareholder, officer, director or employee (or immediate family
member thereof) of USC currently in effect or to be performed in
the future. Other than such agreements or arrangements, if any,
or as further disclosed on Schedule 4.21, there has been no
transaction between USC and any shareholder, officer, director or
employee (or immediate family member of any thereof) of USC in
effect within the two-year period immediately preceding the date
hereof which involved payments to, or from, or for the benefit
of, any such shareholder, officer, director or employee (or
immediate family member of any thereof) (other than (a) salary
and bonus paid as part of the employment relationship for
services rendered (including directors' fees) and (b)
contributions by USC under any of its Plans). Except as set
forth in Schedule 4.21, no shareholder, officer, director or
employee (or immediate family member of any thereof) of USC owns
directly or indirectly, on an individual or joint basis, greater
than a 5% interest in, or serves as an officer, director or
employee of, any customer, competitor or supplier of USC or any
person or entity which has a contract or arrangement with USC.
SECTION 4.22 Suppliers. Except as disclosed on
Schedule 4.22, to the knowledge of USC none of the suppliers of
inventory, equipment or services of USC will cease to sell such
equipment or services to the Partnership as a result of the
transactions contemplated by this Agreement which cessation
will materially disrupt the business of the Partnership.
SECTION 4.23 Environmental Conditions and Governmental
Authorizations. Except as specified in Schedule 4.23:
(a) All real property owned, leased, occupied or
used by USC is free from contamination from any Hazardous
Materials. USC has not caused or suffered, nor, to the best
knowledge of USC after due inquiry, has any other party
previously involved in operations at any such property caused or
suffered, any Environmental Damages.
(b) Neither USC nor, to the best of its knowledge,
any prior owner or occupant of real property owned, leased,
occupied or used by USC has received notice of any alleged
violation of Environmental Requirements, or notice of any
alleged liability for Environmental Damages, and there exists no
writ, injunction, decree, order or judgment outstanding, nor any
claim, suit, proceeding, citation, fine, penalty, directive,
summons or investigation, pending or threatened, relating to the
ownership, use, maintenance or operation of the Premises by any
Person, or to alleged violation of Environmental Requirements, or
to the suspected presence of Hazardous Material thereon, nor does
there exist any basis for such claim, suit, proceeding, citation,
fine, penalty, directive, summons or investigation being
instituted or filed.
(c) There is not constructed, placed, deposited,
stored, disposed of or located on any real property owned,
leased, occupied or used by USC any polychlorinated biphenyls
("PCBs") or transformers, capacitors, ballasts, or other
equipment which contains dielectric fluid containing PCBs, or
any asbestos.
(d) USC has no knowledge of any alleged liability
for Environmental Damages of any alleged violation of
Environmental Requirements asserted against any of the owners or
occupants of any related property located in the vicinity of any
of any real property owned, leased, occupied or used by USC.
(e) USC has in its possession all permits required
to operate in compliance with all applicable laws, and USC is
presently in material compliance with each of such permits.
SECTION 4.24 Leases of Personal Property. (a) Schedule
4.24 correctly describes each lease under which USC is the lessee
of any personal property (collectively, the "Personal Property Leases").
The property described in all of the Personal Property Leases is presently
used in the businesses of USC. USC has all right, title and interest of the
lessee under the terms of all of the Personal Property Leases to which
it is a party. Other than any related consents listed in
Schedule 4.24, no consent is necessary for the assignment of any
Personal Property Lease held by USC to the Partnership.
(b) No event has occurred which (with the passage
of time or the giving of notice) would materially impair any
right of USC to exercise and obtain the benefits of any options
contained in any Personal Property Lease. There is no
substantial default or basis for acceleration or termination,
nor has any event occurred (assuming any related consent
referenced in Section 5.02(f) is obtained prior to the Closing)
which (with the passage of time or the giving of notice) would
constitute such a default or result in or permit the acceleration
of any Personal Property Lease.
SECTION 4.25 Full Disclosure; Materiality. No
representation or warranty by USC herein, nor any statement or
certificate furnished to DRS and/or DRS/MS pursuant hereto, or
in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they were made
and, together with the Schedules attached hereto, not materially
misleading. The Schedules attached hereto completely and
correctly present the information required by this Agreement to
be set forth therein, do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary
to make the statements contained therein, in light of the
circumstances in which they were made and, together with the
representations and warranties by USC herein, not materially
misleading. The aggregate total of any loss, liability or
expenditure, whether contingent or not, of all Material Adverse
Effects referenced in Sections 4.02, 4.08, 4.13 and 4.15 does not
exceed $25,000.00. Originals or true and complete copies of all
documents listed in such Schedules have heretofore been made
available for examination by DRS and/or DRS/MS, including,
without limitation, deeds, leases, mortgages, deeds of trust,
trust deeds, deeds to secure debt, security instruments, permits,
trademarks, patents and other Intellectual Property Rights,
litigation files, Contracts, employee agreements and licenses in
the form existing on the date hereof.
SECTION 4.26 Books and Records. USC has previously
furnished to DRS/MS true and correct copies of the Certificate of
Incorporation (or other charter document) and Bylaws of USC as in
effect on the date hereof. The minute books and stock books of
USC have been made available to DRS/MS and are correct and
complete as of the date hereof in all material respects, and will
be correct and complete at the Closing.
SECTION 4.27 Accounts. Schedule 4.27 correctly
identifies each bank account maintained by or on behalf or for
the benefit of USC and the name of each Person with any power or
authority to act with respect thereto.
