**EXHIBIT 10.1**

**DRSTechnologies, Inc.**

**2006 Omnibus Plan**

**1.     Establishmentand Purpose.**

There is hereby adoptedthe DRS Technologies, Inc. 2006 Omnibus Plan (the “Plan”).  This Plan is intended to promote theinterests of the Company (as defined below) and the stockholders of DRSTechnologies, Inc. (“DRS”) by providing officers and other employees of theCompany (including directors who are also employees of the Company) withappropriate incentives and rewards to encourage them to enter into and continuein the employ of the Company and to acquire a proprietary interest in thelong-term success of the Company; to compensate DRS’s non-employee directorsand provide incentives to such non-employee directors which are directly linkedto increases in stock value; and to reward the performance of individualofficers, other employees, consultants and non-employee directors in fulfillingtheir responsibilities.

**2.     Definitions.**

As used in the Plan, thefollowing definitions apply to the terms indicated below:

(a)                                  “1996 Plan” shall mean the DRSTechnologies, Inc. Amended and Restated 1996 Omnibus Plan, as amended.

(b)                                 “Agreement” shall mean the writtenagreement between DRS and a Participant evidencing an Incentive Award.

(c)                                  “Board of Directors” shall mean theBoard of Directors of DRS.

(d)                                 “Cause” shall mean (1) the willfuland continued failure by the Participant substantially to perform his or herduties and obligations to the Company (other than any such failure resultingfrom his or her incapacity due to physical or mental illness); (2) the willfulengaging by the Participant in misconduct which is materially injurious to theCompany; (3) the commission by the Participant of a felony; or (4) thecommission by the Participant of a crime against the Company which is materiallyinjurious to the Company.  For purposesof this Section 2(d), no act, or failure to act, on a Participant’s part shallbe considered “willful” unless done, or omitted to be done, by the Participantin bad faith and without reasonable belief that his or her action or omissionwas in the best interest of the Company. Determination of Cause shall be made by the Committee in its solediscretion.

(e)                                  A “Change in Control” shall mean theoccurrence of the event set forth in any one of the following paragraphs:

(i)                                           any Person is or becomes the “BeneficialOwner” (as defined in Rule 13d-3 under the Exchange Act), directly orindirectly, of securities of DRS (not including in the 

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securities beneficially owned by such Person any securitiesacquired directly from the Company or its “Affiliates” (as defined in Rule12b-2 under the Exchange Act)) representing 20% or more of the combined votingpower of DRS’s then outstanding securities, excluding any Person who becomessuch a Beneficial Owner in connection with a transaction described in clause(i) of paragraph (3) below; or

(ii)                                        the following individuals cease forany reason to constitute a majority of the number of directors then serving:individuals who, on the Effective Date, constitute the Board of Directors andany new director (other than a director whose initial assumption of office isin connection with an actual or threatened election contest, including but notlimited to a consent solicitation, relating to the election of directors ofDRS) whose appointment or election by the Board of Directors or nomination forelection by DRS’s stockholders was approved or recommended by a vote of atleast two-thirds (2/3) of the directors then still in office who either weredirectors on the Effective Date or whose appointment, election or nominationfor election was previously so approved or recommended; or

(iii)                                     there is consummated a merger orconsolidation of the Company or any direct or indirect subsidiary of theCompany with any other corporation, other than (i) a merger or consolidationwhich would result in the voting securities of DRS, outstanding immediatelyprior to such merger or consolidation continuing to represent (either byremaining outstanding or by being converted into voting securities of the survivingentity or any parent thereof) at least 60% of the combined voting power of thevoting securities of DRS or such surviving entity or any parent thereofoutstanding immediately after such merger or consolidation, or (ii) a merger orconsolidation effected to implement a recapitalization of DRS (or similartransaction) in which no Person is or becomes the Beneficial Owner, directly orindirectly, of securities of DRS (not including in the securities BeneficiallyOwned by such Person any securities acquired directly from the Company or itsAffiliates other than in connection with the acquisition the Company or itsAffiliates of a business) representing 20% or more of the combined voting powerof DRS’s then outstanding securities; or

(iv)                                    the stockholders of DRS approve aplan of complete liquidation or dissolution of DRS or there is consummated anagreement for the sale or disposition by DRS of all or substantially all of DRS’sassets, other than a sale or disposition by DRS of all or substantially all ofDRS’s assets to an entity, at least 60% of the combined voting power of thevoting securities of which are owned by the stockholders of the Company insubstantially the same proportions as their ownership of DRS immediately priorto such sale.

Notwithstanding theforegoing, any event or transaction which would otherwise constitute a Changein Control (a “Transaction”) shall not constitute a Change in Control forpurposes of this Plan with respect to a Participant if, in connection with theTransaction, such Participant participates as an equity investor in theacquiring entity or any of its Affiliates (the “Acquiror”).  For purposes of the preceding sentence, aParticipant shall not be deemed to have participated as an equity investor inthe Acquiror by virtue of (i) obtaining beneficial ownership of any equityinterest in the Acquiror as a result of the grant to the Participant of anincentive compensation award under one or more incentive plans of the Acquiror(including, but not limited to, the conversion in connection with theTransaction of incentive compensation awards of the Company into incentivecompensation awards of the Acquiror), on terms and conditions substantiallyequivalent to those applicable to other executives of the 

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Company immediately prior tothe Transaction, after taking into account normal differences attributable tojob responsibilities, title and the like, or (ii) obtaining beneficialownership of any equity interest in the Acquiror on terms and conditionssubstantially equivalent to those obtained in the Transaction by all otherstockholders of the Company.

(f)                                    “Code” shall mean the InternalRevenue Code of 1986, as amended from time to time, and any regulationspromulgated thereunder.

(g)                                 “Committee” shall mean the ExecutiveCompensation Committee of the Board of Directors or any other committeedesignated by the Board of Directors from time to time to fulfill suchfunction.  The Committee shall consist oftwo or more persons, each of whom is an “outside director” within the meaningof Section 162(m) of the Code and a “non-employee director” within the meaningof Rule 16b-3.

(h)                                 “Company” shall mean, collectively,DRS and each of its Subsidiaries now held or hereinafter acquired.

(i)                                     “Company Stock” shall mean thecommon stock of DRS, par value $.01 per share.

(j)                                     “Disability” shall mean that aParticipant (i) is unable to engage in any substantial gainful activity byreason of any medically determinable physical or mental impairment which can beexpected to result in death or can be expected to last for a continuous periodof not less than 12 months, or (ii) is, by reason of any medically determinablephysical or mental impairment which can be expected to result in death or canbe expected to last for a continuous period of not less than 12 months,receiving income replacement benefits for a period of not less than 3 monthsunder an accident and health plan covering employees of the Company.

(k)                                  “Effective Date” shall mean the dateupon which this Plan is adopted by the Board of Directors.

(l)                                     “Exchange Act” shall mean theSecurities Exchange Act of 1934, as amended from time to time.

(m)                               “Executive Officer” shall have themeaning set forth in Rule 3b-7 promulgated under the Exchange Act.

