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EXHIBIT 10.56  

 
 

AMENDMENT NUMBER ONE
  TO THE
  UNIVERSAL COMPRESSION HOLDINGS, INC.
  EMPLOYEE STOCK PURCHASE PLAN    
  

        This Amendment Number One (the "Amendment") to the Universal Compression Holdings, Inc. Employee Stock Purchase Plan (the "Plan") is hereby duly adopted,
approved, ratified and confirmed by the Board of Directors of Universal Compression Holdings, Inc., a Delaware corporation (the "Company"). All capitalized terms used herein but not defined
herein shall have the meanings set forth in the Plan. 

        WHEREAS,
the Board of Directors of the Company previously adopted the Plan; 

        WHEREAS,
Section 9.01 of the Plan reserves to the Company the right to amend the Plan by action of its Board of Directors; and 

        WHEREAS,
the Company desires to amend the Plan to allow commissions to be included in the pay from which stock can be purchased in accordance with the Plan; 

        NOW,
THEREFORE, the Board of Directors hereby amends the Plan as follows: 

        1.    Section 2.01,
"Base Pay" is deleted, and Sections 2.02, 2.03 and 2.04 are hereby amended by renumbering them as Sections 2.01, 2.02 and 2.03, respectively. 

        2.    Article II
of the Plan is hereby amended by adding the following as a new Section 2.04: 

"Eligible
Pay" means regular straight-time earnings, including commissions, but excluding payments for overtime, shift premium, bonuses and other incentive and special payments. 

        3.    Section 5.02
of the Plan is hereby amended by deleting the term "Base Pay" everywhere it appears and replacing it with the term "Eligible Pay." In addition, the
sentence that begins "In the case of a part-time hourly Employee" is amended to read as follows: 

In
the case of a part-time hourly Employee, such Employee's Eligible Pay during an Offering shall be determined by multiplying such Employee's hourly rate of pay in effect on the Offering
Commencement Date by the number of regularly scheduled hours of work for such Employee during such Offering and adding any payments received as commissions. 

        4.    Section 5.03
of the Plan is hereby amended by deleting the term "Base Pay" everywhere it appears and replacing it with the term "Eligible Pay." 

        5.    Section 6.02
of the Plan is hereby amended by deleting the term "Base Pay" everywhere it appears and replacing it with the term "Eligible Pay." 

        IN
WITNESS WHEREOF, the undersigned, constituting all of the members of the Company's Board of Directors, adopt and declare effective this Amendment on Dec. 20, 2001. 

	 	 	By:	 	/s/  STEPHEN A. SNIDER      
 Stephen A. Snider

Director
	

 	
 	

By:	
 	

/s/  ERNIE L. DANNER      
 Ernie L. Danner

Director

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AMENDMENT NUMBER ONE TO THE UNIVERSAL COMPRESSION HOLDINGS, INC. EMPLOYEE STOCK PURCHASE PLAN<Page>
                                   AGREEMENT

    THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the
26th day of June, 2002, by and between DRS TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), having an address at 5 Sylvan Way, Parsippany, New
Jersey and Robert F. Mehmel, (the "Executive"), currently residing at 15 O'Brien
Court, Bedminster, NJ 07921.

    WHEREAS, the Executive desires to enter into an agreement of employment with
the Company in accordance with the terms and conditions set forth herein; and

    WHEREAS, the Company desires to employ the Executive as its Executive Vice
President, Business Operations & Strategy in accordance with the terms and
conditions set forth herein;

    NOW THEREFORE, in consideration of the premises and mutual agreements herein
contained, the parties hereto, intending legally to be bound, hereby agree as
follows:

1.  TERM OF EMPLOYMENT.  The initial term of employment shall begin on the date
    set forth above (the "Effective Date") and shall continue in effect until
    the second anniversary of the Effective Date (such period being the "Initial
    Term"). On the first anniversary of the Effective Date and on subsequent
    anniversaries, this Agreement shall automatically be renewed for successive
    one year periods, unless at least ninety (90) days prior to the end of each
    renewal date either party hereto gives written notice to the other party of
    its intention not to renew this Agreement and, as provided below, shall
    remain in effect following a Change in Control. This Agreement may be
    terminated at any time during its initial term or during any renewal term
    solely in accordance with the terms and conditions of Section 5 hereof.

