Exhibit 10.36
MBI-VENKATADRI
PARTNERSHIP AGREEMENT
THIS AGREEMENT is made as of October 18, 1996, by (i) Molecular Biosystems,
Inc., a Delaware corporation ("MBI"), and (ii) Bobba Venkatadri ("Mr.
Venkatadri") and Annapurna Bobba ("Mrs. Venkatadri") (together, the
"Venkatadris") (also referred to individually as "Partner", or collectively as
the "Partners").
RECITALS:
A. The Partners wish to purchase real estate to be used as a principal
residence by the Venkatadris located at 13397 Wyngate Point, San Diego,
California 92130 (the "Property").
B. The Partners will own the Property as tenants in common.
C. The Partners desire to set out the terms of their partnership as
follows.
NOW, THEREFORE, in consideration of their mutual promises, the Partners
agree as follows:
1. PURCHASE OF THE PROPERTY. The Venkatadris will have sole
responsibility for selecting the Property and for negotiating, financing (other
than as provided by MBI herein) and consummating the purchase of the Property.
2. CAPITAL CONTRIBUTIONS. MBI will contribute $300,000 ("MBI's Initial
Capital Contribution") towards the purchase of the Property. Such contribution
will be made at the time of the closing of the purchase of the Property. The
Venkatadris will contribute the difference between MBI's Initial Capital
Contribution and the purchase price of the Property (such purchase price to be
known as the "Original Purchase Price").
3. PERCENTAGE OWNERSHIP INTERESTS. Each Partner will own an undivided
interest in the Property as tenants in common (although as between them, the
Venkatadris' interest may be held in joint tenancy), with their percentage
ownership interests in the Property (the "Interests") calculated as follows:
(a) MBI's Interest shall be derived by dividing MBI's Initial Capital
Contribution by the Original Purchase Price, with the result expressed as a
percentage; and
(b) The Venkatadris' Interest shall be equal to the sum of 100% minus MBI's
Interest.
Each Partner's Interest will remain constant, unless recalculated as provided in
Section 6 below or as otherwise agreed upon by the Partners.
4. TITLE AND OTHER DOCUMENTATION. The Venkatadris will ensure that title
to the Property is held in the names of MBI and the Venkatadri as tenants in
common and that any and all real estate, tax, financing or other records reflect
their ownership as tenants in common. The Venkatadris agree to execute and
cooperate in the recording of any and all documents necessary to evidence the
rights and obligations of the Partners contained in this Agreement.
5. OBLIGATIONS WITH RESPECT TO THE PROPERTY. The Venkatadris shall
maintain the Property and keep it in good condition and repair and shall be
responsible for all expenses in connection with maintenance, financing and
ownership of the Property, including, but not limited to, mortgage payments,
upkeep, taxes and other assessments, insurance, homeowner association fees, if
any, repairs and improvements (the latter of which shall be at the Venkatadris'
option) and utilities. The Venkatadris shall maintain liability insurance in
amounts approved by MBI and all-risk property insurance coverage on the
Property, including, without limitation, fire, extended coverage, and vandalism
and malicious mischief in an amount which is not less than 100% of the
replacement cost of the Property. The Venkatadris shall also maintain flood
insurance if the Property is located in an area designated by the Federal
Emergency Management Agency or any other applicable governmental or
quasi-governmental authority having jurisdiction over the Property as a special
flood hazard area. The Venkatadris shall ensure that MBI is named as an
additional insured under all of the insurance policies entered into pursuant to
this Section.
6. FAILURE TO PERFORM OBLIGATIONS. In the event that the Venkatadris fail
or refuse for any reason to perform his obligations under Section 5 above, MBI
may perform such obligations upon written notice to Mr. Venkatadri. MBI may, at
its option, recoup the cost of its performance (the "Performance Cost") as
follows:
(a) deduct the Performance Cost from any payments (including compensation)
due to Mr. Venkatadri by MBI; or
(b) recalculate the Interests as follows:
(i) MBI's recalculated Interest shall be derived by dividing (A) two
times the sum of the Performance Cost PLUS MBI's Initial Capital
Contribution by (B) the Original Purchase Price, with the result
expressed as a percentage; and
(ii) The Venkatadris' recalculated Interest shall be equal to the sum
of 100% minus MBI's recalculated Interest.
In the event of such recalculation of the Interests, the Performance
Cost may also be referred to herein as "MBI's Additional Capital
Contribution."
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7. PURCHASE OF MBI'S INTEREST IN EVENT OF MR. VENKATADRI'S TERMINATION.
(a) AGREED VALUATION. In the event of the termination of Mr. Venkatadri's
employment for any reason, the Partners shall agree on a valuation of the
Property within 30 days of such termination. If the Partners fail to reach
agreement on valuation within such 30-day period, each Partner shall select
a certified appraiser to perform an appraisal of the Property at each
selecting Partner's expense. The average of the two appraisals shall be
known as the Agreed Valuation.
(b) PAYMENT AND CALCULATION OF PURCHASE PRICE. Within (i) 3 years of the
date of termination in the event of an Involuntary Termination, (ii) 2
years of the date of termination in the event of a termination for any
reason other than Involuntary Termination or Voluntary Termination, or
(iii) 1 year from the date of termination in the event of a Voluntary
Termination, Mr. Venkatadri (or his estate) shall purchase MBI's Interest
for a purchase price equal to the following:
the sum of (A) the product of (x) MBI's Interest (as it may be
recalculated in accordance with Section 6) MULTIPLIED BY (y) the
Agreed Valuation, PLUS (B) interest at the prime rate as published
in the Wall Street Journal, accrued from the date of Mr. Venkatadri's
termination to the date of purchase (the "Termination Purchase
Price"), but in no event less than the sum of (C) MBI's Initial
Capital Contribution plus (D) MBI's Additional Capital Contribution.