(n)                                 The “Fair Market Value” of a shareof Company Stock, as of a date of determination, shall mean (1) the closingsales price per share of Company Stock on the national securities exchange onwhich such stock is principally traded for the last preceding date on whichthere was a sale of such stock on such exchange, or (2) if the shares ofCompany Stock are not then listed on the New York Stock Exchange, the averageof the highest reported bid and lowest reported asked prices for the shares ofCompany Stock as reported by the National Association of Securities Dealers,Inc. Automated Quotations System for the last preceding date on which there wasa sale of such stock in such market, or (3) if the shares of Company Stock arenot then listed on a national securities exchange or traded in anover-the-counter market or the value of such shares is not otherwisedeterminable, such value as determined by the Committee in good faith and inaccordance with Section 409A of the Code.

(o)                                 “Full Value Award” shall mean anyIncentive Award, other than an Option, Tandem SAR, or Stand-Alone SAR, whichIncentive Award is settled in Company Stock.

(p)                                 “Good Reason” shall have the meaningset forth in the Participant’s employment or other agreement with Company orany Subsidiary, provided that if the Participant is not a party to any 

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such employment or other agreement or such employment orother agreement does not contain a definition of Good Reason, then Good Reasonshall mean, the occurrence, on or after the date of a Change in Control andwithout the affected Participant’s written consent, of (1) the assignment tothe Participant of duties in the aggregate that are inconsistent with theParticipant’s level of responsibility immediately prior to the date of theChange in Control or any diminution in the nature or status of the Participant’sresponsibilities from those in effect immediately prior to the date of theChange in Control including, without limitation, in the case of a Participantwho was, immediately prior to the Change in Control, an executive officer ofthe Company, such employee ceasing to be an executive officer of a publiccompany; (2) a reduction in the Participant’s annual base salary, annualincentive compensation opportunity, or long term incentive compensationopportunity (including an adverse change in performance criteria or a decreasein the target amount of annual or long term incentive compensation) from thatin effect immediately prior to the Change in Control; or (3) the relocation ofthe Participant’s principal place of employment to a location more than fifty(50) miles from the Participant’s principal place of employment immediatelyprior to the date of the Change in Control, if such relocation also requires amaterial change in the Participant’s commute.

(q)                                 “Incentive Award” shall mean anyOption, Tandem SAR, Stand-Alone SAR, Restricted Stock, Restricted Stock Unit,Stock Bonus or Other Award granted pursuant to the terms of the Plan.

(r)                                    “Incentive Stock Option” shall meanan Option that is an “incentive stock option” within the meaning of Section 422of the Code, or any successor provision, and that is designated by theCommittee as an Incentive Stock Option.

(s)                                  “Initial Director” shall mean aNon-Employee Director of DRS who is a member of the Board of Directors on theEffective Date.

(t)                                    “Issue Date” shall mean the dateestablished by DRS on which certificates representing shares of RestrictedStock shall be issued by DRS pursuant to the terms of Section 10(e).

(u)                                 “Non-Employee Director” shall mean amember of the Board of Directors who is not an employee of the Company.

(v)                                 “Non-Qualified Stock Option” shallmean an Option other than an Incentive Stock Option.

(w)                               “Option” shall mean an option topurchase shares of Company Stock granted pursuant to Section 7 (or, withrespect to a Non-Employee Director, pursuant to Section 14).

(x)                                   “Other Award” shall mean an awardgranted pursuant to Section 13.

(y)                                 “Partial Exercise” shall mean anexercise of an Incentive Award for less than the full extent permitted at thetime of such exercise.

(z)                                   “Participant” shall mean anemployee, consultant or Non-Employee Director of the Company to whom anIncentive Award is granted pursuant to the Plan and, upon the death of such anindividual, his or her successors, heirs, executors and administrators, as thecase may be.

(aa)                            “Person” shall have the meaning setforth in Section 3(a)(9) of the Exchange Act, as modified and used in Sections13(d) and 14(d) thereof, except that such term shall not include (1) theCompany, (2) a trustee or other fiduciary holding securities under an employeebenefit plan of the Company, (3) an underwriter temporarily holding securitiespursuant to an offering of such securities or (4) a

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corporation owned, directly orindirectly, by the stockholders of DRS in substantially the same proportions astheir ownership of stock of DRS.

(bb)                          “Restricted Stock” shall mean ashare of Company Stock which is granted pursuant to the terms of Section 10 andwhich is subject to the restrictions set forth in Section 10(c).

(cc)                            “Restricted Stock Unit” shall meanthe right, granted pursuant to Section 11, to receive, subject to suchrestrictions as the Committee may determine, the Fair Market Value of a shareof Company Stock in shares.

(dd)                          “Rule 16b-3” shall mean the Rule16b-3 promulgated under the Exchange Act, as amended from time to time.

(ee)                            “Securities Act” shall mean theSecurities Act of 1933, as amended from time to time.

(ff)                                “Stand-Alone SAR” shall mean a stockappreciation right which is granted pursuant to Section 9 and which is notrelated to any Option.

(gg)                          “Stock Bonus” shall mean a bonuspayable in shares of Company Stock granted pursuant to Section 12.

(hh)                          “Subsequent Director” shall mean aNon-Employee Director of DRS who becomes a member of the Board of Directorssubsequent to the Effective Date.

(ii)                                  “Subsidiary” shall mean a “subsidiarycorporation” within the meaning of Section 424(f) of the Code.

(jj)                                  “Tandem SAR” shall mean a stockappreciation right which is granted pursuant to Section 8 and which is relatedto an Option.

(kk)                            “Vesting Date” shall mean the dateestablished by the Committee on which a share of Restricted Stock or aRestricted Stock Unit may vest.

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**3.     StockSubject to the Plan.**

**(a)****                                 ****Shares Availablefor Awards.**

The maximum number ofshares of Company Stock reserved for issuance under the Plan (the “Share Limit”)shall be 4,000,000 shares (subject to adjustment as provided herein); providedthat each share issued under the Plan pursuant to a Full Value Award shallreduce the Share Limit by 2 shares for every one share actually issued inconnection with such Incentive Award. (For example, if 100 shares of Restricted Stock are granted under thisPlan, 200 shares shall reduce the Share Limit in connection with that IncentiveAward).  Such shares may be authorizedbut unissued Company Stock or****shares thatshall have been or may be reacquired by the Company in the open market, inprivate transactions or otherwise.  TheCommittee may direct that any stock certificate evidencing shares issuedpursuant to the Plan shall bear a legend setting forth such restrictions ontransferability as may apply to such shares pursuant to the Plan.  The following will not reduce the number ofshares of Company Stock available under the Plan;  (1) the grant of a Tandem SAR, a Stand-AloneSAR or Restricted Stock Unit, (2) the exchange by a Participant of anyTandem SAR, Stand-Alone SAR or Restricted Stock Unit for a cash payment by theCompany, or (3) the grant of any Incentive Award made in connection with anacquisition and in substitution of awards otherwise cancelled in connectionwith such acquisition.  Notwithstandinganything contained herein to the contrary: (A) shares of Company Stock tendered in payment of the exercise price ofan Option shall not be added to the maximum share limitations described above;(B) shares of Company Stock withheld by the Company to satisfy the taxwithholding obligations shall not be added to the maximum share limitationsdescribed above; and (C) all shares of Company Stock covered by a Stand-AloneSAR or Tandem SAR, to the extent that such Stand-Alone SAR or Tandem SAR isexercised and whether or not shares of Company Stock are actually issued uponexercise of the right, shall be considered issued or transferred pursuant tothe Plan.  Upon the exercise of any IncentiveAward granted in tandem with any other Incentive Awards, such related IncentiveAwards shall be cancelled to the extent of the number of shares of CompanyStock as to which the Incentive Award is exercised.