2.  DUTIES.

    2.1 POSITION.  The Company hereby employs the Executive in an executive
       capacity with the title of Executive Vice President, Business
       Operations & Strategy, and the Executive hereby accepts such employment
       and undertakes and agrees to serve in such capacity. In such capacity,
       the Executive shall have such powers, perform such duties and fulfill
       such responsibilities typically associated with such positions in other
       publicly held companies. Performance of his duties hereunder shall in no
       event require that the Executive work on a regular basis at any location
       other than within twenty (20) miles of the Company's present office
       location. The Executive shall devote substantially all of his working
       time and efforts to the performance of his duties hereunder. The
       Executive shall report directly to the Chief Executive Officer ("CEO") of
       the Company and have the authority to hire and discharge any employee
       within his area of responsibility.

    2.2 LIMITATION ON OTHER EMPLOYMENT.  During the term of his employment
       hereunder, the Executive will not engage in any other occupation for
       gain, profit or pecuniary advantage, without the consent of the CEO of
       the Company; provided, however, that this limitation shall not be
       construed as preventing him from (a) serving on the board of directors of
       any corporation not directly competitive with the Company (provided that
       the Executive has obtained the approval of the CEO), and (b) investing or
       trading in securities or other forms of investment, in each case so long
       as such activities do not materially interfere with the performance of
       his duties hereunder and such investments do not represent the ownership
       of 5% or more of the capital stock of publicly traded entities.

3.  COMPENSATION.

    3.1 BASE SALARY.  In consideration of the services rendered hereunder, the
       Company shall pay the Executive during the Initial Term of this Agreement
       a base salary at the rate of THREE HUNDRED FORTY-THREE THOUSAND FOUR
       HUNDRED DOLLARS ($343,400.00)

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       per annum or such higher rate as the CEO may reasonably determine ("Base
       Salary"), which amount will be payable to him in bi-weekly installments
       (or at such intervals as other salaried employees of the Company are
       paid). The amount of the Executive's Base Salary shall be reviewed
       annually by the CEO but shall not be reduced without written consent of
       the Executive.

    3.2 INCENTIVE COMPENSATION.

       (a) The Executive will be eligible to participate in the DRS Incentive
           Compensation Plan ("ICP") at a grade level commensurate with his
           position. The current grade level for the Executive is M76. Specific
           annual entitlements to bonus awards shall be predicated on the
           Executive's performance and subject to the Company achieving its
           operating targets, consistent with the rules set forth in the ICP.

       (b) The Executive shall participate in all other Bonus, Long-Term Capital
           Accumulation and/or Stock-Based Programs that the Company may adopt
           from time to time.

4.  BENEFITS.

    4.1 BENEFIT PROGRAMS.  The Executive will be included in all group insurance
       plans ("Insurance Plans"), retirement plans, and other benefits plans and
       arrangements (such retirement and other benefit plans and arrangements,
       together with the Insurance Plans, the "Benefit Program") available to
       executives of the Company, as such plans may be or have been adopted from
       time to time. The Company will provide to the Executive the specific
       benefits listed on Schedule A hereto. The Executive shall be a Class B
       Participant in the Company's SERP.

    4.2 VACATION.  The Executive shall be entitled to three (3) weeks of
       vacation with pay during each twelve (12) month period of employment
       under this Agreement.

    4.3 AUTOMOBILE AND OTHER EXPENSES.  In accordance with Company policy as
       established from time to time, the Company will provide the Executive
       with an automobile of a type mutually agreed upon and the Company will
       pay, or reimburse him for, all business related operating expenses of
       such automobile (including, without limitation, insurance, service,
       repairs, gasoline and oil). The Company will also reimburse the Executive
       for his ordinary and customary business expenses incurred in the
       performance of his duties hereunder.

5.  TERMINATION.

    5.1 TERMINATION BY THE COMPANY FOR CAUSE.

       (a) DEFINITION.  The Company may terminate the Executive's employment
           hereunder for "Cause" which shall be limited to:

           (i) Gross neglect or dereliction in the performance of the
               Executive's duties or other grave misconduct by him and the
               failure to cure such situation within twenty days after receipt
               of a notice thereof from the Board of Directors,

           (ii) The Executive's engaging in conduct which has caused
               demonstrable and serious injury to the Company, monetary or
               otherwise, as evidenced by a written determination authorized by
               the Board of Directors of the Company, or

           (iii) The Executive's conviction for or plea to a felony or for any
               lesser crime which involves the property of the Company.

