Document:

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                                                                    Exhibit 10.3

                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT, dated as of October 7, 2002 (this "Agreement"),
between THE ASHTON TECHNOLOGY GROUP, INC., a Delaware corporation ("Ashton"),
and Trevor B. Price, an individual ("You" or the "Executive").

     Ashton desires to employ the Executive and the Executive desires to accept
such employment.

     Accordingly, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are mutually acknowledged, Ashton and the Executive agree as
follows:

1.0  Term

     a.   The term of Your employment under this Agreement shall commence on the
Effective Date (as defined below) and shall end on the first anniversary
thereof, unless terminated earlier or extended as provided herein (the "Term").

     b.   The "Effective Date" shall be May 8, 2002.

2.0  Employment Position and Responsibilities

     You will be employed in the position of President and Chief Operating
Officer of Ashton. You will be responsible for such duties as are normally
associated with such position or as otherwise determined by the Board of
Directors.

3.0  Compensation and Benefits

     a.   Your base salary ("Base Salary") during the Term is guaranteed to be
no less than $160,000 per year, which will be payable in accordance with
Ashton's regular payroll practices. Your Base Salary may be reviewed from time
to time by the Board of Directors of Ashton to determine whether there should be
any increase in Base Salary. This determination will be made in view of Your
individual performance and the overall performance of Ashton. No guarantee is
made of any Base Salary increase as a result of any salary review.

     b.   You will receive three (3) weeks vacation per year, which is earned
pro-rata over the year; and receive five (5) paid-time-off days (personal/sick)
per year. You will also receive the same paid holidays as are observed by all of
Ashton's employees.

     c.   In addition to the benefits set forth in paragraphs 3a and 3b, You
shall be entitled to participate in other fringe benefits packages made
available generally to the executive management employees of Ashton, as such
benefits may be determined from time to time by the Board of Directors,
including but not limited to, 401(k), medical, dental, and flexible spending and
dependent care benefits.

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     d.   From time to time, the Board of Directors of Ashton may consider, in
its sole discretion, whether You should receive a cash bonus ("Discretionary
Cash Bonus") based on Your performance during the Term. This determination will
be made in view of Your individual performance and the overall performance of
Ashton. Ashton does not guarantee that You will receive a Discretionary Cash
Bonus acceptable to You or at all.

     e.   At such time as the Board of Directors deems it appropriate, the Board
of Directors may consider whether to implement a cash bonus program for
executive management employees. Ashton does not guarantee that such a cash bonus
program will be implemented on terms acceptable to You or at all.

4.0  Stock Options

     a.   Ashton has created the 2002 Stock Option Plan (the "Stock Option
Plan") for its common stock, par value $0.01 ("Common Stock"). On July 9, 2002,
Ashton has granted to You stock options ("Options") to acquire 23,777,639 shares
of Common Stock. The foregoing number of Options shall be adjusted
proportionately in the event of any stock split, stock dividend, combination, or
reclassification of the Common Stock or any other increase or decrease in the
number of issued shares of the Common Stock without receipt of consideration by
Ashton.

     b.   The grant of Options has been subject to the appropriate approvals,
including approval of Ashton's Board of Directors and, as incentive stock
options have been granted, shareholder approval of the Stock Option Plan. Your
Options will be subject to the same general terms and conditions as other
executive management employees, including but not limited to, the exercise price
of the Options, and the registration rights (if any) in respect of the shares of
Common Stock underlying the Options. Your Options will be governed by a stock
option agreement ("Stock Option Agreement"), which shall provide for an eight
(8) cent exercise price, and the following four year vesting schedule: 1/6/th/
shall vest six months from May 7, 2002 ("Vesting Commencement Date"); 1/6/th/
shall vest one year from the Vesting Commencement Date; and 2/9ths shall vest on
each of the second, third, and fourth anniversary dates from the Vesting
Commencement Date, subject in each case to You continuing to be a Service
Provider (as defined in the Stock Option Plan) on such dates. Additionally, Your
Stock Option Agreement will provide that in the event of a Change of Control (to
be defined in the Stock Option Plan and Stock Option Agreement) of Ashton, fifty
percent (50%) of Your unvested Options shall vest immediately upon the Change of
Control. Ashton will also make commercially reasonable efforts to provide for a
"cashless exercise" method for You to exercise Your Options, if legally
allowable.

