ENGINEERED SUPPORT SYSTEMS, INC.
2004 STOCK OPTION PLAN
ARTICLE I. GENERAL PROVISIONS
Section 1. Purpose of Plan. The purpose of the Engineered Support
Systems, Inc. 2004 Stock Option Plan (the "Plan") is to enhance the
profitability and value of Engineered Support Systems, Inc. (the "Company")
and its shareholders by strengthening the Company's ability to attract,
retain and motivate officers, other key employees and consultants of the
Company who make important contributions to the success of the Company.
Section 2. Definitions of Terms as Used in the Plan.
(a) "Affiliate" means any subsidiary or parent of the Company.
(b) "Award" means a Stock Option granted under Article II.
(c) "Plan Administrator" means the Compensation Committee of the
Board of Directors of the Company.
(d) "Consultant" means any natural person who has a written
agreement with the Company or any Affiliate to provide consulting services.
(e) "Stock" means the $.01 par value common stock of Engineered
Support Systems, Inc.
Section 3. Authorization and Reservation. There shall be
established a reserve of 350,000 shares of authorized and unissued Stock
and/or treasury shares which shall be the total number of shares of Stock
that may be issued pursuant to Awards. Upon the cancellation or expiration
of an Award, all shares of Stock not issued thereunder shall become
available for the granting of additional Awards.
Notwithstanding the above, the maximum number of shares subject to
stock options under this Plan that may be awarded in any calendar year to
any individual shall not exceed 350,000 shares, as adjusted in accordance
with Section 6 of Article VI.
Section 4. Administration of the Plan. The Compensation Committee
shall administer the Plan. Subject to the terms of the Plan, the Plan
Administrator shall have full power to grant Awards, construe and interpret
the Plan, establish rules and regulations and perform all other acts the
Plan Administrator believes reasonable and proper, including the power to
delegate responsibility to others to assist in administering the Plan.
Section 5. Participation in the Plan. Any officer, employee or
consultant of the Company shall be eligible to participate in the Plan.
ARTICLE II. STOCK OPTIONS
Section 1. Description. All options granted under the Plan shall be
nonstatutory options not intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended.
Section 2. Terms and Conditions.
(a) Each stock option shall be set forth in a written Notice
containing such terms and conditions as the Plan Administrator may
determine, subject to the provisions of the Plan.
(b) The purchase price of any shares exercised under any stock
option must be paid in full upon such exercise. The payment shall be made in
such form, which may be in cash or Stock, as the Plan Administrator may
(c) No stock option may be exercised after the expiration of five
(5) years from the date such option is granted unless such term is extended
by the Plan Administrator as evidenced in writing.
(d) The option price of shares subject to any stock option shall be
the closing price of the Stock on the date that the stock option is granted.
If the stock option is granted on a day that is not a trading day, the
option price shall be the closing price of the Stock on the immediately
preceding trading day. Stock options may not be repriced at any time.
ARTICLE III. FORFEITURE OF AWARDS
(a) The recipient of an Award, in the case of an employee of the
Company or any Affiliate, shall forfeit all amounts due or rights not
exercised upon the occurrence of any of the following events:
(i) the recipient is discharged for cause;
(ii) the recipient voluntarily terminates his employment;
(iii) the recipient engages in competition with the
Company or any Affiliate; or,
(iv) the recipient engages in any activity or conduct
contrary to the best interest of the Company or Affiliate.
(b) The recipient of an Award, in the case of a Consultant, shall
forfeit all options not exercised upon the cessation of the provision of
services to the Company by the Consultant.
(c) The Plan Administrator may include in any Award any additional
or different conditions of forfeiture it may deem appropriate. The Plan
Administrator may also, after taking into account the relevant
circumstances, waive any condition of forfeiture stated above or in the
(d) In the event of forfeiture, the recipient shall lose all rights
in and to the Award. This provision, however, shall not be invoked to force
any recipient to return any Stock already received or due under an Award at
the time of the event of forfeiture.
(e) Such determinations as may be necessary for application of this
section, including any grant of authority to others to make determinations
under this section, shall be at the sole discretion of the Plan
Administrator and his determinations shall be conclusive.
