Document:

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 

 

 

1

 

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 

 

 

2

 

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. 

 

 

3

 

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.

 

 

4

 

 

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

  	
   

  
								

 

 

 

5

 

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

 

 

6Exhibit
10.13

AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”),
originally entered into as of November 20, 1996, is hereby amended and restated
as of the 1st day of January, 2005, by and between DRS Technologies
Inc., a Delaware corporation (the “Company”), and Mark S. Newman (the
“Executive”).

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

WHEREAS, the Company desires to continue to
employ the Executive as its Chairman of the Board, President and Chief
Executive Officer in accordance with the terms and conditions set forth herein;

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

1.     Term of Employment.  This Agreement shall be effective from
January 1, 2005 (the “Effective Date”) and its initial term shall continue in
effect until December 31, 2007 (such period being the “Term”).  On January 1 of each year, beginning on
January 1, 2006, the term of this Agreement shall automatically be extended for
one additional year (such that as of January 1 of each year, the term of this
Agreement shall be three years), unless at least ninety (90) days prior to the
end of the calendar year, either party hereto gives written notice to the other
party of its intention not to extend the Term. 
This Agreement may be terminated at any time during its Term solely in
accordance with the terms and conditions of Section 5 herein.  Notwithstanding the foregoing, this Agreement
shall remain in effect for at least two years immediately following a Change in
Control which occurs during the Term.

2.     Duties.

2.1        Position.  The Company hereby employs the Executive in a
professional capacity with the title of Chairman of the Board, President and
Chief Executive Officer of the Company, and the Executive hereby accepts such
employment and undertakes and agrees to serve in such capacities. In such capacities,
the Executive shall have such powers, perform such duties and fulfill such
responsibilities typically associated with such positions in other
publicly-held companies, including, without limitation, planning, supervision
and control of the operations and financial affairs of the Company, management
and direction of the Company’s operating divisions, and such other general
powers and duties of an operational or supervisory nature usually vested in the
offices held by him. In addition, subject to his election by the stockholders
of the Company, the Executive shall serve on the Company’s Board of Directors
as Chairman of the Board. 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 his present office location; provided, however,
that if Executive initiates a relocation of 

 

 

his present office, such shall be deemed a consent to
performance of his duties in such 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 Board of Directors
of the Company (the “Board”), and shall have the authority to hire and
discharge any employee or independent contractor of the Company or its
affiliates (excluding, however, the public accounting firm serving as the
Company’s auditor).

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 Board;
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 Executive has informed the Board of
his intention to so serve and that the Board has not reasonably objected
thereto within twenty days of its receipt of Executive’s notice), 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 period
beginning January 1,  2005 and ending March 31, 2005, a base salary
at the rate of SEVEN HUNDRED EIGHTY THOUSAND DOLLARS ($780,000) per annum.  For the period beginning April 1, 2005 and
continuing for the remainder of the Term of this Agreement, the Company shall
pay the Executive a base salary at the rate of EIGHT HUNDRED ELEVEN THOUSAND
TWO HUNDRED DOLLARS ($811,200) per annum or at such higher rate as the Board
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 Compensation Committee of the Board (the “Compensation
Committee”), but shall not be reduced without written consent of the Executive
and shall in all events be increased annually, by the percentage change in the
Consumer Price index for Urban Wage Earners - New York, N.Y. - Northeastern
N.J. (“CPI”) (which CPI percentage change shall be determined in accordance
with past practice). The Executive and the Company may agree on a higher Base
Salary for any renewal term of this Agreement but if they do not agree by the
beginning of a renewal term, the Executive’s Base Salary shall be the base
salary he received in the year immediately prior to the renewal term increased
by the percentage change in the CPI.

3.2        Incentive
Compensation.

(a)       To
further the attainment of the Company’s long-term profit and growth objectives,
the Executive shall be eligible to receive an incentive bonus subject to the
terms of the currently effective Incentive Compensation Plan (“ICP”). Specific
annual bonus awards shall be predicated on the Executive’s performance and 

 

2

 

subject to the Company achieving its operating targets,
consistent with the rules as set forth in the ICP.  The Executive’s target bonus (“Target
Incentive Compensation”) each year shall be equal to at least 84% of his Base
Salary for such year.  The Executive’s
actual bonus award may exceed the Target Incentive Compensation if his
performance and the Company’s operating result are in excess of targets.

