ENGINEERED SUPPORT SYSTEMS INC, DEF 14A, 2000-01-28

ENGINEERED SUPPORT SYSTEMS INC
DEF 14A, 2000-01-28
AIR-COND & WARM AIR HEATG EQUIP & COMM & INDL REFRIG EQUIP

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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12

ENGINEERED SUPPORT SYSTEMS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:

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(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:

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(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE FILING
FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):

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(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:

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(5) TOTAL FEE PAID:

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/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE>
<PAGE>
NOTICE OF THE ANNUAL MEETING OF
THE SHAREHOLDERS OF
ENGINEERED SUPPORT SYSTEMS, INC.

St. Louis, Missouri
February 1, 2000

To the Shareholders of
Engineered Support Systems, Inc.:

The Annual Meeting of the Shareholders of Engineered Support
Systems, Inc. will be held at Systems & Electronics Inc., a
wholly-owned subsidiary of the Company, 201 Evans Lane, St.
Louis, Missouri 63121 on Tuesday, March 7, 2000 at 10:00 a.m.,
local time, for the purpose of considering and voting upon the
following matters:

1. The election of three (3) directors to hold office for
three (3) years;

2. The approval of the Engineered Support Systems, Inc. 2000
Stock Option Plan and the allocation of 600,000 shares of
Engineered Support Systems, Inc. common stock to the
Plan;

3. The approval of the Engineered Support Systems, Inc. 2000
Stock Option Plan for Nonemployee Directors and the
allocation of 100,000 shares of Engineered Support
Systems, Inc. common stock to the Plan; and,

4. To transact such other business, if any, as lawfully may
be brought before the meeting or any adjournment thereof.

A proxy statement, proxy and a copy of the Company's Annual
Report for the year ended October 31, 1999, accompany this
Notice of the Annual Meeting of the Shareholders.

We encourage all shareholders to attend the 2000 Annual
Meeting at Systems & Electronics Inc., 201 Evans Lane, St.
Louis, Missouri 63121. For security purposes, if you plan to
attend, you must notify the Corporate Secretary of your intent
to do so by Friday, March 3, 2000.

ENGINEERED SUPPORT SYSTEMS, INC.

/s/ Michael F. Shanahan Sr.

Michael F. Shanahan, Sr.
Chairman and Chief Executive Officer

/s/ David D. Mattern

David D. Mattern
Secretary and General Counsel

EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE EXECUTE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY. A RETURN ENVELOPE, WHICH
DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES, IS
ENCLOSED FOR YOUR CONVENIENCE.

ENGINEERED SUPPORT SYSTEMS, INC.
1270 NORTH PRICE ROAD
ST. LOUIS, MISSOURI 63132

PROXY STATEMENT
FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD ON MARCH 7, 2000

THIS PROXY STATEMENT, WHICH IS BEING MAILED TO SHAREHOLDERS ON,
OR ABOUT, FEBRUARY 1, 2000, IS PROVIDED IN CONJUNCTION WITH THE
SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS OF ENGINEERED
SUPPORT SYSTEMS, INC. ("ESSI" OR "COMPANY") FOR USE AT THE 2000
ANNUAL MEETING OF THE SHAREHOLDERS OF THE COMPANY TO BE HELD ON
MARCH 7, 2000, AT 10:00 A.M., LOCAL TIME, AT SYSTEMS & ELECTRONICS
INC., A WHOLLY-OWNED SUBSIDIARY OF THE COMPANY, 201 EVANS LANE,
ST. LOUIS, MISSOURI 63121. THE NOTICE OF MEETING, THE PROXY AND THE
ANNUAL REPORT ARE ENCLOSED IN THIS PACKAGE. THE PROXY SHOULD BE
RETURNED BY MARCH 3, 2000, IN THE ENCLOSED SELF-ADDRESSED, POSTAGE
PREPAID, ENVELOPE.

PROXY

The accompanying proxy is being solicited on behalf of the Board
of Directors of the Company to be used at the 2000 Annual Meeting of
the Shareholders.

The shares represented by each executed proxy will be voted at
the meeting in accordance with the instructions contained in the
proxy subject to the conditions hereinafter set forth. In the event
the Company receives an executed proxy that contains no
instructions, the proxy shall be voted in accordance with the Board
of Directors' recommendations as follows:

1. "FOR" the election of three (3) directors to hold office for
three (3) years;

2. "FOR" the approval of the 2000 Stock Option Plan and the
allocation of 600,000 shares of Engineered Support Systems,
Inc. common stock to the Plan;

3. "FOR" the approval of the 2000 Stock Option Plan for
Nonemployee Directors and the allocation of 100,000 shares of
Engineered Support Systems, Inc. common stock to the Plan;
and,

4. At the discretion of those individuals named in the enclosed
proxy, on any other matter that may lawfully be brought
before the meeting or any adjournment thereof.

The Company will pay the reasonable expenses associated with its
solicitation of the proxies for the meeting. These expenses include
the cost of preparing, assembling and mailing the Notice of the
Annual Meeting of the Shareholders, the proxy, the proxy statement,
the return envelopes, the cost of handling and tabulating the number
of proxies received, and the reasonable fees which brokerage houses,
other institutions, nominees or fiduciaries customarily charge to
forward the aforementioned material to the beneficial owners.

RIGHT OF REVOCATION

Any shareholder executing a proxy for the meeting may revoke the
proxy by written notice of revocation delivered or mailed to, and
received by, the Secretary of the Company at 1270 North Price Road,
St. Louis, Missouri 63132 prior to the time the proxy is voted.

VOTING RIGHTS

The shareholders of record at the close of business on January
17, 2000, are entitled to vote at the 2000 Annual Meeting of the
Shareholders. Proxies properly executed by the Company's
shareholders of record on January 17, 2000 will be voted as
specified on the proxy and will be voted on all business to be voted
upon at the Annual Meeting of the Shareholders and any adjournment
thereof. Generally, each share is entitled to one vote. However,
with the election of Directors, each shareholder has the right to
cast as many total cumulative votes that equals the number of shares
held by that shareholder multiplied by the number of Directors to be

elected. Each shareholder may also cast the whole number of votes
for each nominee or distribute them among some or all nominees. If
authority is withheld to vote for an individual nominee on the
proxy, the total cumulative votes will be allocated equally among
the remaining nominees. As of January 17, 2000, there were 6,896,458
shares of common stock outstanding and entitled to vote.

BENEFICIAL OWNERSHIP OF COMMON STOCK OF THE COMPANY

The table below sets forth the number of shares of common stock
(the only class of outstanding securities of the Company) known by
the Company to be beneficially owned by the officers and directors
of the Company as a group, and each five percent (5%) shareholder as
of January 17, 2000. Except as otherwise indicated in the footnotes
to the table, the individuals listed in the table possess sole
voting and investment power with respect to the shares opposite
their name.

<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER SHARES OF COMMON STOCK PERCENTAGE OF SHARES
OR IDENTITY OF GROUP BENEFICIALLY OWNED OUTSTANDING<F1>
------------------------ ---------------------- --------------------
<S> <C> <C>
Michael F. Shanahan, Sr........................ 1,322,303<F2> 16.7%
1270 N. Price Road
St. Louis, MO 63132
(Business Address)

Fidelity Management & Research Company......... 485,750<F4> 6.1%
82 Devonshire Street
Boston, MA 02109

David L. Babson & Co., Inc..................... 439,400<F5> 5.6%
One Memorial Drive
Cambridge, MA 02142

All officers and directors as a group (18
individuals including Mr. Shanahan, Sr.)..... 2,218,624<F3> 28.1%

<FN>
- ------------------
<F1> For purposes of this table, the calculation of the Percentage of Shares
Outstanding is based on the number of shares of common stock outstanding,
as of January 17, 2000, as increased by the assumed exercise of all of the
1,011,300 outstanding options.