       (b) COMPENSATION UPON TERMINATION FOR CAUSE.  Upon the termination of the
           Executive's employment for Cause, the Company shall pay the Executive
           his Base Salary, prorated

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           incentive compensation and continued participation in the Benefit
           Program through the effective date of such termination.

    5.2 TERMINATION FOR DISABILITY OR DEATH.

       (a) DISABILITY.  The Company may terminate the Executive's employment
           hereunder in the event of the Executive's permanent disability. For
           the purposes of this Agreement, permanent disability shall mean the
           Executive's inability, whether mental or physical, to perform the
           regular duties of his employment on a full-time continuous basis for
           six (6) consecutive months (the "Disability Period"). If a policy of
           disability insurance is in effect insuring the Executive, then in no
           event shall Executive be deemed to be disabled until he is determined
           to be entitled to receive disability income payments pursuant to such
           disability policy. During the Disability Period the Company shall
           (i) pay the Executive his full Base Salary then in effect, as well as
           any ICP benefit to which he would otherwise be entitled, reduced by
           any amounts which he actually received under any disability plan
           maintained by the Company during the Disability Period, and
           (ii) shall continue his participation in the Benefit Program. The
           Company shall notify the Executive in writing of any such finding on
           its part at the end of the Disability Period. If the Company and
           Executive are unable to agree whether he is so disabled the question
           shall be decided by a panel of three physicians, one to be designated
           by the Company, one by the Executive and one by the first two so
           designated. The determination of the panel shall be final and binding
           upon the parties with costs of the panel to be paid by the Company.

       (b) DEATH.  The Executive's employment hereunder will terminate upon the
           Executive's death.

       (c) COMPENSATION UPON TERMINATION FOR DISABILITY OR DEATH.

           (i) If the Company terminates the Executive's employment due to
               permanent disability, pursuant to Subsection 5.2(a) herein, the
               Company shall pay the Executive his monthly Base Salary then in
               effect for one (1) year after his termination, reduced by any
               amounts to which he actually receives under any disability plan
               maintained by the Company and shall pay the Executive when due, a
               pro-rata portion of the bonus determined pursuant to (iii) below
               corresponding to the period of his active employment during the
               termination year.

           (ii) If the Executive's employment is terminated due to his death,
               pursuant to Subsection 5.2 (b) herein, the Company shall pay the
               Executive's estate or designated beneficiary (A) the Executive's
               Base Salary and any other amounts due or earned through the date
               of death, (B) until the end of the fiscal year in which the date
               of death occurred or, if greater, for three months following the
               date of death, the Executive's Base Salary as in effect, and
               (C) a pro-rata portion of the bonus determined pursuant to
               (iii) below corresponding to the period of his employment during
               the termination year.

           (iii) For purposes of determining the bonus payable in the year of
               termination, the Company shall pay a bonus equal to the amount of
               the current year's bonus which could have been paid to Executive
               for the year of termination, pro-rated for the period of his
               employment during the termination year.

       (d) BENEFITS UPON TERMINATION FOR DEATH OR DISABILITY.

           (i) If the Company terminates the Executive's employment due to his
               permanent disability, pursuant to Subsection 5.2(a) herein, the
               Company shall continue to

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               provide him and his dependents coverage under insurance Plans, at
               his option, for the longer of one year or the period required by
               applicable law. The Company shall provide such coverage at its
               expense (except with respect to those costs for which the
               Executive was responsible prior to the termination of
               employment).

           (ii) If the Executive's employment is terminated due to his death,
               pursuant to Subsection 5.2(b) herein, the Company shall continue
               to provide the Executive's dependents medical insurance coverage,
               at their option, for the longer of one (1) year after his death
               or the period required by applicable law. The Company shall
               provide such coverage at its expense (except for those costs for
               which the Executive was responsible prior to his death).