(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
benefit 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.

4.2        Vacation.  The Executive shall be entitled to five (5)
weeks of vacation with pay during each twelve (12) month period of employment
under this Agreement.

4.3        Automobile
and Other Expenses.  The Company will
provide the Executive with an automobile consistent with past practice 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: (a) his
ordinary and customary business expenses incurred in the performance of his
duties hereunder, (b) a comprehensive annual physical examination by a
physician of his choice and (c) tax planning and financial counseling by
professionals of his choice up to an annual limitation of $20,000.

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)                    Willful gross neglect or dereliction of
Executive’s duties or other willful grave misconduct by him; or

(ii)                   Executive’s engaging in willful conduct which has
caused demonstrable and serious injury to the Company, monetary or otherwise,
as evidenced by a written determination made by the Board; or

(iii)                  (A) Executive’s conviction for or plea to a felony,
or (B) Executive’s conviction for or plea to any lesser crime which involves
the property of the Company and which causes demonstrable and serious 

 

3

 

injury to the Company (except for motor vehicle
offenses and minor traffic violations).

Notwithstanding the foregoing, (x) no act, or failure to act,
on the Executive’s part shall be deemed “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that the
Executive’s act, or failure to act, was in the best interest of the Company,
and (y) termination for Cause may not occur pursuant to clauses (i) or (ii) of
this Section 5.1(a) unless and until, with the Board’s prior approval, the
Company has delivered to the Executive a notice of termination (“Notice of
Termination”), which shall contain in reasonable detail the facts purporting to
constitute such nonperformance, act, omission or breach, and afforded him 30
days thereafter to cure the same (if curable) and/or to respond in writing to
the Board setting forth his position that his termination for Cause should not
occur and requesting reconsideration by the Board, in which event (A) the
effective date of termination of employment shall be deferred until the Board
has had the opportunity to consider whether such nonperformance, act, omission
or breach has been cured and to consider any request by the Executive for
reconsideration, and (B) the Board shall thereafter cause a written notice to
be delivered on its behalf to the Executive stating either that it has
rescinded its determination that his employment is to be terminated for Cause
or that affirms its determination that his employment is to be terminated for
Cause and that contains an effective date of termination of employment, which
shall be not earlier than 15 days after such notice is given. Upon delivery to the
Executive of Notice of Termination under this Section 5.1(a), the Executive
shall be suspended from all duties and responsibilities unless and until the
Board rescinds its determination that his employment is to be terminated for
Cause.

(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 through the
effective date of such termination, any unpaid bonuses (including the ICP
Award) for a prior year, any bonuses (including the ICP award) for the year of
termination determined in accordance with Section 5.2(c)(iii), as well as all
other amounts accrued through the effective date of such termination
(collectively the “Accrued Obligations”).

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 maintained by the Company 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 

 

4

 

any amounts to which he actually receives 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 the 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 Section 5.2(a) herein, the
Company shall pay the Executive his Accrued Obligations and a lump sum payment
equal to his annual Base Salary; provided, that the Executive shall repay the
Company any amounts (up to the total amount of the lump sum payment) that he
actually receives under any disability plan maintained by the Company during
the twelve month period following the date of termination.

(ii)                   If the Executive’s employment is terminated due to
his death, pursuant to Section 5.2(b) herein, the Company shall pay the
Executive’s estate or designated beneficiary (A) the Executive’s Accrued
Obligations and (B) and a lump sum payment equal to the Executive’s Base Salary
for the period ending on the end of the fiscal year in which occurred the date
of death or, if longer, for three months following the date of death.

(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 most recent full year’s bonus paid to Executive preceding the year of
termination, pro-rated for the period of his employment during the termination
year.

(iv)                  If the Executive’s employment is terminated due to
his death or permanent disability, all stock options, restricted stock and
restricted stock units and any other equity based awards granted to the
Executive under the 1996 Omnibus Plan or any successor plan, shall immediately
vest and all stock options shall remain exercisable for a period of 12 months
following such termination (or if earlier, until the original expiration term
of such stock option)  (or such longer
period permitted under the applicable plan or agreement) and shall expire
thereafter.

(d)       Benefits
upon Termination for Death or Disability.