(c) PURCHASE BY THIRD PARTY. In the event that Mr. Venkatadri is unable or
unwilling to purchase MBI's Interest, the Venkatadris may sell the Property
to a third party, and Mr. Venkatadri shall be deemed to have complied with
his purchase obligation under this Section if a third party purchaser pays
MBI the Termination Purchase Price. MBI shall cooperate with the
Venkatadris in effectuating a sale to a third party under the circumstances
described herein.
(d) DEFINITIONS. The following terms used in this Section shall have the
meanings assigned to them below:
(i) "Involuntary Termination" shall be deemed to have occurred if Mr.
Venkatadri's employment is terminated by MBI because he dies or cannot
perform his normal duties on a full-time basis by reason of any
physical or mental impairment for a period of 6 consecutive months or
8 months out of any 12-month period.
(ii) "Voluntary Termination" shall be deemed to have occurred if Mr.
Venkatadri's employment is terminated by Mr. Venkatadri, other than in
the event of a Constructive Termination.
(iii) "Constructive Termination" shall be deemed to have occurred if
Mr. Venkatadri's employment is terminated by Mr. Venkatadri within 3
months
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following (A) any reduction in his annual base salary (I.E., exclusive
of bonuses or other compensation) or (B) a relocation of his place of
employment more than 35 miles from San Diego if the costs of such
relocation are not paid for by MBI.
8. SALE OF PROPERTY DURING MR. VENKATADRI'S EMPLOYMENT.
(a) PURCHASE OF REPLACEMENT PROPERTY. During the term of Mr. Venkatadri's
employment by MBI, the Venkatadris may sell the Property and purchase new
property to be used as their principal residence in the San Diego,
California area (or other area in the event of an MBI-required relocation)
(the "Replacement Property"). The Venkatadris may reinvest all of the
proceeds of the sale in the Replacement Property.
(b) PERCENTAGE OWNERSHIP INTERESTS IN REPLACEMENT PROPERTY. Each Partner
will own an undivided interest in the Replacement Property as tenants in
common, with their percentage ownership interests in the Replacement
Property (the "Replacement Interests") calculated as follows:
(i) MBI's Replacement Interest shall be derived by dividing (A) the
sum of (x) MBI's Initial Capital Contribution PLUS (y) MBI's
Additional Capital Contributions, if any plus (2) the amount in excess
of the sum of (x) plus (y) that MBI would have received if no
Replacement Property had been purchased, by (B) the purchase price of
the Replacement Property, with the result expressed as a percentage;
and
(ii) The Venkatadris' Replacement Interest shall be equal to the sum
of (A) 100% minus (B) MBI's Replacement Interest.
(c) RETURN OF EXCESS TO MBI. In the event that the sum of MBI's Initial
Capital Contribution and MBI's Additional Capital Contributions, if any, is
greater than the purchase price of the Replacement Property, the
Venkatadris will return such excess to MBI within 10 days after the closing
of the purchase of the Replacement Property.
(d) CONTINUING RIGHTS AND OBLIGATIONS WITH RESPECT TO REPLACEMENT PROPERTY.
All of the Partners' rights and obligations hereunder with respect to the
Property will continue with respect to the Replacement Property.
9. BOOKS AND RECORDS. The Venkatadris shall keep books and records
relating to the maintenance, financing, taxation and ownership of the Property,
which may be inspected upon reasonable notice by MBI.
10. TRANSFERS OR ENCUMBRANCES. Neither Partner shall sell, transfer,
assign, pledge, or otherwise encumber or divest himself of ownership or control
of the Property or his or its Interest, whether voluntarily or by operation of
law, except as expressly permitted hereunder or with the prior written consent
of the other Partner. Notwithstanding the foregoing, MBI
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may assign its Interest to an entity which it owns or controls. If any
encumbrance affecting the Interest of a Partner or the Property exists in
violation of these restrictions, the Partner who granted or permitted the
encumbrance shall immediately proceed at his or its expense to remove the
encumbrance, and shall hold the other Partner harmless from any loss or expense
suffered as a consequence of the encumbrance.
11. TAXABILITY OF PAYMENTS. In the event that Mr. Venkatadri is deemed to
receive taxable income for any payment or reimbursement by MBI under this
Agreement, such payments will be grossed up to account for all applicable income
taxes.
12. AMENDMENT. This Agreement may be amended only by a written agreement
signed by all of the parties who are bound by this Agreement at the time.
13. NOTICES. Any notice or other communication given under this Agreement
shall be duly given if, and only if, it is in writing and is delivered in person
to the intended recipient or is sent by certified mail, postage prepaid,
addressed, in MBI's case, to MBI at its principal office, and addressed, in the
Venkatadris' case, to Mr. Venkatadri at his residence as it appears on MBI's
books and records. A party may change his address for this purpose by giving
notice of the change in the requisite manner.
14. CAPTIONS. The captions of particular sections and subsections of this
Agreement have been inserted for convenience only and shall not affect the terms
of this Agreement.
15. GOVERNING LAW. This Agreement shall be governed by the substantive
laws of the State of Delaware.
16. BINDING EFFECT. This Agreement shall be binding on, an shall inure to
the benefit of, the parties and their respective heirs, legal representatives,
successors, and permitted assigns.
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IN WITNESS the parties have signed this Agreement on the date first given above.
Dated: October 18, 1996
MOLECULAR BIOSYSTEMS, INC.
By: /s/ Gerard A. Wills
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Its: Vice President, Finance and CFO
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/s/ Bobba Venkatadri
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BOBBA VENKATADRI
/s/ Annapurna Bobba
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MRS. ANNAPURNA BOBBA
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