5.0  Directors and Officers Liability Insurance

     During the term of this Agreement, Ashton shall have in force and effect
(at its own cost) Directors and Officers Liability Insurance, with coverage in
such amounts as may be deemed appropriate by Ashton's Board of Directors.

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6.0  Termination

     a.   Your employment under this Agreement may be terminated by You or
Ashton at any time, with or without Cause (as defined below).

     b.   In the event of termination by Ashton without Cause, or in the event
of a Constructive Termination (as defined below), Ashton shall pay You an amount
equal to the greater of (1) six (6) months of Your Base Salary or (2) the
remainder of the Base Salary due to You from the date of termination through the
expiration of the Term. In the event of termination by Ashton with Cause, or if
You voluntarily terminate Your employment, then You shall not be entitled to the
payment described in paragraph 6b.

     c.   In the event of termination by Ashton without Cause, or in the event
of a Constructive Termination (as defined below), You shall vest immediately in
one hundred percent (100%) of Your first two installments (100% of 1/6/th/ plus
1/6/th/ = 1/3/rd/) and fifty percent (50%) of Your next unvested anniversary
installment (50% of 2/9ths = 1/9/th/) respecting Your July 9, 2002 Options
grant. You may exercise such vested Options within one (1) year from such date
of Your termination. The effect of any other termination of Your employment on
Options granted to You shall be governed by the Stock Option Plan and Stock
Option Agreement.

     d.   In the event this Agreement lapses without being extended in
accordance with paragraph 6g, and at anytime thereafter You are either
terminated by Ashton without Cause or subject to a Constructive Termination (as
defined below), Ashton shall pay You an amount equal to six (6) months of Your
Base Salary and you shall automatically vest in any unvested portion of Your
July 9, 2002 Options grant up to 1/9/th/ of the total grant, which will be in
addition to Your Options that have previously vested. You may exercise such
vested Options within one (1) year from such date of Your termination. The
effect of any other termination of Your employment on Options granted to You
shall be governed by the Stock Option Plan and Stock Option Agreement, and shall
preclude You from receiving the payment described in paragraph 6d.

     e.   For the purposes of this Agreement, "Cause" shall mean (1) a refusal,
failure, or inability to perform any reasonable assigned duties; (2) a material
breach or violation of this Agreement; (3) conduct by the Executive that
constitutes gross negligence or gross misconduct; (4) material failure to follow
Ashton's policies, directives, or orders applicable to Ashton employees holding
comparable positions; (5) intentional destruction or theft of Ashton property or
falsifications of Ashton documents; (6) conviction of a felony or any crime
involving moral turpitude or a misdemeanor where imprisonment in excess of
fifteen (15) days is imposed; or (7) violation of the written Ashton Code of
Conduct (the "Code").

     f.   For the purposes of this Agreement, "Constructive Termination" shall
mean: (1) the material reduction by Ashton of the scope of Your duties for forty
(40) consecutive Business Days, (2) a material reduction in Your Base Salary, or
(3) the continued assignment to You of any duties materially inconsistent with
the level of Your

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position with Ashton; provided that none of the foregoing events shall be deemed
to result in a Constructive Termination if You consent to such events or if such
events are the result of actions of Ashton or its Board of Directors that are
applicable to all officers of Ashton.

     g.   Ashton may extend this Agreement for successive one year terms so long
as Ashton provides You at least sixty (60) calendar days advance written notice
prior to the expiration of the Term.

     h.   A "Business Day" means any day other than (1) a Saturday, Sunday or
legal holiday, or (2) a day on which commercial banks in New York City are
authorized or required by law or executive order to close.

7.0  Confidential Information

     In the course of the Executive's employment with Ashton, the Executive may
become aware of confidential information including, without limitation, computer
system and software designs, plans for new product and service offerings,
customer lists, market research, strategic plans, domain management consulting
methodologies, and other non-public or similar information that relates to the
business of Ashton, its investors, business partners, customers and/or clients.
The Executive will not use or disclose any such confidential information of
Ashton or its investors, business partners, customers or clients except in the
course of his duties to Ashton or unless ordered to do so by a court of
competent jurisdiction (in which latter case the Executive will promptly inform
Ashton of such order). The Executive will comply with Ashton's policies and
procedures for the protection of confidential information. Further, the
Executive's obligation not to disclose or use such confidential information will
continue after the termination of the Executive's employment for whatever
reason. Confidential information excludes any information known by the Executive
prior to the commencement of the first date of employment with Ashton, which was
not obtained from Ashton (or a director, officer, employee or agent of Ashton)
or which is or becomes known by the public or in Ashton's industry other than by
a breach by the Executive of a confidentiality obligation to Ashton.