    5.3 TERMINATION BY THE EXECUTIVE.

       (a) GOOD REASON.  The Executive may terminate his employment during the
           Employment Period hereunder for "Good Reason" (i) upon the failure by
           the Company (or its stockholders as the case may be) to elect or
           reelect or to appoint or reappoint the Executive to the offices of
           Executive Vice President, Business Operations & Strategy, or
           (ii) after the occurrence, without the written consent of the
           Executive, of an event constituting a material breach of this
           Agreement by the Company that has not been fully cured within twenty
           (20) days after written notice thereof has been given by the
           Executive to the Company, or (iii) upon the occurrence of any action
           taken by the Company which would constitute a constructive
           termination; provided, that, in addition to and without limiting the
           generality of the foregoing, on and after a Change in Control (as
           defined in Section 5.3(c)) herein), any one of the following events
           shall be deemed a material breach of this Agreement:

           (i) the assignment to the Executive of any duties inconsistent with
               the Executive's then status as an executive officer of the
               Company or a substantial adverse alteration in the nature of the
               Executive's responsibilities from those in effect immediately
               prior to the Change in Control;

           (ii) a reduction by the Company in the Executive's Base Salary as in
               effect immediately prior to the Change in Control;

           (iii) a reduction in the aggregate percentage upon which the
               Executive's Incentive Compensation is determined following the
               Change of Control unless equivalent reductions are made generally
               for other executives of the Company;

           (iv) the relocation of Executive's principal place of employment,
               without his consent, to a location more than twenty (20) miles
               from the place of such employment immediately prior to the Change
               in Control;

           (v) The failure by the company to continue to provide the Executive
               with benefits substantially similar to those enjoyed by Executive
               under the Benefit Program, as in effect immediately prior to the
               Change in Control, the taking of any action by the company which
               would directly or indirectly materially reduce any of such
               benefits or deprive the Executive of any material fringe benefit
               enjoyed by the Executive immediately prior to the Change in
               Control, or the failure by the Company to provide the Executive
               with the number of paid vacation days to which Executive is
               entitled on the basis of years of service with the Company in
               accordance with the Company's normal vacation policy in effect
               immediately prior to Change in Control; and

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           (vi) The failure of a successor to the Company to expressly assume
               and agree to perform this Agreement pursuant to Section 5.5
               herein.

       (b) COMPENSATION AND BENEFITS UPON TERMINATION BY THE EXECUTIVE.

           (i) In the event of a termination of this Agreement by the Executive,
               without Good Reason, the company shall provide to him his Base
               Salary, the prorated portion of the bonus determined pursuant to
               Section 5.2(c)(iii), corresponding to the period of his
               employment during the termination year and continued
               participation in the Benefit Program, through the effective date
               of such termination.

           (ii) If the Executive terminates his employment hereunder for Good
               Reason, (A) if there has not occurred a Change in Control, the
               Company shall also pay him, as liquidated damages under this
               Agreement, his monthly Base Salary then in effect for twelve
               months following the notice of termination, plus the pro-rata
               portion of the bonus determined pursuant to Section 5.2(c)(iii);
               (B) if there has occurred a Change in Control, the Company shall
               pay him, as liquidated damages under this Agreement, a lump sum
               equal to the sum of the bonus earned by him during the
               immediately preceding fiscal year of the Company plus 200% of his
               annual Base Salary then in effect, and (C) in either case, the
               Executive's employment shall be deemed to continue for the
               balance of the Agreement for purposes of determining his
               participation in the Benefit Program; provided, however, that if
               such participation by him after termination of employment is not
               permitted under any such plan, the Company will provide him with
               the equivalent benefits. The Company will pay the total costs of
               the Executive's participation in such plans or the equivalent
               thereof. During the period the Executive will have full use of
               the Company-supplied automobile. The Executive also will be
               provided with out-placement assistance utilizing a consultation
               service designated and paid for by the Company. Furthermore, all
               stock options granted to Executive shall immediately vest and be
               exercisable for a period of 12 months following termination.

