EXHIBIT 10.2

 

ESSEX CORPORATION

2004 EMPLOYEE STOCK PURCHASE PLAN

 

The following constitute the provisions of the 2004 Employee Stock Purchase Plan
of Essex Corporation.

 

1. PURPOSE. The purpose of the Plan is to provide Employees of the Company and
its Designated Parents or Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions and direct payments.
It is the intention of the Company to have the Plan qualify as an “Employee
Stock Purchase Plan” under Section 423 of the Code and the applicable
regulations thereunder. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.

 

2. DEFINITIONS. AS USED HEREIN, THE FOLLOWING DEFINITIONS SHALL APPLY:

 

a. “ADMINISTRATOR” means either the Board or a committee of the Board that is
responsible for the administration of the Plan as is designated from time to
time by resolution of the Board.

 

b. “APPLICABLE LAWS” means the legal requirements relating to the administration
of employee stock purchase plans, if any, under applicable provisions of federal
securities laws, state corporate and securities laws, the Code and the
applicable regulations thereunder, the rules of any applicable stock exchange or
national market system, and the rules of any foreign jurisdiction applicable to
participation in the Plan by residents therein.

 

c. “BOARD” means the Board of Directors of the Company.

 

d. “CODE” means the Internal Revenue Code of 1986, as amended.

 

e. “COMMON STOCK” means the common stock of the Company.

 

f. “COMPANY” means Essex Corporation, a Virginia corporation.

 

g. “COMPENSATION” means an Employee’s base salary from the Company or one or
more Designated Parents or Subsidiaries, including such amounts of base salary
as are deferred by the Employee (i) under any qualified or non-qualified cash or
deferred arrangement established by the Company or any Parent or Subsidiary of
the Company whether or not described in Section 401(k) of the Code, or (ii) to a
plan qualified under Section 125 of the Code. Compensation does not include
overtime, bonuses, annual awards, other incentive payments, reimbursements or
other expense allowances, fringe benefits (cash or noncash), moving expenses,
contributions (other than contributions described in the first sentence) made on
the Employee’s behalf by the Company or one or more Designated Parents or
Subsidiaries under

 

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any employee benefit or welfare plan now or hereafter established, and any other
payments not specifically referenced in the first sentence.

 

h. “CORPORATE TRANSACTION” means any of the following transactions:

 

(1) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
in which the Company is incorporated;

 

(2) the sale, transfer or other disposition of all or substantially all of the
assets of the Company;

 

(3) the complete liquidation or dissolution of the Company;

 

(4) any reverse merger or series of related transactions culminating in a
reverse merger (including, but not limited to, a tender offer followed by a
reverse merger) in which the Company is the surviving entity but (A) the shares
of Common Stock outstanding immediately prior to such merger are converted or
exchanged by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, or (B) in which securities possessing more than
forty percent (40%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from
those who held such securities immediately prior to such merger or the initial
transaction culminating in such merger, but excluding any such transaction or
series of related transactions that the Administrator determines shall not be a
Corporate Transaction; or

 

(5) acquisition in a single or series of related transactions by any person or
related group of persons (other than the Company or by a Company-sponsored
employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3
of the Exchange Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Company’s outstanding securities but
excluding any such transaction or series of related transactions that the
Administrator determines shall not be a Corporate Transaction.

 

i. “DESIGNATED PARENTS OR SUBSIDIARIES” means the Parents or Subsidiaries which
have been designated by the Administrator from time to time as eligible to
participate in the Plan.

 

j. “EFFECTIVE DATE” means the date determined by the Administrator.

 

k. “EMPLOYEE” means any individual, including an officer or director, who is an
employee of the Company or a Designated Parent or Subsidiary for purposes of
Section 423 of the Code. For purposes of the Plan, the employment relationship
shall be treated as continuing intact while the individual is on sick leave or
other leave of absence approved by the individual’s employer. Where the period
of leave exceeds ninety (90) days and the individual’s right to reemployment is
not guaranteed either by statute or by contract, the employment relationship
will be deemed to have terminated on the ninety-first (91st) day of such leave,
for purposes of determining eligibility to participate in the Plan.

 

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l. “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended.

 

m. “FAIR MARKET VALUE” means, as of any date, the value of Common Stock
determined as follows:

 

(1) If the Common Stock is listed on one or more established stock exchanges or
national market systems, including without limitation The Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on the principal exchange or system on which the Common
Stock is listed (as determined by the Administrator) on the date of
determination (or, if no closing sales price or closing bid was reported on that
date, as applicable, on the last trading date such closing sales price or
closing bid was reported), as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

 

(2) If the Common Stock is regularly quoted on an automated quotation system
(including the OTC Bulletin Board) or by a recognized securities dealer, its
Fair Market Value shall be the closing sales price for such stock as quoted on
such system on the date of determination, but if selling prices are not
reported, the Fair Market Value of a share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on the date of
determination (or, if no such prices were reported on that date, on the last
date such prices were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

 

(3) In the absence of an established market for the Common Stock of the type
described in (i) and (ii), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith.