8.0  Non-solicitation and Non-compete

     a.   The Executive agrees that until his Termination Date (as defined
below), the Executive shall devote substantially all of his working time to the
business and affairs of Ashton.

     b.   The Executive agrees that for a period of twelve (12) months following
the date of termination of the Executive's employment with Ashton for any reason
(the "Termination Date"), the Executive will not, and will not assist anyone
else to, directly or indirectly solicit or induce any of Ashton's employees to
terminate their employment with Ashton or divert, interfere with or take away
from Ashton any person, company or entity which, within the six month period
immediately preceding the date of termination,

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was an investor, customer, client, supplier, business partner, prime contractor,
subcontractor or independent contractor of Ashton.

     c.   From the Termination Date and for a period of twelve (12) months
thereafter, the Executive agrees that he will not, directly or indirectly, as an
equity owner, director, employee, consultant, lender, agent or in any other
capacity, (1) engage or participate in, or have any interest in any corporation,
entity or other person that engages or participates in any actual, contemplated,
or proposed business or activity engaged or participated in by Ashton or its
subsidiaries on the Termination Date, or (2) engage or participate in, or have
an interest in any corporation, entity or other person that participates in a
merger, acquisition or consolidation with Ashton or any of its subsidiaries. For
purposes of this paragraph 8c, the "business or activity" engaged or
participated in by Ashton or its subsidiaries consists of creating,
establishing, providing or supplying equity products and equity derivatives
thereof that guarantee liquidity based on a benchmark price, and the Executive
will be deemed directly or indirectly to be engaged or participating in the
operation of such a business or activity, or to have an interest in a
corporation, entity or other person, if he is a proprietor, partner, joint
venturer, shareholder, director, officer, lender, manager, employee, consultant,
advisor or agent or if he, directly or indirectly (including as a member of a
group), controls all or any part thereof; provided, that nothing in this
paragraph 8c shall prohibit the Executive from holding less than five percent
(5%) of a class of a corporation's outstanding securities that are listed on a
national securities exchange or traded in the over-the-counter market.

     d.   The noncompetition covenant set forth in paragraph 8c above shall not
apply where the Executive's employment is terminated by Ashton without Cause or
where You have been Constructively Terminated, unless, on or before ten (10)
Business Days following Your Termination Date, the Board of Directors of Ashton
directs Ashton to pay by wire transfer of immediately available funds to an
account that You specify (1) an amount equal to twelve times Your gross monthly
salary for the last complete calendar month immediately preceding Your
Termination Date, plus any cash bonus received by You during such period, and
(2) Ashton agrees in writing to maintain, at Ashton's expense for the twelve
(12) months following Your Termination Date, health and medical insurance
coverage to which You were entitled as of the Termination Date.

     e.   You acknowledge that the business conducted by Ashton is national in
nature and, accordingly, You agree that the competition restriction shall apply
to You in the United States for the period set forth in paragraph 8c. You
acknowledge that the restrictions, prohibitions and other provisions of
paragraph 8c are reasonable, fair and equitable in scope, terms and duration,
are necessary to protect the legitimate business interests of Ashton.

9.0  Intellectual Property

     a.   The Executive will fully and promptly disclose and describe to Ashton,
and hereby agrees to assign to Ashton, all of his full right, title, and
interest in all

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intellectual property, including, without limitation, all inventions,
discoveries, concepts, ideas, systems, methods, processes, works, computer
programs and computer software (whether or not patentable or copyrightable or
constituting trade secrets), which the Executive makes, conceives, reduces to
practice, or creates as an employee of or in connection with his employment by
Ashton. The Executive also will disclose and assign to Ashton all of his
interest, if any, in any such intellectual property conceived of or created by
other employees or by clients of Ashton during the Term. The Executive
understands that he will have no rights to any royalties or other compensation
for the use of any intellectual property covered by this Agreement, unless
expressly agreed to in writing by Ashton.

