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    <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><a name="FIS_FORM">As filed with the Securities and Exchange Commission on June 28,
2010</a></font></div>
    <div style="TEXT-ALIGN: right; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Registration No. 333-</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">UNITED
STATES</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">SECURITIES
AND EXCHANGE COMMISSION</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Washington,
D.C. 20549</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">___________________________</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">FORM
S-8</font></div>
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STATEMENT</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">UNDER</font></div>
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SECURITIES ACT OF 1933</font></div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">KRATOS
DEFENSE &amp; SECURITY SOLUTIONS, INC.</font></div>
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Name of Registrant as Specified in its Charter)</font></div>
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      </font></td>
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              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(State
      or Other Jurisdiction of</font></div>
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      </font></td>
            <td valign="top" width="28%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(I.R.S.
      Employer</font></div>
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      or Organization)</font></div>
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            <td valign="top" width="28%"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;
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            <td valign="top" width="28%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Identification
      Number)</font></div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">4820
Eastgate Mall</font></div>
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Diego, California 92121</font></div>
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812-7300</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(Address
of Principal Executive Offices)</font></div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Amended
and Restated 1999 Employee Stock Purchase Plan</font></div>
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and Restated 2005 Equity Incentive Plan</font></div>
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title of the Plan(s))</font></div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Deanna
H. Lund</font></div>
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Vice President and Chief Financial Officer</font></div>
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Defense &amp; Security Solutions, Inc.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">4820
Eastgate Mall</font></div>
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Diego, California 92121</font></div>
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812-7300</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(Name,
address, including zip code, and telephone number, including area code, of agent
for service)</font></div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Copy
to:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
            <td valign="top" width="44%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Scott
      M. Stanton, Esq.</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold">J. Nathan
      Jensen, Esq.</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Morrison
      &amp; Foerster LLP</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">12531
      High Bluff Drive, Suite 500</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">San
      Diego, California 92130</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(858)
      720-5100</font></div>
            </td>
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      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
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        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
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    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="right"><a name="eolPage2"><br></a></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of &#8220;large accelerated filer,&#8221; &#8220;accelerated filer&#8221; and &#8220;smaller
reporting company&#8221; in Rule 12b-2 of the Exchange Act.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Large
accelerated filer [
]&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Accelerated filer [X]</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Non-accelerated
filer [ ] (Do not check if a smaller reporting
company)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Smaller reporting company [ ]</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div>
      <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">CALCULATION
OF REGISTRATION FEE</font></div>
      <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
              <td valign="bottom" width="19%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: #000000 6.75pt double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Title
      of Securities to be Registered(1)</font></div>
              </td>
              <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: #000000 6.75pt double">
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      to</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">be
      registered (2)</font></div>
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              <td valign="bottom" width="16%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: #000000 6.75pt double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Proposed
      maximum</font></div>
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      price</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">per
      share(3)</font></div>
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      maximum</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">aggregate
      offering</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">price</font></div>
              </td>
              <td valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid; BORDER-TOP: #000000 6.75pt double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Amount
      of</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">registration
      fee</font></div>
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            </tr><tr>
              <td valign="top" width="19%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;
      </font></td>
              <td valign="top" width="13%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;
      </font></td>
              <td valign="top" width="16%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;
      </font></td>
              <td valign="top" width="15%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;
      </font></td>
              <td valign="top" width="14%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;
      </font></td>
            </tr><tr>
              <td align="left" valign="top" width="19%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Amended
      and Restated 1999 Employee Stock Purchase Plan</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Common
      Stock, par value $0.001 per share</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
              </td>
              <td valign="top" width="13%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">625,000(4)</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
              </td>
              <td valign="top" width="16%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$10.79</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
              </td>
              <td valign="top" width="15%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$7,343,750</font></div>
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              </td>
              <td valign="top" width="14%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$480.83</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
              </td>
            </tr><tr>
              <td align="left" valign="top" width="19%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Amended
      and Restated 2005 Equity Incentive Plan</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Common
      Stock, par value $0.001 per share</font></div>
              </td>
              <td valign="top" width="13%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,200,000(5)</font></div>
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
              </td>
              <td valign="top" width="16%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$10.79</font></div>
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              </td>
              <td valign="top" width="15%" style="BORDER-BOTTOM: black 4px double">
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              </td>
            </tr></table>
      </div>
      <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
              </td>
            </tr></table>
      </div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(1)&#160;&#160;&#160;&#160;
      Each share of the Registrant's common stock, par value $0.001 per share
      ("Common Stock"), &#160;includes a right to purchase one one-hundredth of
      a share of Series&#160;C Preferred Stock, par value $0.001 per
      share.</font></div>
            </td>
          </tr></table>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(2)&#160;&#160;&#160;&#160;
      Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the
      "Security Act"), this Registration Statement shall also cover any
      additional shares of the Registrant&#8217;s Common Stock that may be offered or
      issued in connection with any stock dividend, stock split,
      recapitalization or other similar transaction effected without receipt of
      consideration that increases the number of outstanding shares of Common
      Stock.</font></div>
            </td>
          </tr></table>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(3)&#160;&#160;&#160;&#160;
      Estimated solely for the purpose of calculating the amount of the
      registration fee pursuant to Rule 457(h) under the Securities Act. The
      price per share and aggregate offering price are based upon the average of
      the high and low sales prices of Registrant&#8217;s Common Stock on June 23,
      2010, as reported on the Nasdaq Global Select
  Market.</font></div>
            </td>
          </tr></table>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(4)&#160;&#160;&#160;&#160;
      Represents 625,000 additional shares of Common Stock available for future
      issuance under the Registrant&#8217;s Amended and Restated 1999 Employee Stock
      Purchase Plan (the &#8220;ESPP&#8221;).&#160; 70,000 shares available for issuance
      under the ESPP were initially registered on a registration statement on
      Form S-8 filed with the Securities and Exchange Commission on November 5,
      1999 (Registration No.&#160;333-90455).&#160; An additional 80,000 shares
      available for issuance under the ESPP were previously registered on a
      registration statement on Form S-8 filed on October 17, 2001 (Registration
      No. 333-71702).&#160; An additional 135,000 shares available for issuance
      under the ESPP were previously registered on a registration statement on
      Form S-8 filed on June 28, 2004 (Registration No.
      333-116903).&#160;&#160;An additional 150,000 shares available for
      issuance under the ESPP were previously registered on a registration
      statement on Form S-8 filed on November 12, 2008
    (333-155317).</font></div>
            </td>
          </tr></table>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(5)&#160;&#160;&#160;&#160;
      Represents 1,200,000 additional shares of Common Stock authorized to be
      issued under the Registrant&#8217;s Amended and Restated 2005 Equity Incentive
      Plan (the &#8220;2005 Plan&#8221;).&#160; 350,000 shares available for issuance under
      the 2005 Plan were initially registered on a registration statement on
      Form S-8 filed with the Securities and Exchange Commission on August 1,
      2005 (Registration No.&#160;333-127060).&#160;&#160;An additional 350,000
      shares available for issuance under the 2005 Plan were previously
      registered on a registration statement on Form S-8 filed on November 12,
      2008 (333-155317).</font></div>
            </td>
          </tr></table>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><a name="eolPage3"><br></a></div><br>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block">&#160;</div>
    <div>&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">INTRODUCTORY
NOTE</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 27pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This
Registration Statement relates solely to the registration of additional
securities of the same class as other securities for which a registration
statement on this form relating to an employee benefit plan is effective.&#160;
Pursuant to General Instruction E of Form S-8, this registration statement
hereby incorporates by reference the contents of the registration statements on
Form S-8 filed by the Registrant on August 1, 2005 and November 12, 2008 with
respect to the Registrant&#8217;s Amended and Restated 2005 Equity Incentive Plan
(Registration Nos. 333-127060 and 333-155317, respectively), and the
registration statements on Form S-8 filed by the Registrant on November 5, 1999,
October 17, 2001, June 28, 2004, and November 12, 2008 with respect to the
Registrant&#8217;s Amended and Restated 1999 Employee Stock Purchase Plan
(Registration Nos.&#160;333-90455, 333-71702, 333-116903, and 333-155317,
respectively).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><a name="eolPage4" />&#160;</div><br>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
    </div><br>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="right"><a name="FIS_EXHIBITS"><br></a></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-WEIGHT: bold">Item 8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;
Exhibits</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The
following is a list of exhibits filed as part of this Registration Statement,
which are incorporated herein:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Exhibit
      Numbers</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Exhibit
      Description</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5.1</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Opinion
      of Morrison &amp; Foerster LLP</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">23.1</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Consent
      of Grant Thornton LLP</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">23.2</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Consent
      of Plante &amp; Moran, PLLC</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">23.3</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Consent
      of Morrison &amp; Foerster LLP (contained in
    Exhibit&#160;5.1)</font></div>
            </td>
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to the requirements of the Securities Act, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form&#160;S-8 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Diego, State of California, on this 28<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">th</font>
&#160;day of June, 2010.</font></div>
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PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints, jointly and severally, Eric M. DeMarco and Deanna H.
Lund his attorneys-in-fact, each with the power of substitution, for him in any
and all capacities, to sign any amendments to this Registration Statement on
Form S-8 (including post-effective amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the SEC,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.</font></div>
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to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.&#160;</font></div>
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          </tr><tr>
            <td align="left" valign="bottom" width="28%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">/s/
      Samuel N. Liberatore</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Samuel
      N. Liberatore</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block">&#160;</div>
            </td>
            <td valign="middle" width="38%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Director</font></div>
            </td>
            <td valign="middle" width="21%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">June
      28, 2010</font></div>
            </td>
          </tr></table>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">&#160;</div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
    </div><br>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">EXHIBIT
INDEX</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Exhibit
      Numbers</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Exhibit
      Description</font></div>
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5.1</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Opinion
      of Morrison &amp; Foerster LLP</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">23.1</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Consent
      of Grant Thornton LLP</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">23.2</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Consent
      of Plante &amp; Moran, PLLC</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">23.3</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Consent
      of Morrison &amp; Foerster LLP (contained in
    Exhibit&#160;5.1)</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">24.1</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Power
      of Attorney (included in the signature page of this Registration
      Statement)</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">99.1</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Amended
      and Restated 1999 Employee Stock Purchase Plan</font></div>
            </td>
          </tr><tr>
            <td align="left" valign="top" width="16%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">99.2</font></div>
            </td>
            <td align="left" valign="top" width="66%">
              <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Amended
      and Restated 2005 Equity Incentive Plan and form stock option agreement
      thereunder</font></div>
            </td>
          </tr></table>
    </div><br>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font></div>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">&#160;</div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">Exhibit
5.1&#160; </font></div>
        <div style="WIDTH: 100%" align="left">
          <div>
            <table cellpadding="0" cellspacing="0" width="100%" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr>
                  <td align="left" valign="top" width="34%">
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block">&#160;</div>
                  </td>
                  <td align="left" valign="top" width="22%">
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">12531
      HIGH BLUFF DRIVE</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">SUITE
      100</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">SAN
      DIEGO, CALIFORNIA</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">92130-2040</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">TELEPHONE:
      858.720.5100</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">FACSIMILE:
      858.720.5125</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">WWW.MOFO.COM</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block">&#160;</div>
                  </td>
                  <td align="left" valign="top" width="20%">
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">morrison
      <font style="DISPLAY: inline; FONT-SIZE: 10pt">&amp;</font> foerster
      llp</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">new
      york, san francisco,</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">los
      angeles, palo alto,</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">san
      diego, washington, d.c.</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">northern
      virginia, denver,</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">sacramento,
      walnut creek</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">tokyo,