 

n. “PARENT” means a “parent corporation” of the Company, whether now or
hereafter existing, as defined in Section 424(e) of the Code.

 

o. “PARTICIPANT” means an Employee of the Company or Designated Parent or
Subsidiary who is automatically enrolled in the Plan pursuant to Section 5(a).

 

p. “PLAN” means this 2004 Employee Stock Purchase Plan.

 

q. “PURCHASE DATE” means the last day of each Purchase Interval. Purchase Dates
shall occur on each March 31, June 30, September 30 and December 31. The first
Purchase Date for the Plan shall be September 30, 2004, unless a later date is
determined by the Administrator.

 

r. “PURCHASE INTERVAL” means a Purchase Interval established pursuant to Section
4.

 

s. “PURCHASE PRICE” shall mean an amount equal to 85% of the Fair Market Value
of a share of Common Stock on the Purchase Date.

 

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t. “RESERVES” means, as of any date, the number of shares of Common Stock which
have been authorized for issuance under the Plan but not then subject to an
outstanding option.

 

u. “SUBSIDIARY” means a “subsidiary corporation” of the Company, whether now or
hereafter existing, as defined in Section 424(f) of the Code.

 

3. ELIGIBILITY.

 

a. GENERAL. Any individual who is an Employee shall be eligible to participate
in the Plan. Employees who are subject to rules or laws of a foreign
jurisdiction that prohibit or make impractical the participation of such
Employees in the Plan shall not be eligible to participate in the Plan. No
individual who is not an Employee shall be eligible to participate in the Plan.

 

b. LIMITATIONS ON GRANT AND ACCRUAL. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be permitted to purchase shares under the
Plan if, immediately prior to purchase, (i) such Employee (taking into account
stock owned by any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any
Parent or Subsidiary, or (ii) such Employee’s rights to purchase stock under all
employee stock purchase plans of the Company and its Parents or Subsidiaries
exceed Twenty-Five Thousand Dollars (US$25,000) worth of stock (determined at
the Fair Market Value of the shares at the time such option is granted) for each
calendar year. The determination of the accrual of the right to purchase stock
shall be made in accordance with Section 423(b)(8) of the Code and the
regulations thereunder.

 

4. PURCHASE INTERVALS.

 

a. Initially, the Plan shall be implemented through consecutive Purchase
Intervals of three (3) months’ duration commencing each January 1, April 1, July
1 and October 1 following the Effective Date (except that the initial Purchase
Interval shall commence on the Effective Date and the first Purchase Date for
the Plan shall be September 30, 2004, unless a later date is determined by the
Administrator). However, the Administrator may provide for shorter or longer
Purchase Intervals and may specify one or more additional Purchase Dates within
Purchase Intervals. The maximum duration of a Purchase Interval shall be
twenty-seven (27) months. Participants shall purchase shares on the applicable
Purchase Dates until such time as (i) the maximum number of shares of Common
Stock available for issuance under the Plan shall have been purchased or (ii)
the Plan shall have been sooner terminated in accordance with Section 19 hereof.

 

b. Except as specifically provided herein, the acquisition of Common Stock on
any Purchase Date through participation in the Plan shall neither limit nor
require the acquisition of Common Stock by a Participant on any subsequent
Purchase Date.

 

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5. PARTICIPATION.

 

a. GENERAL. All Employees eligible to participate in the Plan as of the
Effective Date shall automatically become Participants in the initial Purchase
Interval and be eligible to purchase shares of Common Stock on the Purchase Date
of the initial Purchase Interval. All Employees eligible to participate in the
Plan as of the first day of subsequent Purchase Intervals shall automatically
become Participants in such Purchase Intervals and be eligible to purchase
shares of Common Stock on the Purchase Date of such Purchase Intervals.
Notwithstanding the automatic participation in the Purchase Intervals by all
eligible Employees, no shares of Common Stock shall be purchased on behalf of a
Participant on the Purchase Date of a Purchase Interval unless a Participant has
filed a subscription agreement in accordance with Section 6 hereof.

 

b. PURCHASE OF SHARES. An eligible Employee may purchase shares of Common Stock
by completing a subscription agreement in the form of Exhibit 1 to this Plan (or
such other form or method (including electronic forms) as the Administrator may
designate from time to time) and filing it (as well as a direct payment, if
applicable) with the Company at least three (3) business days prior to the next
Purchase Date, unless a later time for filing the subscription agreement is set
by the Administrator for all eligible Employees with respect to a given Purchase
Date.