<F2> Mr. Shanahan holds 576,591 of these shares as nominee of the Michael F.
Shanahan, Sr. First Amended and Restated Revocable Living Trust dated
August 10, 1990. This Trust may be revoked by Mr. Shanahan at any time
prior to his death and Mr. Shanahan has all rights to vote, sell and
otherwise dispose of the stock. 75,712 shares are held by Mr. Shanahan in
the Engineered Support Systems, Inc. Employee Stock Ownership Plan over
which he has sole voting and dispositive power. 175,000 shares are held in
The Shanahan Family Voting Trust, dated December 11, 1998, over which Mary
Ann Shanahan, wife of Mr. Shanahan, has sole voting power. The remaining
495,000 shares relate to unexercised stock options held by Mr. Shanahan.

<F3> Includes options granted to certain key employees and directors of the
Company as well as those shares allocated to the officers and directors
under the Engineered Support Systems, Inc. Employee Stock Ownership Plan.

<F4> This amount, as reflected on Schedule 13F effective September 30, 1999,
consists of no sole or shared voting power, dispositive power with respect
to 485,750 shares and no shared dispositive power. Sole voting power for
485,750 shares resides with the Board of Trustees of the Fidelity Low
Priced Stock Fund.

<F5> This amount, as reflected on Schedule 13F effective September 30, 1999,
consists entirely of sole voting and dispositive power, with no shared
voting or dispositive power.
</TABLE>

PROPOSAL ONE

ELECTION OF DIRECTORS

The By-laws of the Company provide for staggered terms for the
Directors. The election of the Directors for staggered terms
maintains management continuity, discourages undesirable mergers,
unwanted tender offers, unwelcome proxy contests and the ill-favored
exertion of control by a large block of common stock.

The nominees, Michael F. Shanahan, Sr., Michael F. Shanahan, Jr.
and General Michael P.C. Carns (U.S. Air Force, Retired) are each
proposed to be elected at the Annual Meeting of the Shareholders on
March 7, 2000, for a three (3) year term that will expire in March,
2003. The shares of common stock represented by properly executed
proxies will be voted for the nominees. All nominees have consented
to be named and to serve, if elected. If any nominee is unable to
serve (which management has no reason to expect) the individuals
named in the proxy intend to vote for the balance of those named and
for a substitute nominee, if management recommends a vote for the
substitute nominee.

THE BOARD RECOMMENDS THE SHAREHOLDERS VOTE "FOR" THE THREE (3)
NOMINEES TO THE BOARD.

The following table sets forth the principal occupation, the
year in which their current term ends, the year in which they were
first elected a director, the number of shares of common stock they
beneficially owned as of January 17, 2000, the percent of the total
shares outstanding which they own and the age of each director and
nominee.

<TABLE>
<CAPTION>
CURRENT STOCK BENEFICIALLY PERCENTAGE
NAME AND PRINCIPAL TERM FIRST OWNED AS OF OF SHARES
OCCUPATION OR EMPLOYMENT ENDS ELECTED 1/17/00 OUTSTANDING<F1> AGE
------------------------ ------- ------- ------------------ --------------- ---
<S> <C> <C> <C> <C> <C>
Michael F. Shanahan, Sr. March December 1,322,303 16.7% 60
Chairman and Chief Executive Officer 2000 1983

Gerald A. Potthoff March October 50,000 <F2> 59
President and Chief Operating Officer 2002 1999

Gary C. Gerhardt March March 131,531 1.7% 54
Vice Chairman--Administration and 2001 1998
Chief Financial Officer

R. Bruce Earls March March 31,208 <F2> 53
President and Chief Executive Officer 2001 1998
of Marlo Coil

John J. Wichlenski March March 127,320 1.6% 56
President and Chief Executive Officer 2001 1992
of EASI

General Michael P.C. Carns 0 <F2> 62
U.S. Air Force, Retired

MG George E. Friel March September 8,750 <F2> 57
U.S. Army, Retired 2002 1998

Thomas J. Guilfoil March March 99,000 1.3% 80
Attorney at Law 2002 1993
Guilfoil, Petzall & Shoemake

LTG Kenneth E. Lewi March March 29,553 <F2> 69
U.S. Army, Retired 2001 1992

Michael F. Shanahan, Jr. March December 85,352 1.1% 33
Producer 2000 1994
Lockton Companies

Earl E. Walker March March 14,250 <F2> 79
President 2000 1996
Carr Lane Manufacturing Company

Earl W. Wims, Ph.D. March March 28,250 <F2> 60
Chairman 2001 1992
Marketing Horizons, Inc.

<FN>
- --------------------
<F1> See footnote (1) to Beneficial Ownership of Common Stock of the Company
table.

<F2> The percentage of shares is less than one percent (1%).

<F3> Gerald A. Potthoff was appointed to the board effective October 1, 1999
following the Company's acquisition of Systems & Electronics Inc.
</TABLE>

Michael F. Shanahan, Sr. has been a Director of the Company
since its formation. Mr. Shanahan was elected Chairman of the Board
of the Company in July 1987. He has served as Chief Executive
Officer of the Company since 1985. Mr. Shanahan is also the Chairman
of each of the Company's subsidiaries, Systems & Electronics Inc.
("SEI"), Engineered Air Systems, Inc. ("EASI"), Keco Industries,
Inc. ("KECO"), Engineered Coil Company, d/b/a Marlo Coil ("MC"),
Engineered Electric Company, d/b/a Fermont ("Fermont") and
Engineered Specialty Plastics, Inc. ("ESP").

Gerald A. Potthoff was named President and Chief Operating
Officer of the Company in October 1999. Mr. Potthoff has served as
President of Systems & Electronics Inc. since October 1991.

Gary C. Gerhardt was named Vice Chairman--Administration of the
Company in October 1999 and prior thereto served as Executive Vice
President since December 1994. He has been Chief Financial Officer
of the Company since October 1993. Prior thereto, he was Vice
President--Contract Administration of EASI since 1985. Mr. Gerhardt
joined EASI in 1982 as Manager of Contract Administration.

R. Bruce Earls has been President and Chief Executive Officer of
MC since September 1994. Prior thereto, he was Managing Partner of a
KPMG Peat Marwick Business Unit.

John J. Wichlenski has been President and Chief Executive
Officer of EASI since July 1992. He served as EASI's Executive Vice
President from March 1990 to July 1992 and as Group Vice President
of Operations from March 1988 to March 1990. Mr. Wichlenski joined
EASI as the Vice President of Engineering in August 1986.

General Michael P.C. Carns (U.S. Air Force, Retired) served in
the United States Air Force for 35 years until his retirement in
August 1994. From May 1991 until his retirement, General Carns
served as Vice Chief of Staff, Headquarters U.S. Air Force. Prior
thereto, he served as director of the Joint Staff since September
1989. He performs consulting services for various entities including
the Company and its subsidiaries.

MG George E. Friel (U.S. Army, Retired) served in the United
States Army for 38 years until his retirement in July 1998. In the
six years preceding his retirement, Major General Friel headed the
U.S. Army Chemical and Biological Defense Command (CBDCOM). He
performs consulting services for various entities including the
Company and its subsidiaries.

Thomas J. Guilfoil is the Senior and Founding Partner of the
St. Louis law firm, Guilfoil, Petzall & Shoemake. Mr. Guilfoil's
distinguished legal career of over 50 years began in St. Louis in
1941. Mr. Guilfoil also serves as Vice Chairman of the Arizona
Football Cardinals.

LTG Kenneth E. Lewi (U.S. Army, Retired) served in the United
States Army for 34 years until his retirement in August 1989. His
career in the U.S. Army centered primarily on providing logistical
support to U.S. armed forces. Lieutenant General Lewi performs
consulting services for various entities including the Company and
its subsidiaries.