ARTICLE V.
COVENANTS
SECTION 5.01 Covenants of DRS/MS. DRS/MS covenants
with USC that:
(a) Compliance with Laws. DRS/MS is in all
material respects in compliance with all laws applicable to it;
(b) Maintain Accuracy of Representations. DRS/MS
will not take or omit to take any action which would result in
the inaccuracy on the Closing Date of any of their
representations and warranties (including any and all Schedules
thereto) contained in Article III. It is expressly understood by
USC that a change in control of DRS/MS, whether by merger,
acquisition, share exchange, sale or pledge of stock or
otherwise, shall not by such change of control alone constitute a
breach of any representation or warranty or otherwise breach this
Agreement.
(c) Covenant not to Compete. Neither 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.
SECTION 5.02 Covenants of USC. USC covenants with DRS
and DRS/MS that:
(a) Compliance with Laws. USC is in all material
respects in compliance with all laws applicable to it;
(b) Maintain Accuracy of Representations. USC
will not take or omit to take any action which would result in
the inaccuracy on the Closing Date of any of their
representations and warranties (including any and all Schedules
thereto) contained in Article IV;
(c) No Shop. Until the earlier of the termination
of this Agreement in accordance with its terms or the Closing,
USC shall not directly or indirectly, through any Affiliate,
agent or otherwise, solicit, initiate or encourage the submission
of any proposal or offer from any Person relating to any
acquisition or purchase of all or (other than in the ordinary
course of business) any portion of the stock of USC or the
Transferred Assets or any business combination with USC or
participate in any negotiations regarding, or furnish to any
other Person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. USC immediately shall
cease and cause to be terminated any existing discussions or
negotiations with any parties conducted heretofore with respect
to any of the foregoing. USC shall notify DRS/MS promptly of
any such proposal or offer,
or any inquiry or contract with any Person with respect thereto,
is made and shall, in any such notice to DRS/MS, indicate in
reasonable detail the identity of the Person making such
proposal, offer, inquiry or contact;
(d) Access to Information; Confidentiality.
(i) From the date hereof to the Closing Date,
USC shall and shall cause any Affiliates, employees, auditors and
agents of USC to, afford the officers, employees and agents of
DRS and DRS/MS access during regular business hours to the
officers, employees, agents, properties, offices, plants and
other facilities, books and records of USC, and shall make
available to DRS and DRS/MS all financial, operating and other
data and information as DRS and DRS/MS, through their officers,
employees or agents, may reasonably request;
(ii) Pursuant to a Confidentiality Agreement
dated March 30, 1995, all information obtained by DRS and DRS/MS
pursuant to this Section 5.02 shall be kept confidential;
(iii) No investigation or knowledge of any
matter or condition by DRS or DRS/MS shall affect any
representation or warranty or any condition to their obligations
or any right to terminate this Agreement;
(e) Conduct of Business. Between the date hereof
and the Closing Date, without the consent of DRS/MS and except as
contemplated by the Transaction Documents, USC shall:
(i) conduct its business only in the usual,
regular and ordinary course of business consistent with past
practice;
(ii) except either in the usual, regular and
ordinary course of business and consistent with past practice or
as necessary to comply with the provisions of this Agreement,
refrain from:
(A) making any purchases, sales,
transfers, or leases of any Transferred Assets or mortgaging,
pledging or otherwise creating a security interest in, or any
encumbrance of, any of the Transferred Assets (other than
Permitted Liens);
(B) entering into any Contract, license,
or lease in relation to the business of USC or taking any other
action which would, if entered into or taken on the date hereof,
be required to be disclosed on a Schedule to this Agreement or
the Partnership Agreement;
(C) making any change in the
compensation or benefits payable or to become payable to any
employee employed by USC or making any new bonus payment or
arrangement or benefit to or with any such employee;
(D) making any changes in the customary
methods of operation of the business of USC, including
marketing, selling and pricing practices and policy; and
(E) taking any other action which would
have a material negative impact on the business of USC or on the
prospects of the business of USC;
(iii) use all reasonable efforts to preserve
its business organization intact, to keep its insurance policies
intact, to keep available the services of its present employees
and officers, and to preserve the relationships with and the
goodwill of all suppliers, customers, sales representatives and
others having business relations with USC;
(iv) maintain the Premises and all of the
other properties used in the operation of its business in
customary repair, order and condition, reasonable wear and tear
excepted, and perform all of its obligations under any leases;
(v) maintain its books, accounts and records
in connection with its business in the usual manner on a basis
consistent with past practices;
(vi) refrain from amending, modifying in any
material respect or consenting to the termination of any Material
Contract or other material contract to be transferred to the
Partnership under this Agreement and the Partnership Agreement or
USC's material rights with respect thereto;
(vii) except in the ordinary course of
business, refrain from increasing the total number of employees
employed in connection with its business; and
(viii) refrain from agreeing, whether in writing
or otherwise, to do any of the foregoing;
(f) Third Party Consents; Further Actions.