 

6. PAYROLL DEDUCTIONS AND DIRECT PAYMENT.

 

a. At the time a Participant files a subscription agreement, the Participant may
elect to have payroll deductions made during the Purchase Interval in either (i)
amounts between one percent (1%) and not exceeding ten percent (10%) of the
Compensation which the Participant receives during the Purchase Interval or (ii)
fixed dollar amounts not exceeding ten percent (10%) of the Compensation which
the Participant receives during the Purchase Interval. All payroll deductions
made for a Participant shall be credited to the Participant’s account under the
Plan and will be withheld in either whole percentages or whole dollar amounts.
Payroll deductions shall commence with the first partial or full payroll period
beginning after the Participant’s submission of a subscription agreement and
shall end on the last complete payroll period prior to a Purchase Date, unless
sooner terminated by the Participant as provided in Section 10.

 

b. A Participant may make one or more direct payments into his or her account by
completing and filing with the Company either (i) a subscription agreement in
the form of Exhibit 1 to this Plan or (ii) a notice in the form of Exhibit 2 to
this Plan (or such other form or method (including electronic forms) as the
Administrator may designate from time to time) designating the amount of the
direct payment. Notwithstanding the foregoing, the total amount of the direct
payment(s) and the payroll deductions pursuant to Section 6(a) may not exceed
ten percent (10%) of the Compensation which the Participant receives during the
Purchase Interval.

 

c. A Participant may discontinue participation in a Purchase Interval as
provided in Section 10, or may increase or decrease the rate of payroll
deductions during the Purchase Interval by completing and filing with the
Company a notice in the form of Exhibit 2 to

 

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this Plan (or such other form or method (including electronic forms) as the
Administrator may designate from time to time) authorizing an increase or
decrease in the payroll deduction rate. Any increase or decrease in the rate of
a Participant’s payroll deductions shall be effective with the first full
payroll period commencing ten (10) business days after the Company’s receipt of
such notice unless the Company elects to process a given change in participation
more quickly. A Participant’s subscription agreement (as modified by any
subsequently filed notice) shall remain in effect for successive Purchase Dates
unless terminated as provided in Section 10. The Administrator shall be
authorized to limit the number of payroll deduction rate changes during any
Purchase Interval.

 

d. Notwithstanding the foregoing, to the extent necessary to comply with Section
423(b)(8) of the Code and Section 3(b) herein, a Participant’s payroll
deductions shall be decreased to 0% or zero dollars and one or more direct
payments made by the Participant pursuant to Section 6(b) may be rejected by the
Administrator and returned to the Participant. Payroll deductions shall
recommence at the rate provided in such Participant’s subscription agreement, as
amended, at the time when permitted under Section 423(b)(8) of the Code and
Section 3(b) herein, unless such participation is sooner terminated by the
Participant as provided in Section 10.

 

7. MAXIMUM SHARE PURCHASE. On a Purchase Date, each Participant may purchase (at
the applicable Purchase Price) no more than two hundred and fifty (250) shares
of Common Stock, subject to adjustment as provided in Section 18 hereof;
provided that such purchase of shares shall be subject to the limitations set
forth in Sections 3(b), 6 and 12 hereof. The purchase of shares on the
applicable Purchase Date shall occur as provided in Section 8, unless the
Participant has withdrawn pursuant to Section 10.

 

8. PURCHASE OF SHARES. Unless a Participant withdraws from a Purchase Interval
as provided in Section 10, below, shares of Common Stock will be automatically
purchased for a Participant on each Purchase Date, by applying the accumulated
payroll deductions and direct payments (if any) in the Participant’s account to
purchase the number of full shares determined by dividing such Participant’s
payroll deductions and direct payments (if any) accumulated prior to such
Purchase Date and retained in the Participant’s account as of the Purchase Date
by the applicable Purchase Price. No fractional shares will be purchased; any
amount remaining in a Participant’s account which is not sufficient to purchase
a full share shall be carried over to the next Purchase Date or returned to the
Participant, if the Participant withdraws from the Plan. Notwithstanding the
foregoing, any amount remaining in a Participant’s account following the
purchase of shares on the Purchase Date due to the application of Section
423(b)(8) of the Code or Section 7, above, shall be returned to the Participant
and shall not be carried over to the next Purchase Date.

 

9. DELIVERY AND SALE OF SHARES. Within ten (10) calendar days after the
applicable Purchase Date, the Company will deliver the Shares purchased on such
Purchase Date to the Participant’s account maintained by the Company’s
designated broker. In no event may a Participant sell Shares acquired on a
Purchase Date prior to the delivery of such Shares to the Participant’s account
maintained by the Company’s designated broker.