      london, beijing,</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">shanghai,
      hong kong,</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">singapore,
      brussels</font></div>
                    <div style="TEXT-INDENT: 0pt; DISPLAY: block">&#160;</div>
                  </td>
                </tr></table>
          </div>
          <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
        </div>
      </div>
    </div><br>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">June 28,
2010</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Kratos
Defense &amp; Security Solutions, Inc.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">4820
Eastgate Mall</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">San
Diego, CA 92121</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Re:&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Registration
Statement on Form S-8</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Ladies
and Gentlemen:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">At your
request, we have examined the registration statement on Form S-8 (the
&#8220;Registration Statement&#8221;) to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of an aggregate of: (i) 625,000 shares of Common Stock which will be
issuable under the 1999 Employee Stock Purchase Plan (the &#8220;ESPP&#8221;); and (ii)
1,200,000 shares of Common Stock which will be issuable under the Amended and
Restated 2005 Equity Incentive Plan (the &#8220;2005 Plan,&#8221; and together with the
ESPP, the &#8220;Plans&#8221;).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">As your
counsel in connection with the Registration Statement, we have examined the
proceedings taken and proposed to be taken by you in connection with the
adoption of the Plans and the authorization, issuance and sale of an aggregate
of 1,825,000 shares of Common Stock under the Plans (the &#8220;Plan Shares&#8221;), and
such documents, matters of fact and questions of law as we have deemed necessary
to render this opinion.&#160;&#160;For the purpose of the opinion rendered
below, we have assumed that such proceedings are timely completed in the manner
presently proposed by you and that, upon each issuance of Plan Shares, the
Company will receive the consideration for such Plan Shares required by the
terms of the respective Plan(s) under which they are issued.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Based
upon and subject to the foregoing, we are of the opinion that the Plan Shares,
when issued and outstanding pursuant to the terms of the Plans, will be legally
issued, fully paid and nonassessable.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We
consent to the use of this opinion as an exhibit to the Registration
Statement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Very
truly yours,</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">/s/
Morrison &amp; Foerster LLP</font>

      <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
          <div style="TEXT-ALIGN: center; WIDTH: 100%">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">&#160;</div>
      </div>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="right">
      <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">Exhibit
23.1&#160; </font></div>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Consent
of Independent Registered Public Accounting Firm</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We have
issued our reports dated March 10, 2010 with respect to the consolidated
financial statements and internal control over financial reporting of Kratos
Defense &amp; Security Solutions, Inc. included in the Annual Report on Form
10-K for the year ended December 27, 2009, which are incorporated by reference
in this Registration Statement.&#160;&#160;We consent to the incorporation by
reference of the aforementioned reports in this Registration Statement on Form
S-8.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><font style="DISPLAY: inline; FONT-WEIGHT: bold">/s/ GRANT THORNTON LLP</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">San
Diego, California</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">June 28,
2010</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div><br><br><br>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">Exhibit
23.2&#160; </font></div>
      </div>
    </div><br>
    <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Consent
of Independent Registered Public Accounting Firm</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We
consent to the incorporation by reference in this Registration Statement of
Kratos Defense &amp; Security Solutions, Inc. on Form S-8 of our report dated
March 24, 2010 on the financial statements of Gichner Holdings, Inc. and
Subsidiaries as of and for the periods ending December 31, 2009 and 2008, and
our report dated April 4, 2008 on the financial statements of Gichner Holdings,
Inc. and Subsidiaries as of and for the period ending December 31, 2007, each of
which appears in the Current Report on Form 8-K dated May 19, 2010 of Kratos
Defense &amp; Security Solutions, Inc.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">/s/
Plante &amp; Moran, PLLC</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Cleveland,
Ohio</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">June 28,
2010 </font></div><br>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">&#160;</div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">&#160;</div>
    </div>
    <div id="GLFTR" style="TEXT-ALIGN: right; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
Exhibit 99.1</font></div><br>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">KRATOS
DEFENSE &amp; SECURITY SOLUTIONS, INC.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">AMENDED
AND RESTATED</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">EMPLOYEE
STOCK PURCHASE PLAN</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">ADOPTED
BY THE BOARD OF DIRECTORS ON AUGUST 16, 1999</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">APPROVED
BY THE STOCKHOLDERS ON SEPTEMBER 9, 1999</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">AMENDED
AND RESTATED AS OF MARCH 17, 2010</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">1.&#160;&#160;&#160;PURPOSE.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;The
purpose of this Employee Stock Purchase Plan (the "Plan") is to provide a means
by which employees of Kratos Defense &amp; Security Solutions, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;The
word "Affiliate" as used in the Plan means any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code").</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(c)&#160;&#160;The
Company, by means of the Plan, seeks to retain the services of its employees, to
secure and retain the services of new employees, and to provide incentives for
such persons to exert maximum efforts for the success of the
Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(d)&#160;&#160;The
Company intends that the rights to purchase stock of the Company granted under
the Plan be considered options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">2.&#160;&#160;&#160;ADMINISTRATION.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;The
Plan shall be administered by the Board of Directors (the "Board") of the
Company unless and until the Board delegates administration to a Committee, as
provided in subparagraph 2(c).&#160;&#160;Whether or not the Board has delegated
administration, the Board shall have the final power to determine all questions
of policy and expediency that may arise in the administration of the
Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;The
Board shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(i)&#160;&#160;To
determine when and how rights to purchase stock of the Company shall be granted
and the provisions of each offering of such rights (which need not be
identical).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(ii)&#160;&#160;To
designate from time to time which Affiliates of the Company shall be eligible to
participate in the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(iii)
To construe and interpret the Plan and rights granted under it, and to
establish, amend and revoke rules and regulations for its
administration.&#160;&#160;The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan, in a manner and to the extent
it shall deem necessary or expedient to make the Plan fully
effective.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(iv)
To amend the Plan as provided in paragraph 13.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(v)&#160;&#160;Generally,
to exercise such powers and to perform such acts as the Board deems necessary or
expedient to</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">promote
the best interests of the Company and its Affiliates and to carry out the intent
that the Plan be treated as an "employee stock purchase plan" within the meaning
of Section 423 of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(c)&#160;&#160;The
Board may delegate administration of the Plan to a Committee composed of one (1)
or more members of the Board (the "Committee").&#160;&#160;If administration is
delegated to a Committee, the Committee shall have, in</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">connection
with the administration of the Plan, the powers theretofore possessed by the
Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the
Board.&#160;&#160;The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(d)&#160;&#160;Any
interpretation of the Plan by the Board of any decision made by it under the
Plan shall be final and binding on all persons.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">3.&#160;&#160;SHARES
SUBJECT TO THE PLAN.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;Subject
to the provisions of paragraph 12 relating to adjustments upon changes in stock,
the stock that may be sold pursuant to rights granted under the Plan shall not
exceed in the aggregate one million sixty thousand (1,060,000) shares of the
Company's common stock (the "Common Stock"). If any right granted under the Plan
shall for any reason terminate without having been exercised, the Common Stock
not purchased under such right shall again become available for the
Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;The
stock subject to the Plan may be unissued shares or reacquired shares, bought on
the market or otherwise.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">4.&#160;&#160;GRANT
OF RIGHTS; OFFERING.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;The
Board or the Committee may from time to time grant or provide for the grant of
rights to purchase Common Stock of the Company under the Plan to eligible
employees (an "Offering") on a date or dates (the "Offering Date(s)")selected by
the Board or the Committee.&#160;&#160;Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges.&#160;&#160;The terms and conditions
of an Offering shall be incorporated by reference into the Plan and treated as
part of the Plan.&#160;&#160;The provisions of separate Offerings need not be
identical, but each Offering shall include (through incorporation of the
provisions of this Plan by reference in the document comprising the Offering or
otherwise) the period during which the Offering shall be effective, which period
shall not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in paragraphs 5 through 8,
inclusive.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;If
an employee has more than one (1) right outstanding under the Plan, unless he or
she otherwise indicates in agreements or notices delivered hereunder, a right
with a lower exercise price (or an earlier-granted right if two (2) rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right if two (2)
rights have identical exercise prices) will be exercised.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">5.&#160;&#160;ELIGIBILITY.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;Rights
may be granted only to employees of the Company or, as the Board or the
Committee may designate as provided in subparagraph 2(b), to employees of any
Affiliate of the Company.&#160;&#160;Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be greater than two (2)
years.&#160;&#160;In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;The
Board or the Committee may provide that each person who, during the course of an
Offering, first becomes an eligible employee of the Company or designated
Affiliate will, on a date or dates specified in the Offering which coincides
with the day on which such person becomes an eligible employee or occurs
thereafter, receive a right under that Offering, which right shall thereafter be
deemed to be a part of that Offering.&#160;&#160;Such right shall have the same
characteristics as any rights originally granted under that Offering, as
described herein, except that:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(i)&#160;&#160;&#160;the
date on which such right is granted shall be the "Offering Date" of such right
for all purposes, including determination of the exercise price of such
right;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(ii)&#160;&#160;the
period of the Offering with respect to such right shall begin on its Offering
Date and end coincident with the end of such Offering; and</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(iii)
the Board or the Committee may provide that if such person first becomes an
eligible employee within a specified period of time before the end of the
Offering, he or she will not receive any right under that Offering.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(c)&#160;&#160;No
employee shall be eligible for the grant of any rights under the Plan if,
immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate.&#160;&#160;For
purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code
shall apply in determining the stock ownership of any employee, and stock which
such employee may purchase under all outstanding rights and options shall be
treated as stock owned by such employee.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(d)&#160;&#160;An
eligible employee may be granted rights under the Plan only if such rights,
together with any other rights granted under "employee stock purchase plans" of
the Company and any Affiliates, as specified by Section 423(b)(8) of the Code,
do not permit such employee's rights to purchase stock of the Company or any
Affiliate to accrue at a rate which exceeds twenty five thousand
dollars($25,000) of fair market value of such stock (determined at the time such
rights are granted) for each calendar year in which such rights are outstanding
at any time.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(e)&#160;&#160;Officers
of the Company and any designated Affiliate shall be eligible to participate in
Offerings under the Plan; provided, however, that the Board may provide in an
Offering that certain employees who are highly compensated employees within the
meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
participate.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">6.&#160;&#160;&#160;RIGHTS;
PURCHASE PRICE.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;On
each Offering Date, each eligible employee, pursuant to an Offering made under
the Plan, shall be granted the right to purchase up to the number of shares of
Common Stock of the Company purchasable with a percentage designated by the
Board or the Committee not exceeding fifteen percent (15%) of such employee's
Earnings (as defined in subparagraph 7(a)) during the period which begins on the
Offering Date (or such later date as the Board or the Committee determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering.&#160;&#160;The Board or the
Committee shall establish one (1) or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such
Offering.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;In
connection with each Offering made under the Plan, the Board or the Committee
may specify a maximum number of shares that may be purchased by any employee as
well as a maximum aggregate number of shares that may be purchased by all
eligible employees pursuant to such Offering.&#160;&#160;In addition, in
connection with each Offering that contains more than one (1) Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering.&#160;&#160;If the aggregate purchase of shares upon exercise of rights
granted under the Offering would exceed any such maximum aggregate number, the
Board or the Committee shall make a pro rata allocation of the shares available
in as nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(c)&#160;&#160;The
purchase price of stock acquired pursuant to rights granted under the Plan shall
be not less than the lesser of:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(i)&#160;&#160;an
amount equal to eighty-five percent (85%) of the fair market value of the stock
on the Offering Date; or</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(ii)
an amount equal to eighty-five percent (85%) of the fair market value of the
stock on the Purchase Date.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">7.&#160;&#160;&#160;PARTICIPATION;
WITHDRAWAL; TERMINATION.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;An
eligible employee may become a participant in the Plan pursuant to an Offering
by delivering an enrollment agreement to the Company within the time specified
in the Offering, in such form as the Company provides.&#160;&#160;Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering.&#160;&#160;"Earnings" is defined as an employee's regular salary or
wages(including amounts thereof elected to be deferred by the employee, that
would otherwise have been paid, under any arrangement established by the Company
that is intended to comply with Section 125, Section 401(k), Section 402(e)(3),
Section 402(h) or section 403(b) of the Code, and also including any deferrals
under a non-qualified deferred compensation plan or arrangement established by
the Company), and also, if determined by the Board or the Committee and set
forth in the terms of the Offering, may include any or all of the following:
(i)overtime pay, (ii) commissions, (iii) bonuses, incentive pay, profit sharing
and other remuneration paid directly to the employee, and/or (iv) other items of
remuneration not specifically excluded pursuant to the Plan.&#160;&#160;Earnings
shall not include the cost of employee benefits paid for by the Company or an
Affiliate, education or tuition reimbursements, imputed income arising under any
group insurance or benefit program, traveling expenses, business and moving
expense reimbursements, income received in connection with stock options,
contributions made by the Company or an Affiliate under any employee benefit
plan, and similar items of compensation, as determined by the Board or the
Committee. Notwithstanding the foregoing, the Board or Committee may modify the
definition of "Earnings" with respect to one or more Offerings as the Board or
Committee determines appropriate.&#160;&#160;The payroll deductions made for
each participant shall be credited to an account for such participant under the
Plan and shall be deposited with the general funds of the Company.&#160;&#160;A
participant may reduce(including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering.&#160;&#160;A participant
may make additional payments into his or her account only if specifically
provided for in the Offering and only if the participant has not had the maximum
amount withheld during the Offering.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;At
any time during an Offering, a participant may terminate his or her payroll
deductions under the Plan and withdraw from the Offering by delivering to the
Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Offering except as
provided by the Board or the Committee in the Offering.&#160;&#160;Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated.&#160;&#160;A
participant's withdrawal from an Offering will have no effect upon such
participant's eligibility to participate in any other Offerings under the Plan
but such participant will be required to deliver a new enrollment agreement in
order to participate in subsequent Offerings under the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(c)&#160;&#160;Rights
granted pursuant to any Offering under the Plan shall terminate immediately upon
cessation of any participating employee's employment with the Company and any
designated Affiliate, for any reason, and the Company shall distribute to such
terminated employee all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(d)&#160;&#160;Rights
granted under the Plan shall not be transferable by a participant other than by
will or the laws of descent and distribution, or by a beneficiary designation as
provided in paragraph 14, and during a participant's lifetime, shall be