(i) USC shall use its best reasonable
efforts to obtain at the earliest practicable date after the
date hereof, and, in any event, prior to the Closing Date, all
consents of parties to Contracts contemplated by this Agreement
or any Transaction Document;
(ii) USC shall use its best reasonable
efforts to obtain, and to assist DRS/MS or the Partnership in
obtaining, all waivers, licenses, authorizations,
qualifications, orders, permits, consents and approvals
required to be obtained by it or them and to effect, and to
assist DRS/MS or the Partnership in effecting, all
registrations, filings and notices with or to third parties or
governmental or public bodies or authorities
required to be made which are necessary or desirable in
connection with the transactions contemplated by this
Agreement or any Transaction Documents;
(iii) USC shall obtain the release of all Liens
on or against any of the Transferred Assets, other than
Permitted Liens;
(g) Employee Matters. Prior to the Closing, USC
will not terminate without good business reasons, lay off or
transfer any of its employees without the consent of DRS/MS. USC
shall use its reasonable best efforts to preserve intact the
availability of such employees so as to permit the Partnership
to hire those employees as the Partnership desires, effective
upon the Closing Date. USC will not do anything to dissuade any
of the employees of USC from accepting employment with the
Partnership after the Closing;
(h) Renewal of Permits. USC shall take such steps
as are customary in the industry to file any necessary
applications for the renewals of all licenses and permits
referred to in Section 4.23 including, without limitation,
Environmental Permits, if any such license or permit is required
to be obtained prior to the Closing;
(i) Powers of Attorney. USC shall revoke all
powers of attorney relating to the Transferred Assets upon the
Closing;
(j) Notification of Certain Matters. USC shall
give prompt notice to DRS/MS of (i) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate
and (ii) any failure of USC to comply with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section shall
not limit or otherwise affect the remedies available hereunder
to the party receiving such notice;
(k) Disclosure Schedules. No later than four
weeks after the date hereof, USC shall deliver to DRS/MS complete
Schedules to this Agreement and the Transaction Documents which
are to be provided by USC together with any supporting
documentation which DRS/MS may reasonably request and, within
seven business days after receipt of such Schedules and
supporting documentation either (i) DRS/MS will accept such
Schedules in which case they shall become a part of this
Agreement and the appropriate Transaction Documents, (ii) the
parties hereto will agree upon mutually acceptable revisions to
such Schedules in which case such revised Schedules shall become
a part of this Agreement and the appropriate Transaction
Documents or (iii) DRS/MS will terminate this Agreement pursuant
to Article IX hereof.
(l) Covenant Not to Compete. Neither USC nor its
Affiliates (other than the Shareholders whose covenants not to
compete are set forth below) 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 (other than the
Shareholders) 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.
For the period beginning on the Closing Date and ending
on the later of the third anniversary of the Closing Date or the
first anniversary of the relevant Shareholder's termination of
employment from the Partnership, neither the Shareholders nor any
of them (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, director, officer, employee or otherwise:
(i) any business which develops, manufactures, markets and/or
sells any ultrasound medical imaging equipment or any product
developed, manufactured, marketed and/or sold by the Partnership
(or contemplated to be developed, manufactured, marketed and/or
sold by the Partnership in the reasonably foreseeable future);
(ii) any entity which has been or proposes to be a customer of
the Partnership during the 18 month period immediately preceding
the termination of the relevant Shareholder's employment by the
Partnership; and/or (iii) any entity which proposes to supply or
has supplied the Partnership with technologically-related
products during the 18 month period immediately preceding the
termination of the relevant Shareholder's employment by the
Partnership, except that any and all of the Shareholders 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.
Each Shareholder additionally agrees that he shall not, directly
or indirectly, in any capacity whatsoever:
(a) hire or solicit for employment, directly
or indirectly, any Partnership personnel in any capacity
whatsoever (which shall be deemed to include, without limitation,
any existing or prospective employee of the Partnership or any
person who has been such an employee of the Partnership within
150 days prior to the Closing Date);
(b) attempt directly or indirectly, to induce
any such Partnership personnel to leave the employ of, or
discontinue such person's business association with, the
Partner-ship;
(c) solicit, directly or indirectly, any
client or account or bona fide prospective client or account of
the Partnership with which the Partnership has had good faith
discussions in connection with the sale of goods and/or services
directly or indirectly competitive with the business of the
Partnership; or
(d) interfere with, disrupt, or attempt to
disrupt, the business relationships, contractual or otherwise,
between the Partnership and any of its customers, suppliers or
employees.
SECTION 5.03 Insurance Matters. Each party agrees to
use its best efforts to assist the Partnership in arranging
insurance coverage for the business of the Partnership to be
effective upon the Closing. Such insurance shall be of the
types, in amounts and of an extent and scope at least equal to
the insurance currently covering such businesses.
SECTION 5.04 Closing Conditions. Each party agrees to
use its best efforts to satisfy the conditions precedent to
Closing specified in Article VI.
SECTION 5.05 Net Worth Statements. Promptly after the
execution of this Agreement, USC and DRS/MS shall prepare a
mutually agreed upon balance sheet (the "Preliminary Balance
Sheet") of USC in accordance with GAAP as of December 31, 1995,
and, based on the Preliminary Balance Sheet, shall prepare a Pro
Forma Statement of Net Worth of the Partnership as of December
31, 1995 (the "Preliminary Pro Forma Net Worth Statement"). The
Preliminary Pro Forma Net Worth Statement shall reflect
agreed-upon adjustments to the net worth of USC as reported in
the Preliminary Balance Sheet and shall eliminate any assets or
liabilities included in the USC Balance Sheet, other than the
Transferred Assets and Assumed Liabilities, as herein defined.