 

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10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

 

a. A Participant may either (i) withdraw all but not less than all the payroll
deductions and direct payments (if any) credited to the Participant’s account
and not yet used to purchase shares under a Purchase Interval or (ii) terminate
future payroll deductions, but allow accumulated payroll deductions and prior
direct payments (if any) to be used to purchase shares on the next Purchase Date
at any time by giving written notice to the Company in the form of Exhibit 2 to
this Plan (or such other form or method (including electronic forms) as the
Administrator may designate from time to time). If the Participant elects
withdrawal alternative (i) described above, all of the Participant’s payroll
deductions and direct payments (if any) credited to the Participant’s account
will be paid to such Participant as promptly as practicable after receipt of
notice of withdrawal and no further payroll deductions for the purchase of
shares will be made during the Purchase Interval; provided that notice in the
form of Exhibit 2 to this Plan (or such other form or method (including
electronic forms) as the Administrator may designate from time to time) is
delivered to the Company at least ten (10) business days prior to the next
Purchase Date. If the Participant elects withdrawal alternative (ii) described
above, no further payroll deductions for the purchase of shares will be made
during the Purchase Interval, all of the Participant’s payroll deductions and
direct payments (if any) credited to the Participant’s account will be applied
to the purchase of shares on the next Purchase Date (subject to Sections 3(b),
6, 7 and 12) and all remaining accumulated payroll deduction amounts shall be
returned to the Participant. If a Participant withdraws from a Purchase
Interval, payroll deductions will not resume at the beginning of the succeeding
Purchase Interval unless the Participant delivers to the Company a new
subscription agreement.

 

b. Upon termination of a Participant’s employment relationship (as described in
Section 2(k)) at any time, the payroll deductions and direct payments (if any)
credited to such Participant’s account during the Purchase Interval but not yet
used to purchase shares will be applied to the purchase of Common Stock on the
next Purchase Date, unless the Participant (or in the case of the Participant’s
death, the person or persons entitled to the Participant’s account balance under
Section 14) withdraws from the Plan by submitting a notice in accordance with
subsection (a) of this Section 10. In such a case, the payroll deductions and
direct payments (if any) credited to such Participant’s account during the
Purchase Interval but not yet used to purchase shares will be returned to such
Participant or, in the case of his/her death, to the person or persons entitled
thereto under Section 14.

 

11. INTEREST. No interest shall accrue on the payroll deductions and direct
payments (if any) credited to a Participant’s account under the Plan.

 

12. STOCK.

 

a. The maximum number of shares of Common Stock which shall be made available
for sale under the Plan shall be one million (1,000,000) shares, subject to
adjustment upon changes in capitalization of the Company as provided in Section
18. With respect to any amendment to increase the total number of shares of
Common Stock under the Plan, the Administrator shall have discretion to disallow
the purchase of any increased shares of Common Stock for the Purchase Interval
in existence at the time of such increase. If the Administrator determines that
on a given Purchase Date the number of shares that may be purchased may

 

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exceed the number of shares then available for sale under the Plan the
Administrator may make a pro rata allocation of the shares remaining available
for purchase on such Purchase Date. Any amount remaining in a Participant’s
payroll account following such pro rata allocation shall be returned to the
Participant and shall not be carried over to any future Purchase Date, as
determined by the Administrator.

 

b. Shares to be delivered to a Participant under the Plan will be registered in
the name of the Participant or in the name of the Participant and his or her
spouse, as designated in the Participant’s subscription agreement.

 

13. ADMINISTRATION. The Plan shall be administered by the Administrator which
shall have full and exclusive discretionary authority to construe, interpret and
apply the terms of the Plan, to determine eligibility and to adjudicate all
disputed claims filed under the Plan. Any question or dispute regarding the
administration or interpretation of the Plan shall be submitted by the
Participant or by the Company to the Administrator. The resolution of such
question or dispute as well as every finding, decision and determination made by
the Administrator shall, to the full extent permitted by Applicable Law, be
final and binding upon all persons.

 

14. DESIGNATION OF BENEFICIARY.

 

a. Each Participant will file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the Participant’s account under the
Plan in the event of such Participant’s death. If a Participant is married and
the designated beneficiary is not the spouse, spousal consent shall be required
for such designation to be effective.

 

b. Such designation of beneficiary may be changed by the Participant (and the
Participant’s spouse, if any) at any time by written notice. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living (or in existence) at the time of such Participant’s
death, the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the Participant, or if no such executor or
administrator has been appointed (to the knowledge of the Administrator), the
Administrator shall deliver such shares and/or cash to the spouse (or domestic
partner, as determined by the Administrator) of the Participant, or if no spouse
(or domestic partner) is known to the Administrator, then to the issue of the
Participant, such distribution to be made per stirpes (by right of
representation), or if no issue are known to the Administrator, then to the
heirs at law of the Participant determined in accordance with Section 27.