exercisable only by such participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">8.&#160;&#160;&#160;EXERCISE.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;On
each Purchase Date specified therefor in the relevant Offering, each
participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of Common Stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase one or more whole shares of
Common Stock on the final Purchase Date of an Offering shall be distributed in
full to the participant after such Purchase Date, without interest.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;No
rights granted under the Plan may be exercised to any extent unless the shares
to be issued upon such exercise under the Plan (including rights granted
thereunder) are covered by an effective registration statement pursuant to the
Securities Act of 1933, as amended (the "Securities Act") and the Plan is in
material compliance with all applicable state, foreign and other securities and
other laws applicable to the Plan.&#160;&#160;If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date.&#160;&#160;If on the Purchase Date of any Offering hereunder, as delayed
to the maximum extent permissible, the Plan is not registered and in such
compliance, no rights granted under the Plan or any Offering shall be exercised
and all payroll deductions accumulated during the Offering (reduced to the
extent, if any, such deductions have been used to acquire stock) shall be
distributed to the participants, without interest.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">9.&#160;&#160;&#160;COVENANTS
OF THE COMPANY.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;During
the terms of the rights granted under the Plan, the Company shall keep available
at all times the number of shares of Common Stock required to satisfy such
rights.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;The
Company shall seek to obtain from each federal, state, foreign or other
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of the rights
granted under the Plan.&#160;&#160;If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">10.&#160;&#160;USE
OF PROCEEDS FROM STOCK.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;Proceeds
from the sale of stock pursuant to rights granted under the Plan shall
constitute general funds of the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">11.&#160;&#160;RIGHTS
AS A STOCKHOLDER.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;A
participant shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to rights granted under
the Plan unless and until the participant's shareholdings acquired upon exercise
of rights under the Plan are recorded in the books of the Company (or its
transfer agent).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">12.&#160;&#160;ADJUSTMENTS
UPON CHANGES IN STOCK.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;If
any change is made in the stock subject to the Plan, or subject to any rights
granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and outstanding rights will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights.&#160;&#160;Such adjustments shall be made by the
Board or the Committee, the determination of which shall be final, binding and
conclusive.&#160;&#160;(The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;In
the event of:&#160;&#160;(1) a dissolution or liquidation of the Company; (2) a
sale of all or substantially all of the assets of the Company; (3) a merger or
consolidation in which the Company is not the surviving corporation; (4) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; (5) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,
or comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors; or (6) the individuals who, as of the date of the
adoption of this Plan, are members of the Board (the "Incumbent Board";(if the
election, or nomination for election by the Company's stockholders, of a new
director was approved by a vote of at least fifty percent (50%) of the members
of the Board then comprising the Incumbent Board, such new director shall upon
his or her election be considered a member of the Incumbent Board) cease for any
reason to constitute at least fifty percent (50%) of the Board; then the Board
in its sole discretion may take any action or arrange for the taking of any
action among the following: (i) any surviving or acquiring corporation may
assume outstanding rights or substitute similar rights for those under the Plan,
(ii) such rights may continue in full force and effect, or (iii) all
participants' accumulated payroll deductions may be used to purchase Common
Stock immediately prior to or within a reasonable period of time following the
transaction described above and the participants' rights under the ongoing
Offering terminated.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">13.&#160;&#160;AMENDMENT
OF THE PLAN OR OFFERINGS.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;The
Board at any time, and from time to time, may amend the Plan or the terms of one
or more Offerings. However, except as provided in paragraph 12 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(i)&#160;&#160;&#160;Increase
the number of shares reserved for rights under the Plan;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(ii)&#160;&#160;Modify
the provisions as to eligibility for participation in the Plan or an Offering
(to the extent such modification requires stockholder approval in order for the
Plan to obtain employee stock purchase plan treatment under Section 423 of the
Code or to comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, or any comparable successor rule ("Rule 16b-3"); or</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(iii)
Modify the Plan or an Offering in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements
of Rule 16b-3.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">It is
expressly contemplated that the Board may amend the Plan or an Offering in any
respect the Board deems necessary or advisable to provide eligible employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to employee stock
purchase plans and/or to bring the Plan and/or rights granted under an Offering
into compliance therewith.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;The
Board may, in its sole discretion, submit any amendment to the Plan or an
Offering for stockholder approval.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(c)&#160;&#160;Rights
and obligations under any rights granted before amendment of the Plan or
Offering shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as necessary
to comply with any laws or governmental regulations, or except as necessary to
ensure that the Plan and/or rights granted under an Offering comply with the
requirements of Section 423 of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">14.&#160;&#160;DESIGNATION
OF BENEFICIARY.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;A
participant may file a written designation of a beneficiary who is to receive
any shares and cash, if applicable, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;Such
designation of beneficiary may be changed by the participant at any time by
written notice in the form prescribed by the Company. In the event of the death
of a participant and in the absence of a beneficiary validly designated under
the Plan who is living (or if an entity, is otherwise in existence) at the time
of such participant's death, the Company shall deliver such shares and/or cash
to the executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its sole discretion, may deliver such shares and/or cash to the
spouse or to any one (1) or more dependents or relatives of the participant, or
if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may determine.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">15.&#160;&#160;TERMINATION
OR SUSPENSION OF THE PLAN.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(a)&#160;&#160;The
Board in its discretion, may suspend or terminate the Plan at any
time.&#160;&#160;The Plan shall automatically terminate if all the shares
subject to the Plan pursuant to subparagraph 3(a) are issued.&#160;&#160;No
rights may be granted under the Plan while the Plan is suspended or after it is
terminated.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;(b)&#160;&#160;Rights
and obligations under any rights granted while the Plan is in effect shall not
be impaired by suspension or termination of the Plan, except as expressly
provided in the Plan or with the consent of the person to whom such rights were
granted, or except as necessary to comply with any laws or governmental
regulation, or except as necessary to ensure that the Plan and/or rights granted
under an Offering comply with the requirements of Section 423 of the
Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">16.&#160;&#160;EFFECTIVE
DATE OF PLAN.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;The
Plan shall become effective on the same day on which the Company's registration
statement under the Securities Act with respect to the initial public offering
of shares of the Company's Common Stock becomes effective (the "Effective
Date"), but no rights granted under the Plan shall be exercised unless and until
the Plan had been approved by the stockholders of the Company within twelve (12)
months before or after the date the Plan is adopted by the Board or the
Committee, which date may be prior to the Effective Date.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">17.&#160;&#160;CHOICE
OF LAW.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;All
questions concerning the construction, validity and interpretation of this Plan
shall be governed by the law of the State of California, without regard to such
state's conflict of laws rules.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div><br>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">Exhibit
99.2&#160; </font></div>
      </div>
    </div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold">KRATOS
DEFENSE &amp; SECURITY SOLUTIONS, INC.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold">AMENDED
AND RESTATED</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold">2005
EQUITY INCENTIVE PLAN</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">AMENDED
AND RESTATED AS OF MARCH 17, 2010</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">1.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Establishment, Purpose and
Term of Plan</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">1.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Establishment</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;The
Kratos Defense &amp; Security Solutions, Inc. 2005 Equity Incentive Plan (the
<font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Plan</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>) is hereby established
effective as of May 18, 2005, the date of its approval by the stockholders of
the Company (the <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Effective
Date</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">1.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Purpose</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;The
purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and
reward persons performing services for the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group.&#160;&#160;The Plan seeks to achieve this purpose
by providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares, Performance Units, Restricted Stock Units,
Deferred Stock and Other Stock-Based Awards.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">1.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Term of Plan.</font>&#160;&#160;The
Plan shall continue in effect until the earlier of its termination by the Board
or the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Awards granted under the Plan have
lapsed.&#160;&#160;However, all Incentive Stock Options shall be granted, if at
all, within ten (10) years from the Effective Date.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Definitions and
Construction</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Definitions. </font>Whenever used
herein, the following terms shall have their respective meanings set forth
below:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Affiliate</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means (i)&#160;an entity,
other than a Parent Corporation, that directly, or indirectly through one or
more intermediary entities, controls the Company or (ii)&#160;an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly, or
indirectly through one or more intermediary entities.&#160;&#160;For this
purpose, the term &#8220;control&#8221; (including the term &#8220;controlled by&#8221;) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of the relevant entity, whether through the
ownership of voting securities, by contract or otherwise; or shall have such
other meaning assigned such term for the purposes of registration on Form S-8
under the Securities Act.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Award</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means any Option, SAR,
Restricted Stock, Performance Share, Performance Unit, Restricted Stock Unit,
Deferred Stock or Other Stock-Based Award granted under the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Award
Agreement</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means
a written agreement between the Company and a Participant setting forth the
terms, conditions and restrictions of the Award granted to the
Participant.&#160;&#160;An Award Agreement may be an &#8220;Option Agreement,&#8221; a &#8220;SAR
Agreement,&#8221; a &#8220;Restricted Stock Agreement,&#8221; a &#8220;Performance Share Agreement,&#8221; a
&#8220;Performance Unit Agreement,&#8221; a &#8220;Restricted Stock Unit Agreement,&#8221; a &#8220;Deferred
Stock Unit Agreement,&#8221; or an &#8220;Other Stock-Based Award Agreement.&#8221;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(d)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Board</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the Board of Directors of the Company.&#160;&#160;If one or more
Committees have been appointed by the Board to administer the Plan, <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Board</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
also means such Committee(s).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(e)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Code</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(f)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Committee</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the Compensation Committee or other committee of the Board duly appointed
to administer the Plan and having such powers as shall be specified by the
Board.&#160;&#160;Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(g)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Company</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means Kratos Defense &amp; Security Solutions, Inc., a Delaware corporation, or
any successor corporation thereto.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(h)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Consultant</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means a person engaged to provide consulting or advisory services (other than as
an Employee or a Director) to a Participating Company, provided that the
identity of such person, the nature of such services or the entity to which such
services are provided would not preclude the Company from offering or selling
securities to such person pursuant to the Plan in reliance on a Form S-8
Registration Statement under the Securities Act.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(i)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Covered
Employee</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means
an Employee who is, or could be, a &#8220;covered employee&#8221; within the meaning of
Section 162(m).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(j)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Deferred
Stock</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 9.3 of the Plan to receive a share of Stock on a date determined in
accordance with the Plan and the Participant&#8217;s Award Agreement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(k)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Director</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means a member of the Board or of the board of directors of any other
Participating Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(l)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Disability</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the inability of the Participant, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Participant&#8217;s
position with the Participating Company Group because of the sickness or injury
of the Participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(m)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Dividend
Equivalent</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>
means a credit, made at the discretion of the Board or as otherwise provided by
the Plan, to the account of a Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an
Award held by such Participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(n)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Employee</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means any person treated as an employee (including an Officer or a Director who
is also treated as an employee) in the records of a Participating Company and,
with respect to any Incentive Stock Option granted to such person, who is an
employee for purposes of Section 422 of the Code; provided, however, that
neither service as a Director nor payment of a director&#8217;s fee shall be
sufficient to constitute employment for purposes of the Plan.&#160;&#160;The
Company shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and the
effective date of such individual&#8217;s employment or termination of employment, as
the case may be.&#160;&#160;For purposes of an individual&#8217;s rights, if any,
under the Plan as of the time of the Company&#8217;s determination, all such
determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(o)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Exchange
Act</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the Securities Exchange Act of 1934, as amended.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(p)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Fair Market
Value</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means, as of any date, the value of a share of Stock or other property as
determined by the Board, in its discretion, or by the Company, in its
discretion, if such determination is expressly allocated to the Company herein,
subject to the following:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
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such date, the Stock is listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Stock shall be the closing
price of a share of Stock (or the mean of the closing bid and asked prices of a
share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq
National Market, The Nasdaq SmallCap Market or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in <font style="DISPLAY: inline; TEXT-DECORATION: underline">The Wall Street
Journal</font> or such other source as the Company deems reliable.&#160;&#160;If
the relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be determined
by the Board, in its discretion.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
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such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as
determined by the Board in good faith without regard to any restriction other
than a restriction which, by its terms, will never lapse.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(q)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Incentive Stock
Option</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means an Option intended to be (as set forth in the Award Agreement) and which
qualifies as an incentive stock option within the meaning of Section&#160;422(b)
of the Code.</font></div>
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    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(r)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Indexed
Option</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means an
Option with an exercise price which either increases by a fixed percentage over
time or changes by reference to a published index, as determined by the Board
and set forth in the Option Agreement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(s)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Insider</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means an Officer, a Director of the Company or other person whose transactions
in Stock are subject to Section&#160;16 of the Exchange Act.</font></div>