       (c) DEFINITION OF CHANGE IN CONTROL.  A "Change in Control" shall mean
           the occurrence of an event set forth in any one of the following
           paragraphs:

           (i) any Person is or becomes the Beneficial Owner, directly or
               indirectly, of securities of the Company (not including in the
               securities beneficially owned by such Person any securities
               acquired directly from the Company or its affiliates)
               representing 20% or more of the combined voting power of the
               Company's then outstanding securities, excluding any Person who
               becomes such a Beneficial Owner in connection with a transaction
               described in clause (A) of paragraph (iii) below and excluding a
               transaction whereby a person becomes the Beneficial Owner of 20%
               or more of the combined voting power of the Company's then
               outstanding securities, but such transaction does not transfer
               the power to control the management or the policies of the
               Company; or

           (ii) the following individuals cease for any reason to constitute a
               majority of the number of directors then serving: individuals
               who, on the date hereof, constitute the Board and any new
               director (other than a director whose initial assumption of
               office is in connection with an actual or threatened election
               contest, including but not limited to a consent solicitation,
               relating to the election of directors of the Company) whose
               appointment or election by the Board or nomination for election
               by the Company's stockholders was approved or recommended by a
               vote of at least two-thirds ( 2/3) of the directors then still in
               office who either were directors on the date hereof or

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               whose appointment, election or nomination for election was
               previously so approved or recommended; or

           (iii) there is consummated a merger or consolidation of the Company
               or any direct or indirect subsidiary of the Company with any
               other corporation, other than (A) a merger or consolidation which
               would result in the voting securities of the Company outstanding
               immediately prior to such merger or consolidation continuing to
               represent (either by remaining outstanding or by being converted
               into voting securities of the surviving entity or any parent
               thereof) at least 60% of the combined voting power of the
               securities of the Company or such surviving entity or any parent
               thereof outstanding immediately after such merger or
               consolidation, or (B) a merger or consolidation effected to
               implement a recapitalization of the Company (or similar
               transaction) in which no Person is or becomes the Beneficial
               Owner, directly or indirectly, of securities of the Company (not
               including in the securities Beneficially Owned by such Person any
               securities acquired directly from the Company or its Affiliates
               other than in connection with the acquisition by the Company or
               its Affiliates of a business) representing 20% or more of the
               combined voting power of the Company's then outstanding
               securities; or

           (iv) the stockholders of the Company approve a plan of complete
               liquidation or dissolution of the Company or there is consummated
               an agreement for the sale or disposition by the Company of all or
               substantially all of the Company's assets, other than a sale or
               disposition by the Company of all or substantially all of the
               Company's assets to an entity, at least 60% of the combined
               voting power of the voting securities of which are owned by the
               stockholders of the Company in substantially the same proportions
               as their ownership of the Company immediately prior to such sale.

    For purposes of this Section 5.3(c), the following definitions shall apply:

"Person" shall have the meaning given in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Act"), as modified and used in
Section 13(d) thereof, except that such term shall not include (i) the Company
or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its Affiliates,
(iii) an underwriter temporarily holding securities pursuant to an offering of
such securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company. "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Act. "Affiliate" shall have the meaning set forth
in Rule 12b-2 promulgated under Section 12 of the Act.

    5.4 TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE.

       (a) COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR
           CAUSE.  If the Company terminates the Executive's employment
           hereunder without "Cause", the Company shall pay the Executive the
           amounts described in 5.3(b)(ii).

       (b) BENEFITS UPON TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE.  If
           the company terminates the Executive's employment hereunder without
           "Cause", the Executive's employment shall be deemed to continue for
           the balance of the Agreement for purposes of determining his
           participation in the Benefit Program existing prior to the
           termination or under any equivalent plan providing the same coverage
           which may be substituted for any such plan; provided, however, that
           if such participation by him after termination of employment is not
           permitted under any such plan, the Company will provide him with the
           equivalent benefits. The Company will pay the total costs of the
           Executive's participation

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           in such plans or the equivalent thereof. During this period the
           Executive will have full use of the Company-supplied automobile. The
           Executive also will be provided with out-placement assistance
           utilizing a consultation service designated and paid for by the
           Company. Furthermore, all stock options granted to Executive shall
           immediately vest and be exercisable for a period of 12 months
           following termination.

    5.5 SUCCESSOR.  The Company, or any entity which controls the Company, shall
       require any successor (whether direct or indirect, by purchase, merger,
       consolidation or otherwise) to all or substantially all of the business
       or assets of the Company by written agreement expressly to assume and
       agree to perform this Agreement in the same manner and to the same extent
       as the Company would be required to perform if no such succession had
       occurred. Failure of the Company or a controlling entity to obtain such
       agreement prior to the effective date of any such succession followed by
       failure of the successor to honor this Agreement shall be a breach of
       this Agreement and shall entitle the Executive to the rights and benefits
       hereunder as though he had terminated his employment with the Company for
       Good Reason pursuant to paragraph 5.3 hereof (including those provisions
       which concern compensation following a Change in Control), whether or not
       he terminates his employment with the Company. As used in this Agreement,
       "Company" shall mean the Company as defined above and any successor to
       all or substantially all of its business or assets which becomes bound by
       all of the terms and conditions of this Agreement.

