FIRST MODIFICATION AGREEMENT
TO STOCK PURCHASE AGREEMENT
This First Modification Agreement (the "Modification
Agreement") is entered into as of September ___, 1999, by and
between Engineered Systems and Electronics, Inc.,
a Missouri corporation ("Buyer"), and ESCO Electronics
Corporation, a Missouri corporation ("ESCO"), and Defense Holding
Corp., a Delaware corporation ("DHC") (Buyer, ESCO and DHC are
sometimes hereinafter collectively referred to as the "Parties").
Recitals
WHEREAS, the Parties have entered into the Stock Purchase
Agreement dated August 23, 1999 ("Stock Purchase Agreement"),
whereby Buyer agrees to purchase from Sellers, on the terms and
conditions set forth in the Stock Purchase Agreement, one
thousand (1,000) shares of the common stock, $1 par value per
share, of Systems & Electronics Inc., a Delaware corporation
which is a direct wholly-owned subsidiary of DHC and an indirect
wholly-owned subsidiary of ESCO;
WHEREAS, the Parties desire to amend the Stock Purchase
Agreement as provided below; and
WHEREAS, Engineered Support Systems, Inc. has executed a
joinder to the Stock Purchase Agreement as of the same date
thereof, and it acknowledges and agrees to the modification of
the Stock Purchase Agreement as set forth below.
NOW, THEREFORE, the parties agree as follows:
1. The page 50 of the Stock Purchase Agreement is hereby
amended to read as set forth on Attachment 1 to this Modification
Agreement, which shall replace such page 50 in its entirety.
2. The Exhibit 6.7(b) to the Stock Purchase Agreement is hereby
amended as set forth on Attachment 2 to this Modification
Agreement, which shall replace such Exhibit 6.7(b) in its
entirety.
3. The Exhibit 7.13(b) to the Stock Purchase Agreement is
hereby amended as set forth on Attachment 3 to this Modification
Agreement, which shall replace such Exhibit 7.13(b) in its
entirety.
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Modification Agreement to be executed as of the date first above
written.
ESCO: BUYER:
ESCO ELECTRONICS CORPORATION ENGINEERED SYSTEMS AND
Xxxxxx Xxxxx, ELECTRONICS, INC.
Senior Vice President and Xxxx X. Xxxxxxxx,
General Counsel Executive Vice President and
Chief Financial
Officer
DHC:
DEFENSE HOLDING CORP.
Xxxxxx Xxxxx,
Senior Vice President and
Secretary
JOINDER
The foregoing Modification Agreement is approved by the undersigned
and the undersigned hereby acknowledges and agrees this September
____, 1999 to such modification to the Stock Purchase Agreement and
joins therein.
ENGINEERED SUPPORT SYSTEMS,
INC.:
Xxxx X. Xxxxxxxx,
Executive Vice President and
Chief
Financial Officer
ATTACHMENT 1
If to Sellers:
ESCO Electronics Corporation
0000 Xxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxx LLP
One Metropolitan Square
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxxxxx
Fax: (000) 000-0000
9.3.Entire Agreement.
This Agreement, the joinder of Engineered Support Systems,
Inc., the Schedules hereto, the Exhibits hereto and the
Confidentiality Agreement constitute the entire agreement and
understanding between the Parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous
agreements and understandings relative to such subject matter.
9.4.Assignment; Binding Agreement.
This Agreement and the rights and obligations arising
hereunder shall be binding upon and shall inure to the benefit of
the Parties and to their respective successors and permitted
assigns. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be transferred,
delegated, or assigned (by operation of law or otherwise) by
either of the Parties without the prior written consent of the
other Party; provided, however, Buyer may, without the consent of
the Sellers, transfer and assign its rights and interests under
this Agreement, subject to any right of set-off of the Sellers
under Article VIII of the Agreement, to its lender(s) under the
BOA Credit Facility.
9.5.Counterparts.
This Agreement may be executed simultaneously in multiple
counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same
instrument.
9.6.Headings; Interpretation.