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the Participant will be issued a number of shares of Stock determined in
accordance with a formula X + Y(A-B) / A, where:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
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number of shares of Stock to be issued to the Participant upon exercise of the
Option;</font></div>
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total number of shares with respect to which the Participant has elected to
exercise the Option;</font></div>
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Fair Market Value of one (1) share of Stock;</font></div>
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exercise price per share (as defined in the Participant&#8217;s Award
Agreement).</font></div>
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    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(u)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Nonstatutory
Stock Option</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means an Option not intended to be (as set forth in the Award Agreement) or
which does not qualify as an Incentive Stock Option.</font></div>
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by the Board as an officer of the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(w)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Option</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means a right to purchase Stock pursuant to the terms and conditions of the
Plan.&#160;&#160;An Option may be either an Incentive Stock Option, a
Nonstatutory Stock Option or an Indexed Option.</font></div>
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    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(x)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Option Exchange
Program</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means
any program instituted by the Board which would permit either (i) Participants
the opportunity to transfer any outstanding Options and/or SARs to a financial
institution selected by the Board or (ii) the cancellation of outstanding
Options and/or SARs and the grant in substitution therefore of any new Awards or
cash awards, including specifically any new Options and/or SARs having a lower
exercise price.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
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Award</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means an
Award granted or denominated in Stock or units of Stock pursuant to Section 9.5
of the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(z)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Parent
Corporation</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means any present or future &#8220;parent corporation&#8221; of the Company, as defined in
Section&#160;424(e) of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(aa)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Participant</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means any eligible person
who has been granted one or more Awards.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(bb)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Participating
Company</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the Company or any Parent Corporation or Subsidiary Corporation or
Affiliate.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(cc)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Participating
Company Group</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means, at any point in time, all corporations collectively which are then
Participating Companies.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(dd)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance-Based
Award</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means an
Award granted to selected Covered Employees pursuant to Sections 8 and 9, but
which are subject to the terms and conditions set forth in Section
10.&#160;&#160;All Performance-Based Awards are intended to qualify as qualified
performance-based compensation under Section 162(m).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(ee)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance Bonus
Award</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means the
cash award set forth in Section 9.6</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(ff)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance
Goal</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means the
criteria that the Committee uses to establish qualified performance-based
compensation under Section 162(m) and the formulas for determining whether such
performance targets have been obtained.&#160;&#160;Such Performance Goals may be
based upon one or more Performance Measures, subject to the
following:&#160;&#160;Performance Measures shall have the same meanings as used
in the Company&#8217;s financial statements, or, if such terms are not used in the
Company&#8217;s financial statements, they shall have the meaning applied pursuant to
generally accepted accounting principles, or as used generally in the Company&#8217;s
industry.&#160;&#160;Performance Measures shall be calculated with respect to
the Company and each Subsidiary Corporation consolidated therewith for financial
reporting purposes or such division or other business unit as may be selected by
the Committee.&#160;&#160;For purposes of the Plan, the Performance Measures
applicable to a Performance-Based Award shall be calculated in accordance with
generally accepted accounting principles, but prior to the accrual or payment of
any Performance-Based Award for the same Performance Period and excluding the
effect (whether positive or negative) of any change in accounting standards or
any extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the
Performance-Based Award.&#160;&#160;Performance targets may include a minimum,
maximum, target level and intermediate levels of performance, with the final
value of a Performance-Based Award determined under the applicable
Performance-Based Award formula by the level attained during the applicable
Performance Period.&#160;&#160;A Performance target may be stated as an absolute
value or as a value determined relative to a standard selected by the
Committee.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(gg)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance
Measures</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> may be
one or more of the following, or a combination of the any of the following, as
determined by the Committee: (i) revenue; (ii) gross margin; (iii) operating
margin; (iv) operating income; (v) pre-tax profit; (vi) earnings before
interest, taxes, depreciation and amortization; (vii) net income; (viii) cash
flow; (ix) expenses; (x) the market price of the Stock; (xi) earnings per share;
(xii) return on stockholder equity; (xiii) return on capital; (xiv) return on
net assets; (xv) economic value added; (xvi) number of customers; (xvii) market
share; (xviii) return on investment; (xix) profit after tax; (xx) customer
satisfaction; (xxi) growth of earnings before interest and taxes; and (xxii)
days sales outstanding (&#8220;DSOs&#8221;).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(hh)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance
Period</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means a
period established by the Committee pursuant to Section 10 of the Plan at the
end of which one or more Performance Goals are to be measured.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(ii)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance
Share</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means a
right granted to a Participant pursuant to Section 9.1, to receive Stock, the
payment of which is contingent upon achieving certain Performance Goals or other
performance based targets established by the Committee.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(jj)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Performance
Unit</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 9.2 of the Plan to receive a payment equal to the value of a Performance
Unit, as determined by the Committee, based upon achieving certain Performance
Goals or other performance based targets.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(kk)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Restricted
Stock</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means
Stock granted to a Participant pursuant to Section&#160;8 of the Plan that is
subject to certain conditions (including any applicable Vesting Conditions), and
may be subject to risk of forfeiture.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(ll)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Restricted Stock
Unit</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> or <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Stock
Unit</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 9.4 of the Plan to receive the value associated with a share of Stock on
a date determined in accordance with the provisions of the Plan and the
Participant&#8217;s Award Agreement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(mm)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Restriction
Period</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means
the period established in accordance with Section 8 of the Plan during which
shares subject to a Restricted Stock Award are subject to Vesting
Conditions.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(nn)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Rule
16b-3</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means Rule&#160;16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(oo)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">SAR</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> or <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Stock
Appreciation Right</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means a bookkeeping entry
representing, for each share of Stock subject to such SAR, a right granted to a
Participant pursuant to Section 7 of the Plan to receive payment in Stock of an
amount equal to the excess, if any, of the Fair Market Value of a share of Stock
on the date of exercise of the SAR over the exercise price.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(pp)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Section
162(m)</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> means
Section 162(m) of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(qq)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Securities
Act</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the Securities Act of 1933, as amended.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(rr)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Service</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means a Participant&#8217;s employment or service with the Participating Company
Group, whether in the capacity of an Employee, a Director or a
Consultant.&#160;&#160;A Participant&#8217;s Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders Service to the Participating Company Group or a change in the
Participating Company for which the Participant renders such Service, provided
that there is no interruption or termination of the Participant&#8217;s
Service.&#160;&#160;Furthermore, an Participant&#8217;s Service with the Participating
Company Group shall not be deemed to have terminated if the Participant takes
any military leave, sick leave, or other bona fide leave of absence approved by
the Company; provided, however, that if any such leave exceeds ninety (90) days,
on the ninety-first (91st) day of such leave the Participant&#8217;s Service shall be
deemed to have terminated unless the Participant&#8217;s right to return to Service
with the Participating Company Group is guaranteed by statute or
contract.&#160;&#160;Notwithstanding the foregoing, unless otherwise designated
by the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant&#8217;s Option
Agreement.&#160;&#160;The Participant&#8217;s Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Participant performs Service ceasing to be a Participating
Company.&#160;&#160;Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant&#8217;s Service has terminated and the
effective date of such termination.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(ss)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Stock</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means the common stock of the Company, as adjusted from time to time in
accordance with Section&#160;4.2.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(tt)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Subsidiary
Corporation</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means any present or future &#8220;subsidiary corporation&#8221; of the Company, as defined
in Section&#160;424(f) of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(uu)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Ten Percent Owner
Participant</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
means an Participant who, at the time an Option is granted to the Participant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of a Participating Company (other than an
Affiliate) within the meaning of Section&#160;422(b)(6) of the
Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(vv)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Vesting
Conditions</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> mean
those conditions established in accordance with the Plan prior to the
satisfaction of which shares subject to a Restricted Stock Award or Restricted
Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participant&#8217;s termination of
Service.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Construction.</font>&#160;&#160;Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan.&#160;&#160;Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular.&#160;&#160;Use of the term &#8220;or&#8221; is not
intended to be exclusive, unless the context clearly requires
otherwise.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Administration</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Administration by the
Board.</font>&#160;&#160;The Plan shall be administered by the
Board.&#160;&#160;All questions of interpretation of the Plan or of any Award
shall be determined by the Board, and such determinations shall be final and
binding upon all persons having an interest in the Plan or such
Award.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Authority of
Officers.</font>&#160;&#160;Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.&#160;&#160;The
Board may, in its discretion, delegate to a committee comprised of one or more
Officers the authority to grant one or more Awards, without further approval of
the Board or the Committee, to any Employee, other than a person who, at the
time of such grant, is an Insider; provided, however, that (a)&#160;such Awards
shall not be granted for shares in excess of the maximum aggregate number of
shares of Stock authorized for issuance pursuant to Section 4.1, (b)&#160;the
exercise price per share of each Option shall be not less than the Fair Market
Value per share of the Stock on the effective date of grant (or, if the Stock
has not traded on such date, on the last day preceding the effective date of
grant on which the Stock was traded), and (iii)&#160;each such Award shall be
subject to the terms and conditions of the appropriate standard form of Award
Agreement approved by the Board or the Committee and shall conform to the
provisions of the Plan and such other guidelines as shall be established from
time to time by the Board or the Committee.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Powers of the Board</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;In
addition to any other powers set forth in the Plan and subject to the provisions
of the Plan, the Board shall have the full and final power and authority, in its
discretion:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
determine the persons to whom, and the time or times at which, Awards shall be
granted and the number of shares of Stock or units to be subject to each
Award;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
designate Options as Incentive Stock Options, Nonstatutory Stock Options or
Indexed Options;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
determine the type(s) of Other Stock-Based Awards, and their terms and
conditions that may be granted under the Plan;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(d)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
determine the Fair Market Value of shares of Stock or other
property;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(e)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
determine the terms, conditions and restrictions applicable to each Award (which
need not be identical) and any shares acquired upon the exercise thereof,
including, without limitation, (i) the exercise or purchase price of shares
purchased pursuant to any Award, (ii) the method of payment for shares purchased
pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Award, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the
exercisability of the Award or the vesting of any Award of any shares acquired
pursuant thereto, (v) the Performance Goals applicable to any Award and the
extent to which such Performance Goals have been attained, (vi)&#160;&#160;the
time of the expiration of any Award, (vii) the effect of the Participant&#8217;s
termination of Service with the Participating Company Group on any of the
foregoing, and (viii) all other terms, conditions and restrictions applicable to
any Award or shares acquired pursuant thereto not inconsistent with the terms of
the Plan;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(f)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(g)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
approve one or more forms of Award Agreement;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(h)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to amend,
modify, extend, cancel or renew any Award or to waive restrictions or conditions
applicable to any Award or any shares acquired pursuant thereto, provided that
the Board does not have the authority to accelerate or waive the restriction
periods of any of the stock-based Awards itemized in Section 9 of the Plan,
except with respect to the death, disability or retirement of such Award
holder(s) or under such circumstances as set forth in Section 12.2 of the
Plan;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(i)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
accelerate, continue, extend or defer the exercisability of any Award or any
shares acquired pursuant thereto, including with respect to the period following
a Participant&#8217;s termination of Service with the Participating Company Group,
provided that the Board does not have the authority to accelerate or waive the
restriction periods of any of the stock-based Awards itemized in Section 9 of
the Plan, except with respect to the death, disability or retirement of such
Award holder(s) or under such circumstances as set forth in Section 12.2 of the
Plan;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(j)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
prescribe, amend or rescind rules, guidelines and policies relating to the Plan,
or to adopt sub-plans or supplements to, or alternative versions of, the Plan,
including, without limitation, as the Board deems necessary or desirable to
comply with the laws or regulations of, or to accommodate the tax policy,
financial accounting or custom of, foreign jurisdictions whose citizens may be
granted Awards;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(k)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
authorize, in conjunction with any applicable Company deferred compensation
plan, that the receipt of cash or Stock subject to any Award under this Plan,
may be deferred under the terms and conditions of such Company deferred
compensation plan; and</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(l)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">to
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Award as the Board may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Administration with Respect to
Insiders.</font>&#160;&#160;With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered
pursuant to Section&#160;12 of the Exchange Act, the Plan shall be administered
in compliance with the requirements, if any, of Rule&#160;16b-3.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.5</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Committee Complying with
Section&#160;162(m).</font>&#160;&#160;If the Company is a &#8220;publicly held
corporation&#8221; within the meaning of Section&#160;162(m), the Board may establish
