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.

 

 

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ARTICLE IV

 

MISCELLANEOUS

 

4.1           Effectiveness of Partnership Agreement.  Other than as
specifically set forth in this Amendment, all of the terms and conditions of the
Partnership Agreement shall remain in full force and effect.

 

4.2           Consistency.  Procedures for accounting for direct and indirect
costs incurred in connection with Partnership Programs, New Partnership
Programs, DRS Requested Programs and DRS Allocated Programs shall be consistent.

 

4.3           Resolution of Disputes.  All disputes between the Partners arising
out of, or relating to, the interpretation or performance pursuant to the terms
of this Amendment, or any breach thereof, shall be resolved in accordance with
the provisions of Article 9 of the Partnership Agreement.

 

4.4           Amendment.  This Amendment may not be amended, altered or modified
except by written instrument, signed by all parties.

 

4.5           Headings.  All headings herein are inserted only for convenience
and ease of reference and are not to be considered in the construction or
interpretation of any provision of this Amendment.

 

4.6           Complete Agreement.  This Amendment and the Partnership Agreement
constitute the complete and exclusive statement of the agreement between the
Partners with respect to the subject matter hereof, and replaces and supersedes
all prior agreements by and among the Partners.  This Amendment supersedes any
and all prior written or oral statements and no representation, statement, or
condition or warranty not contained in this Amendment or the Partnership
Agreement shall be binding on the Partners or have any force or effect
whatsoever.  Except as specifically modified herein, all of the terms and
conditions contained in the Partnership Agreement shall remain in full force and
effect.

 

4.7           Additional Documents and Acts.  In connection with this Amendment,
as well as all transactions contemplated by this Amendment, each Partner agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be reasonably necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and conditions of
this Amendment, and all such transactions.

 

4.8           Binding Effect.  This Amendment shall be binding upon and inure to
the benefit of the Partners, and their respective distributees, successors and
permitted assigns.

 

 

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4.9           Counterparts.  This Amendment may be executed in a number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same document.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.

 

 

 

 

 

DRS SYSTEMS MANAGEMENT CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Paul G. Casner

 

 

 

 

 

PRINT NAME:

PAUL G. CASNER, JR.

 

 

 

 

 

Print Title:

President

 

 

 

 

 

 

 

 

 

 

SUNBURST MANAGEMENT, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Kim Kunkle

 

 

 

 

 

Print Name:

Kim Kunkle

 

 

 

 

 

Print Title:

President

 

 

 

 

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EXHIBIT “A”

(Partnership Programs)

 

 

 

 

 

1.               Northrop Grumman J-STARS

2.               Lockheed Martin Q-70

3.               Lockheed Martin JECCS

4.               United Defense

                — Bradley

                — BFIST

                — M88

                — FSCATT

                — Grizzly

                — Crusader

5.               Condor Systems

6.               Lockheed Martin — Manassas

7.               Boeing

8.               National Oceanic Atmospheric Administration

9.               Northrop Grumman Baltimore

 

 

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