 

15. TRANSFERABILITY. No payroll deductions or direct payments credited to a
Participant’s account or any rights with regard to the purchase of shares under
the Plan may be assigned, transferred, pledged or otherwise disposed of in any
way (other than by will, the laws of descent and distribution, or as provided in
Section 14 hereof) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the
Administrator may, in its sole discretion, treat such act as an election to
withdraw funds in accordance with Section 10.

 

16. USE OF FUNDS. All payroll deductions and direct payments (if any) received
or held by the Company under the Plan may be used by the Company for any
corporate purpose, and the

 

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Company shall not be obligated to segregate such payroll deductions and direct
payments (if any) or hold them exclusively for the benefit of Participants. All
payroll deductions and direct payments (if any) received or held by the Company
may be subject to the claims of the Company’s general creditors. Participants
shall have the status of general unsecured creditors of the Company. Any amounts
payable to Participants pursuant to the Plan shall be unfunded and unsecured
obligations for all purposes, including, without limitation, Title I of the
Employee Retirement Income Security Act of 1974, as amended. The Company shall
retain at all times beneficial ownership of any investments, including trust
investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary
relationship between the Administrator, the Company or any Designated Parent or
Subsidiary and a Participant, or otherwise create any vested or beneficial
interest in any Participant or the Participant’s creditors in any assets of the
Company or a Designated Parent or Subsidiary. The Participants shall have no
claim against the Company or any Designated Parent or Subsidiary for any changes
in the value of any assets that may be invested or reinvested by the Company
with respect to the Plan.

 

17. REPORTS. Individual accounts will be maintained for each Participant in the
Plan. Statements of account will be given to Participants at least annually,
which statements will set forth the amounts of payroll deductions and direct
payments (if any), the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.

 

18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.

 

a. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the Reserves, the maximum number of shares that
may be purchased on any Purchase Date, as well as any other terms that the
Administrator determines require adjustment may be proportionately adjusted for
(i) any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, (ii) any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock including a
corporate merger, consolidation, acquisition of property or stock, separation
(including a spin-off or other distribution of stock or property),
reorganization, liquidation (whether partial or complete) or any similar
transaction; provided, however that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment, if any, shall be made by the Administrator and
its determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to the
Reserves.

 

b. CORPORATE TRANSACTIONS. In the event of a proposed Corporate Transaction,
each stock purchase right under the then existing Purchase Interval under the
Plan shall be assumed by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Administrator, in the exercise of its
sole discretion and in lieu of such assumption, determines to shorten the
Purchase Interval then in progress by setting a new Purchase Date (the

 

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“New Purchase Date”). If the Administrator shortens the Purchase Interval then
in progress in lieu of assumption in the event of a Corporate Transaction, the
Administrator shall notify each Participant in writing at least ten (10)
business days prior to the New Purchase Date, that the Purchase Date has been
changed to the New Purchase Date and that EITHER:

 

(1) the Participant will purchase shares on the New Purchase Date, unless prior
to such date the Participant has withdrawn from the Purchase Interval as
provided in Section 10; or

 

(2) the Company shall pay to the Participant on the New Purchase Date an amount
in cash, cash equivalents, or property as determined by the Administrator that
is equal to the excess, if any, of (i) the Fair Market Value of the shares over
(ii) the Purchase Price due had the Participant purchased shares under
Subsection (b)(1) above. In addition, all remaining accumulated payroll
deduction amounts and direct payments (if any) shall be returned to the
Participant.

 

c. For purposes of Subsection 18, a stock purchase right under the then existing
Purchase Interval under the Plan shall be deemed to be assumed if, in connection
with the Corporate Transaction, the stock purchase right is replaced with a
comparable stock purchase right with respect to shares of capital stock of the
successor corporation or Parent thereof. The determination of comparability
shall be made by the Administrator prior to the Corporate Transaction and its
determination shall be final, binding and conclusive on all persons.

 

19. AMENDMENT OR TERMINATION.

 

a. The Administrator may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 18, no such termination can adversely affect
the purchase rights of a Participant with respect to the then existing Purchase
Interval under the Plan, provided that the Plan or then existing Purchase
Interval may be terminated by the Administrator establishing an earlier Purchase
Date with respect to the Purchase Interval then in progress if the Administrator
determines that the termination of the Plan or such Purchase Interval is in the
best interests of the Company and its stockholders. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other Applicable Law), the Company shall obtain stockholder approval of any
amendment in such a manner and to such a degree as required.

 

b. Without stockholder consent, the Administrator shall be entitled to limit the
frequency and/or number of changes in the amount withheld during Purchase
Intervals, determine the length of any future Purchase Intervals, establish the
exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, establish additional terms, conditions, rules or procedures to
accommodate the rules or laws of applicable foreign jurisdictions, permit
payroll withholding in excess of the amount designated by a Participant in order
to adjust for delays or mistakes in the Company’s processing of properly
completed withholding elections, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each Participant properly
correspond with amounts withheld from the Participant’s Compensation, and
establish such other limitations or procedures as the Administrator determines
in its sole discretion

 

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advisable and which are consistent with the Plan, in each case to the extent
consistent with the requirements of Code Section 423 and other Applicable Laws.

