Exhibit 10.4

 

AMENDMENT TO PARTNERSHIP AGREEMENT

OF

LAUREL TECHNOLOGIES PARTNERSHIP

 

 

                THIS AMENDMENT TO PARTNERSHIP AGREEMENT (“Amendment”) dated as of August 3, 1999, by and between LAUREL TECHNOLOGIES, INC., now known as SUNBURST MANAGEMENT, INC., a Pennsylvania corporation (“Laurel”) and DRS SYSTEMS MANAGEMENT CORPORATION, a Delaware corporation (“DRS”).

 

RECITALS

 

A.            By way of a Partnership Agreement (“Partnership Agreement”) dated as of December 13, 1993, Laurel and DRS formed a Partnership for the Business and related activities necessary and appropriate to effect the Business.

 

B.            Pursuant to the Partnership Agreement, as of this date the Partnership Percentage Interest of DRS is 80% and the Partnership Percentage Interest of Laurel is 20%.

 

C.            The Partners seek to maximize the use and capacity of their facilities by undertaking activities and programs the income from which would not be allocated in accordance with the Partnership Percentage Interests.

 

D.            In order to expand their respective opportunities, Laurel and DRS wish to set forth their respective rights and obligations with respect to activities that would not be subject to the Partnership Percentage Interests set forth in the Partnership Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Laurel and DRS agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1           All capitalized terms not specifically defined in this Amendment shall have the meanings set forth in the Partnership Agreement.

 

1.2           When used in this Amendment, the following terms will have the meaning set forth below:

 

(a)           “Allocable Indirect Costs” shall mean (i) unallowable costs as currently defined by the Federal Acquisition Regulations and in accordance with the Partnership’s usual methodology and (ii) inter-company interest (if any).  DRS

 

 

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Management Fees, Laurel Management Fees and royalties are not Allocable Indirect Costs.

 

(b)           “Cost” shall mean the sum of labor, material and other costs directly attributable to a program plus overhead and general and administrative costs allocated to such program in accordance with the Partnership’s usual methodology which complies with GAAP and FAR.

 

(b)           “DRS Affiliate” shall mean (i) any firm, partnership, corporation, trustee or other entity that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with DRS, excluding, however, the Partnership or any of its subsidiaries or controlled entities.

 

(c)           “DRS Allocated Programs” shall have the meaning set forth in paragraph 2.1.

 

(d)           “DRS Requested Programs” shall have the meaning set forth in paragraph 2.2.

 

(e)           “Indirect Costs” shall mean unallowable costs, interest expense (if any), DRS management fees, Laurel management fees, royalties, and inter-company interest.

 

(f)            “Net Income” shall mean Operating Income minus Indirect Costs.

 

(g)           “New Partnership Program” shall mean any new program that is acquired through the marketing efforts of the Partnership or DRS or a DRS Affiliate with the intent that the Partnership would perform the services.

 

(h)           “Operating Income” shall mean the revenue from a program minus Cost associated with such program and minus Allocable Indirect Costs.

 

(i)          “Partnership Program” shall mean all production programs obtained through the marketing efforts of the management of the Partnership.  All non-intercompany production programs currently being undertaken by the Partnership as of the date of this Amendment will be considered Partnership Programs.  Examples of such Partnership Programs are set forth in Exhibit “A”.

 

ARTICLE II

 

PRODUCTION PROGRAMS

 

2.1           DRS Allocated Programs

 

2.1.1        Should DRS desire that the Partnership undertake any new program to be performed by the Partnership (a) that is obtained solely through the marketing efforts of DRS or a DRS Affiliate and (b) that is not a Partnership Program or

 

 

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a New Partnership Program (a “DRS Allocated Program”), DRS shall submit a written notice (a “Notice”) to Laurel of its desire to do so at least seven (7) days prior to causing the Partnership to commence work on such program, which Notice shall be sufficiently detailed to describe the proposed program and the marketing efforts which led to such proposed program.  If, within seven (7) days after receipt of a Notice, Laurel does not deliver a written objection, which objection shall be limited to the designation of such program as a DRS Allocated Program (an “Objection”), it shall be so designated.  If, however, Laurel delivers a timely Objection to the designation of the program as a DRS Allocated Program, DRS, at its sole option, may (1) designate the program as a New Partnership Program to be completed by the Partnership, (2) determine that the program will not be undertaken by the Partnership or (3) refer the matter for dispute resolution as set forth in Section 4.3 of this Amendment; provided, however, that the Partnership shall not undertake the program pending resolution of the dispute.

 

2.1.2                        All Operating Income from a DRS Allocated Program shall be paid to DRS.

 

2.2           DRS Requested Programs

 

2.2.1        Should DRS desire that the Partnership use its excess capacity not otherwise needed to complete Partnership Programs or New Partnership Programs to subcontract to perform projects for programs not part of the Business (“DRS Requested Programs”), DRS shall submit a Notice to Laurel of its desire to do so at least seven (7) days prior to causing the Partnership to commence work on the program.  If, within seven (7) days after receipt of a Notice, Laurel does not deliver a written objection, which objection shall be limited to the designation of such program as a DRS Requested Program (an “Objection”), it shall be so designated.  If, however, Laurel delivers a timely Objection to the designation of the program as a DRS Requested Program, DRS, at its sole option, may (1) designate the program as a New Partnership Program to be completed by the Partnership, (2) determine that the program will not be undertaken by the Partnership, or (3) refer the matter for dispute resolution as set forth in Section 4.3 of this Amendment; provided, however, that the Partnership shall not undertake the program pending resolution of the dispute.

 

2.2.2        The price charged by the Partnership to the customer for DRS Requested Programs shall be Cost plus Allocable Indirect Costs.

 

ARTICLE III

 

ALLOCATION OF COSTS

 

                3.1           Allocable Indirect Costs shall be allocated to DRS Allocated Programs and DRS Requested Programs on the same basis that allowable general and administrative costs is allocated.