     b.   The Executive will cooperate with Ashton in doing whatever is
appropriate, including executing assignments, to apply for, obtain and enforce
patent rights (U.S. and/or foreign) for Ashton or its clients on any invention
which is made by the Executive (either alone or jointly with others) during the
Term and to which Ashton is entitled to possession under the terms of this
Agreement, provided that (1) all expenses required to apply for, obtain and
enforce any patent rights will be paid by Ashton, and (2) if the Executive is no
longer employed by Ashton and is required to spend a substantial amount of time
to carry out his obligations under this paragraph 9, the Executive will be
entitled to reasonable compensation from Ashton for that time at levels based on
his total annual compensation in effect at the time the Executive's employment
with Ashton was terminated. The Executive understands that Ashton will have no
obligation to him to apply for or obtain any such patent rights.

     c.   Any written materials or software relating to the business of Ashton
that the Executive prepares, in whole or in part, during the Term, will be the
property of Ashton. The Executive hereby assigns to Ashton all of his full
right, title and interest in any such written materials or software. The
Executive also will do whatever is appropriate to obtain copyright protection of
any such written materials or software relating to his work for Ashton or its
clients, should Ashton so request.

     d.   Upon the termination of the Executive's employment with Ashton, or
during the Executive's employment if so requested by Ashton, the Executive will
deliver to an authorized representative of Ashton (1) all credit cards,
identification cards, badges, keys, and other items which have been provided to
the Executive by Ashton, (2) all tools, equipment, and software provided to the
Executive by Ashton, and (3) all written materials, records, tapes, disks and
other media which relate to the business of Ashton. The Executive will not
retain any copies or duplicates of the items described above, except that the
Executive may retain copies of his own records relating to his compensation and
benefits from Ashton, a copy of this Agreement and any other agreement between
the Executive and Ashton, and his personal copies of any papers which have been
written by the Executive and have been published without restriction.

10.0 Monies Owed to Ashton

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     Upon the separation of Your employment from Ashton, You agree to authorize
Ashton to deduct from Your final wages or other monies due to You any debts or
financial obligations owned to Ashton by You.

11.0 Arbitration

     Any claim, controversy, or dispute arising out of or relating to this
Agreement, the Executive's employment with Ashton or the termination of such
employment shall be resolved by binding confidential arbitration, to be held in
Philadelphia, Pennsylvania, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.

12.0 Remedies

     You understand and agree that Ashton will be irreparably damaged in the
event that the provisions of paragraphs 7, 8, or 9 of this Agreement are
violated. You agree that Ashton shall be entitled to (in addition to any other
remedy to which it may be entitled, at law or in equity) to an injunction to
redress breaches of paragraphs 7, 8, or 9 of this Agreement and to specifically
enforce the terms and provisions thereof.

13.0 Separability

     Each provision of this Agreement will be interpreted in such a manner as to
be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provisions, to the extent of such prohibition or invalidity, shall be deemed not
to be part of this Agreement, and shall not invalidate the remainder of such
provision or the remaining provisions of this Agreement.

14.0 Governing Law

     The Agreement shall be governed by and interpreted under the laws of
Pennsylvania.

15.0 Amendments

     This Agreement may not be modified or amended except by written instrument
executed by You and an authorized corporate officer of Ashton.

16.0 Entire Agreement

     This Agreement constitutes the parties' entire agreement, and supersedes
and prevails over all other prior, or contemporaneous, agreements,
understandings or representations by or between the parties, whether oral or
written, with respect to the subject matters herein.

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17.0 Legal Expenses

     Upon presentation of an itemized invoice, Ashton shall reimburse You for
fees of counsel in connection with the negotiation of this Agreement, such fees
not to exceed two thousand five hundred dollars ($2,500.00).

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.

          THE ASHTON TECHNOLOGY GROUP, INC.

          By: /s/ Robert J. Warshaw
             --------------------------------
             Name: Robert J. Warshaw
             Title: CEO

          By: /s/ Trevor B. Price
             --------------------------------
             Trevor B. Price<PAGE>

                                                                    Exhibit 10.9

                           ALLIED RESEARCH CORPORATION
                        1992 EMPLOYEE STOCK PURCHASE PLAN

                  Allied Research Corporation, a Delaware corporation (the
"Company"), hereby offers certain employees of the Company options to purchase
shares of the Company's Common Stock upon the terms and conditions set forth
herein.