(b)                                 **IndividualLimitation.**

The total number ofshares of Company Stock subject to Incentive Awards (including Incentive Awardswhich may be payable in cash but denominated as shares of Company Stock, i.e.,Stand-Alone SARs and Restricted Stock Units), granted to any employee duringany tax year of the Company, shall not exceed 200,000 shares (subject toadjustment as provided herein). Determinations under the preceding sentence shall be made in a mannerthat is consistent with Section 162(m) of the Code.

**(c)****                                 ****Adjustment forChange in Capitalization.**

If the Committee shoulddetermine that any dividend or other distribution (whether in the form of cash,Company Stock, or other property), recapitalization, Company Stock split,reverse Company Stock split, reorganization, merger, consolidation, spin-off,combination, repurchase, or share exchange, or other similar corporatetransaction or event, affects the Company Stock such that an adjustment isappropriate in order to prevent dilution or enlargement of the rights ofParticipants under the Plan, then the Committee shall make such equitablechanges or adjustments as it deems necessary or appropriate to any or all of(1) the number and kind of shares of Company Stock which may thereafter beissued in connection with Incentive Awards, (2) the number and kind of sharesof Company Stock issued or issuable in respect of outstanding Incentive Awards,(3) the

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exercise price, grantprice or purchase price relating to any Incentive Award, and (4) the maximumnumber of shares subject to Incentive Awards which may be awarded to anyemployee during any tax year of the Company; provided that, with respect toIncentive Stock Options, such adjustment shall be made in accordance withSection 424 of the Code, and provided further that no such adjustment shallcause any Award hereunder which is or becomes subject to Section 409A of theCode to fail to comply with the requirements of such section.

**(d)****                                 ****Re-Use of Shares.**

Except as provided below,any shares subject to an Incentive Award, including an Incentive Award grantedunder the 1996 Plan, that remain unissued upon the cancellation, surrender,exchange or termination of such award for any reason whatsoever and anyforfeited shares of Restricted Stock, including any forfeited shares ofRestricted Stock granted under the 1996 Plan, shall again become available forIncentive Awards.  Notwithstanding theforegoing, shares of Company Stock that are exchanged by a Participant orwithheld by the Company as full or partial payment in connection with anyIncentive Award under the Plan, as well as any shares of Company Stockexchanged by a Participant or withheld by the Company or any Subsidiary tosatisfy the tax withholding obligations related to any Incentive Award underthe Plan, shall not be available for subsequent Incentive Awards under thePlan.  Upon the exercise of any IncentiveAward granted in tandem with any other Incentive Awards, such related Awardsshall be cancelled to the extent of the number of shares of Company Stock as towhich the Incentive Award is exercised and such number of shares shall nolonger be available for Incentive Awards under the Plan.

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**4.     Administrationof the Plan.**

The Plan shall beadministered by the Committee. The Committee shall have the authority in itssole discretion, subject to and not inconsistent with the express provisions ofthe Plan, to administer the Plan and to exercise all the powers and authoritieseither specifically granted to it under the Plan or necessary or advisable inthe administration of the Plan, including, without limitation, the authority togrant Incentive Awards; to determine the persons to whom and the time or timesat which Incentive Awards shall be granted; to determine the type and number ofIncentive Awards to be granted, the number of shares of Stock to which an Awardmay relate and the terms, conditions, restrictions and performance criteriarelating to any Incentive Award; to determine whether, to what extent, andunder what circumstances an Incentive Award may be settled, cancelled,forfeited, exchanged, or surrendered; to make adjustments in the performancegoals in recognition of unusual or non-recurring events affecting the Companyor the financial statements of the Company (to the extent not inconsistent withSection 162(m) of the Code, if applicable), or in response to changes inapplicable laws, regulations, or accounting principles; to construe andinterpret the Plan and any Incentive Award; to prescribe, amend and rescindrules and regulations relating to the Plan; to determine the terms andprovisions of Agreements; and to make all other determinations deemed necessaryor advisable for the administration of the Plan. *** ***Notwithstanding the foregoing,the Committee shall not take any action with respect to an Incentive Award thatwould be treated, for accounting purposes, as a “repricing” of such IncentiveAward unless such action is approved by the Company’s shareholders.

The Committee may, in itsabsolute discretion, without amendment to the Plan, upon the death, Disability,retirement or termination by the Company without Cause of any Participant (a)accelerate the date on which any Option or Stand-Alone SAR granted to suchParticipant under the Plan becomes exercisable, waive or amend the operation ofPlan provisions respecting exercise after termination of employment orotherwise adjust any of the terms of such Option or Stand-Alone SAR, and (b)accelerate the Vesting Date or Issue Date, or waive any condition imposedhereunder, with respect to any share of Restricted Stock, Restricted Stock Unitor other Incentive Award granted to such Participant or otherwise adjust any ofthe terms applicable to any such Incentive Award.

No member of theCommittee shall be liable for any action, omission or determination relating tothe Plan, and the Company shall indemnify (to the extent permitted underDelaware law and the certificate of incorporation of the Company) and holdharmless each member of the Committee and each other director or employee ofthe Company to whom any duty or power relating to the administration orinterpretation of the Plan has been delegated against any cost or expense(including counsel fees) or liability (including any sum paid in settlement ofa claim with the approval of the Committee) arising out of any action, omissionor determination relating to the Plan, unless, in either case, such action,omission or determination was taken or made by such member, director oremployee in bad faith and without reasonable belief that it was in the bestinterests of the Company.

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**5.     Eligibility.**

Incentive Awards pursuantto the Plan may be granted to employees of the Company, including officers ofthe Company, whether or not they are directors of DRS, consultants andNon-Employee Directors of the Company.

**6.     AwardsUnder the Plan; Agreement.**

The Committee may grantOptions, Tandem SARs, Stand-Alone SARs, shares of Restricted Stock, StockBonuses, Restricted Stock Units and Other Awards in such amounts and with suchterms and conditions as the Committee shall determine, subject to theprovisions of the Plan.  Non-QualifiedStock Options shall be granted to Non-Employee Directors in accordance withSection 14.

Each Incentive Awardgranted under the Plan (except an unconditional Stock Bonus) shall be evidencedby an Agreement which shall contain such provisions as the Committee may in itssole discretion deem necessary or desirable. By accepting an Incentive Award, aParticipant thereby agrees that the award shall be subject to all of the termsand provisions of the Plan and the applicable Agreement.

**7.     Options.**

**(a)****                                 ****Identification ofOptions.**

Each Option shall beclearly identified in the applicable Agreement as either an Incentive StockOption or a Non-Qualified Stock Option.

**(b)****                                 ****Exercise Price.**

Each Agreement withrespect to an Option shall set forth the amount (the ”option exerciseprice”) payable by the grantee to the Company upon exercise of the Option.  The option exercise price per share shall bedetermined by the Committee; provided, however, that the option exercise priceshall in no event be less than the Fair Market Value of a share of CompanyStock on the date the Option is granted.