The article and section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of the Agreement. Each reference
in this Agreement to an Article, Section, Schedule or Exhibit,
unless otherwise indicated, shall mean an Article or a Section of
this Agreement or a Schedule or Exhibit attached
ATTACHMENT 2
Schedule 7.13(b)
ESCO Retirement Plan - Pension
(a) As of the date immediately following the Closing Date, the
Sellers shall take all necessary actions to cause the ESCO
Retirement Plan to be split into two separate plans (1) a plan
covering Transferred Employees ("Buyer's Pension Plan") and (2) a
plan covering all participants in the ESCO Retirement Plan and
others who are not Transferred Employees respectively and to
provide for the direct trust-to-trust transfer of assets and
assumption of liabilities as provided below to the Buyer's
Pension Plan. The Buyer or its Affiliate shall adopt the Buyer's
Pension Plan as of the date immediately following the Closing
Date. The assets and liabilities associated with any Transferred
Employee shall be transferred from the ESCO Retirement Plan to
Buyer's Pension Plan.
(b) The amount of the assets to be transferred ("Transferred
Amount") shall be equal to the greater of:
(i) Asset Value A (as defined below) plus fifty (50) percent of
the excess, if any, of Asset Value B over Asset Value A (as
defined below), or
(ii) The amount of assets as of the Closing Date necessary
to meet all applicable requirements of Section 414(l) of the
Internal Revenue Code ("Code").
Asset Value A is defined as the sum of the actuarial accrued
liability as of the Closing Date per CAS 413.50(c)(12)(i),
plus the government's full share of any surplus assets as of
the Closing Date as calculated in CAS 413.50(c)(12)(vi). The
actuarial assumptions for calculations of the actuarial
accrued liability per CAS 413.50(c)(12)(i), including, but not
limited to, the interest rate, mortality, termination,
disability, and retirement assumptions, are specified in the
most recent CAS actuarial report covering fiscal year 1999
("CAS Actuarial Report").
Asset Value B is defined as the market value of the assets as
of the Closing Date allocated to the SEI segment, as
referenced in Cost Accounting Standards ("CAS") 413.50(c)(12).
The interest rate utilized for calculations described in
Section 1(b)(ii) shall be the Pension Benefit Guaranty
Corporation interest rate for valuing annuity benefits for
first twenty (20) years as of the Closing Date, plus 25 basis
points. All other actuarial assumptions for calculations
described in Section 1(b)(ii) are specified in the CAS
Actuarial Report.
The assets transferred shall be in the form of cash or other
assets mutually acceptable to the Buyer and the Sellers.
(c) The asset transfer will occur as soon as reasonably
practicable after the Closing Date, and the amount so transferred
shall equal the Transferred Amount and shall be adjusted by
actual investment return (net of plan expenses) earned by the
ESCO Retirement Plan trust from the Closing Date to the date of
actual asset transfer, and decreased by any benefit payments made
with respect to the Transferred Employees.
(d) As soon as reasonably practicable after the Closing Date,
the Sellers shall report, or cause their actuary to report, to
the Buyer the Sellers' calculations of the amount described in
Section 1(b) and Section 1(c) above, and shall provide to the
Buyer such information and data as may be reasonably requested by
the Buyer to permit the Buyer to review the calculations. If the
Sellers and the Buyer cannot agree on the calculations of such
amounts, then the calculations shall be referred to and settled
with final and binding effect by such independent Fellow of the
American Society of Actuaries as the Sellers and the Buyer may
jointly select ("Independent Actuary"). The Independent Actuary
shall perform such calculations in accordance with the applicable
assumptions and methods as described in Section 1(b) and Section
1(c) of this Schedule 7.13(b). The costs of such independent
actuarial determination shall be borne equally by the Sellers and
the Buyer.
(e) All liabilities under the ESCO Retirement Plan in respect of
the Transferred Employees shall be assumed by the Buyer as of the
Closing Date, and the Sellers shall have no further obligation in
respect of any such liabilities, except as provided in this
Agreement.
(f) Unless otherwise mutually agreed to by the Sellers and the
Buyer, the transfer of such assets and liabilities will be
subject to the Buyer's certification to the Sellers, and the
Sellers' certification to the Buyer, that the ESCO Retirement
Plan and the Buyer's Pension Plan are qualified under the
applicable provisions of the Code.
(g) All methodologies used in the calculations required under
this Schedule 7.13(b) for 1999 shall be consistent with those
applied to the comparable calculations made for 1998.
(h) Buyer shall maintain the Buyer's Pension Plan substantially
in the form existing at Closing for a period of at least 24
months beginning with the first full calendar month following
Closing.