6.  RESTRICTIONS.

    6.1 CONFIDENTIAL INFORMATION.  The Executive agrees that during and after
       the period of his employment he will not, without authorization from the
       Company, divulge, disclose or otherwise communicate to any person or
       company any information of a confidential nature pertaining to specific
       details of the Company's business, functions or operations, except in
       connection with the discharge of his duties hereunder, or pursuant to the
       order of a court of competent jurisdiction. The Executive further agrees
       that, upon termination of his employment with the Company for any reason,
       he will promptly return to the Company all books and records of or
       pertaining to the Company's business, and all other property belonging to
       the Company which is in his custody or possession.

    6.2 NON-COMPETE.  During his employment by the Company and in the event he
       is terminated by the Company for Cause or terminates his employment
       without Good Reason, for twelve (12) months thereafter, subject to
       Section 2.2 above, the Executive shall not compete with the Company in
       any activity relating to the Business of the Company as conducted by the
       Company during the term of this Agreement. For purposes of the preceding
       sentence, competition shall include, without limitation, direct or
       indirect competition by the Executive, whether as an owner, officer,
       director, employer, partner, consultant, advisor, contractor, principal
       agent, licensor, employee or affiliate of a person firm, venture or
       corporation that so competes with the Company. Without the prior written
       approval of the CEO, the Executive further agrees that during the twelve
       (12) month period following the termination of this Agreement for any
       reason he will not solicit for employment any employee of the Company. It
       is further agreed and understood that the Executive shall not engage in
       any conduct or communication which shall disparage the Company or
       interfere with its current or prospective business relationships.

    6.3 CAUSE OF ACTION.  The parties hereby declare that the rights of the
       Company are of a unique nature, the loss of which may cause irreparable
       harm, and that it may be impossible to measure in money the damages which
       will accrue to the company by reason of the loss of such rights or a
       failure by the Executive to perform or adhere to any of the obligations
       under Sections 6.1 and 6.2 hereof. The Executive expressly acknowledges
       that remedies at law alone

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       will be inadequate to compensate the Company for any breach or violation
       of any of the provisions of Sections 6.1 or 6.2 hereof, and that the
       Company, in addition to all other remedies hereunder or thereunder, shall
       be entitled, as a matter of right, to seek injunctive relief, including
       specific performance, with respect to any such breach of violation, in
       any court of competent jurisdiction.

7.  LEGAL MATTERS.

    7.1 RESOLUTION OF CONFLICT.  Other than as provided in Section 6.3 herein
       with respect to obligations contained in Sections 6.1 and 6.2 herein, any
       and all disputes, claims and controversies between the parties hereto
       concerning the validity, interpretation, performance, termination or
       breach of this Agreement, which cannot be resolved by the parties within
       ninety (90) days after such dispute, claim or controversy arises shall,
       at the option of either party, be referred to and finally settled by
       arbitration. Such arbitration shall be initiated by the initiating party
       giving notice (the "Arbitration Notice") to the other party (the
       "Respondent") that it intends to submit such dispute, claim or
       controversy to arbitration. Each party shall, within thirty (30) days of
       the date the Arbitration Notices is received by the Respondent, designate
       a person to act as an arbitrator, if either party fails to designate a
       person to Act as an arbitrator within the time specified herein the
       arbitration shall be conducted by the sole designated arbitrator. The two
       arbitrators appointed by the parties shall, within thirty (30) days after
       their designation appoint a third arbitrator who shall act as presiding
       arbitrator (the "Presiding Arbitrator"). If the two arbitrators
       designated by the parties are unable to appoint a Presiding Arbitrator,
       the Presiding Arbitrator shall be appointed according to the rules of the
       American Arbitration Association as in effect on the date the notice of
       submission to arbitration is given (the "Rules").