**(c)****                                 ****Term and Exerciseof Options.**

(i)             Unless the applicable Agreementprovides otherwise, an Option shall become cumulatively exercisable as to 25 percentof the shares covered thereby on each of the first, second, third and fourthanniversaries of the date of grant.  TheCommittee shall determine the expiration date of each Option; provided,however, that no Option shall be exercisable more than 10 years after the dateof grant.  Unless the applicableAgreement provides otherwise, no Option shall be exercisable prior to the firstanniversary of the date of grant.

(ii)          An Option may be exercised for allor any portion of the shares as to which it is exercisable, provided that noPartial Exercise of an Option shall be for an aggregate exercise price of lessthan $1,000.  The Partial Exercise of anOption shall not cause the expiration, termination or cancellation of theremaining portion thereof.

(iii)       An Option shall be exercised in amanner prescribed by the Company. Payment for 

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shares of Company Stock purchased upon the exercise ofan Option shall be made on the effective date of such exercise by one or acombination of the following means: (i) by personal check, certified check,bank cashier’s check or wire transfer; (ii) subject to the approval of theCommittee, in shares of Company Stock owned by the Participant valued at theirFair Market Value on the effective date of such exercise; or (iii) subject tothe approval of the Committee, by such other provision as the Committee mayfrom time to time authorize.  Any paymentin shares of Company Stock shall be effected by (A) the delivery of such sharesto the Secretary of DRS, duly endorsed in blank or accompanied by stock powersduly executed in blank, together with any other documents and evidences as theSecretary of DRS shall require, or (B) such other manner prescribed by theCompany.

(iv)      Reasonably promptly after theexercise of an Option, unless otherwise determined by the Committee, DRS, inits sole discretion, may either (i) issue a stock certificate, registered inthe name of the Participant to whom such shares were granted, evidencing suchshares or (ii) establish and maintain, or cause a representative to establishand maintain, an account to record the Company Stock granted to suchParticipant and transactions and events affecting such stock.  No adjustment to any Option shall be made fordividends or other rights for which the record date occurs prior to the datesuch stock certificate is issued.

**(d)****                                 ****Limitations onIncentive Stock Options.**

(i)             To the extent that the aggregateFair Market Value of shares of Company Stock with respect to which IncentiveStock Options are exercisable for the first time by a Participant during anycalendar year under the Plan and any other stock option plan of the Company (orany Subsidiary) shall exceed $100,000, such Options shall be treated asNon-Qualified Stock Options. Such Fair Market Value shall be determined as ofthe date on which each such Incentive Stock Option is granted.

(ii)                      No Incentive Stock Option may begranted to an individual if, at the time of the proposed grant, such individualowns (or is attributed to own by virtue of the Code) stock possessing more thanten percent of the total combined voting power of all classes of stock of theCompany or any Subsidiary unless (i) the exercise price of such Incentive StockOption is at least 110 percent of the Fair Market Value of a share of CompanyStock at the time such Incentive Stock Option is granted and (ii) suchIncentive Stock Option is not exercisable after the expiration of five yearsfrom the date such Incentive Stock Option is granted.

**(e)****                                 ****Effect ofTermination of Employment.**

(i)             Unless the applicable Agreementprovides otherwise, in the event that the employment of a Participant with theCompany shall terminate for any reason other than Cause, Disability or death,(i) Options granted to such Participant, to the extent that they are exercisableat the time of such termination, shall remain exercisable until the date thatis three months after such termination, on which date they shall expire, and(ii) Options granted to such Participant, to the extent that they were notexercisable at the time of such termination, shall expire at 5:00 pm New YorkCity time on the date of such termination. The three-month period described inthis Section 7(e)(1) shall be extended to one year from the date of suchtermination in

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the event of the Participant’s death during such three-monthperiod. Notwithstanding the foregoing, no Option shall be exercisable after theexpiration of its term.

(ii)          Unless the applicable Agreementprovides otherwise, in the event that the employment of a Participant with theCompany shall terminate on account of the Disability or death of theParticipant, (i) Options granted to such Participant, to the extent that theywere exercisable at the time of such termination, shall remain exercisableuntil the first anniversary of such termination, on which date they shallexpire, and (ii) Options granted to such Participant, to the extent that theywere not exercisable at the time of such termination, shall expire at the closeof business on the date of such termination; provided, however, that no Optionshall be exercisable after the expiration of its term.

(iii)       In the event of the termination of aParticipant’s employment for Cause, all outstanding Options granted to suchParticipant shall expire at the commencement of business on the date of suchtermination.

**(f)****                                   ****Acceleration ofExercise Date Upon Change in Control.**

Upon the occurrence of aChange in Control, each Option granted under the Plan and outstanding at suchtime shall become fully and immediately vested and exercisable and shall remainexercisable until its expiration, termination or cancellation unless suchOptions are converted, assumed, or replaced by a successor with an award of equivalenteconomic value containing equivalent terms.  With respect to any converted, assumed, or replaced Options,if a Participant’s employment is subsequently terminated without Cause or forGood Reason within 24 months of the Change in Control, such Options shall becomefully and immediately vested and exercisable upon the date of the Participant’stermination.

**8.     TandemSARs.**

The Committee may grantin connection with any Option granted hereunder, except a Non-Qualified StockOption granted to a Non-Employee Director pursuant to Section 14, one or moreTandem SARs relating to a number of shares of Company Stock less than or equalto the number of shares of Company Stock subject to the related Option. ATandem SAR granted in connection with an Option must be granted at the sametime that such Option is granted; provided, however, that a Tandem SAR grantedin connection with a Non-Qualified Stock Option may be granted subsequent tothe time that such Non-Qualified Stock Option is granted.

**(a)****                                 ****Benefit UponExercise.**

The exercise of a TandemSAR with respect to any number of shares of Company Stock shall entitle theParticipant to a cash payment, for each such share, equal to the excess of (1)the Fair Market Value of a share of Company Stock on the exercise date over (2)the option exercise price of the related Option. Such payment shall be made assoon as practicable after the effective date of such exercise.

**(b)****                                 ****Term and Exerciseof Tandem SAR.**

(i)             A Tandem SAR shall be exercisableonly if and to the extent that its related Option

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is exercisable.

(ii)          The exercise of a Tandem SAR withrespect to a number of shares of Company Stock shall cause the immediate andautomatic cancellation of its related Option with respect to an equal number ofshares.  The exercise of an Option, orthe cancellation, termination or expiration of an Option (other than pursuant tothis Section 8(b)(2)), with respect to a number of shares of Company Stockshall cause the automatic and immediate cancellation of any related Tandem SARsto the extent of the number of shares of Company Stock subject to such Optionwhich is so exercised, cancelled, terminated or expired.

(iii)       A Tandem SAR may be exercised forall or any portion of the shares as to which it is exercisable; provided, thatno Partial Exercise of a Tandem SAR shall be for an aggregate exercise price ofless than $1,000.

(iv)      No Tandem SAR shall be assignable ortransferable otherwise than together with its related Option.

(v)         A Tandem SAR shall be exercised bydelivering notice to DRS’s principal office, to the attention of its Secretary.Such notice shall be accompanied by the applicable Agreement, shall specify thenumber of shares of Company Stock with respect to which the Tandem SAR is beingexercised and the effective date of the proposed exercise and shall be signedby the Participant or other person then having the right to exercise the Optionto which the Tandem SAR is related.