a Committee of &#8220;outside directors&#8221; within the meaning of Section&#160;162(m) to
approve the grant of any Option which might reasonably be anticipated to result
in the payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section&#160;162(m).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.6</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">No Repricings, Exchanges or
Buyouts.</font>&#160;&#160;Without the affirmative vote of holders of a majority
of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all
outstanding shares of Stock is present or represented by proxy, the Board shall
not approve (i) a program providing for the amendment of outstanding Options
and/or SARs to reduce the exercise price thereof or (ii) an Option Exchange
Program.&#160;&#160;This paragraph shall not be construed to apply to, and a
stockholder approval shall not be required for, the following
actions:&#160;&#160;(x) &#8220;issuing or assuming a stock option in a transaction to
which section 424(a) applies,&#8221; within the meaning of Section 424 of the Code,
(ii) adjusting outstanding Awards pursuant to Section 4.6 of the Plan in
connection with certain changes in the capital structure of the Company, or
(iii) the treatment of outstanding Awards pursuant to Section 12 of the Plan in
connection with a Change in Control.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.7</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Indemnification.</font>&#160;&#160;In
addition to such other rights of indemnification as they may have as members of
the Board or officers or employees of the Participating Company Group, members
of the Board and any officers or employees of the Participating Company Group to
whom authority to act for the Board or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys&#8217;
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">4.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Shares Subject to
Plan</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">4.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Maximum Number of Shares
Issuable.</font>&#160;&#160;Subject to adjustment as provided in
Section&#160;4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan shall be One Million Nine Hundred Thousand
(1,900,000).&#160;&#160;This share reserve shall consist of authorized but
unissued or reacquired shares of Stock or any combination thereof.&#160;&#160;If
any outstanding Award for any reason expires or is terminated or canceled
without having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company, the shares of Stock allocable to the terminated
portion of such Award, or such forfeited or repurchased shares of Stock shall
again be available for grant under the Plan.&#160;&#160;Notwithstanding anything
in the Plan, or any Award Agreement to the contrary, shares underlying Options
transferred under any Option Exchange Program described in Section 2.1(x)(i)
shall not be again available for grant under the Plan.&#160;&#160;Shares of
Stock shall not be deemed to have been granted pursuant to the Plan
(a)&#160;with respect to any portion of an Award that is settled in cash or
(b)&#160;to the extent such shares are withheld in satisfaction of tax
withholding obligations pursuant to Section 15.&#160;&#160;Upon payment in
shares of Stock pursuant to the exercise of a SAR, the number of shares
available for grant under the Plan shall be reduced only by the number of shares
actually issued in such payment.&#160;&#160;If the exercise price of an Option
is paid by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant, the number of shares available for grant under
the Plan shall be reduced by the net number of shares for which the Option is
exercised.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">4.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Adjustments for Changes in Capital
Structure</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;In
the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the capital
structure of the Company, appropriate adjustments shall be made in the number
and class of shares subject to the Plan and to any outstanding Awards, in the
Section 162(m) Grant Limit set forth in Section 5.4 and in the exercise price or
purchaser price of any outstanding Awards.&#160;&#160;If a majority of the
shares which are of the same class as the shares that are subject to outstanding
Awards are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event, as defined in Section&#160;12.1) shares
of another corporation (the <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">New
Shares</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>),
the Board may unilaterally amend the outstanding Awards to provide that such
Awards are accurately reflected for New Shares.&#160;&#160;In the event of any
such amendment, the number of shares subject to, and the exercise price and/or
purchase price per share of, the outstanding Awards (if any) shall be adjusted
in a fair and equitable manner as determined by the Board, in its
discretion.&#160;&#160;Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section&#160;4.2 shall be rounded
down to the nearest whole number, and in no event may the exercise price and/or
purchase price of any Award be decreased to an amount less than the par value,
if any, of the stock subject to the Award.&#160;&#160;The adjustments determined
by the Board pursuant to this Section&#160;4.2 shall be final, binding and
conclusive.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">5.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Eligibility and Award
Limitations</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">5.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Persons Eligible for
Awards</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;Awards
may be granted only to Employees, Consultants, and Directors.&#160;&#160;For
purposes of the foregoing sentence, <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font>Employees,<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font>Consultants<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font> and <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font>Directors<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font> shall include
prospective Employees, prospective Consultants and prospective Directors to whom
Awards are granted in connection with written offers of an employment or other
service relationship with the Participating Company Group; provided, however,
that no Stock subject to any such Award shall vest, become exercisable or be
issued prior to the date on which such person commences Service.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">5.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Participation.</font>&#160;&#160;&#160;Awards
are granted solely at the discretion of the Board.&#160;&#160;Eligible persons
may be granted more than one (1) Award.&#160;&#160;However, eligibility in
accordance with this Section shall not entitle any person to be granted an
Award, or, having been granted an Award, to be granted an additional
Award.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">5.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Incentive Stock Option
Limitations</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Persons
Eligible</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.&#160;&#160;</font>An Incentive
Stock Option may be granted only to a person who, on the effective date of
grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">ISO-Qualifying
Corporation</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>).&#160;&#160;Any person who
is not an Employee of an ISO-Qualifying Corporation on the effective date of the
grant of an Option to such person may be granted only a Nonstatutory Stock
Option.&#160;&#160;An Incentive Stock Option granted to a prospective Employee
upon the condition that such person become an Employee of an ISO-Qualifying
Corporation shall be deemed granted effective on the date such person commences
Service with an ISO-Qualifying Corporation, with an exercise price determined as
of such date in accordance with Section&#160;6.1.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Fair Market Value
Limitation</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;To
the extent that options designated as Incentive Stock Options (granted under all
stock option plans of the Participating Company Group, including the Plan)
become exercisable by a Participant for the first time during any calendar year
for stock having a Fair Market Value greater than One Hundred Thousand dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options.&#160;&#160;For purposes of this Section,
options designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is
granted.&#160;&#160;If the Code is amended to provide for a different limitation
from that set forth in this Section, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code.&#160;&#160;If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section, the Participant
may designate which portion of such Option the Participant is
exercising.&#160;&#160;In the absence of such designation, the Participant shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first.&#160;&#160;Upon exercise, shares issued pursuant to each such portion
shall be separately identified.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">5.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Section 162(m) Award
Limits.</font>&#160;&#160;The following limits shall apply to the grant of any
Award if, at the time of grant, the Company is a &#8220;publicly held corporation&#8221;
within the meaning of Section&#160;162(m).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(i)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Options and
SARs.</font>&#160;&#160;Subject to adjustment as provided in Section&#160;4.2,
no Employee shall be granted within any fiscal year of the Company one or more
Options or Freestanding SARs which in the aggregate are for more than Two
Million (2,000,000) shares of Stock, provided, however, that the Company may
make an additional one-time grant to any newly-hired Employee of an Option
and/or SAR for the purchase of up to an additional One Million (1,000,000)
shares of Stock.&#160;&#160;An Option which is canceled (or a Freestanding SAR
as to which the exercise price is reduced to reflect a reduction in the Fair
Market Value of the Stock) in the same fiscal year of the Company in which it
was granted shall continue to be counted against such limit for such fiscal
year.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(ii)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Restricted Stock and Restricted Stock
Units.</font>&#160;&#160;Subject to adjustment as provided in Section&#160;4.2,
no Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Units, subject to Vesting Conditions
based on the attainment of Performance Goals, for more than Two Million
(2,000,000) shares of Stock, provided, however, that the Company may make an
additional one-time grant to any newly-hired Employee of a Restricted Stock
Award or Restricted Stock Units of up to an additional One Million (1,000,000)
shares of Stock.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(iii)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Performance Shares and Performance
Units.</font>&#160;&#160;Subject to adjustment as provided in Section 4.2, no
Employee shall be granted (A) Performance Shares which could result in such
Employee receiving more than Two Million (2,000,000) shares of Stock for each
full fiscal year of the Company contained in the Performance Period for such
Award, or (B)&#160;Performance Units which could result in such Employee
receiving more than $1,000,000 for each full fiscal year of the Company
contained in the Performance Period for such Award.&#160;&#160;No Participant
may be granted more than one Performance Share or Performance Unit for the same
Performance Period.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(iv)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Performance Bonus
Awards.</font>&#160;&#160;No Employee shall be paid a Performance Bonus Award
pursuant to Section 9.6 which is greater than $1,000,000 for each full fiscal
year of the Company contained in the Performance Period for such
award.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; TEXT-DECORATION: underline">Terms
and Conditions of Options</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Options shall be evidenced by Award
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish.&#160;&#160;No Option or
purported Option shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.&#160;&#160;Award Agreements
evidencing Options may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise Price</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;The
exercise price for each Option shall be established in the discretion of the
Board; provided, however, that (a)&#160;the exercise price per share for an
Option shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the Option, (b)&#160;no Incentive Stock Option
granted to a Ten Percent Owner Participant shall have an exercise price per
share less than one hundred ten percent (110%) of the Fair Market Value of a
share of Stock on the effective date of grant of the Option, and (c)
notwithstanding anything to the contrary in this Section 6.1, in the case of an
Indexed Option, the Board shall determine the exercise price of such Indexed
Option and the terms and conditions that affect, if any, any adjustments to the
exercise price of such Indexed Option.&#160;&#160;Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than the minimum exercise
price set forth above if such Option is granted pursuant to an assumption or
substitution for another option in a manner qualifying under the provisions of
Section&#160;424(a) of the Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercisability and Term of
Options</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;Options
shall be exercisable at such time or times, or upon such event or events, and
subject to such terms, conditions, performance criteria and restrictions as
shall be determined by the Board and set forth in the Award Agreement evidencing
such Option; provided, however, that (a)&#160;no Option shall be exercisable
after the expiration of ten (10) years after the effective date of grant of such
Option, (b)&#160;no Incentive Stock Option granted to a Ten Percent Owner shall
be exercisable after the expiration of five (5) years after the effective date
of grant of such Option, and (c)&#160;no Option granted to a prospective
Employee, prospective Consultant or prospective Director may become exercisable
prior to the date on which such person commences Service with a Participating
Company.&#160;&#160;Subject to the foregoing, unless otherwise specified by the
Board in the grant of an Option, any Option granted hereunder shall terminate
ten (10) years after the effective date of grant of the Option, unless earlier
terminated in accordance with its provisions.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Payment
of Exercise Price.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Forms of
Consideration Authorized.</font>&#160;&#160;Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i)&#160;in cash, by check or cash
equivalent, (ii)&#160;by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii)&#160;by delivery of a properly executed notice of
exercise together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation&#160;T as promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Cashless
Exercise</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>),
(iv)&#160;provided that the Participant is an Employee (unless otherwise not
prohibited by law, including, without limitation, any regulation promulgated by
the Board of Governors of the Federal Reserve System) and in the Company&#8217;s sole
discretion at the time the Option is exercised, by delivery of the Participant&#8217;s
promissory note in a form approved by the Company for the aggregate exercise
price, provided that, if the Company is incorporated in the State of Delaware,
the Participant shall pay in cash that portion of the aggregate exercise price
not less than the par value of the shares being acquired, (v) by delivery of a
properly executed notice of exercise electing a Net-Exercise, (vi) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vii)&#160;by any combination
thereof.&#160;&#160;The Board may at any time or from time to time, by approval
of or by amendment to the standard forms of Award Agreement described in
Section&#160;11, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Limitations
on Forms of Consideration.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(i)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Tender of
Stock.</font>&#160;&#160;Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company&#8217;s stock.&#160;&#160;Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the
Participant for more than six (6) months (and not used for another Option
exercise by attestation during such period) or were not acquired, directly or
indirectly, from the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(ii)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Cashless
Exercise.</font>&#160;&#160;The Company reserves, at any and all times, the
right, in the Company&#8217;s sole and absolute discretion, to establish, decline to
approve or terminate any program or procedures for the exercise of Options by
means of a Cashless Exercise, including with respect to one or more Participants
specified by the Company notwithstanding that such program or procedures may be
available to other Participants.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(iii)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Payment by Promissory
Note.</font>&#160;&#160;No promissory note shall be permitted if the exercise of
an Option using a promissory note would be a violation of any
law.&#160;&#160;Any permitted promissory note shall be on such terms as the
Board shall determine.&#160;&#160;The Board shall have the authority to permit
or require the Participant to secure any promissory note used to exercise an
Option with the shares of Stock acquired upon the exercise of the Option or with
other collateral acceptable to the Company.&#160;&#160;Unless otherwise provided
by the Board, if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Company&#8217;s securities, any promissory note shall comply with such applicable
regulations, and the Participant shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 144pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(iv)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Net-Exercise.</font>&#160;&#160;The
Company reserves, at any and all times, the right, in the Company&#8217;s sole and
absolute discretion, to grant Incentive Stock Options (or to grant, or amend,
any Nonstatutory Options) to provide that such Options may be exercised by the
means of a Net-Exercise, including with respect to one or more Participants
specified by the Company notwithstanding that such program or procedures may be
available to other Participants.&#160;&#160;No Option will be granted (or
amended in the case of a Nonstatutory Stock Option) to permit a Net-Exercise
prior to the effectiveness of the Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 123R.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Effect of Termination of
Service.</font>&#160;&#160;An Option shall be exercisable after a Participant&#8217;s
termination of Service to such extent and during such period as determined by
the Board, in its discretion, and set forth in the Award Agreement evidencing
such Option.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.5</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Transferability of
Options.</font>&#160;&#160;During the lifetime of the Participant, an Option
shall be exercisable only by the Participant or the Participant&#8217;s guardian or
legal representative.&#160;&#160;Prior to the issuance of shares of Stock upon
the exercise of an Option, the Option shall not be subject in any manner to
anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant&#8217;s
beneficiary, except transfer by will or by the laws of descent and
distribution.&#160;&#160;Notwithstanding the foregoing, to the extent permitted
by the Board, in its discretion, and set forth in the Award Agreement evidencing
such Option, a Nonstatutory Stock Option shall be assignable or transferable
subject to the applicable limitations, if any, described in the General
Instructions to Form&#160;S-8 Registration Statement under the Securities
Act.&#160;&#160;Notwithstanding any of the foregoing, the Board may permit
further transferability of any Option, on a general or specific basis, and may
impose conditions and limitations on any permitted
transferability.&#160;&#160;Notwithstanding any of the foregoing, the Board may
permit further transferability of any Option, on a general or specific basis, to