ARTICLE IV. DEATH OF OPTIONEE
Section 1. Death of Optionee. Upon the death of an Award recipient,
a stock option, to the extent exercisable on the date of his death, may be
exercised at any time within six (6) months after the recipient's
death, but in no event after the expiration of the term of the option, by
the recipient's beneficiary. From time to time, in a form acceptable to the
Plan Administrator, the recipient may designate any person or persons,
including a trust (concurrently, contingently or successively) to whom the
Award shall be transferred in the event that the recipient dies before
exercising the option. A beneficiary designation form shall be effective
only when the form is signed by the recipient and filed in writing with the
Plan Administrator while the recipient is alive, and shall cancel all
beneficiary designation forms that the recipient previously signed and
filed. If the recipient does not designate a beneficiary, the beneficiary
shall be the surviving spouse of the recipient, and if the recipient has no
spouse surviving, by the personal representative or the person or persons
entitled thereto by will or in accordance with the laws of descent and
distribution applicable to the recipient.
ARTICLE V. EXERCISE OF OPTION AND ISSUANCE OF STOCK
Section 1. Exercise of Option. The holder of an Award shall
exercise their right to acquire the Stock pursuant to the Award by written
notice to the Secretary of the Company at 201 Evans Lane, St. Louis,
Missouri 63121. Written notice shall set forth the number of shares for
which the exercise is applicable together with a check for the purchase
price of the Stock. If the holder of the Award exercises his option for less
than the total number of shares awarded, he will execute such documents as
required by the Corporate Secretary for the remaining number of shares
subject to the Award.
ARTICLE VI. OTHER GOVERNING PROVISIONS
Section 1. Transferability. No Award shall be transferable other
than at death as set out in Article IV, and any right granted under an Award
may be exercised during the lifetime of the holder thereof only by him.
Section 2. Rights as a Shareholder. A recipient of an Award shall
have no rights as a shareholder with respect to any options or shares which
may be issued in connection with the Award until the issuance of a stock
certificate for such shares, and no adjustment shall be made for dividends
or other rights for which the record date is prior to the issuance of such
Section 3. General Conditions of Awards. No employee or other
person shall have any right with respect to the Plan, or in the shares
reserved pursuant to the Plan, or in any Award, contingent or otherwise,
until written evidence of the Award shall have been delivered to the
recipient and all the terms, conditions and provisions of the Plan
applicable to such recipient have been met.
Section 4. Limitation as to Service. Neither the Plan, nor the
granting of an option, nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express or
implied, that an eligible participant has a right to continue as an employee
or consultant for any period of time or at any particular rate of
Section 5. Acceleration. The Plan Administrator may in its sole
discretion accelerate the date of exercise of any Award.
Section 6. Adjustments. Upon any Stock split, Stock dividend,
combination or reclassification of shares of Stock, or consolidation, merger
or sale of all or substantially all of the assets of the Company,
appropriate adjustments shall be made to the shares reserved under Article I
of the Plan and the terms of the outstanding Awards.
Section 7. Withholding of Taxes. The Company shall deduct from any
payment, or otherwise collect from the recipient, any taxes required to be
withheld by federal, state or local governments in connection with any
Section 8. No Warranty of Tax Effect. Except as may be contained in
the terms of any Award, no opinion is expressed nor warranties made as to
the effect for federal, state, or local tax purposes of any Awards.
Section 9. Amendment of Plan. The Board of Directors of the Company
may from time to time amend, suspend or terminate the Plan, in whole or in
part, and if terminated may reinstate any or all of the provisions of the
Plan, except that (1) no amendment, suspension or termination may apply to
the terms of any Award (contingent or otherwise) granted prior to the
effective date of such amendment, suspension or termination without the
recipient's consent; and, (2) any increase in the number of shares that may
be issued under the Plan, or any material increase in benefits under the
Plan must be approved by shareholders.
Section 10. Construction of Plan. The place of administration of
the Plan shall be in the State of Missouri, and the validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of Missouri.
ARTICLE VII. EFFECTIVE DATE AND TERM
This Plan shall be effective upon approval by the shareholders of
the Company. The Plan shall continue until October 31, 2009 unless sooner
terminated or extended by the Board of Directors. Any balances in the share
reserve shall be canceled, and no Awards shall be granted under the Plan
thereafter. The Plan shall continue in effect, however, insofar as is
necessary to complete all of the Company's obligations under outstanding
Awards and to conclude the administration.