                                    ARTICLE I

                                      Title

                  Section 1.01. This employee stock purchase plan shall be known
as the Allied Research Corporation 1992 Employee Stock Purchase Plan
(hereinafter, the "Plan").

                                   ARTICLE II

                                     Purpose

                  Section 2.01. The Plan is intended to provide an opportunity
for eligible employees of the Company to share in the growth and prosperity of
the Company through acquisition of the Company's Common Stock.

                                   ARTICLE III

                                   Definitions

                  Unless the context clearly otherwise requires, the following
terms shall have the meanings set forth opposite them:

                  Section 3.01. The term "Board" shall mean the Board of
Directors of the Company.

                  Section 3.02. The term "Business Day" shall mean each Monday
through Friday except those holidays on which banks located in Baltimore,
Maryland are generally closed for business.

                  Section 3.03. The term "Calendar Quarter" shall mean each
January 1 - March 31, April 1 - June 30, July 1 - September 30 and October1 -
December 31 period.

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                  Section 3.04. The term "Committee" shall mean the Compensation
Committee of the Board.

                  Section 3.05. The term "Common Stock" shall mean the $0.10 par
value Common Stock of the Company.

                  Section 3.06. The term "Exercise Date" shall mean the last day
of each Calendar Quarter, or if such day is not a Business Day, on the
immediately preceding Business Day.

                  Section 3.07. The term "Employee" shall mean each current or
future employee of the Company, any Parent or any Subsidiary (including officers
and directors who are also employees).

                  Section 3.08. The term "Exercise Price" shall mean 85% of the
closing price of the Common Stock on the Exercise Date as reported by the
American Stock Exchange, Inc.

                  Section 3.09. The term "Gross Compensation" shall mean (i) for
a Participant compensated on a salaried basis, the gross annual salary of the
Participant for the then current calendar year and (ii) for a Participant
compensated on a basis other than a salaried basis, the estimated gross annual
compensation payable to such Participant during the then current calendar year,
all as determined by the Committee.

                  Section 3.10. The term "Offering Date" shall mean the first
day of each Calendar Quarter, or if such day is not a Business Day, on the
immediately preceding Business Day.

                  Section 3.11. The term "Parent" shall mean any corporation
having a relationship to the Company described in Section 424(e) of the Internal
Revenue Code of 1986, as amended.

                  Section 3.12. The term "Participant" shall mean each Employee
who has met the conditions for becoming a Participant as provided in Article IV
hereof.

                  Section 3.13. The term "Pay Period" shall mean the periodic
intervals at which the Company compensates the Employees, which Pay Period may
be different for different classes of Employees.

                  Section 3.14. The term "Section 16 Participant" shall mean a
Participant who is subject to the reporting and/or insider trading requirements
of Section 16 of the Securities Exchange Act of 1934.

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                  Section 3.15. The term "Subsidiary" shall mean any corporation
having a relationship to the Company described in Section 424(f) of the Internal
Revenue Code of 1986, as amended.

                                   ARTICLE IV

                            Participation in the Plan

                  Section 4.01. Each Employee will be eligible to become a
Participant effective as of each Offering Date except (i) customary employment
with the Company or any Parent or any Subsidiary is for not more than five (5)
months in any calendar year and (ii) Employees whose customary employment with
the Company or any Parent or any Subsidiary is for twenty (20) hours or less per
week.

                  Section 4.02. Upon becoming a Participant, the Participant
shall be bound by the terms of this Plan, including any amendments hereto.

                  Section 4.03. An Employee may become a Participant by
completing and forwarding to the Secretary of the Company, no later than 10
Business Days prior to the beginning of each Calendar Quarter, a "Payroll
Deduction Authorization for Purchase of Allied Research Corporation Common
Stock" in the form attached hereto as Exhibit A (the "Authorization"). The
Authorization will authorize regular payroll deductions from the Participant's
compensation throughout the immediately following Calendar Quarter. All such
payroll deductions will be deposited in a separate Company bank account (the
"Account") and used to purchase shares of Common Stock as set forth in Article
VII hereof.

