Exhibit 10.3


 


AMENDMENT NO. 1 TO


EMPLOYMENT AGREEMENT


 


AMENDMENT (this “Amendment”)
made as of August 18, 2004 by and between DRS Technologies, Inc., a Delaware
corporation (the “Company”), and Nina Laserson Dunn (the “Executive”).  This Amendment amends the Employment
Agreement (the “Employment Agreement”) made as of April 30, 1997 between the
Company and the Executive


 


1.             The Employment Agreement is hereby
amended by adding the following sentence to the end of Section 1:


 


“Notwithstanding the
foregoing, this Agreement shall remain in effect for at least two years
immediately following a Change in Control.”


 


2.             The Employment Agreement is hereby
amended by deleting the language in Section 5.3(a)(iii) after the phrase
“following the Change of Control.”


 


3.             The Employment Agreement is hereby
amended by adding the parenthetical phase 
“(without regard to the early termination thereof hereunder)” after
“balance of this Agreement then effect” in Section 5.3(b)(ii)(A).


 


4.             The Employment Agreement is hereby
amended by replacing the number “2.99” in Section 5.3(b)(ii)(B) with “3.”


 


5.             The Employment Agreement is hereby
amended by deleting the first sentence of Section 5.3(b)(ii)(C) and replacing
it with the following:


 


“her employment shall be
deemed to continue, for purposes of determining her participation in the
Benefit Program (excluding pension plans) (1) for the balance of this Agreement
(without regard to the early termination thereof hereunder) if her employment
is terminated prior to a Change in Control or (2) for 3 years if her employment
is terminated following a Change in Control; provided, however, if
participation by the Executive in the Benefit Program during the applicable
benefit continuation period is not permitted under any such plan, the Company will
provide her with equivalent benefits. 
Notwithstanding the foregoing, continued benefits or payments otherwise
receivable by the Executive under the Benefit Program pursuant to this Section
5.3(b)(ii) shall be reduced to the extent benefits of the same type are
received by or made available to the Executive by a subsequent employer during
the benefit continuation period (and any such benefits received by or made
available to the Executive shall be reported to the Company by the Executive).”


 

















 


6.             The Employment Agreement is hereby
amended by adding in Section 5.4(a) the phrase “and provide to the Executive
the benefits” between the words “amounts” and “described” and  deleting Section 5.4(b) in its entirety.


 


7.             The Employment Agreement is hereby
amended to add the following as a new Section 5.5 and the Employment Agreement
and any cross-references shall be renumbered accordingly:


 


“5.5         Gross-up.


 


(a)           Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company, any individual or entity whose actions result in a
Change in Control, or their respective subsidiaries or affiliates to or for the
benefit of the Executive (including any payment or benefits received in
connection with a Change in Control or the Executive’s termination of
employment, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement) (all such payments and benefits, excluding the
Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will
be subject to any excise tax imposed under section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”) (such tax, the “Excise Tax”), the Company
shall pay to the Executive an additional amount (the “Gross Up Payment”) such
that the net amount retained by the Executive, after deduction of any Excise
Tax on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, and after taking
into account the phase out of itemized deductions and personal exemptions
attributable to the Gross-Up Payment, shall be equal to the Total Payments.


 


(b)           For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) all of the Total Payments shall be treated as “parachute payments” (within
the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control, the
Company’s independent auditor (the “Auditor”) (which Tax Counsel may be the
Company’s general counsel), such payments or benefits (in whole or in part) do
not constitute parachute payments, including by reason of section 280G(b)(4)(A)
of the Code, (ii) all “excess parachute payments” within the meaning of section
280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered (within
the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and (iii) the value of any non-cash


 


2

















 


benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code.  For purposes of determining the amount of
the Gross Up Payment, the Executive shall be deemed to pay federal income tax
at the highest marginal rate of federal income taxation in the calendar year in
which the Gross Up Payment is to be made and state and local income taxes at
the highest marginal rate of taxation in the state and locality of the
Executive’s residence on the date of termination of the Executive’s employment
with the Company (or if there is no date of termination, then the date on which
the Gross-Up Payment is calculated for purposes of this Section 5.5), net of
the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.


 


(c)           In the event that the Excise Tax is finally determined to
be less than the amount taken into account hereunder in calculating the
Gross-Up Payment, the Executive shall repay to the Company, within five (5)
business days following the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of the Gross Up Payment
attributable to such reduction (plus that portion of the Gross Up Payment
attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross Up Payment being repaid by the
Executive), to the extent that such repayment results in a reduction in the
Excise Tax and a dollar-for-dollar reduction in the Executive’s taxable income
and wages for purposes of federal, state and local income and employment taxes,
plus interest on the amount of such repayment at 120% of the rate provided in
section 1274(b)(2)(B) of the Code.  In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder in calculating the Gross-Up Payment (including by reason of
any payment the existence or amount of which cannot be determined at the time
of the Gross Up Payment), the Company shall make an additional Gross Up Payment
in respect of such excess (plus any interest, penalties or additions payable by
the Executive with respect to such excess) within five (5) business days
following the time that the amount of such excess is finally determined.  The Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Total Payments.”


 


8.             The Employment Agreement is hereby
amended by deleting the  third and
fourth sentences of the second paragraph of Section 7.1, which read “Each party
shall bear its own costs and attorneys fees. 
All other costs and expenses of arbitration shall be apportioned between
the parties by the arbitrators.”


 


9.             The Employment Agreement is hereby
amended by adding the following paragraph as Section 7.2 and the Employment
Agreement and any cross-references shall be renumbered accordingly:


 


3

















 


“Legal Fees.  If the Company and the Executive become
involved in any action, suit or proceeding relating to the alleged breach of
this Agreement by the Company, the Company shall reimburse the Executive for
all expenses (including reasonable attorney’s fees) incurred by the Executive
in connection with such action, suit or proceeding; provided, however, that the
Company will not reimburse the Executive for any amounts incurred by the
Executive in any action, suit or proceeding which is ultimately determined by
the arbitrator to have been frivolous. 
Such costs shall be paid to the Executive promptly upon presentation of expense
statements or other supporting information evidencing the incurrence of such
expenses.”


 


 


IN WITNESS WHEREOF, the parties have duly
executed this Amendment effective as of August 18, 2004.


 


 


	
   

  	
  DRS
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Mark S. Newman

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  /s/ Nina Laserson Dunn

  



 


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