(i)                    If the Company terminates the Executive’s
employment due to his permanent disability, pursuant to Section 5.2(a) herein,
the 

 

5

 

Company shall continue to provide him and his
dependents coverage under the Insurance Plans, at his option, for the longer of
Executive reaching the age of sixty-five (65) or the period required by
applicable law provided that if any such plan does not permit such coverage,
the Company shall provide the Executive with a cash payment equivalent on an
after-tax basis to the premium cost of obtaining comparable coverage for such
period. 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 Section 5.2(b) herein, the Company shall continue to
provide the Executive’s dependents medical insurance coverage, at their option,
for the longer of: (A) one (1) year after his death, (B) the period for which
Executive’s children would be considered dependents for health insurance
purposes, or (C) 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 this death); provided that if any such plan does not permit such
coverage, the Company shall provide the Executive’s dependents with a cash
payment equivalent on an after-tax basis to the premium cost of obtaining
comparable coverage for such period.

5.3        Termination
by the Executive.

(a)       Good
Reason. The Executive may terminate his employment during the Term hereunder
for “Good Reason” upon the occurrence of any of the events listed below:

(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 President and Chief Executive Officer of the
Company or as a member of the Board or as Chairman of the Board; provided,
however, failure to reelect or reappoint the Executive as Chairman of the Board
shall not constitute Good Reason where the Company or the stockholders fail to
reelect the Executive in order to comply with any rule or regulation of any governmental or regulatory body or any exchange on which the Company
is listed; 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)                  the assignment to the Executive of any duties
inconsistent with the Executive’s position as the President and Chief Executive
Officer of the Company or a substantial adverse alteration in the nature of the
Executive’s responsibilities associated with such positions, or

 

6

 

(iv)                  upon the occurrence of any action taken by the
Company which would constitute a constructive termination; or

(v)                   a reduction by the Company in the Executive’s Base
Salary; provided, that, across the board salary reductions affecting similarly
situated senior executives of the Company shall not constitute Good Reason; or

(vi)                  a reduction in the Target Incentive Compensation
upon which the Executive’s annual incentive compensation is determined;
provided, that, prior to a Change in Control equivalent reductions made across
the board for similarly situated senior executives shall not constituting Good
Reason; or

(vii)                 the failure by the Company to continue to provide
the executive with current benefits, fringe benefits or vacation days;
provided, that, across the board benefit reductions affecting similarly
situated senior executives of the Company shall not constitute Good Reason; or

(viii)                the relocation of Executive’s
principal place of employment, without his consent, to a location more than
twenty (20) miles from the current place of such employment; or

(ix)                   the failure of a successor to the Company to
expressly assume and agree to perform this Agreement pursuant to Section 5.7
herein.

(b)       Compensation
and Benefits upon Termination by the Executive.

(i)                    The Executive may terminate his employment
hereunder for any reason.  In the event
of a termination of this Agreement by the Executive for any reason (other than
for Good Reason), the Company shall provide to him his Accrued Obligations.

(ii)                   If the Executive terminates his employment
hereunder for Good Reason:

(A)          the Company shall provide him his Accrued Obligations;

(B)           the Company shall pay him, as liquidated damages under
this Agreement, a lump sum payment equal to three (or, in the case of a
termination prior to a Change in Control, the greater of (x) 2 or (y) the
fraction, the numerator of which is the number of months remaining in the Term
and the denominator of which is 12) times the sum of (1) his Base Salary then
in effect plus (2) the bonus earned by him during the immediately preceding
fiscal year of the Company; and

 

7

 

(C)           his employment shall be deemed to continue, for purposes
of determining his participation in all medical, dental, hospitalization, life
insurance and other welfare and perquisite plans and programs, in each case in
which he was participating on the date of termination of the Executive’s
employment with the Company for 3 (or, in the case of a termination prior to a
Change in Control, the greater of (x) 2 or (y) the fraction, the numerator of
which is the number of months remaining in the Term and the denominator of
which is 12) years; 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 him with equivalent
after-tax 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). 
During the applicable period referenced above the Executive will have
full use of the Company supplied automobile. 
The Executive also will be provided with outplacement assistance
utilizing a consultation service designated and paid for by the Company.