**9.     Stand-AloneSARs.**

**(a)****                                 ****Exercise Price.**

The exercise price pershare of a Stand-Alone SAR shall be determined by the Committee at the time ofgrant, but shall in no event be less than the Fair Market Value of a share ofCompany Stock on the date of grant.

**(b)****                                 ****Benefit UponExercise.**

The exercise of aStand-Alone SAR with respect to any number of shares of Company Stock shallentitle the Participant to a payment, for each such share, equal to the excessof (1) the Fair Market Value of a share of Company Stock on the exercise dateover (2) the exercise price of the Stand-Alone SAR.  Such payments shall be made as soon aspracticable after such exercise, in cash and/or shares of Company Stock, as determinedby the Committee.  No adjustment shall bemade to any Stand-Alone SAR for dividends or other rights for which the recorddate occurs prior to the date shares of Company Stock are issued.

**(c)****                                 ****Term and Exerciseof Stand-Alone SARs.**

(i)             Unless the applicable Agreementprovides otherwise, a Stand-Alone SAR shall become cumulatively exercisable asto 25 percent of the shares covered thereby on each of the first, second, thirdand fourth anniversaries of the date of grant. The Committee shall determine theexpiration date of each Stand-Alone SAR. Unless the applicable Agreementprovides otherwise, no Stand-Alone SAR shall be exercisable prior to the firstanniversary of the date of grant.

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(ii)          A Stand-Alone SAR may be exercisedfor all or any portion of the shares as to which it is exercisable; provided,that no Partial Exercise of a Stand-Alone SAR shall be for an aggregateexercise price of less than $1,000.

(iii)       A Stand-Alone SAR shall be exercisedby delivering notice to DRS’s principal office, to the attention of itsSecretary.  Such notice shall beaccompanied by the applicable Agreement, shall specify the number of shares ofCompany Stock with respect to which the Stand-Alone SAR is being exercised, andthe effective date of the proposed exercise, and shall be signed by theParticipant.

**(d)****                                 ****Effect ofTermination of Employment.**

The provisions set forthin Section 7(e) with respect to the exercise of Options following terminationof employment shall apply as well to such exercise of Stand-Alone SARs.

**(e)****                                 ****Acceleration ofExercise Date Upon Change in Control.**

Upon the occurrence of aChange in Control any Stand-Alone SAR granted under the Plan and outstanding atsuch time shall become fully and immediately exercisable and shall remainexercisable until its expiration, termination or cancellation unless suchStand-Alone SARs are converted, assumed, or replaced by a successor with anaward of equivalent economic value containing equivalent terms.  With respect to any converted, assumed, or replacedStand-Alone SARs, if a Participant’s employment is subsequentlyterminated without Cause or for Good Reason within 24 months of the Change in Control,such Stand-Alone SARs shall become fully and immediately vested upon the dateof the Participant’s termination.

**10.  RestrictedStock.**

**(a)****                                 ****Issue Date andVesting Date.**

At the time of the grantof shares of Restricted Stock, the Committee shall establish an Issue Date orIssue Dates and a Vesting Date or Vesting Dates with respect to suchshares.  The Committee may divide suchshares into classes and assign a different Issue Date and/or Vesting Date foreach class.  If the grantee is employedby the Company on an Issue Date (which may be the date of grant), the specifiednumber of shares of Restricted Stock shall be issued in accordance with theprovisions of Section 10(e). Provided that all conditions to the vesting of ashare of Restricted Stock imposed pursuant to Section 10(b) are satisfied, andexcept as provided in Section 10(g), upon the occurrence of the Vesting Datewith respect to a share of Restricted Stock, such share shall vest and therestrictions of Section 10(c) shall lapse.

**(b)****                                 ****Conditions toVesting.**

At the time of the grantof shares of Restricted Stock, the Committee may impose such restrictions orconditions to the vesting of such shares as it, in its absolute discretion,deems appropriate.

**(c)****                                 ****Restrictions onTransfer Prior to Vesting.**

Prior to the vesting of ashare of Restricted Stock, no transfer of a Participant’s rights with respectto such share, whether voluntary or involuntary, by operation of law orotherwise, shall be permitted. Immediately upon any attempt to transfer suchrights, such share, and all of the rights related thereto, shall be forfeitedby the Participant.

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**(d)****                                 ****Dividends on RestrictedStock.**

The Committee in itsdiscretion may require that any dividends paid on shares of Restricted Stock beheld in escrow until all restrictions on such shares have lapsed.

**(e)****                                 ****Issuance ofCertificates.**

(i)             Reasonably promptly after the IssueDate with respect to shares of Restricted Stock, unless otherwise determined bythe Committee, DRS, in its sole discretion, may either (i) issue a stockcertificate, registered in the name of the Participant to whom such shares weregranted, evidencing such shares; provided, however that DRS shall not causesuch a stock certificate to be issued unless it has received a stock power dulyendorsed in blank with respect to such shares; and provided further that unlessdetermined otherwise by the Committee such stock certificates shall be held bythe Company or its representative or (ii) establish and maintain, or cause arepresentative to establish and maintain, an account to record the shares ofRestricted Stock granted to such Participant and transactions and events affectingsuch stock.

(ii)          The following legend shall be (i)inscribed on any certificate issued or (ii) notated on any account established,for Restricted Stock prior to the lapse of any outstanding restrictions:

THETRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBYARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITUREPROVISIONS AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE DRSTECHNOLOGIES, INC. 2006 OMNIBUS PLAN, AND AN AGREEMENT ENTERED INTO BETWEEN THEREGISTERED OWNER OF SUCH SHARES AND DRS. A COPY OF THE PLAN AND AGREEMENT IS ONFILE IN THE OFFICE OF THE SECRETARY OF DRS, 5 SYLVAN WAY, PARSIPPANY, NEWJERSEY 07054.

Such legend shall not beremoved until such shares vest pursuant to the terms hereof.  Reasonably promptly after the Vesting Datewith respect to shares of Restricted Stock, unless otherwise determined by theCommittee, DRS, in its sole discretion, may either issue to the Participant orthe Participant’s personal representative or deposit in such Participant’s orthe Participant’s personal representative’s brokerage account via electronictransfer, a stock certificate representing one share of Company Stock, withrespect to each whole share of Restricted Stock.

**(f)****                                   ****Consequences ofVesting.**

Upon the vesting of ashare of Restricted Stock, the restrictions of Section 10(c) shall lapse withrespect to such share. Reasonably promptly after a share of Restricted Stockvests, DRS shall cause to be delivered to the Participant to whom such shareswere granted, a certificate evidencing such share, free of the legend set forthin Section 10(e).

**(g)****                                ****Effect ofTermination of Employment.**

(i)             Subject to such other provision asthe Committee may set forth in the applicable Agreement, and to the Committee’samendment authority pursuant to Section 4, upon the termination of aParticipant’s employment for any reason other than Cause, any and all shares towhich restrictions on transferability apply shall be

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immediately forfeited by the Participant and transferred to,and reacquired by, DRS; provided that if the Committee, in its sole discretion,shall within thirty (30) days after such termination of employment notify theParticipant in writing of its decision not to terminate the Participant’srights in such shares, then the Participant shall continue to be the owner ofsuch shares subject to such continuing restrictions as the Committee mayprescribe in such notice. In the event of a forfeiture of shares pursuant tothis section, DRS shall repay to the Participant (or the Participant’s estate)any amount paid by the Participant for such shares. In the event that DRSrequires a return of shares, it shall also have the right to require the returnof all dividends paid on such shares, whether by termination of any escrowarrangement under which such dividends are held or otherwise.