 

20. NOTICES. All notices or other communications by a Participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Administrator at the location, or by
the person, designated by the Administrator for the receipt thereof.

 

21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued under the
Plan unless the purchase and the issuance and delivery of such shares shall
comply with all Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a condition to the
purchase of shares on a Purchase Date, the Company may require the Participant
to represent and warrant at the time of any such exercise that the shares are
being purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned Applicable Laws or is
otherwise advisable. In addition, no shares shall be purchased hereunder before
the Plan shall have been approved by stockholders of the Company as provided in
Section 23.

 

22. TERM OF PLAN. The Plan shall become effective upon its approval by the
stockholders of the Company. It shall continue in effect for a term of twenty
(20) years unless sooner terminated under Section 19.

 

23. NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly, create any
right for the benefit of any employee or class of employees to purchase any
shares under the Plan, or create in any employee or class of employees any right
with respect to continuation of employment by the Company or a Designated Parent
or Subsidiary, and it shall not be deemed to interfere in any way with such
employer’s right to terminate, or otherwise modify, an employee’s employment at
any time.

 

24. NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS. Except as specifically
provided in a retirement or other benefit plan of the Company or a Designated
Parent or Subsidiary, participation in the Plan shall not be deemed compensation
for purposes of computing benefits or contributions under any retirement plan of
the Company or a Designated Parent or Subsidiary, and shall not affect any
benefits under any other benefit plan of any kind or any benefit plan
subsequently instituted under which the availability or amount of benefits is
related to level of compensation. The Plan is not a “Retirement Plan” or
“Welfare Plan” under the Employee Retirement Income Security Act of 1974, as
amended.

 

25. EFFECT OF PLAN. The provisions of the Plan shall, in accordance with its
terms, be binding upon, and inure to the benefit of, all successors of each
Participant, including, without limitation, such Participant’s estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.

 

26. GOVERNING LAW. The Plan is to be construed in accordance with and governed
by the internal laws of the State of Maryland without giving effect to any
choice of law rule that

 

11

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would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Maryland to the rights and duties of the parties,
except to the extent the internal laws of the State of Maryland are superseded
by the laws of the United States. Should any provision of the Plan be determined
by a court of law to be illegal or unenforceable, the other provisions shall
nevertheless remain effective and shall remain enforceable.

 

27. VENUE AND WAIVER OF JURY TRIAL. The Company and the Participant, or their
respective successors (the “parties”) agree that any suit, action, or proceeding
arising out of or relating to the Plan shall be brought in the United States
District Court for the District of Maryland (or should such court lack
jurisdiction to hear such action, suit or proceeding, in a Maryland state court
in the County of Howard) and that the parties shall submit to the jurisdiction
of such court. The parties irrevocably waive, to the fullest extent permitted by
law, any objection the party may have to the laying of venue for any such suit,
action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY
RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR
PROCEEDING. If any one or more provisions of this Section 27 shall for any
reason be held invalid or unenforceable, it is the specific intent of the
parties that such provisions shall be modified to the minimum extent necessary
to make it or its application valid and enforceable.

 

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EXHIBIT 1

 

Essex Corporation 2004 Employee Stock Purchase Plan

SUBSCRIPTION AGREEMENT

 

1. PERSONAL INFORMATION. All shares of the Company’s Common Stock purchased
under the Essex Corporation 2004 Employee Stock Purchase Plan (the “ESPP”) must
be registered in the Employee’s name. Please complete your personal information
requested below.

 

Shares may also be registered in the name of the Employee’s spouse. Complete the
information about your spouse ONLY IF YOU WOULD LIKE YOUR SPOUSE TO BE
REGISTERED AS THE JOINT OWNER OF ANY COMMON STOCK OF THE COMPANY THAT YOU
PURCHASE UNDER THE ESPP. PLEASE PRINT CLEARLY:

 

Your Legal Name          

(Last)        (First)        (MI)

   Location    Depart

Street Address                Daytime Telephone

City, State/Country, Zip                E-Mail Address

Social Security No.    __ __ __ - __ __ - __ __ __ __

Employee I.D. No.                                    Manager    Mgr.

Location     

Legal Name of Spouse          

(Last)

   (First)    (MI)

Street Address           Daytime Telephone

City, State/Country, Zip           E-Mail Address

Social Security No.   __ __ __ - __ __ - __ __ __ __

 

2. ELIGIBILITY. Any Employee who does not hold (directly or indirectly) five
percent (5%) or more of the combined voting power of the Company, a parent or a
subsidiary, whether in stock or options to acquire stock is eligible to
participate in the ESPP; provided, however, that Employees who are subject to
the rules or laws of a foreign jurisdiction that prohibit or make impractical
the participation of such Employees in the ESPP are not eligible to participate.