                  Section 4.04. The minimum amount which may be designated by a
Participant for payroll deduction for purposes of participation in the Plan
shall be $10.00 per Pay Period. The maximum amount which may be designated in
any calendar year by a Participant for payroll deduction in the Plan shall be
15.0% of the Participant's Gross Compensation.

                  Section 4.05. Section 16 Participants who cease participation
in the Plan may not participate again for at least six (6) months.

                  Section 4.06. The Participants shall not be entitled to any
interest on funds maintained in the Account.

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                                    ARTICLE V

                           Shares Subject to the Plan

                  Section 5.01. The aggregate number of shares which may be
issued under the Plan as a result of the exercise of Options is 525,000 shares
of the Company's Common Stock.

                                   ARTICLE VI

                                Grant of Options

                  Section 6.01. On each Offering Date, each Participant who has
timely complied with the provisions of Section 4.03 hereof shall automatically
be granted an option to purchase shares of the Common Stock as set forth in this
Article VI (an "Option").

                  Section 6.02. Each Option shall entitle the Participant to
purchase the number of whole shares of Common Stock computed as set forth in
Section 7.01 hereof.

                  Section 6.03. Each Option shall be exercisable as of the last
day of the Calendar Quarter in accordance with the provisions of Article VII
hereof.

                                   ARTICLE VII

                               Purchase of Shares

                  Section 7.01. Subject to the provisions of this Article VII,
on each Exercise Date, the Company shall issue and sell and each Participant
shall purchase the whole number of shares of Common Stock computed by dividing
the amount withheld from said Participant's compensation throughout the Calendar
Quarter by the Exercise Price. The Company shall apply the amount withheld from
each Participant's compensation throughout the Calendar Quarter and deposited in
the Account to the purchase price for said shares of Common Stock.
Notwithstanding the foregoing: (i) in no event may a Participant purchase shares
of Common Stock hereunder if such purchase would result in the then current
calendar year in granting the Participant the right to purchase stock under all
employee stock purchase plans of the Company or any Parent or any Subsidiary at
a rate which exceeds $25,000 of fair market value of such stock (determined at
the time such option is granted); (ii) in no event may a Participant purchase
shares of Common Stock hereunder if such Participant, immediately after the
purchase, would own stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or any Parent or any
Subsidiary as computed pursuant to the provisions of

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<PAGE>

Section 423 of the Internal Revenue Code of 1986, as amended; and (iii) if the
total number of shares of Common Stock to be purchased by all Participants
exceeds the number of shares of Common Stock remaining authorized for issuance
hereunder (the "Remaining Shares"), such Participant shall be entitled to
purchase only the number of shares computed by multiplying the Remaining Shares
by a fraction, the numerator of which is the amount of compensation withheld
hereunder from such Participant's compensation in the then current Calendar
Quarter and the denominator of which is the aggregate amount of compensation
withheld from all Participants in the then current Calendar Quarter.

                  Section 7.02. Any amount withheld from a Participant's
compensation in a Calendar Quarter which is not applied to the purchase of
Common Stock because of the limitations set forth in Section 7.01, because such
funds are insufficient to purchase a whole share of Common Stock or for any
other reason (i) shall be maintained in the Account for use in the immediately
succeeding Calendar Quarter if the Participant has properly filed an
Authorization for said immediately succeeding Calendar Quarter.

                  Section 7.03. All purchases of Common Stock pursuant to the
Plan shall be funded from payroll deductions deposited into the Account pursuant
to properly completed Authorizations. Participants may not (i) make separate
deposits into the Account or (ii) otherwise contribute funds to purchase shares
of Common Stock hereunder.

                  Section 7.04. Within thirty (30) days after the end of each
Calendar Quarter, the Company shall issue to each Participant a stock
certificate evidencing the number of shares of Common Stock purchased by the
Participant on the last day of the preceding Calendar Quarter. The certificates
will be registered in the name of the Participant, or, if the Participant so
directs by written notice to the Company prior to the Exercise Date, in the
names of the Participant and one such other person as may be designated by the
participant, as joint tenants with rights of survivorship, to the extent
permitted by applicable law.

                  Section 7.05. A Participant may terminate his participation in
the Plan at any time in any Calendar Quarter by providing the Company written
notice of said termination in the form attached hereto as Exhibit B. In the
event of such termination, the Company shall pay to said Participant, within 30
days for the Company's receipt of the termination notice, the amount of
compensation withheld from said Participant throughout the Calendar Quarter,
without interest.

