REINSTATEMENT AGREEMENT


          THIS REINSTATEMENT AGREEMENT (this "Agreement"),
dated January 28, 1997, is by and between Varo Inc., a
Texas corporation (the "Seller") and Varo Acquisition Corp.,
a Delaware corporation (the "Purchaser").

RECITALS

          WHEREAS, the Seller, principally through its
Electronic Systems Division, is engaged in the business of
manufacturing and selling guided missile launcher systems
and electric power conversion systems for military and
commercial applications (the "Business"); and

          WHEREAS, on September 13, 1996, the Seller and the
Purchaser entered into that certain Asset Purchase Agreement
(the "Purchase Agreement"), a copy of which is attached
hereto as Exhibit A, whereby the Seller agreed to sell and
the Purchaser agreed to purchase substantially all the
assets of the Business, subject to certain conditions; and

          WHEREAS, Section 15.1(c) of the Purchase Agreement
provided to the Seller the right to terminate the Purchase
Agreement if the Purchaser had not obtained all financing
necessary in order to consummate the transactions
contemplated by the Purchase Agreement on or before the date
that was 60 days after the date of the Purchase Agreement;
and

          WHEREAS, on the date that was 60 days after the
date of the Purchase Agreement, the Purchaser had not
obtained all financing necessary in order to consummate the
transactions contemplated by the Purchase Agreement; and

          WHEREAS, on November 19, 1996, the Seller sent the
Purchaser written notice (the "Termination Notice") of the
termination of the Purchase Agreement pursuant to Section
15.1(c) of the Purchase Agreement; and

          WHEREAS, the parties desire to reinstate the terms
of the Purchase Agreement, subject to certain amendments
described herein, as if the Termination Notice had not been
sent by the Sellerr and the Purchase Agreement had not been
terminated;

          NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller and
the Purchaser hereby agree as follows:

          1.   Reinstatement. The Seller and the Purchaser
agree to reinstate the Purchase Agreement and to be bound by
its terms, subject to amendments described herein, as if the
Termination Notice had not been sent by the Seller and the
Purchase Agreement had not been terminated.

          2.   Amendments. The Purchase Agreement, as
reinstated pursuant to Section 1 of this Agreement, shall be
amended as follows:
               (a)  The first paragraph or preamble of the
     Purchase Agreement shall be deleted in its entirety and
     replaced with the following:

                    "THIS ASSET  PURCHASE AGREEMENT (as it
          may be amended from time to time hereafter)
          together with all such amendments, this
          `Agreement') dated as of September 13, 1996, is by
          and between Varo Inc., a Texas Corporation (the
          "Seller"), and Varo Acquisition Corp., a Delaware
          corporation (the "Purchaser")."

               (b)  The following definitions contained in
     Section 1.1 of the Purchase Agreement shall be deleted
     in their entirety: (i) "Closing Balance Sheet," (ii)
     "Closing Net Book Value," (iii) "Final Purchase Price
     Adjustment," (iv) "Interim Period," (v) "Negative
     Adjustment," (vi) "Positive Adjustment," (vii)
     "Preliminary Net Book Value," and (viii) "Preliminary
     Purchase Price Adjustment."

               (c)  The definition of "Arbitrator" in
     Section 1.1 of the Purchase Agreement shall be deleted
     in its entirety and replaced with the following:

                    "`Arbitrator' shall mean Ernst & Young
          LLP or such other arbitrator as may be mutually
          agreed upon by the Seller and the Purchaser."

               (d)  The following new definition shall be
     added to Section 1.1 of the Purchase Agreement
     immediately after the definition of "Facility":

                    "`Final Balance Sheet' shall mean the
          balance sheet for the Business as of the last day
          of the month immediately preceding the Closing
          Date, adjusted as appropriate in order to reflect
          any Cash Transactions relating to the Business
          after the date of such balance sheet. The Final
          Balance Sheet shall be prepared by the Seller on a
          basis consistent with the Initial Balance Sheet."

               (e)  Section 3.1 of the Purchase Agreement
     shall be deleted in its entirety and replaced with the
     following:

                    "3.1 Purchase Price and Payment. The
          aggregate purchase price to be paid by the
          Purchaser to the Seller for the Purchased Assets
          and the Assumed Liabilities shall be $12,000,000
          (the "Purchase Price"). Payment of the Purchase
          Price shall be in United States dollars and shall
          be made no later than 11:30 a.m. (New York City
          time) on the Closing Date by wire transfer of
          immediately available funds to the account or
          accounts designated by the Seller."

               (f)  Section 3.2 of the Purchase Agreement
     shall be deleted in its entirety.

               (g)  Section 3.3 of the Purchase Agreement
     shall be deleted in its entirety.

               (h)  Section 3.4 of the Purchase Agreement
     shall be renumbered Section 3.2 and all references in
     the Purchase Agreement to Section 3.4 shall be deemed
     to refer to such section as renumbered.

               (i)  Section 4.3(f) and 4.3(g) of the
     Purchase Agreement shall each be deleted in their
     entirety and all subsequent clauses of Section 4.3
     shall be renumbered as appropriate. All references in
     the Purchase Agreement to such clauses of Section 4.3
     shall be deemed to refer to such clauses as renumbered.

               (j)  Section 4.3 (m) of the Purchase
     Agreement shall be amended to insert the words "and
     updated representations to conform thereto" after the
     word "Agreement" and before the words "to provide".

               (k)  The following new clause shall be added
     at the end of Section 4.3 of the Purchase Agreement:

                    "(l) The Final Balance Sheet."

               (l)  The final section of Section 9.1(a) of
     the Purchase Agreement shall be deleted in its entirety
     and replaced with the following:

                    "The Purchaser shall be solely
          responsible for all compensation accruing, or as
          accrued on the Final Balance Sheet, or to be paid
          on or after the Closing Date with respect to the
          Transferred Employees and for all employment and
          withholding tax obligations with respect to such
          compensation."

               (m)  Section 9.2 of the Purchase Agreement
     shall be amended to insert the word "or" after the
     parenthetical phrase between the words "consulting" and
     "employment".

               (n)  Section 15.1(c) of the Purchase
     Agreement shall be deleted in its entirety and replaced
     with the following:

                         "(c) by the Seller if the
          conditions set forth in Section 11.6 is not
          satisfied on or before February 28, 1997; or"

               (o)  Section 15.1(d) of the Purchase
     Agreement shall be deleted in its entirety and replaced
     with the following:

                    "(d) by either the Purchaser or the
          Seller if the Closing shall not have occurred on
          or before April 30, 1997."

          3.   Entire Agreement.   This Agreement and the
Purchase Agreement, as amended (together with the Schedules
and Exhibits attached thereto, as they may be amended from
and after the date hereof,) contain, and are intended as, a
complete statement of all of the terms and the arrangements
between the parties hereto with respect to the matters
provided for herein, and supersede any and all previous
agreements and understandings between the parties hereto
with respect to such matters.

          4.   Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Texas, without giving effect to the conflicts of
law principles thereof, and controlling United States
federal law.

          5.   Notices. All notices and other communications
under this Agreement shall be made in accordance with the
notice provisions of the Purchase Agreement.

          6.   Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument

          IN WITNESS WHEREOF,  the parties hereto have
executed this Agreement as of the date and year first above
written.


                              VARO INC.



                              By: /s/ T. J. Bird
                              Name:T. J. Bird
                              Title:Executive VP, General Counsel &
                                    Secretary



                              VARO ACQUISITION CORP.



                              By: /s/Harry Armon
                              Name:Harry Armon
                              Title:President