As soon as practicable after the Closing, and in any event no
more than 60 days after the Closing Date, USC will prepare, and
DRS/MS will internally review, a final statement of net worth of
the Partnership as of the most recent date practicable prior to
the Closing (the "Final Pro Forma Net Worth Statement"). All
physical inventories in connection with the Final Pro Forma Net
Worth Statement shall be taken as near as practicable to the
Closing Date. The Final Pro Forma Net Worth Statements shall be
prepared in a manner that is consistent with the preparation of
the Preliminary Pro Forma Net Worth Statement. To the extent
that the Final Pro Forma Net Worth Statements reflects that
Assumed Liabilities are greater than Transferred Assets (a
"deficit"), 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
[and/or USC] on a present value basis, or choosing any
combination of such two options so as to eliminate such deficit.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 6.01 Conditions Precedent to Obligations of
DRS/MS. The obligation of DRS/MS to make the DRS/MS Capital
Contribution and to perform its other obligations hereunder and
under the Transaction Documents is subject to the satisfaction
or waiver of the conditions precedent that:
(a) Documents. DRS/MS shall have received on or
before the Closing Date the following, each dated the Closing
Date, in form and substance satisfactory to DRS/MS:
(i) counterparts of each of the following
Transaction Documents duly executed and, to the extent
appropriate, acknowledged by all appropriate parties
other than DRS/MS and its affiliates, together with all
documents to be delivered to DRS/MS thereunder on the
Closing Date:
(1) the Partnership Agreement;
(2) the Employment Agreements; and
(3) the Asset Transfer Documents
referred to in Section 2.03(b);
(ii) a Certificate of USC, signed on behalf of
USC by the President or a Vice President and the
Secretary or any Assistant Secretary (the statements
made in which Certificate shall be true on and as of the
Closing Date), certifying fulfillment of the conditions
specified in subsections (b) and (c) below;
(iii) copies of resolutions of the board of
directors and the shareholders of USC, certified by the
Secretary of USC, authorizing the execution, delivery
and performance of this Agreement and the Transaction
Documents and all other documents and instruments to be
delivered pursuant hereto and thereto; and
(iv) opinion of counsel to USC, substantially
in the form attached as Exhibit D.
(b) Representations and Warranties. The
representations and warranties of USC contained in this
Agreement, as modified by any Schedules delivered by USC
pursuant to Section 5.02(k) hereof, shall be true and correct in
all material respects on the date hereof and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given again at and as of the Closing
Date, except for any representation and warranty expressly
stated to have been made or given as of a specified date, which,
at the Closing Date, shall be true and correct in all material
respects as of the date expressly stated.
(c) Performance. USC shall have performed and
complied in all material respects with all of their respective
agreements, covenants and conditions required by this Agreement
and each Transaction Document to be performed or complied with
by them prior to or at the Closing Date.
(d) No Material Adverse Change. Since the date of
the Balance Sheet there shall not have occurred an event or
condition which has resulted or which reasonably may be expected
to result in a Material Adverse Effect.
(e) Net Worth. Assumed Liabilities shall not
exceed Transferred Assets as reflected on the Preliminary Balance
Sheet and as reflected on the Partnership's Pro Forma Net Worth
Statement (prior to taking into account the DRS/MS Capital
Contribution).
(f) Consents, etc. All notices to, and
declarations, filings and registrations with, and consents,
approvals and waivers from governmental and regulatory agencies
required to consummate the transactions contemplated hereby and
all consents, approvals and waivers from third parties required
to have been obtained in connection with the transactions
contemplated by this Agreement and the Transaction Documents
shall have been obtained prior to Closing; provided, however,
that USC may have the consent of Independence Bank ("USC
Obligee") contingent upon the pay off on the Closing Date by USC
of a certain loan from USC Obligee to USC upon presenting
evidence of such contingent consent in form and substance
satisfactory to DRS/MS prior to the Closing Date and upon
presenting evidence of such pay off in form and substance
satisfactory to DRS/MS at the time of Closing.
(g) No Proceeding or Litigation.
(i) No preliminary or permanent injunction or
other order shall have been issued by any court of competent
jurisdiction, whether federal, state or foreign, or by any
governmental or regulatory body, whether federal, state or
foreign, nor shall any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority,
whether federal, state or foreign, be in existence or effect,
which prevents the consummation of the transactions contemplated
by this Agreement or any Transaction Document.
(ii) No suit, action, claim, proceeding or
investigation before any court, arbitrator or administrative,
governmental or regulatory body or authority, whether federal,
state or foreign, shall have been commenced and be pending
against either DRS/MS, USC or any of their respective
Affiliates, associates, officers or directors seeking to
prevent the consummation of the transactions contemplated by
this Agreement or any Transaction Document or asserting that
such transactions would be illegal.
(h) Licenses; Permits. All operating licenses and
permits necessary for the operation of the businesses of USC as
conducted on the Closing Date (including, without limitation,
Environmental Permits) to the extent transferable shall have been
transferred by USC to the Partnership as of the Closing Date, or
new permits issued in replace thereof, at the expense of the
Partnership.
(i) Other. DRS/MS shall have received such
further assurances and documents as it may reasonably request.