Michael F. Shanahan, Jr. has been a producer for Lockton
Companies, an insurance concern, since October 1994. Prior thereto,
he served as Assistant to the Company's Chairman since 1991.
Mr. Shanahan, Jr. joined EASI in January 1990 as a Marketing
Representative.

Earl E. Walker has been the President and principal shareholder
of Carr Lane Manufacturing Company since he founded the company in
1952. Carr Lane is a worldwide manufacturer of tooling, jig and
fixture components.

Earl W. Wims, Ph.D., has been Chairman of Marketing Horizons,
Inc., a marketing research and consulting firm, since 1986. Dr. Wims
is nationally recognized for his work in market strategy and focus.

DIRECTOR MEETINGS AND COMMITTEES

During the fiscal year ended October 31, 1999, the Board of
Directors of the Company met five (5) times. The Board has three
committees: Executive, Compensation and Audit.

The Executive Committee for fiscal year 1999 consisted of
Michael F. Shanahan, Sr., Dr. Earl W. Wims, Thomas J. Guilfoil and
Michael F. Shanahan, Jr. The principal function of the Executive
Committee is to execute all the authority and power of the full
Board of Directors in the management and operation of the Company
and to act on behalf of the Board between regular meetings of the
Board of Directors. The Executive Committee met on several
occasions, as needed, throughout the course of fiscal year 1999.

The Audit Committee for fiscal year 1999 consisted of Kenneth E.
Lewi, George E. Friel, Michael F. Shanahan, Jr. and Dr. Earl W.
Wims. The Audit Committee met twice during fiscal year 1999 with
representatives of the Company and representatives of the Company's
independent accountants. The function of the Audit Committee is to:
review, from time to time, the financial statements of the Company;
meet, together and separately, with management of the Company and
its independent accountants to discuss the financial statements and
general accounting policies of the Company; and, review the
management letter issued by the independent accountants and the
Company's responses thereto.

The Compensation Committee for fiscal year 1999 consisted of MG
George E. Friel, LTG Kenneth E. Lewi and Michael F. Shanahan, Jr.
The purpose of the Compensation Committee is to review and approve
the Company's and its subsidiaries' compensation policies and
arrangements as well as to administrate the Company's stock option
plans. Members of the Compensation Committee are restricted from
voting on matters that affect them. The Compensation Committee met
twice during fiscal year 1999.

DIRECTORS FEES

Directors who are not full-time employees of the Company are
paid $1,000 for each meeting of the Board and $500 for each meeting
of the committee on which they serve. They are also paid $300 per
month during their term. Outside directors are reimbursed for
expenses incurred in attending meetings.

AFFILIATION OF DIRECTORS

The Company has a consulting agreement with LTG Kenneth E. Lewi
(U.S. Army, Retired) that may be terminated upon thirty (30) days
written notice by either party. This agreement provides for payments
of $2,200 per month.

The Company has a consulting agreement with Michael F. Shanahan,
Jr. that may be terminated upon ninety (90) days written notice.
This agreement provides for payments of $4,500 per month.

The Company has a consulting agreement with MG George E. Friel
(U.S. Army, Retired) that may be terminated upon thirty (30) days
written notice by either party. This agreement provides for payments
of $2,000 per month.

The Company has a consulting agreement with General Michael P.C.
Carns (U.S. Air Force, Retired) that may be terminated upon thirty
(30) days written notice by either party. This agreement provides
for payments of $2,500 per month.

REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION

The following report is provided by the Compensation Committee.
The Committee supervises the Company's Executive Compensation
Program ("Program") and is directly responsible for compensation
actions affecting the Chairman and Chief Executive Officer and other
executive officers of the Company and its subsidiaries. The
Committee, which consists entirely of non-employee directors, met
twice in fiscal year 1999.

THE EXECUTIVE COMPENSATION PHILOSOPHY

The Program is designed and managed to link executive
compensation to four basic objectives: Company performance,
shareholder return, individual performance and competitive position.
With respect to competitive position, the Program is designed to pay
competitive compensation so the Company is able to attract and
retain highly qualified executives. In determining competitive
compensation practices, the Committee frequently utilizes
information about other companies' compensation levels, as well as
information from qualified compensation consultants.

The Program uses overall Company performance in determining
compensation levels and compensation changes. The Committee
considers the Company's overall performance in meeting both
short-term and long-term objectives. The Committee considers the
Company's operating achievements in typical performance measures
such as earnings, cash management and contract backlog. The
Committee also considers the Company's progress towards long-term
strategic objectives that cannot be easily quantified.

The Program also links the interests of the Company's executives
with the interests of its shareholders. This is accomplished by
allocating a portion of executive compensation to performance-based
equity compensation.

THE EXECUTIVE COMPENSATION PROGRAM

The Program consists of three basic elements: base salary,
incentive cash compensation and performance-based equity
compensation. Base salaries are reviewed annually. Salary changes
reflect overall Company performance, pay competitiveness and the
individual's performance.

A substantial portion of each executive's annual cash
compensation is tied to the Company's performance through the
Company's Executive Incentive Plan ("Plan"). The Plan is an annual
incentive cash compensation plan which was implemented November 1,
1993. The goals of the Plan are to focus the attention of executives
on profits, continuing Company growth, increasing efficiency,
lowering costs, encouraging teamwork and encouraging the continuity
of management thinking, as well as to improve the Company's ability
to attract and retain outstanding executive talent.

Consistent with the Plan, the Committee determines the annual
incentive payment for each executive at the end of each fiscal year
based on the Company's performance in important areas such as
earnings, contract backlog and cash management. The Committee also
considers the executive's individual contribution to the Company's
performance and the executives contributions to the Company's
progress towards long-term strategic objectives. Certain executives
do have minimum payments under the Plan.

To ensure that management's interests are directly tied to
shareholder return, a substantial portion of an executive's total
compensation is equity compensation. To place emphasis on
shareholder return, the Company, pursuant to shareholder approval,
has adopted various Stock Option Plans ("Option Plans"). As of
October 31, 1999, there were 1,105,788 options reserved for issuance
under the Option Plans. All options granted to date have been
awarded at an exercise price equal to the fair market value of the
stock on the date of the award. The Option Plans are administered by
the Compensation Committee and option awards are made subjectively
based upon the evaluations of the executive's past and anticipated
contribution to the Company's performance in key areas such as
earnings, contract backlog and cash management, as well as to the
Company's achievement of long-term strategic objectives.

FISCAL YEAR 1999 EXECUTIVE OFFICER COMPENSATION

In determining the fiscal year compensation for the executive
officers, the Committee considered information in an executive
compensation survey from a nationally recognized independent
consulting firm. The comparison companies in the compensation survey
were selected on the basis of their size, products and

markets served. With respect to base salary, bonus and total
compensation, the compensation of the Chairman and Chief Executive
Officer and the other executive officers was at a level comparable
to the 1999 median levels for those similarly situated in the
comparison companies.

In determining the fiscal year 1999 performance compensation
payments for the Chairman and Chief Executive Officer and the other
executive officers, the Committee considered the Company's operating
performance and return to shareholders. On a per share basis, fiscal
year 1999 net revenues, net income excluding the impact of gains on
asset sales, and book value increased 40%, 13% and 48%, respectively,
over fiscal year 1998. Funded backlog increased 243% during this same
period. Share price decreased 19.3% from $14.875 per share on
December 31, 1998 to $12.00 per share on December 31, 1999. The
Committee also considered the Company's successful acquisition
activity in 1999 as well as each executive's contribution to the
Company's performance.