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<PAGE>

                  Section 7.06. In the event of: (i) the death of a Participant;
(ii) the retirement of a Participant from all positions of employment held by
the Participant with the Company, any Parent or any Subsidiary; or (iii) the
termination of all positions of employment held by the Participant with the
Company, any Parent or any Subsidiary for any other reason, the Participant's
participation in the Plan shall immediately cease. In such event, the Company
shall pay to the Participant (or to the Participant's legal representative),
within 30 days of the death, retirement or termination, the amount of
compensation withheld from said Participant throughout the Calendar Quarter,
without interest.

                                  ARTICLE VIII

                                 Administration

                  Section 8.01. The Plan shall be administered by the Committee.
Any rules, regulations or procedures that may be necessary for the proper
administration or functioning of the Plan that are not provided in the plan may
be promulgated and adopted by the Committee. All determinations of the Committee
concerning the administration and interpretation of the Plan shall be binding
and conclusive on the Company and the Employees.

                                   ARTICLE IX

                                  Miscellaneous

                  Section 9.01. The Board may, at any time or from time to time,
terminate the Plan, or amend the Plan in any respect, except that, without the
approval of the stockholders of the Company, no amendment may (i) increase the
number of shares reserved under the Plan as provided in Section 5.01 hereof or
(ii) amend the definition of "Employee" set forth in Section 3.07 hereof or
otherwise amend the designation of corporations whose employees may be offered
Options hereunder.

                  Section 9.02. All Article headings in this plan are inserted
for convenience of reference only and are not to be used in the construction of
any provisions hereof.

                  Section 9.03. The Plan shall be construed in accordance with
the laws of the State of Delaware.

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<PAGE>

                   Section 9.04. The Options granted hereunder are not
transferable by the Participants otherwise than by will or the laws of descent
or distribution, and are exercisable during the Participant's lifetime only by
such Participants.

                   Section 9.05. The Plan is intended to be an employee stock
purchase plan qualified under Section 423 of the Internal Revenue Code of 1986,
as amended, and all of the provisions of the Plan shall be interpreted so as to
cause the Plan to be an employee stock purchase plan qualified under Section 423
of the Internal Revenue Code of 1986, as amended.

                   Section 9.06. Any notice which the Company or any Participant
may be required or permitted to give hereunder shall be in writing, and shall be
delivered personally or by first class mail, postage prepaid, addressed as
follows: if to the Company, to Allied Research Corporation, 8000 Towers Crescent
Drive, Suite 260, Vienna, Virginia 22182, Attention: Secretary, or to such other
address as the Company by notice to the Participants may designate in writing
from time to time; and if to the Participants, to the addresses shown on the
records of the Company, or to such other address as any Participant by notice to
the Company may designate in writing from time to time.

                   Section 9.07. No Participant shall have any rights as a
shareholder with respect to any shares of Common Stock subject to Option prior
to the issuance to him or her of a certificate or certificates for such shares.

                   Section 9.08. The Plan and all Options granted under the Plan
shall not confer upon any Participant any right with respect to continuance of
employment by the Company or any Parent or any Subsidiary, nor shall the Plan or
any Option granted under the Plan interfere in any way with the right of the
Company or any Parent or any Subsidiary to terminate any Participant's
employment at any time.

                   Section 9.09. All references made in the Plan in the neuter,
masculine or feminine gender shall be deemed to have been made in all such
genders.

                   Section 9.10. The proceeds received by the Company from the
sale of the Common Stock hereunder shall be used for general corporate purposes.

                   Section 9.11. In the event that the outstanding shares of the
Common Stock are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company or
of another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, reverse stock split,

                                       7

<PAGE>

combination of shares or dividend payable in corporate shares, appropriate
adjustments shall be made by the Board to the number and kind of shares which
may be issued.

                  Section 9.12. In the event the Plan is not approved by the
Company's stockholders prior to June 15, 1993, the Plan shall be null and void.
In such an event, the Company shall repay all amounts paid by Participants for
Common stock purchased hereunder and all such Participants shall return all
certificates evidencing such shares so repurchased. The Company shall cause a
legend to be placed on all certificates issued prior to the date of stockholder
approval of the Plan prohibiting transferability of the relevant shares of
Common Stock pending stockholder approval.