(D)          Upon any termination of employment by the Executive for
Good Reason, all stock options, restricted stock and restricted stock units and
any other equity based awards granted to the Executive under the 1996 Omnibus
Plan or any successor plan, shall immediately vest and all stock options shall
remain exercisable for a period of 12 months (or such longer period permitted
under the applicable plan or agreement) following such termination (or if
earlier, until the original expiration term of such stock option) and shall
expire thereafter.

(c)       Definition
of Change in Control. A “Change in Control” shall mean the occurrence of the
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; 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 

 

8

 

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 of the directors then still in office who either were directors on
the date hereof or 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 Sections
13(d) and 14(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 

 

9

 

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.  If
the Company terminates the Executive’s employment hereunder without “Cause,”
the Company shall pay the Executive the amounts, and provide to the Executive
the benefits, described in Section 5.3(b)(ii).

5.5        Termination
after the expiration of the Term.  If the
Executive’s employment with the Company is terminated upon or after the
expiration of the Term, the Company shall pay the Executive his Accrued
Obligations.

5.6        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 ownership or control (a “Change in
Ownership or Control”) as provided in Section 280G(b)(2)(A)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”), 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 Ownership or 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 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 Ownership or Control, the
Company’s independent auditor (the “Auditor”), 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
benefits or any deferred payment or benefit shall be determined by the Auditor
in accordance with the principles of sections 

 

10

 

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.

5.7        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 herein (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 (except with
respect to the definition of Change in Control), “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.

 

11

 

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  when required to do so by a
court of law, by any governmental agency having supervisory authority over the
Company or the Executive or by any administrative or legislative body
(including a committee thereof) with apparent or actual jurisdiction to order
him to divulge, disclose or make accessible such information or as necessary to
enforce his rights under this Agreement or any other agreement, plan or
arrangement with the Company. 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 his employment. 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 Board, the Executive further
agrees that during the twelve (12) month period following the termination of
his employment for any reason he will not solicit for employment any employee
of the Company.

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 herein. The Executive expressly acknowledges that
remedies at law alone will be inadequate to compensate the Company for any
breach or violation of any of the provisions of Sections 6.1 or 6.2 herein, 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 Matter.

7.1        Resolution
of Conflict.  Except as provided in
Section 6.3, 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. 

 

12

 

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 Notice 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. 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        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 addition, the Company agrees to reimburse
the Executive for up to $20,000 of legal fees incurred in connection with the
negotiation of this Agreement.

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.     Indemnification.  The Company hereby agrees to indemnify the
Executive and hold him harmless (including the advancement of fees and
expenses) to the fullest extent permitted by law and/or under the by-laws and
charter of the Company against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including reasonable
attorney’s fees), losses, penalties and damages resulting

 

13

 

 from the Executive’s good faith performance of
his duties and obligations with the Company.

9.     Miscellaneous.

9.1        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.

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

9.3        Entire
Agreement.  This Agreement sets forth the
entire agreement and understanding of the parties relating to the subject
matter herein, and from and after the date hereof supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter herein 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.  No provision of this
Agreement is intended to confer on any person not a party hereto any rights or
remedies.

9.4        Assignment.  This Agreement is binding upon and shall
insure 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.

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

9.6        No
Mitigation.  The Company agrees that, if
the Executive’s employment with the Company terminates during the term of this
Agreement, the Executive is not required to seek other employment or to attempt
in any way to reduce any amounts payable to the Executive by the Company
pursuant to Section 5 herein.  Further,
no payment or benefit provided for in this Agreement shall be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise, except as provided in
Section 5.3(b)(ii)(C).

9.7        Conformance
with Internal Revenue Code Section 409A. 
The Company and the Executive agree to negotiate in good faith should
any amendment to the Agreement be required in order to comply with Section 409A
of the Code.

9.8        Counterparts.  This Agreement may be executed in several
counterparts (including by means of facsimile), each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.

 

14

 

 

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.

 

 

	
   

  	
  DRS
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/
  General Dennis J. Reimer

  
	
   

  	
  General
  Dennis J. Riemer, USA (Ret.)

  
	
   

  	
   

  
	
   

  	
   

  

 

 

	
   

  	
  THE
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mark
  S. Newman

  
	
   

  	
  Mark
  S. Newman

  
	
   

  	
   

  
	
   

  	
   

  

 

 

15

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