Based on the subjective evaluation of the above factors, the
Committee approved the base annual salary of $550,000 and an
Executive Incentive Plan payment of $526,000 for the Company's
Chairman and Chief Executive Officer. Based on the subjective
evaluation of the above factors, the Committee also approved: the
base annual salary of $202,500 and an Executive Incentive Plan
payment of $115,000 for the Vice Chairman--Administration and Chief
Financial Officer; the base annual salary of $150,000 and an
Executive Incentive Plan payment of $75,000 for the Vice President--
Planning and Development of the Company; the base annual salary of
$200,000 and an Executive Incentive Plan payment of $100,000 for the
President and Chief Executive Officer of MC; and, the base annual
salary of $200,000 and an Executive Incentive Plan payment of $50,000
for the President and Chief Executive Officer of EASI. The Committee
also awarded 150,000, 30,000, 30,000, 15,000 and 15,000 executive
options under stock option plans to Mr. Shanahan, Mr. Gerhardt,
Mr. Davis, Mr. Earls and Mr. Wichlenski, respectively.

The Company does have employment agreements with its Chairman
and Chief Executive Officer, the Vice Chairman--Administration and
Chief Financial Officer of the Company, the Vice President--Planning
and Development of the Company, the President and Chief Executive
Officer of MC and the President and Chief Executive Officer of EASI.
These employment agreements are discussed in detail in the next
section of this proxy statement.

SUMMARY

Through the design and management of the Executive Compensation
Program, as described above, the Committee believes total compensation
of the Company's executives is linked directly to Company performance,
individual performance and shareholder return. The Committee will
continue to emphasize performance-based and stock-based compensation
that is consistent with individual performance and that links management
and shareholder interests. We conclude that the Company's performance
and the competitive market warrant the compensation package approved
for Mr. Shanahan, Sr. and the other executive officers.

The Compensation Committee

LTG Kenneth E. Lewi, Chairman
MG George E. Friel
Michael F. Shanahan, Jr.

EMPLOYMENT AGREEMENTS

The Company and its subsidiaries have employment agreements with
certain executive officers. The following represents a summary of
the terms and conditions of those agreements with the Chairman and
Chief Executive Officer of the Company, the Vice Chairman--Administration
and Chief Financial Officer of the Company, the Vice President--Planning
and Development of the Company, the President and Chief Executive Officer
of MC and the President and Chief Executive Officer of EASI.

CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF THE
COMPANY. The employment agreement with Michael F. Shanahan, Sr. was
executed on September 1, 1998 for a term of three (3) years. Unless
terminated by either party upon thirty (30) days prior written
notice, or for cause upon seven (7) days notice, the employment
agreement continues on a year-to-year basis. The current base salary
under this agreement is $550,000.

If the agreement is terminated by the Company, for other than
cause, Mr. Shanahan is entitled to termination pay equal to twice
his total annual compensation (payable in 24 equal monthly payments)
for the fiscal year of the Company ending immediately prior to the
date of termination. Mr. Shanahan is prohibited from competing with
the Company for a period of one year after termination. The
employment agreement further provides that he shall be entitled to a
bonus in accordance with the terms and conditions of a bonus plan,
which is based on the Company's net income per share. The employment
agreement also provides that the Company will pay Mr. Shanahan's
club membership costs and reimburse his expenses associated with
performing his duties on behalf of the Company and its subsidiaries.

The Company is also a party to a split dollar life insurance
agreement with the Michael F. Shanahan, Sr. Irrevocable Life
Insurance Trust. Under this arrangement, the Company will make
annual life insurance premium payments for Mr. Shanahan. In return,
the Company will be reimbursed for premiums it has paid. As provided
for by the insurance policy, the Company can borrow funds against
the cash surrender value. Although the life insurance trust is the
owner and beneficiary of the policy, its ownership rights are
subordinate to the Company's rights to be reimbursed for the
premiums it has paid. Mr. Shanahan's employment agreement requires
the Company to maintain life insurance on Mr. Shanahan during the
term of the agreement.

The employment agreement also provides for deferred compensation
to be paid in the event of the retirement, disability or death of
Mr. Shanahan. For disability, the benefit is $27,500 per month for a
maximum of sixty (60) consecutive months. For retirement or death,
the benefit is $27,500 per month for twenty-four (24) months.
Although Mr. Shanahan has the right to vote on the authorization of
his employment agreement as recommended by the Compensation
Committee, he abstained from voting on it as on all other matters
pertaining to his compensation.

VICE CHAIRMAN--ADMINISTRATION AND CHIEF FINANCIAL OFFICER OF THE
COMPANY. Under the terms of Gary C. Gerhardt's employment agreement
with the Company, effective October 1, 1999, Mr. Gerhardt is paid a
base annual salary of $230,000. Under the terms of the Executive
Incentive Plan, Mr. Gerhardt also receives a bonus that is based
upon the Company's profitability. Mr. Gerhardt has also been granted
a club membership and is reimbursed for expenses associated with
performing his duties on behalf of the Company and its subsidiaries.
The Company has a split dollar life insurance arrangement with
Mr. Gerhardt similar to its agreement with Mr. Shanahan.

VICE PRESIDENT--PLANNING AND DEVELOPMENT OF THE COMPANY. Under
the terms of Ronald W. Davis' employment agreement with the Company,
effective September 1, 1998, Mr. Davis is paid a base annual salary
of $150,000. Under the terms of the Executive Incentive Plan,
Mr. Davis also receives a bonus that is based upon the Company's
profitability. Mr. Davis has also been granted a club membership and
he is reimbursed for expenses associated with performing his duties
on behalf of the Company.

PRESIDENT AND CHIEF EXECUTIVE OFFICER OF MC. Under the terms of
R. Bruce Earls' employment agreement with MC, effective February 1,
1998, Mr. Earls is paid a base annual salary of $200,000. Mr. Earls
also receives a minimum bonus payment. Mr. Earls has also been
granted a club membership and he is reimbursed for expenses
associated with performing his duties on behalf of the Company and
MC. During 1998, the Company borrowed funds from Mr. Earls at market
rates of interest. Interest earned by Mr. Earls under this arrangement
totaled $11,100. All such borrowings were paid off as of October 31, 1998.

PRESIDENT AND CHIEF EXECUTIVE OFFICER OF EASI. Under the terms
of John J. Wichlenski's employment agreement with EASI, effective
November 1, 1997, Mr. Wichlenski is paid a base annual salary
of $200,000. Under the terms of the Executive Incentive Plan,
Mr. Wichlenski also receives a bonus that is based upon the Company's
and EASI's profitability. Mr. Wichlenski has also been granted a
club membership and he is reimbursed for expenses associated with
performing his duties on behalf of the Company and EASI. The Company
has a split dollar life insurance arrangement with Mr. Wichlenski
similar to its agreement with Mr. Shanahan.