SECTION 6.02 Conditions Precedent to Obligations of
USC. The obligations of USC to perform its other obligations
hereunder and under the Transaction Documents are subject to
satisfaction or waiver of the conditions precedent that:
(a) Documents. USC shall have received on or
before the Closing Date the following, each dated the Closing
Date, in form and substance satisfactory to USC:
(i) counterparts of each of the following
Transaction Documents duly executed and, to the extent
appropriate, acknowledged by all appropriate parties, together
with all documents to be delivered thereunder on the Closing
Date, all in form and substance reasonably satisfactory to USC:
(1) the Partnership Agreement;
(ii) a Certificate of DRS/MS, signed on behalf
of DRS/MS by the President or a Vice President and the Secretary
or any Assistant Secretary of DRS/MS (the statements made in
which Certificate shall be true on and as of the Closing Date),
certifying as to the fulfillment of the conditions specified in
subsections (b) and (c) below;
(iii) copies of resolutions of the board of
directors of DRS/MS, certified by the Secretary of DRS/MS
authorizing the execution, delivery and performance of this
Agreement and the Transaction Documents to which each is a party
and all other documents and instruments to be delivered pursuant
hereto and thereto; and
(iv) opinion of counsel to DRS/MS,
substantially in the form attached as Exhibit E.
(b) Representations and Warranties. The
representations and warranties of DRS/MS contained in this
Agreement shall be true and correct in all material respects on
the date hereof and as of the Closing Date with the same effect
as through such representations and warranties had been made or
given again at and as of the Closing Date, except for any
representation or warranty expressly stated to have been made or
given as of a specified date, which, at the Closing Date, shall
be true and correct in all material respects as of the date
expressly stated.
(c) Performance. DRS/MS shall have performed and
complied in all material respects with all of its agreements,
covenants and conditions required by this Agreement and each
Transaction Document to be performed or complied with by it
prior to or at the Closing Date.
(d) Consents, etc. All notices to, and
declarations, filings and registrations with, and consents,
approvals and waivers from, governmental and regulatory agencies
required to consummate the transactions contemplated hereby and
all consents, approvals and waivers from third parties required
to have been obtained in connection with the transactions
contemplated by this Agreement and the Transaction Document shall
have been obtained prior to Closing.
(e) No Proceeding or Litigation.
(i) No preliminary or permanent injunction or
other order shall have been issued by any court of competent
jurisdiction, whether federal, state or foreign, or by any
governmental or regulatory body, whether federal, state or
foreign, nor shall any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority,
whether federal, state or foreign, be in existence or effect,
which prevents the consummation of the transactions contemplated
by this Agreement or any Transaction Document.
(ii) No suit, action, claim, proceeding or
investigation before any court, arbitrator or administrative,
governmental or regulatory body or authority, whether federal,
state or foreign, shall have been commenced and be pending
against either DRS/MS or USC or any of their respective
Affiliates, associates, officers or directors seeking to prevent
the consummation of the transactions contemplated by this Agreement
or any Transaction Document or asserting that such transactions would
be illegal.
(f) DRS/MS Capital Contributions. The
Partnerships shall have received the DRS/MS Capital
Contributions in accordance with the terms of the Partnership
Agreement.
(g) Other. USC shall have received such further
assurances and documents as it may reasonably request.
ARTICLE VII.
[Intentionally Omitted]
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.01 Survival of Representations and
Warranties. The representations and warranties of USC and DRS/MS shall
survive the Closing for a period of three years from the Closing
Date, provided however, that representations and warranties in
Section 4.14 shall survive 90 days following expiration of the
period during which claims may be pursued in respect of such
matters pursuant to the applicable statute of limitations; and
provided further that there shall be no temporal limitation of
indemnification in respect of representations and warranties set
forth in Section 4.04 (as such representations and waranties of
Section 4.04 relate to Transferred Assets but not to Assumed
Liabilities).
SECTION 8.02 Indemnification by the Parties. Except as
otherwise limited by this Article, each of the Partnership and
its respective partners, officers, directors, employees, agents,
successors and assigns (each an "Indemnified Party") shall be
indemnified and held harmless by DRS/MS, on the one hand, and
each of USC and the Shareholders on the other hand, (each an
"Indemnifying Party") for any and all liabilities, losses,
damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation,
reasonable legal costs and expenses and environmental
engineering consultants' fees) actually suffered or incurred by
the Indemnified Party (hereinafter a "Loss"), actually arising
out of or resulting from:
(a) the breach of any representation or warranty
by the Indemnifying Party contained herein or contained in any of
the Transaction Documents; or
(b) the breach of any covenant or agreement by the
Indemnifying Party contained herein or contained in any of the
Transaction Documents;
provided, however, that except for any Loss or Losses
attributable to a breach of any representation or warranty under
Section 4.04 (as such representations and waranties of Section
4.04 relate to Transferred Assets but not to Assumed Liabilities)
and/or Section 4.14 (the indemnification of which shall be
unlimited in amount), the aggregate amount of any Loss or Losses
recoverable hereunder by an Indemnified Party from USC and/or the
Shareholders shall be limited to the total of (i) the
$1,200,000.00 in total bonus payments paid or payable to the
Shareholders pursuant to the Employment Agreements ("Bonus
Payments"), plus (ii) the amount of any Royalties not yet paid
at the time the claim for indemnification is made ("Unpaid
Royalties"), plus (iii) any interest or interests in the
Partnership held by USC, the Shareholders and/or their
successors in interest, and provided further that the aggregate
amount of any Loss or Losses sought to be recovered hereunder by
an Indemnified Party from all Indemnifying Parties must exceed
$5,000.00 except for any Loss or Losses attributable to a breach
in any representation or warranty contained in Section 4.14 or
Section 4.04. In satisfying the indemnification obligations of
the Shareholders and/or USC hereunder, the Indemnified Party
agrees to offset any Loss or Losses: (i) first against Bonus
Payments; (ii) if there are no or insufficient Bonus Payments
remaining against which to offset such Loss or Losses, then such
Loss or Losses shall be offset against any Unpaid Royalties due
to be paid within six (6) months of a claim for indemnification;
(iii) if there are no or insufficient Bonus Payments or Unpaid
Royalties, then such Loss or Losses shall be satisfied by
surrender of an appropriate portion of the Shareholder's and/or
USC's interest in the Partnership (or by offset against any
amounts due pursuant to Section 7.6 of the Partnership
Agreement), and (iv) if the indemnification obligations remain
unsatisfied pursuant to clauses (i) - (iii) above, then USC
and/or the Shareholders shall satisfy any Loss or Losses by
payment of cash.