third parties in connection with an Option Exchange Program established and
approved by the Board pursuant to which Participant&#8217;s may receive a cash
payment, or other consideration, in exchange for the transfer of such Option,
and the Board may impose any conditions and limitations on any permitted
transferability and may amend, without Participant consent, any outstanding
Option as may be necessary to facilitate the transfer of such Option under any
Option Exchange Program.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Terms and Conditions of
Stock Appreciation Rights</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Stock
Appreciation Rights shall be evidenced by Award Agreements specifying the number
of shares of Stock subject to the Award, in such form as the Board shall from
time to time establish.&#160;&#160;No SAR or purported SAR shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement.&#160;&#160;Award Agreements evidencing SARs may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Types of SARs
Authorized.</font>&#160;&#160;SARs may be granted in tandem with all or any
portion of a related Option (a <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Tandem
SAR</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>) or may be
granted independently of any Option (a <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Freestanding
SAR</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>).&#160;&#160;A Tandem SAR
may be granted either concurrently with the grant of the related Option or at
any time thereafter prior to the complete exercise, termination, expiration or
cancellation of such related Option.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise Price and Other
Terms.</font>&#160;&#160;The Board, subject to the provisions of the Plan, will
have complete discretion to determine the terms and conditions of each SAR
granted under the Plan; provided, however, that (a)&#160;the exercise price per
share subject to a Tandem SAR shall be the exercise price per share under the
related Option and (b)&#160;the exercise price per share subject to a
Freestanding SAR shall be not less than the Fair Market Value of a share of
Stock on the effective date of grant of the SAR.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise of
SARs.</font>&#160;&#160;SARs will be exercisable on such terms and conditions as
the Board, in its sole and absolute discretion, will determine.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Award
Agreement.&#160;&#160;</font>Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the Board, in its
sole discretion, will determine.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.5</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Expiration of
SARs.</font>&#160;&#160;Each SAR grant under the Plan will expire upon the date
determined by the Board, in its sole discretion, and set forth in the Award
Agreement.&#160;&#160;Notwithstanding the foregoing, the requirements of
Sections 6.2, 6.3, 6.4 and 6.5 also will apply to SARs to the extent not
replaced or superseded by the terms of any Award Agreement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Terms and Conditions of
Restricted Stock Awards</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Restricted
Stock Awards shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Board shall from time
to time establish.&#160;&#160;No Restricted Stock Award or purported Restricted
Stock Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.&#160;&#160;Award Agreements
evidencing Restricted Stock Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Grant of Restricted
Stock.</font>&#160;&#160;The Board is authorized to make Awards of Restricted
Stock to any Participant selected by the Board in such amounts and subject to
such terms and conditions as determined by the Board.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Issuance and
Restrictions.&#160;&#160;</font>Restricted Stock Awards will be subject to such
restrictions on transferabilty and other restrictions as the Board may impose
(inlcuding, without limitation, limitations on the right to vote shares of Stock
or the right to receive dividends on the Stock).&#160;&#160;These restrictions
may lapse separately or in combination at such times, pursuant to such
circumstances, in such installments, or otherwise, as the Board determines at
the time of the grant of the Award or thereafter.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Forfeiture.&#160;&#160;</font>Except
as otherwise determined by the Board at the time of grant of the Award or
thereafter, upon termination of Service during the applicable Restriction
Period, Restricted Stock that is at that time subject to restrictions will be
forefeited; provided, however, that the Board may (a) provide in any Restricted
Stock Award Agreement that restrictions or forfeiture conditions will be waived
in whole or in part in the event of terminations resulting from specified
causes, and (b) in other cases waive in whole or in part restrictions or
forfeiture conditions.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Voting Rights; Dividends and
Distributions.</font>&#160;&#160;Except as may be provided in any Award
Agreement, during the Restriction Period applicable to shares subject to a
Restricted Stock Award, the Participant shall have all of the rights of a
stockholder of the Company holding shares of Stock, including the right to vote
such shares and to receive all dividends and other distributions paid with
respect to such shares.&#160;&#160;However, in the event of a dividend or
distribution paid in shares of Stock or any other adjustment made upon a change
in the capital structure of the Company as described in Section 4.2, then any
and all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant is entitled by reason of the
Participant&#8217;s Restricted Stock Award shall be immediately subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid or adjustments were
made.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Terms and Conditions of
Other Types of Awards</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Other
types of Awards, such as Performance Shares, Performance Units, Deferred Stock,
Restricted Stock Units, Other Stock-Based Awards and Performance Bonus Awards
(collectively a <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Other Types of
Award</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>) shall be
evidenced by Award Agreements specifying the type of Award and the number of
shares of Stock subject to the Award, in such form as the Board shall from time
to time establish.&#160;&#160;No Other Type of Award or purported Award shall be
a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement.&#160;&#160;Award Agreements evidencing any Other Type
of Award may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and
conditions:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Performance
Shares.</font>&#160;&#160;Any Participant selected by the Committee may be
granted one or more Performance Share awards which will be denominated in a
number of shares of Stock and which may be linked to any one or more of the
Performance Goals or other specific performance criteria determined appropriate
by the Committee, in each case on a specified date or dates or over any period
or periods determined by the Committee.&#160;&#160;In making such
determinations, the Committee will consider (among other such factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular
Participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Performance
Units.</font>&#160;&#160;Any Participant selected by the Committee may be
granted one or more Performance Unit awards which will be denominated in units
of value, which, without limitation, may include the dollar value of shares of
Stock, and which may be linked to any one or more of the Performance Goals or
other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee.&#160;&#160;In making such determinations, the Committee will
consider (among other such factors as it deems relevant in light of the specific
type of Award) the contributions, responsibilities and other compensation of the
particular Participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Deferred Stock.</font>&#160;&#160;Any
Participant selected by the Board may be granted an award of Deferred Stock in
the manner determined from time to time by the Board.&#160;&#160;The number of
shares of Deferred Stock will be determined by the Board and may be linked to
the Performance Goals or other specific performance criteria determined to be
appropriate by the Board, in each case on a specified date or dates or over any
period or periods determined by the Board.&#160;&#160;Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee, or upon such settlement date as may be elected by the
Participant.&#160;&#160;Unless otherwise provided by the Board, a Participant
awarded Deferred Stock will have no rights as a Company stockholder with respect
to such Deferred Stock until such time as the Award has vested and the Stock
underlying such Award has been issued.&#160;&#160;In addition, Deferred Stock
may be granted automatically with respect to such number of shares of Stock and
upon such other terms and conditions as established by the Board in lieu
of:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">cash or
shares of Stock otherwise issuable to such Participant upon the exercise or
settlement of a Restricted Stock Award or Performance Award; or</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">any cash
to be otherwise paid to the Participant in the form of salary, bonus,
commissions, or such other compensation program maintained by the
Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Restricted Stock
Units.</font>&#160;&#160;The Board is authorized to make Awards of Restricted
Stock Units to any Participant selected by the Board in such amounts and subject
to such terms and conditions as determined by the Board.&#160;&#160;The number
of Restricted Stock Units will be determined by the Board and may be linked to
the Performance Goals or other specific performance criteria determined to be
appropriate by the Board, in each case on a specified date or dates or over any
period or periods determined by the Board.&#160;&#160;At the time of grant, the
Board will specify the date or dates on which the Restricted Stock Units will
become fully vested and nonforfeitable, and may specify such conditions to
vesting as it deems appropriate.&#160;&#160;At the time of grant, the Board will
specify the settlement date applicable to each grant of Restricted Stock Units
which will be no earlier than the vesting date or dates of the Award and may be
determined at the election of the Participant.&#160;&#160;On the settlement
date, the Company will transfer to the Participant either (i) one unrestricted,
fully transferable share of Stock or (ii) cash equal to the value of one such
share of Stock for each Restricted Stock Unit scheduled to be paid out on such
date and which was not previously forfeited.&#160;&#160;The Board will specify
the purchase price, if any, to be paid by the Participant to the Company for
such shares of Stock.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.5</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Other Stock-Based
Awards.</font>&#160;&#160;Any Participant selected by the Board may be granted
one or more awards that provide Participants with shares of Stock or the right
to purchase shares of Stock or that have a value derived from the value of, or
an exercise or conversion privilege at a price related to, or that are otherwise
payable in shares of Stock and which may be linked to any one or more of the
Performance Goals or other specific performance criteria determined appropriate
by the Board, in each case on a specified date or dates or over any period or
periods determined by the Board.&#160;&#160;In making such determinations, the
Board will consider (among such other factors as it deems relevant in light of
the specific type of award) the contributions, responsibilities and other
compensation to the particular Participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.6</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Performance Bonus
Awards.</font>&#160;&#160;Any Participant selected by the Committee may be
granted one or more Performance-Based Award in the form of a cash bonus payable
upon the attainment of Performance Goals that are established by the Committee,
in each case on a specified date or dates or over any period or periods
determined by the Committee.&#160;&#160;Any such Performance Bonus Award paid to
a Covered Employee will be based upon objectively determinable bonus formulas
established in accordance with Section 10.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.7</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Term of Other Type
Awards.</font>&#160;&#160;Except as otherwise provided herein, the term of any
Other Type Award will be set by the Board in its sole and absolute discretion
and set forth in any applicable Award Agreement, provided that and except for a
de minimus number of awards (as defined below), Other types Awards shall be
subject to restriction periods of not less than one year for any performance
based Awards and not less than three years for any time based
Awards.&#160;&#160;If 5% or fewer of the shares currently authorized for grant
under the Plan are unrestricted, the de minimus requirement set forth above
shall be met.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.8</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise or Purchase
Price.</font>&#160;&#160;The Board may establish the exercise or purchase price,
if any, of any Other Type Award; provided, however, that such price will not be
less that the par value of a share of Stock on the date of grant, unless
otherwise permitted by applicable law.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.9</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exercise Upon Termination of
Service.</font>&#160;&#160;Any Other Type of Award will only be exercisable or
payable while the Participant is an Employee, Consultant or Director, as
applicable; provided, however, that the Board in its sole and absolute
discretion may provide that any Other Type of Award may be exercised or paid
subsequent to a termination of Service, as applicable, or following a Change in
Control, or because of the Participant&#8217;s retirement, death or disability, or
otherwise; provided, however, that any such provision with respect to
Performance Shares, Performance Units or Performance Bonus Awards will be
subject to the requirements of Section 162(m) that apply to such award and/or
compensation.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.10</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Form of
Payment.</font>&#160;&#160;Payments with respect to any Other Type of Award will
be made in cash, in Stock or a combination of both, as determined by the Board
and as set forth in any applicable Award Agreement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.11</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Award
Agreement.</font>&#160;&#160;All Other Types of Awards will be subject to such
additional terms and conditions as determined by the Board and will be evidenced
by a written Award Agreement.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.12</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Voting Rights; Dividend Equivalent
Rights and Distributions.</font>&#160;&#160;Participants shall have no voting
rights with respect to shares of Stock represented by any Other Type of Award
until the date of the issuance of such shares, if any (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).&#160;&#160;However, the Board, in its discretion, may
provide in the Award Agreement evidencing any Other Type of Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to
the payment of cash dividends on Stock having a record date prior to the date on
which such shares of Stock underlying any such award are settled or
forfeited.&#160;&#160;Such Dividend Equivalents, if any, shall be credited to
the Participant in the form of additional whole shares of Stock, or such cash
equivalent, depending on the type of award, as of the date of payment of such
cash dividends on Stock.&#160;&#160;The number of additional shares of Stock
(rounded to the nearest whole number) to be so credited shall be determined by
dividing (a)&#160;the amount of cash dividends paid on such date with respect to
the number of shares of Stock represented by the shares of Stock underlying such
award previously credited to the Participant by (b)&#160;the Fair Market Value
per share of Stock on such date.&#160;&#160;Dividend Equivalents may be paid
currently or may be accumulated and paid to the extent that such award become
nonforfeitable, as determined by the Board.&#160;&#160;Settlement of Dividend
Equivalents may be made in cash, shares of Stock, or a combination thereof as
determined by the Board, and may be paid on the same basis as settlement of the
related award.&#160;&#160;In the event of a dividend or distribution paid in
shares of Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.2, appropriate adjustments
shall be made in the Participant&#8217;s Other Type of Awards so that it represents
the right to receive upon settlement any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the
Participant would entitled by reason of the shares of Stock issuable upon
settlement of the award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.13</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Nontransferability of
Awards.</font>&#160;&#160;Prior to settlement or payment of any Other Type of
Award in accordance with the provisions of the Plan, no such award shall be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant&#8217;s beneficiary, except transfer by will or by the laws of
descent and distribution.&#160;&#160;All rights with respect to such award
granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant&#8217;s guardian or legal
representative.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Terms and Conditions of Any
Performance-Based Award</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Purpose.</font>&#160;&#160;The
purpose of this Section 10 is to provide the Committee the ability to qualify
Awards (other than Options and SARs) that are granted pursuant to Sections 8 and
9 as qualified performance-based compensation under Section
162(m).&#160;&#160;If the Committee, in its discretion, decides to grant a
Performance-Based Award subject to Performance Goals to a Covered Employee, the
provisions of this Section 10 will control over any contrary provision in the
Plan; provided, however, that the Committee may in its discretion grant Awards
to such Covered Employees that are based on Performance Goals or other specific
criteria or goals but that do not satisfy the requirements of this Section
10.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Applicability.</font>&#160;&#160;This
Section 10 will apply to those Covered Employees which are selected by the
Committee to receive any Award subject to Performance Goals.&#160;&#160;The
designation of a Covered Employee as being subject to Section 162(m) will not in
any manner entitle the Covered Employee to receive an Award under the
Plan.&#160;&#160;Moreover, designation of a Covered Employee subject to Section
162(m) for a particular Performance Period will not require designation of such
Covered Employee in any subsequent Performance Period and designation of one
Covered Employee will not require designation of any other Covered Employee in
such period or in any other period.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Procedures with Respect to
Performance Based Awards.</font>&#160;&#160;To the extent necessary to comply
with the performance-based compensation of Section 162(m), with respect to any
Award granted subject to Performance Goals, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m)), the Committee will, in writing, (a)
designate one or more Participants who are Covered Employees, (b) select the
Performance Goals applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (d) specify the relationship between
Performance Goals and the amounts of such Awards, as applicable, to be earned by
each Covered Employee for such Performance Period.&#160;&#160;Following the
completion of each Performance Period, the Committee will certify in writing
whether the applicable Performance Goals have been achieved for such Performance
Period.&#160;&#160;In determining the amounts earned by a Covered Employee, the
Committee will have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of individual or
corporate performance for the Performance Period.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.4</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Payment of Performance Based
Awards.</font>&#160;&#160;Unless otherwise provided in the applicable Award