EXECUTIVE COMPENSATION

The following table sets forth the compensation for the
Company's Chairman and Chief Executive Officer and the four next
highest-paid executive officers for the Company's last three fiscal
years:

<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------- -------
RESTRICTED LTIP
SALARY OTHER ANNUAL STOCK NUMBER OF PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR <F1> BONUS COMPENSATION AWARDS OPTIONS<F10> <F2> COMPENSATION
- --------------------------- ---- ------ ----- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael F. Shanahan, Sr. 1999 $550,000 $526,000 $0 $0 150,000 $0 $98,300<F3>
Chairman & Chief 1998 $388,833 $373,433 $0 $0 150,000 $0 $30,000
Executive Officer (ESSI) 1997 $356,600 $350,000 $0 $0 45,000 $0 $29,300

Gary C. Gerhardt 1999 $203,200 $115,000 $0 $0 30,000 $0 $13,300<F4>
Vice Chairman-- 1998 $200,000 $100,000 $0 $0 15,000 $0 $ 9,400
Administration & Chief 1997 $110,000 $ 96,400 $0 $0 11,250 $0 $ 7,500
Financial Officer (ESSI)

Ronald W. Davis 1999 $153,000 $ 75,000 $0 $0 30,000 $0 $12,800<F5>
Vice President--Planning
and Development (ESSI)<F9>

R. Bruce Earls 1999 $202,300 $100,000 $0 $0 15,000 $0 $ 8,400<F6>
President and Chief 1998 $152,300 $ 75,000 $0 $0 15,000 $0 $ 5,800
Executive Officer (MC)<F8>

John J. Wichlenski 1999 $203,200 $ 50,000 $0 $0 15,000 $0 $13,400<F7>
President & Chief 1998 $203,600 $100,000 $0 $0 15,000 $0 $10,400
Executive Officer (EASI) 1997 $134,700 $128,400 $0 $0 15,000 $0 $ 9,500

<FN>
- --------------------
<F1> This amount includes base salary and expense reimbursement allowances.
Mr. Gerhardt's expenses for fiscal year 1999 were $700. Mr. Davis'
expenses for fiscal year 1999 were $3,000. Mr. Earl's expenses for fiscal
year 1999 were $2,300. Mr. Wichlenski's expenses for fiscal year 1999
were $3,200.

<F2> There were no long-term incentive plan awards granted during the three
year period ending October 31, 1999.

<F3> This amount includes $79,900 accrued pursuant to Mr. Shanahan's
employment agreement which provides for deferred compensation to be paid
in the event of retirement, disability, or death; $7,400 pursuant to the
benefit of life insurance premiums paid by the Company; and, $11,000
pursuant to the Engineered Support Systems, Inc. Employee Stock Ownership
Plan.

<F4> This amount includes $2,300 pursuant to the benefit of life insurance
premiums paid by the Company and $11,000 pursuant to the Engineered
Support Systems, Inc. Employee Stock Ownership Plan.

<F5> This amount includes $600 pursuant to the benefit of life insurance
premiums paid by the Company and $12,200 pursuant to the Engineered
Support Systems, Inc. Employee Stock Ownership Plan.

<F6> This amount includes $100 pursuant to the benefit of life insurance
premiums paid by the Company and $8,300 pursuant to the Engineered
Support Systems, Inc. Employee Stock Ownership Plan.

<F7> This amount includes $2,400 pursuant to the benefit of life insurance
premiums paid by the Company and $11,000 pursuant to the Engineered
Support Systems, Inc. Employee Stock Ownership Plan.

<F8> Mr. Earls joined the Company on February 1, 1998, concurrent with the
Company's acquisition of MC. Accordingly, compensation information for
1998 relates only to the period Mr. Earls was employed by the Company.

<F9> Compensation for Mr. Davis is not presented for 1997 and 1998 because the
SEC's criteria for inclusion were not met.

<F10> All option amounts have been restated to reflect a 3-for-2 stock split
effected in the form of a 50% stock dividend on June 26, 1998.
</TABLE>

PERFORMANCE GRAPH

The following graph compares the annual percentage change in the
Company's cumulative total shareholder return on its common stock
with (i) the cumulative total return on the S&P 500 composite index
and with (ii) the cumulative total return of the S&P Manufacturing
(Diversified Industry) index for the period October 31, 1994 through
October 31, 1999.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN<F*>
AMONG ENGINEERED SUPPORT SYSTEMS, INC., THE S & P 500 INDEX
AND THE S & P MANUFACTURING (DIVERSIFIED) INDEX

[GRAPH]

<TABLE>
<CAPTION>
10/94 10/95 10/96 10/97 10/98 10/99

<S> <C> <C> <C> <C> <C> <C>
ENGINEERED SUPPORT SYSTEMS, INC. 100 163 242 560 539 481
S & P 500 100 126 157 207 253 299
S & P MANUFACTURING (DIVERSIFIED) 100 126 174 218 240 330
</TABLE>

<F*>$100 invested on 10/31/94 in stock or index--including
reinvestment of dividends. Fiscal year ending October 31.

EMPLOYEE EQUITY PLANS

The Company has reserved 1,105,788 shares of common stock for
issuance under four (4) stock option plans adopted in 1992, 1993,
1997 and 1998 ("option plans"). The option plans provide for the
award of stock options to employees and non-employee directors of
the Company. Option plans for the employees are administered by the
Compensation Committee of the Board of Directors. The Compensation
Committee has the authority, subject to the terms of the option
plans, to determine optionees and the number of shares subject to
each option granted. The option plans for the non-employee directors
are administered by the Chairman of the Board. Subject to
continuation of employment, options granted under the option plans
must be exercised by the optionee within five (5) years from the
date of grant. The exercise price for an option granted is equal to
the fair market value of the common stock at the date of grant. As
of October 31, 1999, thirty (30) employees and directors held
options under these plans.

The following tables show, as to executive officers previously
listed, the options granted, aggregate options exercised and option
values during the fiscal year ended October 31, 1999.

<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
PERCENT OF FOR OPTION TERM
TOTAL OPTIONS -------------------------
OPTIONS GRANTED IN EXERCISE PRICE EXPIRATION 5% ASSUMED 10% ASSUMED
NAME GRANTED FISCAL YEAR PER SHARE DATE RATE RATE
- ---- ------- ------------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Shanahan, Sr......... 150,000 43.8% $11.75 6/30/04 $487,500 $1,075,500
Gary C. Gerhardt................ 30,000 8.8% $11.75 6/30/04 $ 97,500 $ 215,100
Ronald W. Davis................. 30,000 8.8% $11.75 6/30/04 $ 97,500 $ 215,100
R. Bruce Earls.................. 15,000 4.4% $11.75 6/30/04 $ 48,750 $ 107,550
John J. Wichlenski.............. 15,000 4.4% $11.75 6/30/04 $ 48,750 $ 107,550
</TABLE>

No stock appreciation rights have ever been granted by the
Company.

<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
NUMBER OPTIONS OPTIONS
OF SHARES AT 10/31/99 AT 10/31/99
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Michael F. Shanahan, Sr.. 0 $0 345,000/0 $236,250/$0
Gary C. Gerhardt......... 0 $0 67,500/0 $155,100/$0
Ronald W. Davis.......... 0 $0 63,750/0 $126,250/$0
R. Bruce Earls........... 0 $0 15,000/0 $0/$0
John J. Wichlenski....... 0 $0 67,500/0 $270,310/$0
</TABLE>

No stock appreciation rights have ever been granted by the
Company.

PROPOSAL TWO

APPROVAL OF ENGINEERED SUPPORT SYSTEMS, INC. 2000 STOCK
OPTION PLAN AND ALLOCATION OF 600,000 SHARES OF COMMON
STOCK TO THE PLAN

The Company is seeking shareholder approval of the Engineered
Support Systems, Inc. 2000 Stock Option Plan ("Plan") for officers,
key employees and consultants, and the allocation of 600,000 shares
of Engineered Support Systems, Inc. common stock to the Plan which,
if approved, the Company proposes to implement after March 7, 2000.
The purpose of the Plan is to increase motivation on the part of
officers, key employees and consultants, by creating an incentive
for them to remain in the employ of the Company and to work for the
achievement of the Company's strategic objectives. To accomplish
this purpose, the Compensation Committee may award stock options of
the Company's common stock to eligible officers, key employees and
consultants to be earned by achieving performance objectives.

The complete text of the Plan is included in this proxy
statement. The following summary of certain provisions of the Plan
is qualified by reference to the text of the Plan.

Participants of the Plan include any employee or consultant
selected by the Compensation Committee as eligible for any award
contemplated under the Plan. The Compensation Committee shall
administer the Plan and, in connection therewith, it shall have full
power to grant awards, construe and interpret the Plan, determine
those eligible to receive awards, and the amount and type of each
award shall rest in the sole discretion of the Compensation
Committee, subject to the provisions of the Plan.