 

3. DEFINITIONS. Each capitalized term in this Subscription Agreement shall have
the meaning set forth in the ESPP.

 

4. SUBSCRIPTION. I hereby subscribe to purchase shares of the Company’s Common
Stock in accordance with this Subscription Agreement and the ESPP. I have
received a complete copy of the ESPP and a prospectus describing the ESPP and
understand that my participation in the ESPP is in all respects subject to the
terms of the ESPP. The effectiveness of this Subscription Agreement is dependent
on my eligibility to participate in the ESPP.

 

1

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5. PAYROLL DEDUCTION AUTHORIZATION/DIRECT PAYMENT. I hereby authorize payroll
deductions from my Compensation during the Purchase Interval in either (a) the
percentage specified below OR (b) the whole dollar amount specified below
(payroll deductions may not exceed 10% of Compensation nor the limitation under
Section 423(b)(8) of the Code and the regulations thereunder):

 

Percentage to be Deducted                                                  

(circle one)

   1%    2%    3%    4%    5%    6%    7%    8%    9%    10%

 

Dollar Amount to be Deducted      (whole dollars only)    $                    

 

Alternatively or in addition to the payroll deductions authorized above, I
hereby submit the following amount as a direct payment to my account to be used
to purchase shares of the Company’s Common Stock in accordance with this
Subscription Agreement and the ESPP:

 

$                    

 

The total of payroll deductions authorized above and the direct payment
submitted herewith (if any) may not exceed 10% of Compensation nor the
limitation under Section 423(b)(8) of the Code and the regulations thereunder.
Any direct payments in excess of 10% of Compensation or the limitation under
Section 423(b)(8) of the Code shall be returned to me.

 

I understand that the Company is not obligated to segregate my payroll
deductions and direct payments (if any) or hold them exclusively for my benefit.

 

6. ESPP ACCOUNTS AND PURCHASE PRICE. I understand that all payroll deductions
and direct payments (if any) will be credited to my account under the ESPP. No
interest will be credited on funds held in the account at any time including any
refund of the account caused by withdrawal from the ESPP. All payroll deductions
and direct payments (if any) shall be accumulated for the purchase of Company
Common Stock at the applicable Purchase Price determined in accordance with the
ESPP.

 

7. WITHDRAWAL AND CHANGES IN PAYROLL DEDUCTION. I understand that I may
discontinue my participation with respect to a particular Purchase Interval at
any time prior to the applicable Purchase Date as provided in Section 10 of the
ESPP, but if I do not withdraw from the ESPP, any accumulated payroll deductions
and prior direct payments will be applied automatically to purchase Company
Common Stock. I may increase or decrease the rate of my payroll deductions on
only one occasion during any Purchase Interval by completing and timely filing a
Change of Status or Direct Payment Notice. Any increase or decrease will be
effective for the first full payroll period commencing no fewer than ten (10)
business days following the Company’s receipt of the Change of Status or Direct
Payment Notice.

 

8. PERPETUAL SUBSCRIPTION. I understand that this Subscription Agreement shall
remain in effect for successive Purchase Intervals until I withdraw from
participation in a particular Purchase Interval, or termination of the ESPP.

 

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9. TAXES. I have reviewed the ESPP prospectus discussion of the federal tax
consequences of participation in the ESPP and consulted with tax consultants as
I deemed advisable prior to my participation in the ESPP. I hereby agree to
notify the Company in writing within thirty (30) days of any disposition
(transfer or sale) of any shares purchased under the ESPP if such disposition
occurs within two (2) years of the first day of the Purchase Interval during
which the shares were purchased or within one (1) year of the Purchase Date (the
date I purchased such shares), and I will make adequate provision to the Company
for foreign, federal, state or other tax withholding obligations, if any, which
arise upon the disposition of the shares. In addition, the Company may withhold
from my Compensation any amount necessary to meet applicable tax withholding
obligations incident to my participation in the ESPP, including any withholding
necessary to make available to the Company any tax deductions or benefits
contingent on such withholding.

 

10. ADMINISTRATION AND INTERPRETATION. I agree that any question or dispute
regarding the administration or interpretation of the Plan shall be submitted by
me or by the Company to the Administrator. I further agree that the resolution
of such question or dispute by the Administrator shall be final and binding on
all persons.

 

11. VENUE AND WAIVER OF JURY TRIAL. The Company and I, or our respective
successors (the “parties”) agree that any suit, action, or proceeding arising
out of or relating to the Plan shall be brought in the United States District
Court for the District of Maryland (or should such court lack jurisdiction to
hear such action, suit or proceeding, in a Maryland state court in the County of
Howard) and that the parties shall submit to the jurisdiction of such court. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section 11 shall for any reason be held
invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.