       Such arbitration shall be held in New Jersey in accordance with the Rules
       except as otherwise expressly provided herein. The arbitrators shall, by
       majority vote, render a written decision stating reasons therefor in
       reasonable detail within three (3) months after the appointment of all
       the arbitrators. 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. The award of the arbitrators shall be
       made in United States currency and shall be final and binding, and
       judgment thereon may be rendered by any court having jurisdiction
       thereof, or application may be made to such court for the judicial
       acceptance of the award and an order of enforcement as the case may be.

    7.2 AGREEMENT CONFIDENTIAL.  Both the Executive and the Company will keep
       the terms of this Agreement confidential provided that this provision
       shall not restrict any disclosure by the Company pursuant to any
       applicable law, regulation or judicial order.

    7.3 NOTICES.  All notices, requests, consents and other communications,
       required or permitted to be given hereunder, shall be in writing and
       shall be deemed to have been duly given if delivered personally or mailed
       first class, postage prepaid, by registered or certified mail, addressed
       to either party at the address first written above (or to such other
       address as either party shall designate by notice in writing to the other
       party in accordance herewith).

8.  MISCELLANEOUS.

    8.1 GOVERNING LAW.  This Agreement shall be governed by and construed and
       enforced in accordance with the laws of the State of New Jersey
       applicable to agreements made and to be performed within New Jersey,
       without regard to the principles of conflict of laws.

    8.2 HEADINGS.  The section headings contained herein are for reference
       purposes only and shall not in any way affect the meaning or
       interpretation of this Agreement.

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<Page>
    8.3 ENTIRE AGREEMENT.  This Agreement sets forth the entire agreement and
       understanding of the parties relating to the subject matter hereof, and
       from and after the date hereof supersedes all prior agreements,
       arrangements and understandings, written or oral, relating to the subject
       matter hereof provided, however, that the benefits conferred under this
       Agreement are in addition to, and not in lieu of, any and all benefits
       conferred under plans and arrangements currently in effect for the
       Executive.

    8.4 ASSIGNMENT.  This Agreement is binding upon and shall inure to the
       benefits of the Executive and his estate, but the Executive's rights and
       obligations hereunder may not be assigned or pledged by him.

    8.5 MODIFICATION.  This Agreement may be amended, modified, superseded,
       canceled, renewed or extended, and the terms or covenants hereof may be
       waived, only be written instrument executed by both of the parties hereto
       or in the case of a waiver, by the party waiving compliance.

    8.6 SECTION 162(M).  In the event compensation payable to Executive
       hereunder in any single tax year would result in the non-deductibility of
       a portion of such compensation by the Company solely by reason of
       Section 162(m) of the Internal Revenue Code of 1986, as amended, then,
       and in such event, the Company shall be permitted to defer payment of
       such non-deductible amount to the Executive to be paid to him on the
       first day of the succeeding tax year of the Company.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement with legal and binding effect as of the day and year first above
written.

<Table>
<S>                                                <C>
DRS TECHNOLOGIES, INC.                             THE EXECUTIVE

/s/ Mark S. Newman                                 /s/ Robert F. Mehmel
-------------------------------------------        -------------------------------------------
By: Mark S. Newman, Chairman, President and        Robert F. Mehmel
Chief Executive Officer
</Table>

                                       9
<Page>
                                   SCHEDULE A

<Table>
<S>                                            <C>
GROUP PLANS                                    BENEFIT

DRS Group Medical/Dental Plan                  Varies
DRS Group Life Insurance Plan                  $50,000
DRS Group AD&D                                 $500,000 (2 X salary to 500K max)
DRS Long Term Disability Plan--Class I         $10,000 monthly benefit
DRS Retirement/Savings Plan (401K)             Varies
DRS Reimbursement Account Plan (IRC 125)       Varies (See below)

EXECUTIVE PLANS/BENEFITS                       BENEFIT

Executive Incentive Compensation Plan          Varies
1996 Omnibus Plan                              Varies
Life Insurance       (Split $) Survivor's      $1,200,000
Benefit
Life Insurance (Group Carve-out)               $450,000
DRS Reimbursement Account: one time annual     $7500 for 2002
Deposit to the reimbursement account (amount
may vary from year to year)

Supplemental Executive Retirement Plan
(SERP)-Class B Participant                     Determined at time of Retirement
</Table>

                                       10

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