The options shall be granted at the fair market value of the
common stock on the date awarded. The options expire five (5) years
from the date of grant, unless ended sooner due to the termination
of service or death of the optionee. In case of death, the estate of
the deceased will have the right for six (6) months after the date
of death to exercise the options. The options granted may not be
repriced at any time and are not transferable or assignable. The
members of the Company's Compensation Committee are ineligible to
receive awards under the Plan. Hence, the Plan, as proposed, is
intended to meet the requirements of Rule 16b-3 under the Securities
Exchange Act of 1934.

THE BOARD RECOMMENDS THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE 2000 STOCK OPTION PLAN

PROPOSAL THREE

APPROVAL OF ENGINEERED SUPPORT SYSTEMS, INC. 2000 STOCK
OPTION PLAN FOR NONEMPLOYEE DIRECTORS AND ALLOCATION OF
100,000 SHARES OF COMMON STOCK TO THE PLAN

The Company is seeking shareholder approval of the Engineered
Support Systems, Inc. 2000 Stock Option Plan for Nonemployee
Directors ("Nonemployee Director Plan") and the allocation of
100,000 shares of Engineered Support Systems, Inc. common stock to
the Nonemployee Director Plan. If approved, the Company proposes to
implement the Nonemployee Director Plan after March 7, 2000. The
Nonemployee Director Plan is being proposed in order to maintain the
Company's compliance with Rule 16b-3 of the Securities Act of 1934
("Act"). Rule 16b-3 provides that certain stock transactions by
executive officers and directors of public companies ("Reporting
Persons"), pursuant to the stock based benefit plans of such
companies, will be exempt from certain provisions of Section 16 of
the Act if the plans conform to certain requirements. Generally,
these requirements impose restrictions on the timing of such
transactions and restrictions on how the plans may award benefits or
who may make decisions as to the amount, timing and recipients of
awards under such plans.

Rule 16b-3 provides that persons having discretion as to awards
under the Company's plans, in which Reporting Persons participate,
may not themselves be eligible to receive awards under such plans
and, therefore, must be "disinterested". The members of the
Company's Compensation Committee are ineligible to receive awards
under the plans they administrate.

The Nonemployee Director Plan, as proposed, is intended to meet
the requirements of Rule 16b-3. The persons eligible to participate
in the Nonemployee Director Plan will be nonemployee members of the
Board of Directors. The Plan provides for the granting of stock
options of the Company's common stock to nonemployee directors.
Under the terms of the Nonemployee Director Plan, an initial grant
of 3,000 shares will be awarded to each nonemployee director
immediately following the first Annual Shareholders Meeting after
such director is first elected or appointed. Subsequent annual
grants of 2,000 shares will be made immediately following each
Annual Shareholders Meeting to all nonemployee directors who have
previously received initial grants. The Chairman of the Board, or
his designee, will administer the Nonemployee Director Plan.

The complete text of the 2000 Stock Option Plan for Nonemployee
Directors is included in the proxy statement. The options shall be
granted at the fair market value of the common stock at the date
awarded. The options expires five (5) years from the date of grant,
unless ended sooner due to the termination of service or death of
the optionee. In the event of death, the estate of the deceased has
the right, for six (6) months after the date of death, to exercise
the options. The options granted may not be repriced at any time and
are not transferable or assignable. The foregoing summary of the
2000 Stock Option Plan for Nonemployee Directors is qualified by
reference to the text of the Plan.

THE BOARD RECOMMENDS THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE 2000 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

PricewaterhouseCoopers LLP, independent certified public
accountants, have been the auditors of the accounts of the Company
since 1991, including the fiscal year ended October 31, 1999. The
Company anticipates that representatives of PricewaterhouseCoopers
LLP will be present at the 2000 Annual Meeting of the Shareholders
and PricewaterhouseCoopers LLP will have the opportunity to make a
statement if they so desire at that time. PricewaterhouseCoopers LLP
will also be available to respond to appropriate questions raised at
the 2000 Annual Meeting of the Shareholders.

PricewaterhouseCoopers LLP has informed the Company that it does
not have any direct financial interest in the Company and that it
has not had any direct connection with the Company as either a
promoter, an underwriter, a director, an officer or an employee.

As is customary, accountants for the current fiscal year will,
upon the recommendation of the Audit Committee, be appointed by the
Board of Directors at their meeting immediately following the Annual
Meeting of the Shareholders.

SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING

Shareholder proposals for the 2001 Annual Meeting of the
Shareholders must be received by the Company no later than October
31, 2000, for inclusion in the Company's proxy statement and proxy
for that meeting. The proposals should be submitted to the Company
at 1270 North Price Road, St. Louis, MO 63132, Attention: Corporate
Secretary.

OTHER MATTERS

Other than the foregoing, the Board of Directors does not intend
to bring any other matter before the meeting and does not know of
any matter that anyone else proposes to present for action at the
meeting. However, if any other matters properly come before such
meeting, the individuals named in the accompanying proxy, or their
duly qualified substitutes acting at the meeting, will be deemed
authorized to vote or otherwise act in accordance with their
judgment on such matters.

By order of the Board of Directors

/s/ David D. Mattern

David D. Mattern, Secretary
and General Counsel

Dated: February 1, 2000

NOTICE: Upon written request from any shareholder of record as
of January 17, 2000 (or any beneficial owner representing they are
or were entitled to vote at the 2000 Annual Meeting), the Company
will furnish to such shareholder, without charge, its Annual Report
on Form 10-K for the year ended October 31, 1999, as filed with the
Securities and Exchange Commission, including financial statements.
The Company may impose a reasonable fee for its expense in
connection with providing exhibits referred to in such Form 10-K, if
the full text of such exhibits are specifically requested. Requests
should be directed to: Investor Relations, Engineered Support
Systems, Inc., 1270 North Price Road, St. Louis, MO 63132.

ENGINEERED SUPPORT SYSTEMS, INC.
2000 STOCK OPTION PLAN

ARTICLE I. GENERAL PROVISIONS

Section 1. Purpose of Plan. The purpose of the Engineered
Support Systems, Inc. 2000 Stock Option Plan (the "Plan") is to
enhance the profitability and value of Engineered Support Systems,
Inc. (the "Company") and its shareholders by strengthening the
Company's ability to attract, retain, and motivate officers, other
key employees, and consultants of the Company who make important
contributions to the success of the Company.

Section 2. Definitions of Terms as Used in the Plan.

(a) "Affiliate" means any subsidiary or parent of the Company.

(b) "Award" means a Stock Option granted under Article II.

(d) "Company" means Engineered Support Systems, Inc.

(e) "Consultant" shall mean such party or entity or employee of
such consultant, which has a written agreement with the Company to
provide consulting services.

(f) "Plan" means the Engineered Support Systems, Inc. 2000 Stock
Option Plan.

(g) "Stock" means the $.01 par value common stock of Engineered
Support Systems, Inc.

Section 3. Authorization and Reservation. There shall be
established a reserve of 600,000 shares of Stock of authorized and
unissued shares, which shall be the total number of shares of Stock
that may be issued pursuant to Awards. The Board of Directors may,
from time to time, increase the number of shares allocated to the
Plan as approved by the Board of Directors. The reserve may consist
of authorized but unissued shares of Stock or of reacquired shares,
or both. Upon the cancellation or expiration of an Award, all shares
of Stock not issued thereunder shall become available for the
granting of additional Awards.