SECTION 8.03 General Indemnification Provisions. An
Indemnified Party shall promptly give the Indemnifying Party
notice of any matter which an Indemnified Party has determined
has given or could give rise to a right of indemnification under
this Agreement, stating the amount of the Loss, if known, and
method of computation thereof, all with reasonable particularity
and containing a reference to the provisions of this Agreement
in respect of which such right of indemnification is claimed or
arises. The obligations and liabilities of an Indemnifying
Party under this Article with respect to Losses arising from
claims of any third party that are subject to the indemnification
provided for in this Article ("Third Party Claims") shall be
governed by and contingent upon the following additional terms
and conditions: if an Indemnified Party shall receive notice of
any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party prompt notice of such Third Party Claim and
shall permit the Indemnifying Party, at its option, to
participate in the defense of such Third Party Claim by counsel
of its own choice and at its expense. If, however, the
Indemnifying Party acknowledges in writing its obligation to indemnify
the Indemnified Party hereunder against any Losses that may result from
such Third Party Claims (subject to the limitations set forth herein), then
the Indemnifying Party shall be entitled, at its option, to
assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives prompt
notice of intention to do so to the Indemnified Party. In the
event the Indemnifying Party exercises its right to undertake the
defense against any such Third Party Claim as provided above, the
Indemnified Party shall cooperate with the Indemnifying Party in
such defense and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses, pertinent records,
materials and information in its possession or under its control
relating thereto as is reasonably required by the Indemnifying
Party. Similarly, in the event the Indemnified Party is,
directly or indirectly, conducting the defense against any such
Third Party Claim, the Indemnifying Party shall cooperate with
the Indemnified Party in such defense and make available to it
all such witnesses, records, materials and information in its
possession or under its control relating thereto as is reasonably
required by the Indemnified Party. No such Third Party Claim,
except the settlement thereof which involves the payment of money
only and for which the Indemnified Party is totally indemnified
by the Indemnifying Party, may be settled by the Indemnifying
Party without the written consent of the Indemnified Party (which
consent shall not be unreasonably withheld). Similarly, no Third
Party Claim which is being defended in good faith by the
Indemnifying Party shall be settled by the Indemnified Party
without the written consent of the Indemnifying Party (which
consent shall not be unreasonably withheld).
SECTION 8.04 Materiality. Notwithstanding anything in
this Agreement to the contrary, for purposes of application of
the indemnity provisions of this Article, the amount of any Loss
arising from the breach of any representation, warranty, covenant
or agreement shall be the entire amount of any Loss incurred by
the respective Indemnified Party as a result of such breach and
not just that portion of the Loss that exceeds the relevant level
of materiality.
ARTICLE IX.
TERMINATION
SECTION 9.01 Termination of Agreement. This Agreement
may be terminated at any time prior to the Closing:
(a) By mutual written consent of DRS/MS and USC; or
(b) By either DRS/MS or USC, if the Closing shall
not have occurred on or before February 29, 1996; or
(c) By either DRS/MS or USC if any court of
competent jurisdiction (whether federal, state or foreign) or any
governmental body or agency (whether federal, state or foreign)
shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement or any Transaction
Document, and such order, decree, ruling or other action shall
have become final and nonappealable; or
(d) By DRS/MS if DRS/MS has not received the
Schedules and supporting documentation described in Section
5.02(k) on or before four weeks after the date hereof; or
(e) At any time before the Closing Date, by DRS/MS
if, at any time in the course of its legal, accounting,
financial, operational or environmental due diligence
investigation as to the Transferred Assets, the business of USC
and the liabilities thereof (whether disclosed, undisclosed,
direct, indirect, absolute, contingent, secured, unsecured,
accrued or otherwise, whether known or unknown) including,
without limitation, its continuing review of the Disclosure
Schedules delivered by USC and any other materials delivered to
DRS/MS, whether prior or subsequent to the date hereof, it shall
have become aware of any facts or circumstances that materially
and adversely effect the basis upon which DRS/MS determined to
enter into the transactions contemplated hereby.
SECTION 9.02 Procedure and Effect of Termination. In
the event of termination of this Agreement by either or both of
the parties pursuant to Section 9.01, written notice thereof
shall forthwith be given to the other party specifying the
provision hereof pursuant to which such termination is made and
this Agreement shall forthwith become void and there shall be no
liability on the part of the parties hereto (or their respective
officers, directors or affiliates), except nothing herein shall
relieve either party from liability for any willful breach hereof
and except that the provisions of the Confidentiality Agreement
entered into by USC and DRS on March 30, 1995 and the provisions
of Section 11.02 dealing with payment of expenses shall survive
such termination. The parties shall consult with each other
before any public announcement of the termination, or of
discussions regarding the termination, of this Agreement is
made.