(ii)          In the event of the termination of aParticipant’s employment for Cause, all shares of Restricted Stock granted tosuch Participant which have not vested as of the date of such termination shallimmediately be returned to DRS, together with any dividends paid on suchshares, in return for which DRS shall repay to the Participant any amount paidby the Participant for such shares.

**(h)****                                ****Effect of Change inControl.**

Upon the occurrence of aChange in Control all outstanding shares of Restricted Stock which have nottheretofore vested shall immediately vest and all restrictions on such sharesshall immediately lapse unless such shares of Restricted Stock are converted,assumed, or replaced by a successor with an award of equivalenteconomic value containing equivalent terms.  With respect to any converted, assumed, or replaced sharesof Restricted Stock, if a Participant’s employment is subsequentlyterminated without Cause or for Good Reason within 24 months of the Change in Control,such shares of Restricted Stock shall become fully and immediately vested uponthe date of the Participant’s termination.

**(i)****                                   ****Special ProvisionsRegarding Awards.**

Notwithstanding anythingto the contrary contained herein, Restricted Stock granted to ExecutiveOfficers pursuant to this Section 10 may be subject to attainment by theCompany (or a Subsidiary or division of DRS if applicable) of performance goalspre-established by the Committee, based on one or more of the followingcriteria: (1) earnings including operating income, earnings before orafter taxes, earnings before or after interest, depreciation, amortization, orextraordinary or special items or book value per share (which may exclude nonrecurringitems); (2) pre-tax income or after-tax income; (3) earnings per common share(basic or diluted); (4) operating profit; (5) revenue, revenue growth or rateof revenue growth; (6) return on assets (gross or net), return on investment,return on capital, or return on equity; (7) returns on sales or revenues;(8) operating expenses; (9) stock price appreciation; (10) cash flow, freecash flow, cash flow return on investment (discounted or otherwise), net cashprovided by operations, or cash flow in excess of cost of capital;(11) implementation or completion of critical projects or processes;(12) economic value created; (13) cumulative earnings per share growth;(14) operating margin or profit margin; (15) common stock price or totalstockholder return; (16) cost targets, reductions and savings, productivity andefficiencies; (17) strategic business criteria, consisting of one or moreobjectives based on meeting specified market penetration, geographic businessexpansion, customer satisfaction, employee satisfaction, human resourcesmanagement, supervision of litigation, information technology, and goalsrelating to acquisitions, divestitures, joint ventures and similartransactions, and budget comparisons; (18) personal professional objectives,including any of the

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foregoing performancegoals, the implementation of policies and plans, the negotiation oftransactions, the development of long term business goals, formation of jointventures, research or development collaborations, and the completion of othercorporate transactions; and (19) any combination of, or a specified increasein, any of the foregoing.  Whereapplicable, the performance goals may be expressed in terms of attaining aspecified level of the particular criteria or the attainment of a percentageincrease or decrease in the particular criteria, and may be applied to one ormore of the Company, any Subsidiary, or a division or strategic business unitof the Company, or may be applied to the performance of the Company relative toa market index, a group of other companies or a combination thereof, all asdetermined by the Committee.  Theperformance goals may include a threshold level of performance below which nopayment will be made (or no vesting will occur), levels of performance at whichspecified payments will be made (or specified vesting will occur), and amaximum level of performance above which no additional payment will be made (orat which full vesting will occur).  Eachof the foregoing performance goals shall be determined in accordance withgenerally accepted accounting principles; provided that the Committee shallhave the authority to make equitable adjustments to the performance goals inrecognition of unusual or non-recurring events affecting the Company or anySubsidiary or the financial statements of the Company or any Subsidiary, inresponse to changes in applicable laws or regulations, or to account for itemsof gain, loss or expense determined to be extraordinary or unusual in nature orinfrequent in occurrence or related to the disposal of a segment of a businessor related to a change in accounting principles.  Shares of Restricted Stock granted toExecutive Officers pursuant to this Section 10 and subject to the attainment byDRS of the Company (or a Subsidiary or division of DRS if applicable), shall bereleased from restrictions only after the attainment of such performancemeasures has been certified by the Committee.

**(j)****                                   ****Consent to Electronic Delivery.**

In lieu of issuingdocuments in paper format, to the fullest extent permitted by law, theCommittee may, in its discretion provide for electronic delivery of anydocuments that DRS may be required to deliver (including, but not limited to,prospectuses, prospectus supplements, grant or award notifications andagreements, account statements, annual and quarterly reports, and all otherforms or communications) in connection with the grant of awards and any otherprior or future incentive award or program made or offered by DRS or itspredecessors or successors.

**11.  RestrictedStock Units.**

**(a)****                                 ****Vesting Date.**

At the time of the grantof Restricted Stock Units, the Committee shall establish a Vesting Date orVesting Dates with respect to such units. The Committee may divide such units into classes and assign a differentVesting Date for each class.  Providedthat all conditions to the vesting of a Restricted Stock Unit imposed pursuantto Section 11(c) are satisfied, and except as provided in Section 11(d), uponthe occurrence of the Vesting Date with respect to a Restricted Stock Unit,such unit shall vest.

**(b)****                                 ****Benefit UponVesting.**

Upon the vesting of aRestricted Stock Unit, the Participant shall be entitled to receive, within 30days of the date on which such unit vests, an amount, in cash and/or shares ofCompany Stock, as determined by the Committee, equal to the sum of (1) the FairMarket Value of a share of Company Stock on the date on which such RestrictedStock Unit vests and (2) the aggregate amount of cash dividends paid withrespect to a share of Company Stock during the period 

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commencing on the date onwhich the Restricted Stock Unit was granted and terminating on the date onwhich such unit vests.

**(c)****                                 ****Conditions toVesting.**

At the time of the grantof Restricted Stock Units, the Committee may impose such restrictions orconditions to the vesting of such units as it, in its absolute discretion,deems appropriate.

**(d)****                                 ****Effect ofTermination of Employment.**

Subject to such otherprovision as the Committee may set forth in the applicable Agreement, and tothe Committee’s amendment authority pursuant to Section 4, Restricted StockUnits that have not vested, together with any dividends credited on such units,shall be forfeited upon the Participant’s termination of employment for anyreason.

**(e)****                                 ****Effect of Change inControl.**

Upon the occurrence of aChange in Control, all outstanding Restricted Stock Units which have nottheretofore vested shall immediately vest and payment in respect of such unitsshall be made in accordance with the terms of this Plan unless such Restricted StockUnits are converted, assumed, or replaced by a successor with an award of equivalenteconomic value containing equivalent terms.  If a Participant’s employment is subsequentlyterminated without Cause or for Good Reason within 24 months of the Change in Control,any such Restricted Stock Units so converted, assumed, or replaced that remainunvested shall become fully and immediately vested upon the date of theParticipant’s termination.