Section 4. Administration of the Plan. The Compensation
Committee, subject to the approval of the Chairman, shall administer
the Plan. Subject to the terms of the Plan, the Plan Administrator
shall have full power to grant Awards, construe and interpret the
Plan, establish rules and regulations and perform all other acts the
Plan Administrator believes reasonable and proper, including the
power to delegate responsibility to others to assist in
administering the Plan.

Section 5. Participation in the Plan. Any officer, employee, or
consultant of the Company shall be eligible to participate in the
Plan.

ARTICLE II. STOCK OPTIONS

Section 1. Description. All options granted under the Plan shall
be nonstatutory options not intended to qualify under Section 422 of
the Internal Revenue Code of 1986, as amended.

Section 2. Terms and Conditions.

(a) Each Stock Option shall be set forth in a written Notice
containing such terms and conditions as the Plan Administrator may
determine, subject to the provisions of the Plan.

(b) The purchase price of any shares exercised under any Stock
Option must be paid in full upon such exercise. The payment shall be
made in such form, which may be in cash or stock, as the Plan
Administrator may determine.

(c) No Stock Option may be exercised after the expiration of
five (5) years from the date such Option is granted unless such term
is extended by the Plan Administrator as evidenced in writing.

(d) The option price of shares subject to any Stock Option shall
be the closing price of the Stock on the date that the Stock Option
is granted and may not be repriced at any time.

A-1

ARTICLE III. FORFEITURE OF AWARDS

(a) The recipient of an Award shall forfeit all amounts due or
rights not exercised upon the occurrence of any of the following
events:

(i) The recipient is discharged for cause;

(ii) The recipient voluntarily terminates his employment
other than by Normal Retirement as defined in the Engineered
Support Systems, Inc. Employee Stock Ownership Plan;

(iii) The recipient engages in competition with the Company
or any Affiliate;

(iv) The recipient engages in any activity or conduct
contrary to the best interest of the Company or Affiliate.

(b) The Plan Administrator may include in any Award any
additional or different conditions of forfeiture he may deem
appropriate. The Plan Administrator may also, after taking into
account the relevant circumstances, waive any condition of
forfeiture stated above or in the Award.

(c) In the event of forfeiture, the recipient shall lose all
rights in and to the Award. This provision, however, shall not be
invoked to force any recipient to return any Stock already received
or due under an Award at the time of the event of forfeiture.

(d) Such determinations as may be necessary for application of
this section, including any grant of authority to others to make
determinations under this section, shall be at the sole discretion
of the Plan Administrator and his determinations shall be
conclusive.

ARTICLE IV. DEATH OF AWARDEE

Section 1. Death of Optionee. Upon the death of an Award
recipient, a Stock Option, to the extent exercisable on the date of
his death, may be exercised at any time within six (6) months after
the recipient's death, but not after the expiration of the term of
the option, by the recipient's personal representative or the person
or persons entitled thereto by will or in accordance with the laws
of descent and distribution for the State of Missouri.

ARTICLE V. EXERCISE OF OPTION AND ISSUANCE OF STOCK

Section 1. Exercise of Option. The holder of an Award shall
exercise their right to acquire the Stock pursuant to the Award by
written notice to the Secretary of the Company at 1270 North Price
Road, St. Louis, Missouri 63132. Written notice shall set forth the
number of shares for which the exercise is applicable together with
a check for the purchase price for the Stock. If the holder of the
Award exercises his option for less than the total number of Shares
awarded, he will execute such documents as required by the Corporate
Secretary for the remaining number of shares subject to the Award.

Section 2. Endorsement on Stock Certificates.

(a) The Stock issued pursuant to an Award shall be restricted
before Stock is issued until the Plan is registered in accordance
with the provisions of the applicable Securities Act and the
provisions of applicable state securities laws or until the Stock
may be transferred in accordance with an exemption from
registration.

(b) Until registered, the certificate or certificates
representing the shares issued by the Company to any of the parties
hereto shall have endorsed upon them the following legend:

"The shares represented by this certificate have not been
registered pursuant to the Securities Act of 1934 or the
Missouri Uniform Securities Act, and therefore are "restricted
securities" within the meaning of the Act. These shares have
been acquired for investment and not with a view to
distribution or resale and may not be made subject to a
security interest, pledge, hypothecation, or otherwise
transferred without an effective registration statement for
such shares under the Securities Act of 1934 or the Missouri
Uniform Securities Act or an opinion of counsel for the
corporation that registration is not required under the Acts."

A-2

ARTICLE VI. OTHER GOVERNING PROVISIONS

Section 1. Transferability. No Award shall be transferable other
than by will or the laws of descent and distribution as set out in
Article V, and any right granted under an Award may be exercised
during the lifetime of the holder thereof only by him or at his
death by his legal representative within six (6) months after such
date.

Section 2. Rights as a Shareholder. A recipient of an Award
shall, unless the terms of the Award provide otherwise, have no
rights as a shareholder with respect to any options or shares which
may be issued in connection with the Award until the issuance of a
Stock certificate for such shares, and no adjustment shall be made
for dividends or other rights for which the record date is prior to
the issuance of such stock certificate.

Section 3. General Conditions of Awards. No employee or other
person shall have any right with respect to this Plan, in the shares
reserved, or in any Award, contingent or otherwise, until written
evidence of the Award shall have been delivered to the recipient and
all the terms, conditions and provisions of the Plan applicable to
such recipient have been met.

Section 4. Limitation as to Service. Neither the Plan, nor the
granting of an option, nor any other action taken pursuant to the
Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an eligible participant has
a right to continue as an employee or consultant for any period of
time or at any particular rate of compensation.

Section 5. Acceleration. The Plan Administrator may in its sole
discretion accelerate the date of exercise of any Award.

Section 6. Adjustments. Upon any Stock split-up, Stock dividend,
combination or reclassification of shares of Stock, or
consolidation, merger or sale of all or substantially all of the
assets of the Company, appropriate adjustments shall be made to the
shares reserved under Article I of the Plan and the terms of the
outstanding Awards.

Section 7. Withholding of Taxes. The Company shall deduct from
any payment, or otherwise collect from the recipient, any taxes
required to be withheld by federal, state or local governments in
connection with any Award.

Section 8. No Warranty of Tax Effect. Except as may be contained
in the terms of any Award, no opinion is expressed nor warranties
made as to the effect for federal, state, or local tax purposes of
any Awards.

Section 9. Amendment of Plan. The Board of Directors of the
Company may from time to time amend, suspend or terminate the Plan,
in whole or in part, and if terminated may reinstate any or all of
the provisions of the Plan, except that (1) no amendment, suspension
or termination may apply to the terms of any Award (contingent or
otherwise) granted prior to the effective date of such amendment,
suspension or termination without the recipient's consent; (2) no
amendment may withdraw the authority from the Plan Administrator to
administer the Plan; (3) no amendment may change the persons who may
be eligible; and (4) no amendment may change the restrictions in the
Plan against the transferability of Awards.

Section 10. Construction of Plan. The place of administration of
the Plan shall be in the State of Missouri, and the validity,
construction, interpretation, administration and effect of the Plan
and of its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of the State
of Missouri.

ARTICLE VII. EFFECTIVE DATE AND TERM

This Plan shall be effective upon approval by the shareholders
of the Company. The Plan shall continue until October 31, 2005
unless extended by the Board of Directors, when it shall terminate.
Any balances in the Share Reserve shall be canceled, and no Awards
shall be granted under the Plan thereafter. The Plan shall continue
in effect, however, insofar as is necessary to complete all of the
Company's obligations under outstanding Awards and to conclude the
administration.

A-3

ENGINEERED SUPPORT SYSTEMS, INC.
2000 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS

ARTICLE I. GENERAL PROVISIONS

Section 1. Purpose of Plan. The purpose of the Engineered
Support Systems, Inc. 2000 Stock Option Plan for Nonemployee
Directors (the "Plan") is to enhance the profitability and value of
Engineered Support Systems, Inc. (the "Company") and its
shareholders by strengthening the Company's ability to attract and
retain the services of experienced and knowledgeable nonemployee
directors and by encouraging such directors to acquire an increased
proprietary interest in the Company.