ARTICLE X.
RESOLUTIONS OF DISPUTES
SECTION 10.01 Notice of Dispute. All disputes,
without exception, between the parties to the Agreement arising
hereunder, or under any other Agreement among any of such
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 Article X.
SECTION 10.02 Umpires. (a) 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) and (d) 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.
(b) In addition to the requirements described in
Section 10.02 (a) 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 10.07 below.
(c) If the umpires are not selected within the
period of time specified in Section 10.02(a) 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
10.02(a), 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
10.02(a) and 10.02(b) above. The umpire to be selected pursuant
to this Section 10.02(c) must be designated within thirty (30)
days after the expiration of the period described in Section
10.02(a) above.
(d) 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.
(e) 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.
SECTION 10.03 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 10.02.
SECTION 10.04 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 the others' 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.
SECTION 10.05 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 10.07.
SECTION 10.06 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.
SECTION 10.07 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.
SECTION 10.08 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).
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01 Taxes. Each party shall pay any and all
stamp and other taxes payable or determined to be payable by it
in connection with the execution and delivery of this Agreement
and the other documents to be delivered by it hereunder, and
agrees to save the other party harmless from and against any and
all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
SECTION 11.02 Expenses. Whether or not the
transactions contemplated in this Agreement are consummated,
DRS/MS, on the one hand, and USC, on the other hand, shall each
pay its own expenses incident to this Agreement and the
Transaction Documents and in preparing to consummate the
transactions provided for herein and therein.
SECTION 11.03 Consents. Whenever this Agreement
requires or permits consents by or on behalf of any party hereto,
such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as specified in
Section 11.07.
SECTION 11.04 Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the
benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations herein
shall be assigned by either party without the prior written
consent of the other party.
SECTION 11.05 Entire Agreement. This Agreement, the
other documents referred to herein or delivered pursuant hereto
which form a part hereof and other writings of even date
herewith, together with the Transaction Documents and other
writings referred to therein or delivered pursuant thereto,
contain the entire understanding of the parties with respect to
the subject matter hereof. This Agreement supersedes all prior
agreements with respect to the subject matter hereof, including
that Letter of Intent dated July 21, 1995.
SECTION 11.06 Amendment. This Agreement may not be
amended except by an instrument in writing signed by DRS/MS and
USC.
SECTION 11.07 Waiver. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with
any obligation, covenant, agreement or condition herein may be
waived by the party entitled to the benefit thereof only by a
written instrument signed by the party granting such waiver, but
the failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement or
condition shall not operate as a waiver of or estoppel with
respect to said compliance and such failure shall not operate as
a waiver of or estoppel with respect to any subsequent or other
failure.
SECTION 11.08 Headings. The Article and Section
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 11.09 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 telephone 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, Xxx Xxxxxx 00000
Attn.: Xx. Xxxx X. 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, Chief Executive
Officer
with a copy to:
Xxxxx, Danzig, Scherer, Xxxxxx & Xxxxxxxx
Xxxxxxxxxxxx Xxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxxx Xxxxxxx III, Esq.
(c) If to a Shareholder:
To the Shareholder at the address of such
Shareholder set forth at the beginning of this
Agreement.
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.
SECTION 11.10 LAW GOVERNING. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW JERSEY, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
DRS/MS AND USC HEREBY CONSENT TO AND GRANT ANY APPROPRIATE COURT
OF THE STATE OF NEW JERSEY JURISDICTION OVER THE PERSON OF SUCH
PARTIES AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREE
THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN SUCH MANNER AS MAY BE PERMITTED BY
LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
SECTION 11.11 Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
SECTION 11.12 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic substance
of the transactions contemplated hereby is not affected in any
manner adverse to any party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their respective officers thereunto
duly authorized as of the date first above written.
ATTEST: UNIVERSAL SONICS CORPORATION
By: By:
Title: Its:
ATTEST: DRS/MS, INC.
By: By:
Title: Its:
XXX XXXXXX
XXXXXX XXXXX
XXXXXX X. XXXXXX
Section 5.01(c) of this Agreement
is acknowledged and agreed to by
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
By:_______________________________
Name:
Title:
GUARANTY
For ONE DOLLAR and other good and valuable consideration,
Diagnostic/Retrieval Systems, Inc. (the "undersigned" or "DRS")
guarantees to each of Universal Sonics Corporation ("USC"), Xxx
Xxxxxx ("Hadani"), Xxxxxx Xxxxx ("Xxxxx") and Xxxxxx Xxxxxx
("Xxxxxx") (each of USC, Xxxxxx, Xxxxx and Soulos, an "obligee")
prompt payment when due of all sums required to be paid by
DRS/MS, INC. ("DRS/MS") under Section 2.02(i) of the above Joint
Venture Agreement, under Section 7.6 of the Partnership Agreement
between DRS/MS and USC, and under Section 3.1(b) of each of the
Employment Agreements with Xxxxxx, Xxxxx and Xxxxxx, all of which
agreements are dated as of the Closing Date (collectively, the
"Obligations"). In the event of a default by DRS/MS in payment
of any Obligation which may be due and payable, and following a
thirty (30) day period in which DRS/MS may cure such default,
such unpaid Obligation shall become due and payable by DRS
hereunder. The undersigned hereby agrees that this is a
continuing guaranty which shall bind the undersigned until such
time as all of the Obligations due and payable to the obligees
have been paid.