**(f)****                                   ****Special ProvisionsRegarding Awards.**

Notwithstanding anythingto the contrary contained herein, the vesting of Restricted Stock Units grantedpursuant to this Section 11 to Executive Officers may be based on theattainment by DRS or the Company (or a Subsidiary or division of DRS ifapplicable) of one or more of the performance criteria set forth in Section10(i), in each case, as determined in accordance with generally acceptedaccounting principles. No payment in respect of any such Restricted Stock Unitaward will be made to an Executive Officer until the attainment of therespective performance measures have been certified by the Committee.

**(g)****                                ****Bookkeeping.**

The Company shallestablish and maintain an account for the participant to record RestrictedStock Units and transactions and events affecting such units. Restricted StockUnits and other items reflected in the account will represent only bookkeepingentries by the Company to evidence unfunded obligations of the Company.

**12.  StockBonuses.**

In the event that theCommittee grants a Stock Bonus, as soon as practicable after the date on whichsuch Stock Bonus is payable, unless otherwise determined by the Committee, DRS,in its sole discretion, may either (i) issue a stock certificate, registered inthe name of the Participant to whom such grant was made, evidencing such sharesor (ii) establish and maintain, or cause a representative to establish andmaintain, an account to record the Stock Bonus granted to such Participant andtransactions and events affecting such stock.

 

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Executive Officersshall be eligible to receive Stock Bonus grants hereunder only after adetermination of eligibility is made by the Committee, in its sole discretion.

**13.  OtherAwards.**

Other forms of IncentiveAwards (“Other Awards”) valued in whole or in part by reference to, orotherwise based on, Company Stock may be granted either alone or in addition toother Incentive Awards under the Plan. Subject to the provisions of the Plan,the Committee shall have sole and complete authority to determine the personsto whom and the time or times at which such Other Awards shall be granted, thenumber of shares of Company Stock to be granted pursuant to such Other Awardsand all other conditions of such Other Awards.

**14.  Non-EmployeeDirector Formula Stock Options.**

The provisions of thisSection 14 shall apply only to grants of Non-Qualified Stock Options toNon-Employee Directors.

**(a)****                                 ****General.**

Non-Employee Directorsshall receive Non-Qualified Stock Options under the Plan, in addition to anyother Incentive Awards granted to Non-Employee Directors.  The exercise price per share of Company Stockpurchasable under Non-Qualified Stock Options granted to Non-Employee Directorsshall be the Fair Market Value of a share of Company Stock on the date ofgrant.  No Non-Qualified Stock Optiongranted to a Non-Employee Director may be subject to an acceleration ofexercisability except upon a Change in Control as described in Section 7(f).

**(b)****                                 ****Initial Grants toSubsequent Directors.**

Unless otherwisedetermined, each Subsequent Director shall, at the time such director becomes amember of the Board of Directors, be granted automatically a Non-QualifiedStock Option to purchase 5,000 shares of Company Stock.

**(c)****                                 ****Subsequent Grantsto Directors.**

On the date of eachannual meeting of the stockholders of DRS subsequent to the annual meetingimmediately following the Effective Date, unless otherwise determined, eachcontinuing Initial Director will be granted automatically a Non-Qualified StockOption to purchase 2,500 shares of Company Stock; provided, however, that in noevent shall a continuing Initial Director be granted Non-Qualified StockOptions to purchase more than 2,500 shares of Company Stock under the Plan orany other stock option plan of the Company during any tax year of theCompany.  On the date of each annualmeeting of the stockholders of DRS subsequent to a Subsequent Director’sbecoming a member of the Board of Directors, unless otherwise determined, suchSubsequent Director shall be granted automatically a Non-Qualified Stock Optionto purchase 2,500 shares of Company Stock.

**(d)****                                 ****Method and Time ofPayment.**

The Option exercise priceshall be paid in full, at the time of exercise, in cash (including cashreceived from the Company as compensation), in shares of Company Stock having aFair Market Value equal to such Option exercise price, in a combination of cashand Company Stock or through a cashless exercise procedure.

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**(e)****                                  Termand Exercisability.**

Each Non-Qualified StockOption granted under this Section 14 shall (1) be exercisable as to 100% of theshares of Company Stock covered thereby on the first anniversary of the datethat the Non-Qualified Stock Option is granted and (2) expire ten years fromthe date of grant.

**(f)****                                   ****Termination.**

In the event of thetermination of a Non-Employee Director’s service with DRS other than for Cause,any Non-Qualified Stock Option granted to such Non-Employee Director under thisSection 14, to the extent that it is exercisable on the date of suchtermination, may be exercised by such Non-Employee Director (or, if applicable,by his or her executors, administrator, legatees or distributees) until theearlier of (1) the date that is two years from the date of such termination or(2) the expiration of such Non-Qualified Stock Option. In the event of thetermination of a Non-Employee Director’s service with DRS for Cause, alloutstanding Non-Qualified Stock Options granted to such Non-Employee Directorshall expire at the commencement of business on the date of such termination.

**15.  Rightsas a Stockholder.**

No person shall have anyrights as a stockholder with respect to any shares of Company Stock covered byor relating to any Incentive Award until the date of issuance of a stockcertificate with respect to such shares. Except as otherwise expressly provided in Section 3(c), no adjustment toany Incentive Award shall be made for dividends or other rights for which therecord date occurs prior to the date such stock certificate is issued.

**16.  NoSpecial Employment Rights; No Right to Incentive Award.**

Nothing contained in thePlan or any Agreement shall confer upon any Participant any right with respectto the continuation of employment by the Company or interfere in any way withthe right of the Company, subject to the terms of any separate employmentagreement to the contrary, at any time to terminate such employment or toincrease or decrease the compensation of the Participant.

No person shall have anyclaim or right to receive an Incentive Award hereunder. The Committee’sgranting of an Incentive Award to a participant at any time shall neitherrequire the Committee to grant any other Incentive Award to such Participant orother person at any time or preclude the Committee from making subsequentgrants to such Participant or any other person.

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**17.  SecuritiesMatters.**

(a)                                  DRS shall be under no obligation toeffect the registration pursuant to the Securities Act of any interests in thePlan or any shares of Company Stock to be issued hereunder or to effect similarcompliance under any state laws. Notwithstanding anything herein to thecontrary, DRS shall not be obligated to cause to be issued or delivered anycertificates evidencing shares of Company Stock pursuant to the Plan unless anduntil DRS is advised by its counsel that the issuance and delivery of suchcertificates is in compliance with all applicable laws, regulations ofgovernmental authority and the requirements of any securities exchange on whichshares of Company Stock are traded.  TheCommittee may require, as a condition of the issuance and delivery ofcertificates evidencing shares of Company Stock pursuant to the terms hereof,that the recipient of such shares make such agreements and representations, andthat such certificates bear  such legends,as the Committee, in its sole discretion, deems necessary or desirable.

(b)                                 The transfer of any shares ofCompany Stock hereunder shall be effective only at such time as counsel to DRSshall have determined that the issuance and delivery of such shares is incompliance with all applicable laws, regulations of governmental authority andthe requirements of any securities exchange on which shares of Company Stockare traded. The Committee may, in its sole discretion, defer the effectivenessof any transfer of shares of Company Stock hereunder in order to allow theissuance of such shares to be made pursuant to registration or an exemptionfrom registration or other methods for compliance available under federal orstate securities laws. The Committee shall inform the Participant in writing ofits decision to defer the effectiveness of a transfer. During the period ofsuch deferral in connection with the exercise of an Option, the Participantmay, by written notice, withdraw such exercise and obtain the refund of anyamount paid with respect thereto.