Agreement, a Covered Employee must be employed by the Participating Company
Group on the day a Performance-Based Award for such Performance Period is paid
to the Covered Employee.&#160;&#160;Furthermore, a Covered Employee will be
eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are
achieved.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.5</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Additional
Limitations.</font>&#160;&#160;Notwithstanding any other provision of the Plan,
any Award which is granted to a Covered Employee and is intended to constitute
qualified performance based compensation under Section 162(m) will be subject to
any additional limitations set forth in the Code (including any amendment to
Section 162(m) or any regulations and ruling issued thereunder that are
requirements for qualification as qualified performance-based compensation as
described in Section 162(m), and the Plan will be deemed amended to the extent
necessary to conform to such requirements.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">11.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Standard Forms of Award
Agreement</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">11.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Award Agreements</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;Each
Award shall comply with and be subject to the terms and conditions set forth in
the appropriate form of Award Agreement approved by the Board and as amended
from time to time.&#160;&#160;Any Award Agreement may consist of an appropriate
form of Notice of Grant and a form of Agreement incorporated therein by
reference, or such other form or forms as the Board may approve from time to
time.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">11.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Authority to Vary Terms</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;The
Board shall have the authority from time to time to vary the terms of any
standard form of Award Agreement either in connection with the grant or
amendment of an individual Award or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Award Agreement are
not inconsistent with the terms of the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">12.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in
Control</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">12.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Definitions.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">An <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Ownership Change
Event</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>
shall be deemed to have occurred if any of the following occurs with respect to
the Company:&#160;&#160;(i) the direct or indirect sale or exchange in a single
or series of related transactions by the stockholders of the Company of more
than fifty percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company is a party; (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company (other than a
sale, exchange or transfer to one or more subsidiaries of the Company); or (iv)
a liquidation or dissolution of the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">A <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Change in
Control</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font> shall
mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, a <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Transaction</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>) in which the stockholders
of the Company immediately before the Transaction do not retain immediately
after the Transaction, in substantially the same proportions as their ownership
of shares of the Company<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8217;</font>s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of an Ownership
Change Event described in Section 12.1(a)(iii), the entity to which the assets
of the Company were transferred (the <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Transferee</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>), as the case may
be.&#160;&#160;For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business
entities which own the Company or the Transferee, as the case may be, either
directly or through one or more subsidiary corporations or other business
entities.&#160;&#160;The Board shall have the right to determine whether
multiple sales or exchanges of the voting securities of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">12.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Effect of Change in Control on
Options and SARs</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">.</font></font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Accelerated
Vesting</font>.&#160;&#160;Notwithstanding any other provision of the Plan to
the contrary, the Board, in its sole discretion, may provide in any Award
Agreement or, in the event of a Change in Control, may take such actions as it
deems appropriate to provide for the acceleration of the exercisability and
vesting in connection with such Change in Control of any or all outstanding
Options and SARs and shares acquired upon the exercise of such Options and SARs
upon such conditions and to such extent as the Committee shall
determine.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Assumption or
Substitution</font>.&#160;&#160;In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business
entity or parent corporation thereof, as the case may be (the <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Acquiring
Corporation</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>),
may, without the consent of the Participant, either assume the Company&#8217;s rights
and obligations under outstanding Options and SARs or substitute for outstanding
Options and SARs substantially equivalent options and stock appreciation rights
for the Acquiring Corporation&#8217;s stock.&#160;&#160;In the event that the
Acquiring Corporation elects not to assume or substitute for outstanding Options
and SARs in connection with a Change in Control, or if the Acquiring Corporation
is not a &#8220;publicly held corporation&#8221; within the meaning of Section&#160;162(m),
the exercisability and vesting of each such outstanding Option, SAR and any
shares acquired upon the exercise thereof held by a Participant whose Service
has not terminated prior to such date shall be accelerated, effective as of the
date ten (10) days prior to the date of the Change in Control.&#160;&#160;The
exercise or vesting of any Option, SAR and any shares acquired upon the exercise
thereof that was permissible solely by reason of this Section&#160;12.2 and the
provisions of such applicable Award Agreement shall be conditioned upon the
consummation of the Change in Control.&#160;&#160;Any Options and SARs which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Change in Control nor exercised as of the date of the Change in Control
shall terminate and cease to be outstanding effective as of the date of the
Change in Control.&#160;&#160;Notwithstanding the foregoing, shares acquired
upon exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shares shall
continue to be subject to all applicable provisions of the applicable Award
Agreement evidencing such Option or SAR except as otherwise provided in such
applicable Award Agreement.&#160;&#160;Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the outstanding
Options and SARs immediately prior to an Ownership Change Event described in
Section&#160;12.1(a)(i) constituting a Change in Control is the surviving or
continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section&#160;1504(a) of the Code without
regard to the provisions of Section&#160;1504(b) of the Code, the outstanding
Options and SARs shall not terminate unless the Committee otherwise provides in
its discretion.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 108pt; MARGIN-LEFT: 0pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Cash-Out</font>.&#160;&#160;The
Committee may, in its sole discretion and without the consent of any
Participant, determine that, upon the occurrence of a Change in Control, each or
any Option or SAR outstanding immediately prior to the Change in Control shall
be canceled in exchange for a payment with respect to each vested share of Stock
subject to such canceled Option or SAR in (i) cash, (ii) stock of the Company or
of a corporation or other business entity a party to the Change in Control, or
(iii) other property which, in any such case, shall be in an amount having a
Fair Market Value equal to the excess of the Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control over the
exercise price per share under such Option or SAR (the <font style="FONT-STYLE: italic; DISPLAY: inline">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Spread</font><font style="FONT-STYLE: italic; DISPLAY: inline">&#8221;</font>).&#160;&#160;In the event
such determination is made by the Committee, the Spread (reduced by applicable
withholding taxes, if any) shall be paid to Participants in respect of their
canceled Options and SARs as soon as practicable following the date of the
Change in Control.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">12.3</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Effect of Change in Control on
Restricted Stock and Other Type of Awards.</font>&#160;&#160;The Committee may,
in its discretion, provide in any Award Agreement evidencing a Restricted Stock
or Other Type of Award that, in the event of a Change in Control, the lapsing of
any applicable Vesting Condition, Restriction Period or Performance Goal
applicable to the shares subject to such Award held by a Participant whose
Service has not terminated prior to the Change in Control shall be accelerated
and/or waived effective immediately prior to the consummation of the Change in
Control to such extent as specified in such Award Agreement.&#160;&#160;Any
acceleration, waiver or the lapsing of any restriction that was permissible
solely by reason of this Section&#160;12.3 and the provisions of such Award
Agreement shall be conditioned upon the consummation of the Change in
Control.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">13.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; TEXT-DECORATION: underline">Provision
of Information</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>Each Participant shall be given access
to information concerning the Company equivalent to that information generally
made available to the Company&#8217;s common stockholders.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">14.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compliance with Securities
Law</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>The grant of Options and the issuance
of shares of Stock upon exercise of Options shall be subject to compliance with
all applicable requirements of federal, state and foreign law with respect to
such securities.&#160;&#160;Options may not be exercised if the issuance of
shares of Stock upon exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed.&#160;&#160;In addition, no Option may be exercised unless
(a)&#160;a registration statement under the Securities Act shall at the time of
exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (b)&#160;in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act.&#160;&#160;The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company&#8217;s legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained.&#160;&#160;As a condition to the
exercise of any Option, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">15.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax
Withholding</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">15.1</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Tax Withholding in
General.</font>&#160;&#160;The Company shall have the right to deduct from any
and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant
thereto.&#160;&#160;The Company shall have no obligation to deliver shares of
Stock, to release shares of Stock from an escrow established pursuant to an
Award Agreement, or to make any payment in cash under the Plan until the
Participating Company Group&#8217;s tax withholding obligations have been satisfied by
the Participant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">15.2</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Withholding in
Shares.</font>&#160;&#160;The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group.&#160;&#160;The Fair Market Value
of any shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">16.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; TEXT-DECORATION: underline">Termination
or Amendment of Plan</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>The Board may terminate or amend the
Plan at any time.&#160;&#160;However, subject to changes in applicable law,
regulations or rules that would permit otherwise, without the approval of the
Company&#8217;s stockholders, there shall be (a)&#160;no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section&#160;4.2), (b)&#160;no change in the
class of persons eligible to receive Incentive Stock Options, and (c)&#160;no
other amendment of the Plan that would require approval of the Company&#8217;s
stockholders under any applicable law, regulation or rule.&#160;&#160;No
termination or amendment of the Plan shall affect any then outstanding Option
unless expressly provided by the Board.&#160;&#160;In any event, no termination
or amendment of the Plan may adversely affect any then outstanding Option
without the consent of the Participant, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">17.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; TEXT-DECORATION: underline">Stockholder
Approval</font>.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>The Plan or any increase in the maximum
aggregate number of shares of Stock issuable thereunder as provided in
Section&#160;4.1 (the <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8220;</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Authorized
Shares</font><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman">&#8221;</font>)
shall be approved by the stockholders of the Company within twelve (12) months
of the date of adoption thereof by the Board.&#160;&#160;Options granted prior
to stockholder approval of the Plan or in excess of the Authorized Shares
previously approved by the stockholders shall become exercisable no earlier than
the date of stockholder approval of the Plan or such increase in the Authorized
Shares, as the case may be.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br></div><br>
    <div id="PGBRK" style="TEXT-INDENT: 0pt; WIDTH: 100%; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="TEXT-ALIGN: center; WIDTH: 100%"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
        <div style="TEXT-ALIGN: center; WIDTH: 100%">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">&#160;
</font></div>
      </div>
    </div><br>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold">Kratos
Defense &amp; Security Solutions, Inc.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold">2005
Equity Incentive Plan</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 12pt; FONT-WEIGHT: bold">Form
of Stock Option Agreement</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(Incentive
and Nonstatutory Stock Options)</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Pursuant
to your Stock Option Grant Notice (&#8220;Grant Notice&#8221;) and this Stock Option
Agreement, Kratos Defense &amp; Security Solutions, Inc. (the &#8220;Company&#8221;) has
granted to you an Option under its 2005 Equity Incentive Plan (the &#8220;Plan&#8221;) to
purchase the number of shares of the Company&#8217;s Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice.&#160;&#160;Defined
terms not explicitly defined in this Stock Option Agreement but defined in the
Plan shall have the same definitions as in the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The
details of your Option are as follows:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">1.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Vesting</font>.&#160;&#160;Subject
to the limitations contained herein, your Option will vest as provided in your
Grant Notice, provided that vesting will cease upon the termination of your
Service.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">2.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Number of
Shares and Exercise Price</font>.&#160;&#160;The number of shares of Stock
subject to your Option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for capitalization adjustments,
as provided in Section&#160;4.2 of the Plan.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">3.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Method of
Payment</font>.&#160;&#160;Payment of the exercise price is due in full upon
exercise of all or any part of your Option.&#160;&#160;You may elect to make
payment of the exercise price in cash or by check or in any other manner <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">permitted by your
Grant Notice</font>, which may include one or more of the
following:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Provided
that at the time of exercise the Stock is publicly traded and quoted regularly
in <font style="FONT-STYLE: italic; DISPLAY: inline">The Wall Street
Journal</font>, by delivery of already-owned shares of Stock either that you
have held for the period required to avoid a charge to the Company&#8217;s reported
earnings (generally six months) or that you did not acquire, directly or
indirectly from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value on
the date of exercise.&#160;&#160;&#8220;Delivery&#8221; for these purposes, in the sole
discretion of the Company at the time you exercise your Option, shall include
delivery to the Company of your attestation of ownership of such shares of Stock
in a form approved by the Company.&#160;&#160;Notwithstanding the foregoing, you
may not exercise your Option by tender to the Company of Stock to the extent
such tender would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company&#8217;s stock.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Provided
that at the time of exercise the Stock is publicly traded and quoted regularly
in <font style="FONT-STYLE: italic; DISPLAY: inline">The Wall Street
Journal</font>, you may exercise your vested shares in a Cashless Exercise
transaction pursuant to the Company&#8217;s electronic notice and exercise system by
delivery (on a form prescribed by the Company and the Company&#8217;s licensed
securities broker) of an irrevocable direction to the Company&#8217;s licensed
securities broker acceptable to the Company to sell Stock and to deliver all or
part of the sale proceeds to the Company in payment of the aggregate Option
price and any withholding taxes (if approved in advance by the Compensation
Committee of the Board if you are either an executive officer or a director of
the Company).</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">4.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Tax
Consequences.</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline">&#160;</font>This Option is
intended to have the tax status designated in the Grant Notice.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Incentive Stock
Option</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;If the Grant
Notice so designates, this Option is intended to be an Incentive Stock Option
within the meaning of Section&#160;422(b) of the Code, but the Company does not
represent or warrant that this Option qualifies as such.&#160;&#160;You should
consult with your own tax advisor regarding the tax effects of this Option and
the requirements necessary to obtain favorable income tax treatment under
Section&#160;422 of the Code, including, but not limited to, holding period
requirements.&#160;&#160;(NOTE: If the Option is exercised more than three (3)
months after the date on which you cease to be an Employee (other than by reason
of your death or permanent and total disability as defined in
Section&#160;22(e)(3) of the Code), the Option will be treated as a Nonstatutory
Stock Option and not as an Incentive Stock Option to the extent required by
Section&#160;422 of the Code.)</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Nonstatutory
Stock Option.</font>&#160;&#160;If the Grant Notice so designates, this Option
is intended to be a Nonstatutory Stock Option and shall not be treated as an
Incentive Stock Option within the meaning of Section&#160;422(b) of the
Code.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">ISO Fair Market
Value Limitation</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>&#160;&#160;If the Grant
Notice designates this Option as an Incentive Stock Option, then to the extent
that the Option (together with all Incentive Stock Options granted to you under