                  Section 9.13. The term of the Plan shall commence as of the
date the Plan is approved by the Board and shall terminate on the earlier of (i)
the issuance and sale of all of the shares of Common Stock set forth in Section
5.01 hereof, (ii) December 31, 2012 or (iii) the failure of the stockholders of
the Company to approve the Plan by June 15, 1993 as required by Section 9.12
hereof.

                                       8

<PAGE>

                                                                       EXHIBIT A

                         PAYROLL DEDUCTION AUTHORIZATION

                   FOR PURCHASE OF ALLIED RESEARCH CORPORATION

                                  COMMON STOCK

                  This Payroll Deduction authorization for Purchase of Allied
Research Corporation Common Stock is executed and delivered by the undersigned
in connection with the Allied Research Corporation 1992 Employee Stock Purchase
Plan (the "Plan"). All undefined capitalized terms contained herein shall have
the same meanings as set forth in the Plan. In accordance with the provisions of
the plan, which provision are incorporated herein by reference, the undersigned
desires to participate in the Plan as follows:

                  1. The undersigned desires to participate in the Plan in the
                     Calendar Quarter commencing February 1, 1993, January 1,
                     20__, April 1, 20__, July 1, 20__, or October 1, 20__.

                           (Complete and Circle One)

                  2. The undersigned desires to authorize regular payroll
                     deductions from his/her compensation throughout the
                     above-designated Calendar Quarter equal to $_________ per
                     Pay Period.

                  3. The undersigned represents to the Company that his/her
                     Gross Compensation for the current calendar year shall be
                     $______________.

                  4. The undersigned represents to the Company that he/she has
                     purchased the following number of shares of the Company's
                     Common Stock during the current calendar year pursuant to
                     the plan or any other employee stock purchase plan of the
                     Company:

                                               Date              Date Shares
                     Number of Shares          Option Granted    Purchased
                     ----------------          --------------    ------------

                  5. The undersigned represents to the Company that he/she owns
                     the following number of shares of the Company's Common
                     Stock: _____________ shares.

                                       9

<PAGE>

                  6. The undersigned represents to the Company that he/she owns
                     options for the following number of shares of the
                     Company's Common Stock:

                                   _____________ shares

                  7. The undersigned agrees to participate in the Plan in
                     accordance with all of the provisions of the Plan as the
                     same may from time to time be amended.

                  8. The undersigned desires to participate in the Plan in all
                     succeeding calendar quarters unless and until the
                     undersigned notifies the Company of the undersigned's
                     desire to cease such participation. (Please initial if you
                     desire to elect such continuous participation _______).

                                            ____________________________________
                                            Name of Participant
                                            (Please Print)

Date:  _________________________            ____________________________________
                                            Signature of Participant

                                       10

<PAGE>

                                                                       EXHIBIT B

                         TERMINATION OF PARTICIPATION IN

                    ALLIED RESEARCH CORPORATION 1992 EMPLOYEE

                               STOCK PURCHASE PLAN

                   This Termination of Participation in Allied Research
Corporation 1992 Employee Stock Purchase Plan is executed and delivered by the
undersigned in connection with the Allied Research Corporation 1992 Employee
Stock Purchase Plan (the "Plan"). All undefined capitalized terms contained
herein shall have the same meanings as set forth in the Plan. In accordance with
the provisions of the Plan, which provisions are incorporated herein by
reference, the undersigned desires to terminate his/her participation in the
Plan as follows:

                  1. The undersigned has executed and delivered a Payroll
                     Deduction Authorization for Purchase of Allied Research
                     Common Stock form (the "Authorization") to participate in
                     the Plan in the Calendar Quarter commencing January 1,
                     20__, April1, 20__, July 1, 20__, or October 1, 20__.

                                 (Complete and Circle One)

                  2. The undersigned desires to terminate his/her participation
                     in the Plan effective immediately and desires a return of
                     the amount of compensation withheld during the Calendar
                     Quarter set forth in paragraph 1 hereof in accordance with
                     the terms of the Plan.

                                            ____________________________________
                                            Name of Participant
                                            (Please Print)

Date:  _________________________            ____________________________________
                                            Signature of Participant

                                       11

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