**18.  WithholdingTaxes.**

Whenever cash is to bepaid pursuant to an Incentive Award, the Company shall have the right to deducttherefrom an amount sufficient to satisfy any federal, state and localwithholding tax requirements related thereto.

Whenever shares ofCompany Stock are to be delivered pursuant to an Incentive Award, the Companyshall have the right to require the Participant to remit to the Company in cashan amount sufficient to satisfy any federal, state and local withholding taxrequirements related thereto.  With theapproval of the Committee, a Participant may satisfy the foregoing requirementby electing to have the Company withhold from delivery shares of Company Stockhaving a value less than or equal to the amount of tax to be withheld, but notgreater than the statutory minimum. Such shares shall be valued at their FairMarket Value on the date on which the amount of tax to be withheld isdetermined (the “Tax Date”). Fractional share amounts shall be settled in cash.Such a withholding election may be made with respect to all or any portion ofthe shares to be delivered pursuant to an Incentive Award.

**19.  Notificationof Election Under Section 83(b) of the Code.**

If any Participant shall,in connection with the acquisition of shares of Company Stock under the Plan,make the election permitted under Section 83(b) of the Code (i.e., an electionto include in gross income in the year of transfer the amounts specified inSection 83(b)), such Participant shall notify the Company of such electionwithin 10 days of filing notice of the election with the Internal RevenueService, in addition to any filing

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and a notificationrequired pursuant to regulation issued under the authority of Section 83(b) ofthe Code.

**20.****      ****Notification UponDisqualifying Disposition Under Section 421(b) of the Code.**

Each Agreement withrespect to an Incentive Stock Option shall require the Participant to notifythe Company of any disposition of shares of Company Stock issued pursuant tothe exercise of such Option under the circumstances described in Section 421(b)of the Code (relating to certain disqualifying dispositions), within 10 days ofsuch disposition.

**21.  Amendmentor Termination of the Plan.**

The Board of Directorsmay, at any time, suspend or terminate the Plan or revise or amend it in anyrespect whatsoever; provided, however, that stockholder approval shall berequired if and to the extent the Board of Directors determines that suchapproval is appropriate for purposes of satisfying Sections 162(m) or 422 ofthe Code.  Incentive Awards may begranted under the Plan prior to the receipt of such stockholder approval buteach such grant shall be subject in its entirety to such approval and no awardmay be exercised, vested or otherwise satisfied prior to the receipt of suchapproval. Nothing herein shall restrict the Committee’s ability to exercise itsdiscretionary authority pursuant to Section 4, which discretion may beexercised without amendment to the Plan. No action hereunder may, without theconsent of a Participant, reduce the Participant’s rights under any outstandingIncentive Award.

**22.  TransfersUpon Death; Nonassignability.**

Upon the death of aParticipant, outstanding Incentive Awards granted to such Participant may beexercised only by the executor or administrator of the Participant’s estate orby a person who shall have acquired the right to such exercise by will or bythe laws of descent and distribution.  Notransfer of an Incentive Award by will or the laws of descent and distributionshall be effective to bind the Company unless the Committee shall have beenfurnished with (a) written notice thereof and with a copy of the will and/orsuch evidence as the Committee may deem necessary to establish the validity ofthe transfer and (b) an agreement by the transferee to comply with all theterms and conditions of the Incentive Award that are or would have beenapplicable to the Participant and to be bound by the acknowledgements made bythe Participant in connection with the grant of the Incentive Award.

A Participant may, uponproviding written notice to the Secretary of DRS and subject to any conditionsas the Committee may prescribe, elect to transfer any or all Options granted tosuch Participant pursuant to the Plan only to members of his or her immediatefamily, including, but not limited to, children, grandchildren and spouse or totrusts for the benefit of such immediate family members or to partnerships inwhich such family members are the only partners; provided, however, that nosuch transfer by any Participant may be made in exchange for consideration.

**23.  Expensesand Receipts.**

Theexpenses of the Plan shall be paid by the Company. Any proceeds received by theCompany in connection with any Incentive Award will be used for generalcorporate purposes.

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**24.  Failureto Comply.**

In addition to theremedies of the Company elsewhere provided for herein, failure by a Participant(or beneficiary) to comply with any of the terms and conditions of the Plan orthe applicable Agreement, unless such failure is remedied by such Participant(or beneficiary) within ten days after notice of such failure by the Committee,shall be grounds for the cancellation and forfeiture of such Incentive Award,in whole or in part, as the Committee, in its absolute discretion, maydetermine.

**25.  EffectiveDate and Term of Plan.**

The Plan became effectiveon the Effective Date, but the Plan (and any grants of Incentive Awards madeprior to stockholder approval of the Plan) shall be subject to the requisiteapproval of the stockholders of DRS. In the absence of such approval, suchIncentive Awards shall be null and void. Unless earlier terminated by the Boardof Directors, the right to grant Incentive Awards under the Plan will terminateon the tenth anniversary of the Effective Date. Incentive Awards outstanding at Plan termination will remain in effectaccording to their terms and the provisions of the Plan.

**26.  ApplicableLaw.**

Except to the extentpreempted by any applicable federal law, the Plan will be construed and administeredin accordance with the laws of the State of Delaware, without reference to itsprinciples of conflicts of law.

**27.  ParticipantRights.**

No Participant shall haveany claim to be granted any award under the Plan, and there is no obligationfor uniformity of treatment for Participants. Except as provided specificallyherein, a Participant or a transferee of an Incentive Award shall have norights as a stockholder with respect to any shares covered by any award untilthe date of the issuance of a Company Stock certificate to him or her for suchshares.

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**28. ****Unfunded****Status of Awards.**

The Plan is intended toconstitute an “unfunded” plan for incentive and deferred compensation. Withrespect to any payments not yet made to a Participant pursuant to an IncentiveAward, nothing contained in the Plan or any Agreement shall give any suchParticipant any rights that are greater than those of a general creditor of theCompany.

**29.  NoFractional Shares.**

No fractional shares ofCompany Stock shall be issued or delivered pursuant to the Plan. The Committeeshall determine whether cash, other Incentive Awards, or other property shallbe issued or paid in lieu of such fractional shares or whether such fractionalshares or any rights thereto shall be forfeited or otherwise eliminated.

**30.  Beneficiary.**

A Participant may filewith the Committee a written designation of a beneficiary on such form as maybe prescribed by the Committee and may, from time to time, amend or revoke suchdesignation. If no designated beneficiary survives the Participant, theexecutor or administrator of the Participant’s estate shall be deemed to be thegrantee’s beneficiary.

**31.  Interpretation.**

The Plan is designatedand intended to comply with Rule 16b-3 and, to the extent applicable, withSection 162(m) of the Code, and all provisions hereof shall be construed in amanner to so comply.

**32.  Severability.**

If any provision of thePlan is held to be invalid or unenforceable, the other provisions of the Planshall not be affected but shall be applied as if the invalid or unenforceableprovision had not been included in the Plan.

 

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