ATTEST: DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
__________________________ By:_______________________________
Name: Name:
Secretary Title:
JOINT VENTURE AGREEMENT
By and Among
DRS/MS, INC.,
UNIVERSAL SONICS CORPORATION,
XXX XXXXXX,
XXXXXX XXXXX,
and
XXXXXX X. XXXXXX
DATED: FEBRUARY 6, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS ............................... 2
SECTION 1.01 Certain Defined Terms ...... 2
ARTICLE II. FORMATION OF PARTNERSHIP AND
EXECUTION OF TRANSACTION DOCUMENTS ........ 7
SECTION 2.01 Formation of Partnerships
and Execution of Trans-
action Documents ........... 7
SECTION 2.02 Contributions .............. 7
SECTION 2.03 Closing .................... 7
SECTION 2.04 Method of Payment .......... 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
DRS/MS ................................... 8
SECTION 3.01 Corporate Existence ........ 8
SECTION 3.02 Authority Relative to
this Agreement and
Transaction Documents ...... 9
SECTION 3.03 No Litigation .............. 10
SECTION 3.04 Full Disclosure;
Materiality ................ 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF USC AND THE SHAREHOLDERS ............... 10
SECTION 4.01 Corporate Existence ........ 10
SECTION 4.02 Authority Relative to this
Agreement and Transaction
Documents; Consents ........ 10
SECTION 4.03 No Litigation .............. 12
SECTION 4.04 Title to Transferred
Assets; Assumed
Liabilities ................ 12
SECTION 4.05 Compliance with Laws;
Permits and Licenses ....... 12
SECTION 4.06 Intellectual Property ...... 13
SECTION 4.07 Litigation ................. 14
SECTION 4.08 Contracts .................. 14
SECTION 4.09 Labor Union Contracts ...... 16
SECTION 4.10 Employees, Labor Matters,
etc. ....................... 16
SECTION 4.11 ERISA ...................... 16
SECTION 4.12 Brokers' or Finders'
Fees ....................... 18
SECTION 4.13 Financial Information; Un-
disclosed Liabilities ..... 18
SECTION 4.14 Taxes ...................... 19
SECTION 4.15 Absence of Changes ......... 20
SECTION 4.16 Accounts Receivable ........ 21
SECTION 4.17 Insurance .................. 22
SECTION 4.18 Sufficiency of Transferred
Assets ..................... 22
SECTION 4.19 Foreign Assets ............. 22
SECTION 4.20 Certain Payments ........... 23
SECTION 4.21 Affiliate Transactions ..... 23
SECTION 4.22 Suppliers .................. 23
SECTION 4.23 Environmental Conditions
and Governmental
Authorizations ............. 23
SECTION 4.24 Leases of Personal
Property ................... 24
SECTION 4.25 Full Disclosure;
Materiality ................ 25
SECTION 4.26 Books and Records .......... 25
SECTION 4.27 Accounts ................... 25
ARTICLE V. COVENANTS ................................. 25
SECTION 5.01 Covenants of DRS/MS ........ 25
SECTION 5.02 Covenants of USC ........... 26
SECTION 5.03 Insurance Matters .......... 31
SECTION 5.04 Closing Conditions ......... 31
SECTION 5.05 Net Worth Statements ....... 31
ARTICLE VI. CONDITIONS PRECEDENT TO THE CLOSING ....... 32
SECTION 6.01 Conditions Precedent to
Obligations of DRS/MS ...... 32
SECTION 6.02 Conditions Precedent to
Obligations of USC ......... 34
ARTICLE VII. [Intentionally Omitted] ................... 36
ARTICLE VIII. INDEMNIFICATION ........................... 36
SECTION 8.01 Survival of Representa-
tions and Warranties ...... 36
SECTION 8.02 Indemnification by the
Parties .................... 36
SECTION 8.03 General Indemnification
Provisions ................. 37
SECTION 8.04 Materiality ................ 38
ARTICLE IX. TERMINATION ............................ 38
SECTION 9.01 Termination of Agreement ... 38
SECTION 9.02 Procedure and Effect of
Termination ................ 39
ARTICLE X. RESOLUTIONS OF DISPUTES ................... 39
SECTION 10.01 Notice of Dispute .......... 39
SECTION 10.02 Umpires .................... 40
SECTION 10.03 Time and Place of
Alternative Resolution .... 41
SECTION 10.04 Fees ....................... 41
SECTION 10.05 Discovery .................. 42
SECTION 10.06 Provisional Remedies ....... 42
SECTION 10.07 Time and Method for
Resolution ................. 42
SECTION 10.08 Act and Agreement Govern ... 42
ARTICLE XI. MISCELLANEOUS ............................. 42
SECTION 11.01 Taxes ...................... 43
SECTION 11.02 Expenses ................... 43
SECTION 11.03 Consents ................... 43
SECTION 11.04 Assignment ................. 43
SECTION 11.05 Entire Agreement ........... 43
SECTION 11.06 Amendment .................. 43
SECTION 11.07 Waiver ..................... 43
SECTION 11.08 Headings ................... 43
SECTION 11.09 Notices .................... 44
SECTION 11.10 LAW GOVERNING .............. 45
SECTION 11.11 Counterparts ............... 45
SECTION 11.12 Severability ............... 45