Section 2. Definitions of Terms as Used in the Plan.

(a) "Affiliate" means any subsidiary or parent of the Company.

(b) "Award" means a Stock Option granted under Article II.

(d) "Company" means Engineered Support Systems, Inc.

(e) "Director" means a member of the Board of Directors of
Engineered Support Systems, Inc.

(f) "Plan" means the Engineered Support Systems, Inc. 2000 Stock
Option Plan for Nonemployee Directors.

(g) "Stock" means the $.01 par value common stock of Engineered
Support Systems, Inc.

Section 3. Authorization and Reservation. There shall be
established a reserve of 100,000 shares of Stock of authorized and
unissued shares, which shall be the total number of shares of Stock
that may be issued pursuant to Awards. The Board of Directors may,
from time to time, increase the number of shares allocated to the
Plan as approved by the Board of Directors. The reserve may consist
of authorized but unissued shares of Stock or of reacquired shares,
or both. Upon the cancellation or expiration of an Award, all shares
of Stock not issued thereunder shall become available for the
granting of additional Awards.

Section 4. Administration of the Plan. The Chairman of the Board
of the Company shall administer the Plan. Subject to the terms of
the Plan, the Plan Administrator shall have full power to grant
Awards, construe and interpret the Plan, establish rules and
regulations and perform all other acts the Plan Administrator
believes reasonable and proper, including the power to delegate
responsibility to others to assist in administering the Plan.

Section 5. Participation in the Plan. Each member of the
Company's Board of Directors who is not otherwise an employee of the
Company or of any subsidiary of the Company ("Eligible Director")
shall be eligible to participate in the Plan.

ARTICLE II. STOCK OPTIONS

Section 1. Description. All options granted under the Plan shall
be nonstatutory options not intended to qualify under Section 422 of
the Internal Revenue Code of 1986, as amended.

Section 2. Terms and Conditions.

(a) Each Stock Option shall be set forth in a written Notice
containing such terms and conditions as the Plan Administrator may
determine, subject to the provisions of the Plan.

(c) No Stock Option may be exercised after the expiration of
five (5) years from the date such Option is granted unless such term
is extended by the Plan Administrator as evidenced in writing.

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(d) The option price of shares subject to any Stock Option shall
be the closing price of the Stock on the date that the Stock Option
is granted and may not be repriced at any time.

Section 3. Option Grant Size and Grant Dates.

(a) Initial Grants. An option to purchase 3,000 Shares (as
adjusted pursuant to Article VI, Section 6) shall be granted to each
Eligible Director immediately following the Annual Meeting after
such Eligible Director is first elected or immediately following the
first Annual Meeting after such Eligible Director is elected or
appointed by the Board to be Director. Eligible Directors are only
entitled to receive one (1) initial grant during their lifetime.

(b) Annual Grants. An option to purchase 2,000 Shares (as
adjusted Pursuant to Article VI, Section 6) shall be granted
automatically each year immediately following the Annual Meeting, to
each Eligible Director who has not received an initial grant in that
fiscal year.

Section 4. Option Exercise Price. The option exercise price per
share for an initial or annual award shall be the closing price of
the Stock on the date the Option is granted and may not be repriced
at any time.

ARTICLE III. FORFEITURE OF AWARDS

Section 1. Termination Other Than by Retirement, Disability, or
Death. In the event of the termination of an optionee's service as a
Director, other than by reason of retirement, total and permanent
disability, or death, the then outstanding options of such optionee
shall automatically expire on the effective date of such
termination. For purposes of the Plan, the term "by reason of
retirement" means (i) mandatory retirement pursuant to Board Policy
or (ii) termination of service at a time when the optionee would be
entitled to a retirement benefit under the Engineered Support
Systems, Inc. Employee Stock Ownership Plan as then in effect, if
the Eligible Director were an employee of the Company.

Section 2. Termination By Retirement or Disability. In the event
of the termination of an optionee's service as a Director by reason
of retirement or total and permanent disability, the then
outstanding options of such optionee shall become exercisable to the
full extent of the number of Shares remaining covered by such
options, regardless of whether such options were previously
exercisable, and each such option shall expire four years after the
date of such termination or on the stated grant expiration date,
whichever is earlier.

ARTICLE IV. DEATH OF AWARDEE

ARTICLE V. EXERCISE OF OPTION AND ISSUANCE OF STOCK

Section 2. Endorsement on Stock Certificates.

(b) Until registered, the certificate or certificates
representing the shares issued by the Company to any of the parties
hereto shall have endorsed upon them the following legend:

B-2

or resale and may not be made subject to a security interest,
pledge, hypothecation, or otherwise transferred without an
effective registration statement for such shares under the
Securities Act of 1934 or the Missouri Uniform Securities Act
or an opinion of counsel for the corporation that registration
is not required under the Acts."

ARTICLE VI. OTHER GOVERNING PROVISIONS

Section 4. Limitation as to Directorship. Neither the Plan, nor
the granting of an option, nor any other action taken pursuant to
the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that an Eligible Director has a
right to continue as a Director for any period of time or at any
particular rate of compensation.

Section 5. Acceleration. The Plan Administrator may in its sole
discretion accelerate the date of exercise of any Award.

ARTICLE VII. EFFECTIVE DATE AND TERM

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<PAGE>
<PAGE>
PROXY ENGINEERED SUPPORT SYSTEMS, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OF SHAREHOLDERS MARCH 7, 2000

The undersigned hereby appoints Michael F. Shanahan, Sr. proxy, with full
power of substitution, to represent the undersigned at the annual meeting of
shareholders of Engineered Support Systems, Inc. to be held at Systems &
Electronics Inc., a wholly-owned subsidiary of the Company, 201 Evans Lane,
St. Louis, Missouri 63121 on Tuesday, March 7, 2000, and at any adjournments
thereof, on all matters coming before said meeting.

You are encouraged to specify your choices by making the appropriate boxes
on the REVERSE SIDE. The Proxy cannot vote your shares unless you sign and
return this card.

^FOLD AND DETACH HERE^

<PAGE>
<PAGE>
PLEASE MARK YOUR
VOTES AS INDICATED IN
THIS EXAMPLE /X/

1. Election of Directors for a term of three years.
Nominees:
Michael F. Shanahan, Sr.,
Michael F. Shanahan, Jr., and
FOR WITHHELD General Michael P.C. Carns
/ / / / (U.S. Air Force, Retired)

To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided. Your total cumulative votes will be allocated
equally among the remaining nominees.

For, except vote withheld from the following nominee(s):

- --------------------------------------------------------------------------------

2. Engineered Support Systems, Inc. 2000 Stock FOR AGAINST ABSTAIN
Option Plan and the allocation of 600,000
shares of Engineered Support Systems, Inc.
common stock to the Stock Option Plan. / / / / / /

3. Engineered Support Systems, Inc. 2000 Stock
Option Plan for Nonemployee Directors and the
allocation of 100,000 shares of Engineered / / / / / /
Support Systems, Inc. common stock to the
Stock Option Plan for Nonemployee Directors.
Attend meeting / /

(change of address)

---------------------------------------------------------

DATE:
----------------------------------------------------

---------------------------------------------------------
SIGNATURE(S)

---------------------------------------------------------
NOTE: Please sign exactly as name appears hereon. Joint
members should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.

^FOLD AND DETACH HERE^

APPENDIX

Page 11 of the printed Proxy contains a stock performance graph. The
information contained in the graph has been presented in a tabular format
that may be processed by the EDGAR system.