 

12. DESIGNATION OF BENEFICIARY. In the event of my death, I hereby designate the
following person or trust as my beneficiary to receive all payments and shares
due to me under the ESPP:

 

                     I am single                      I am married

 

Beneficiary (please print)                                      Relationship to
Beneficiary (if any)

 

                        (Last)  (First)  (MI)

 

Street Address                                   
                                        
                                        
                                        
                                                                 

 

City, State/Country, Zip                                 
                                        
                                        
                                        
                                                 

 

13. TERMINATION OF ESPP. I understand that the Company has the right,
exercisable in its sole discretion, to amend or terminate the ESPP at any time,
and a termination may be effective as early as a Purchase Date, including the
establishment of an alternative Purchase Date.

 

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14. EFFECTIVE DATE OF SUBSCRIPTION AGREEMENT. With respect to the commencement
of payroll deductions, this Subscription Agreement will be effective for the
first partial or full payroll period beginning (a) after the Company’s receipt
of this Subscription Agreement or (b) if later, after the commencement of the
initial Purchase Interval under the ESPP. Direct payments submitted in
connection with this Subscription Agreement will be applied to the next Purchase
Date provided this Subscription Agreement is received by Company at least three
(3) business days prior to such Purchase Date.

 

Date:  

         Employee Signature:            

 

 

Spouse’s signature (if beneficiary is other than spouse)

 

4

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EXHIBIT 2

 

Essex Corporation 2004 Employee Stock Purchase Plan

CHANGE OF STATUS OR DIRECT PAYMENT NOTICE

 

  

Participant Name (Please Print)

  

Social Security Number

 

    

WITHDRAWAL FROM ESPP

¨

  

I hereby withdraw from the current Purchase Interval under the Essex Corporation
2004 Employee Stock Purchase Plan (the “ESPP”) and agree that all accumulated
payroll deductions and prior direct payments (if any) credited to my account
will be refunded to me or applied to the purchase of Common Stock depending on
the alternative indicated below. No further payroll deductions will be made for
the purchase of shares in the applicable Purchase Interval and I may purchase
shares in future Purchase Intervals only by timely delivery to the Company of a
new Subscription Agreement.

¨

  

WITHDRAWAL AND PURCHASE OF COMMON STOCK

    

Payroll deductions will terminate, but your account balance will be applied to
purchase Common Stock on the next Purchase Date. Any remaining balance will be
refunded.

¨

  

WITHDRAWAL WITHOUT PURCHASE OF COMMON STOCK

    

Entire account balance will be refunded to me and no Common Stock will be
purchased on the next Purchase Date provided this notice is submitted to the
Company at least ten (10) business days prior to the next Purchase Date.

¨

  

CHANGE IN PAYROLL DEDUCTION

I hereby elect to change my rate of payroll deduction under the ESPP as follows
(select one):

 

Percentage to be Deducted                                                  

(circle one)

   1%    2%    3%    4%    5%    6%    7%    8%    9%    10%

 

Dollar Amount to be Deducted      (whole dollars only)    $                    

 

1

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Payroll deductions may not exceed 10% of Compensation nor the limitation under
Section 423(b)(8) of the Code and the regulations thereunder. An increase or a
decrease in payroll deduction will be effective for the first full payroll
period commencing no fewer than ten (10) business days following the Company’s
receipt of this notice, unless this change is processed more quickly.

 

¨

  

SUBMISSION OF DIRECT PAYMENT

 

I hereby submit the following amount as a direct payment to my account to be
used to purchase shares of the Company’s Common Stock in accordance with the
terms of the ESPP:

 

$                    

 

The total of payroll deductions authorized by me and the direct payment
submitted herewith (and prior direct payments, if any) may not exceed 10% of
Compensation nor the limitation under Section 423(b)(8) of the Code and the
regulations thereunder. Any direct payments in excess of 10% of Compensation or
the limitation under Section 423(b)(8) of the Code shall be returned to me.

 

Direct payments submitted in connection with this notice will be applied to the
next Purchase Date provided this notice is received by Company at least three
(3) business days prior to such Purchase Date.

 

     CHANGE OF BENEFICIARY                 

I am single

        I am married

 

This change of beneficiary shall terminate my previous beneficiary designation
under the ESPP. In the event of my death, I hereby designate the following
person or trust as my beneficiary to receive all payments and shares due to me
under the ESPP:

 

Beneficiary (please print)

    

Relationship to Beneficiary

   (if any)                     (Last)                
(First)                     (MI)

 

Street Address

    

City, State/Country, Zip

    

 

Date:    

         Employee Signature:            

 

 

Spouse’s signature (if beneficiary is other than spouse)

 

2