all stock option plans of the Company and any Affiliate, including the Plan)
becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000),
the portion of such options which exceeds such amount will be treated as
Nonstatutory Stock Options.&#160;&#160;For purposes of this Section, options
designated as Incentive Stock Options are taken into account in the order in
which they were granted, and the Fair Market Value of Stock is determined as of
the time the option with respect to such Stock is granted.&#160;&#160;If the
Code is amended to provide for a different limitation from that set forth in
this Section, such different limitation shall be deemed incorporated herein
effective as of the date required or permitted by such amendment to the
Code.&#160;&#160;If the Option is treated as an Incentive Stock Option in part
and as a Nonstatutory Stock Option in part by reason of the limitation set forth
in this Section, you may designate which portion of such Option you are
exercising.&#160;&#160;In the absence of such designation, you shall be deemed
to have exercised the Incentive Stock Option portion of the Option
first.&#160;&#160;Separate certificates representing each such portion shall be
issued upon the exercise of the Option.&#160;&#160;(NOTE: If the aggregate
exercise price of the Option (that is, the exercise price multiplied by the
number of shares subject to the Option) plus the aggregate exercise price of any
other Incentive Stock Options you hold (whether granted pursuant to the Plan or
any other stock option plan of the Company or any Affiliate) is greater than
$100,000, you should contact the Chief Financial Officer of the Company to
ascertain whether the entire Option qualifies as an Incentive Stock
Option.)</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">5.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Whole
Shares; Minimum Purchase</font>.&#160;&#160;You may exercise your Option only
for whole shares of Stock.&#160;&#160;Unless you exercise your Option with
respect to all shares then vested, or unless otherwise permitted by the Company,
you may exercise your Option only for at least <font style="DISPLAY: inline; FONT-WEIGHT: bold">one hundred (100)</font> shares on
any exercise date.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">6.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Securities
Law Compliance</font>.&#160;&#160;Notwithstanding anything to the contrary
contained herein, you may not exercise your Option unless the shares of Stock
issuable upon such exercise are then registered under the Securities Act or, if
such shares of Stock are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration requirements of
the Securities Act.&#160;&#160;The exercise of your Option must also comply with
other applicable laws and regulations governing your Option, and you may not
exercise your Option if the Company determines that such exercise would not be
in material compliance with such laws and regulations.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">7.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Term</font>.&#160;&#160;The
term of your Option commences on the Date of Grant and expires upon the <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">earliest</font>
of the following:</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">in the
sole discretion of the Board, immediately upon the termination of your Service
for Cause;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">ninety
(90) days after the termination of your Service for any reason other than Cause,
Disability or death, provided that if during any part of such ninety (90) day
period you may not exercise your Option solely because of the condition set
forth in the preceding paragraph relating to &#8220;Securities Law Compliance,&#8221; your
Option shall not expire until the earlier of the Expiration Date or until it
shall have been exercisable for an aggregate period of thirty (30) days after
the termination of your Service;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">twelve
(12) months after the termination of your Service due to your
Disability;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(d)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">eighteen
(18) months after your death if you die either during your Service or within
thirty (30) days after your Service terminates for reason other than
Cause;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(e)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">the
Expiration Date indicated in your Grant Notice; or</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(f)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">the day
immediately preceding the tenth (10th) anniversary of the Date of
Grant.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For
purposes of your Option, &#8220;Cause&#8221; means that the Board determines in good faith
that you have engaged in misconduct, including but not limited
to:&#160;&#160;(i)&#160;your commission of any felony or any crime involving
moral turpitude or dishonesty, (ii)&#160;your participation in a fraud or act of
dishonesty against or adversely affecting the Company, or (iii)&#160;your
intentional, material violation of any contract between the Company and you, any
statutory duty of yours to the Company or any policy of the Company which you do
not correct within thirty (30) days after written notice to you
thereof.&#160;&#160;Your physical or mental disability shall not constitute
&#8220;Cause.&#8221;</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">8.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Exercise.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">You may
exercise the vested portion of your Option during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.&#160;&#160;However, your
Option shall not be exercisable at any time that the Company is investigating
whether it has grounds to terminate your Service for Cause.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">By
exercising your Option you agree that, as a condition to any exercise of your
Option, the Company may require you to enter into an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your Option, (2) the lapse of
any substantial risk of forfeiture to which the shares of Stock are subject at
the time of exercise, or (3) the disposition of shares of Stock acquired upon
such exercise.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">If your
Option is an incentive stock Option, by exercising your Option you agree that
you will notify the Company in writing within fifteen (15) days after the date
of any disposition of any of the shares of the Stock issued upon exercise of
your Option that occurs within two (2) years after the date of your Option grant
or within one (1) year after such shares of Stock are transferred upon exercise
of your Option.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">9.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Transferability</font>.&#160;&#160;Your
Option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by
you.&#160;&#160;Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
your Option.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">10.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Option not
a Service Contract</font>.&#160;&#160;Your Option is not an employment or
service contract, and nothing in your Option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or any obligation of the Company or an Affiliate to
continue your employment.&#160;&#160;In addition, nothing in your Option shall
obligate the Company or an Affiliate, their respective shareholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">11.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Withholding
Obligations.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(a)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">At the
time you exercise your Option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any
other amounts payable to you, and otherwise agree to make adequate provision for
(including by means of a Cashless Exercise), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with your Option.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(b)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Upon your
request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable conditions or restrictions of law, the Company
may withhold from fully vested shares of Stock otherwise issuable to you upon
the exercise of your Option a number of whole shares of Stock having a Fair
Market Value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by
law.&#160;&#160;If the date of determination of any tax withholding obligation
is deferred to a date later than the date of exercise of your Option, share
withholding pursuant to the preceding sentence shall not be permitted unless you
make a proper and timely election under Section 83(b) of the Code, covering the
aggregate number of shares of Stock acquired upon such exercise with respect to
which such determination is otherwise deferred, to accelerate the determination
of such tax withholding obligation to the date of exercise of your
Option.&#160;&#160;Notwithstanding the filing of such election, shares of Stock
shall be withheld solely from fully vested shares of Stock determined as of the
date of exercise of your Option that are otherwise issuable to you upon such
exercise.&#160;&#160;Any adverse consequences to you arising in connection with
such share withholding procedure shall be your sole responsibility.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 72pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">(c)</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">You may
not exercise your Option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied.&#160;&#160;Accordingly, you may not be able
to exercise your Option when desired even though your Option is vested, and the
Company shall have no obligation to issue a certificate for such shares of Stock
or release such shares of Stock from any escrow provided for
herein.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">12.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Notices</font>.&#160;&#160;Any
notices provided for in your Option or the Plan shall be given in writing and
shall be deemed effectively given upon receipt or, in the case of notices
delivered by mail by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the last address you
provided to the Company.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="TEXT-INDENT: 36pt; MARGIN-LEFT: 0pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">13.</font><font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black">&#160;</font><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-VARIANT: small-caps; DISPLAY: inline; FONT-WEIGHT: bold">Governing
Plan Document</font>.&#160;&#160;Your Option is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your Option, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the
Plan.&#160;&#160;In the event of any conflict between the provisions of your
Option and those of the Plan, the provisions of the Plan shall
control.</font></div>
    <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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[{"type": "S-8", "sequence": "1", "filename": "forms8june28.htm", "description": "FORM S-8 SECURITIES REGISTRATION", "secsgml_size_bytes": 347051}]
{"company-data": {"conformed-name": "KRATOS DEFENSE & SECURITY SOLUTIONS, INC.", "cik": "0001069258", "assigned-sic": "4899", "irs-number": "133818604", "state-of-incorporation": "DE", "fiscal-year-end": "0517"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-167839", "film-number": "10920818"}, "business-address": {"street1": "4820 EASTGATE MALL", "street2": ".", "city": "SAN DIEGO", "state": "CA", "zip": "92121", "phone": "858-812-7300"}, "mail-address": {"street1": "4820 EASTGATE MALL", "street2": ".", "city": "SAN DIEGO", "state": "CA", "zip": "92121"}, "former-company": {"former-conformed-name": "WIRELESS FACILITIES INC", "date-changed": "19990817"}}
forms8june28.htm
As filed with the Securities and Exchange Commission on June 28,
2010
Registration No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________
FORM
S-8
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
___________________________
KRATOS
DEFENSE & SECURITY SOLUTIONS, INC.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
13-3818604
(State
      or Other Jurisdiction of
(I.R.S.
      Employer
Incorporation
      or Organization)
Identification
      Number)
4820
Eastgate Mall
San
Diego, California 92121
(858)
812-7300
(Address
of Principal Executive Offices)
___________________________
Amended
and Restated 1999 Employee Stock Purchase Plan
Amended
and Restated 2005 Equity Incentive Plan
(Full
title of the Plan(s))
___________________________
Deanna
H. Lund
Executive
Vice President and Chief Financial Officer
Kratos
Defense & Security Solutions, Inc.
4820
Eastgate Mall
San
Diego, California 92121
(858)
812-7300
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
___________________________
Copy
to:
Scott
      M. Stanton, Esq.
J. Nathan
      Jensen, Esq.
Morrison
      & Foerster LLP
12531
      High Bluff Drive, Suite 500
San
      Diego, California 92130
(858)
      720-5100
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large
accelerated filer [
]                                                                                           
Accelerated filer [X]
Non-accelerated
filer [ ] (Do not check if a smaller reporting
company)            
Smaller reporting company [ ]
CALCULATION
OF REGISTRATION FEE
Title
      of Securities to be Registered(1)
Amount
      to
be
      registered (2)
Proposed
      maximum
offering
      price
per
      share(3)
Proposed
      maximum
aggregate
      offering
price
Amount
      of
registration
      fee
Amended
      and Restated 1999 Employee Stock Purchase Plan
Common
      Stock, par value $0.001 per share
625,000(4)
$10.79
$7,343,750
$480.83
Amended
      and Restated 2005 Equity Incentive Plan
Common
      Stock, par value $0.001 per share
1,200,000(5)
$10.79
$14,100,000
$923.19
(1)    
      Each share of the Registrant's common stock, par value $0.001 per share
      ("Common Stock"),  includes a right to purchase one one-hundredth of
      a share of Series C Preferred Stock, par value $0.001 per
      share.
(2)    
      Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the
      "Security Act"), this Registration Statement shall also cover any
      additional shares of the Registrant's Common Stock that may be offered or
      issued in connection with any stock dividend, stock split,
      recapitalization or other similar transaction effected without receipt of
      consideration that increases the number of outstanding shares of Common
      Stock.
(3)    
      Estimated solely for the purpose of calculating the amount of the
      registration fee pursuant to Rule 457(h) under the Securities Act. The
      price per share and aggregate offering price are based upon the average of
      the high and low sales prices of Registrant's Common Stock on June 23,
      2010, as reported on the Nasdaq Global Select
  Market.
(4)    
      Represents 625,000 additional shares of Common Stock available for future
      issuance under the Registrant's Amended and Restated 1999 Employee Stock
      Purchase Plan (the "ESPP").  70,000 shares available for issuance
      under the ESPP were initially registered on a registration statement on
      Form S-8 filed with the Securities and Exchange Commission on November 5,
      1999 (Registration No. 333-90455).  An additional 80,000 shares
      available for issuance under the ESPP were previously registered on a
      registration statement on Form S-8 filed on October 17, 2001 (Registration
      No. 333-71702).  An additional 135,000 shares available for issuance
      under the ESPP were previously registered on a registration statement on
      Form S-8 filed on June 28, 2004 (Registration No.
      333-116903).  An additional 150,000 shares available for
      issuance under the ESPP were previously registered on a registration
      statement on Form S-8 filed on November 12, 2008
    (333-155317).
(5)    
      Represents 1,200,000 additional shares of Common Stock authorized to be
      issued under the Registrant's Amended and Restated 2005 Equity Incentive
      Plan (the "2005 Plan").  350,000 shares available for issuance under
      the 2005 Plan were initially registered on a registration statement on
      Form S-8 filed with the Securities and Exchange Commission on August 1,
      2005 (Registration No. 333-127060).  An additional 350,000
      shares available for issuance under the 2005 Plan were previously
      registered on a registration statement on Form S-8 filed on November 12,
      2008 (333-155317).
INTRODUCTORY
NOTE
This
Registration Statement relates solely to the registration of additional
securities of the same class as other securities for which a registration
statement on this form relating to an employee benefit plan is effective. 
Pursuant to General Instruction E of Form S-8, this registration statement
hereby incorporates by reference the contents of the registration statements on
Form S-8 filed by the Registrant on August 1, 2005 and November 12, 2008 with
respect to the Registrant's Amended and Restated 2005 Equity Incentive Plan
(Registration Nos. 333-127060 and 333-155317, respectively), and the
registration statements on Form S-8 filed by the Registrant on November 5, 1999,
October 17, 2001, June 28, 2004, and November 12, 2008 with respect to the
Registrant's Amended and Restated 1999 Employee Stock Purchase Plan
(Registration Nos. 333-90455, 333-71702, 333-116903, and 333-155317,
respectively).
Item 8.       
Exhibits
.
The
following is a list of exhibits filed as part of this Registration Statement,
which are incorporated herein:
Exhibit
      Numbers
Exhibit
      Description
5.1
Opinion
      of Morrison & Foerster LLP
23.1
Consent
      of Grant Thornton LLP
23.2
Consent
      of Plante & Moran, PLLC
23.3
Consent
      of Morrison & Foerster LLP (contained in
    Exhibit 5.1)
24.1
Power
      of Attorney (included in the signature page of this Registration
      Statement)
99.1
Amended
      and Restated 1999 Employee Stock Purchase Plan
99.2
Amended
      and Restated 2005 Equity Incentive Plan and form stock option agreement
      thereunder
SIGNATURES
Pursuant
to the requirements of the Securities Act, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-8 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Diego, State of California, on this 28
th
day of June, 2010.
KRATOS
DEFENSE & SECURITY SOLUTIONS, INC.
By:
      /s/ Eric M. DeMarco
Eric
M. DeMarco
President
and Chief Executive Officer
POWER
OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints, jointly and severally, Eric M. DeMarco and Deanna H.
Lund his attorneys-in-fact, each with the power of substitution, for him in any
and all capacities, to sign any amendments to this Registration Statement on
Form S-8 (including post-effective amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the SEC,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.
Signature
Title
Date
/s/  Eric
      M. DeMarco
Eric
      M. DeMarco
President,
      Chief Executive Officer and Director
(Principal
      Executive Officer)
June 28, 2010
/s/  Deanna
      H. Lund
Deanna
      H. Lund
Executive
      Vice President and Chief Financial Officer
(Principal
      Financial Officer)
June
      28, 2010
/s/  Laura
      Siegal
Laura
      Siegal
Vice
      President, Corporate Controller,
Secretary
      & Treasurer
(Principal Accounting
      Officer)
June
      28, 2010
/s/  Scott
      I. Anderson
Scott
      I. Anderson
Director
June
      28, 2010
/s/  Bandel
      L. Carano
Bandel
      L. Carano
Director
June
      28, 2010
/s/  William
      A. Hoglund
William
      A. Hoglund
Director
June
      28, 2010
/s/
      Scot B. Jarvis
Scot
      B. Jarvis
Director
June
      28, 2010
/s/
      Samuel N. Liberatore
Samuel
      N. Liberatore
Director
June
      28, 2010
EXHIBIT
INDEX
Exhibit
      Numbers
Exhibit
      Description
5.1
Opinion
      of Morrison & Foerster LLP
23.1
Consent
      of Grant Thornton LLP
23.2
Consent
      of Plante & Moran, PLLC
23.3
Consent
      of Morrison & Foerster LLP (contained in
    Exhibit 5.1)
24.1
Power
      of Attorney (included in the signature page of this Registration
      Statement)
99.1
Amended
      and Restated 1999 Employee Stock Purchase Plan
99.2
Amended
      and Restated 2005 Equity Incentive Plan and form stock option agreement
      thereunder
Exhibit
5.1
12531
      HIGH BLUFF DRIVE
SUITE
      100
SAN
      DIEGO, CALIFORNIA
92130-2040
TELEPHONE:
      858.720.5100
FACSIMILE:
      858.720.5125
WWW.MOFO.COM
morrison
&
foerster
      llp
new
      york, san francisco,
los
      angeles, palo alto,
san
      diego, washington, d.c.
northern
      virginia, denver,
sacramento,
      walnut creek
tokyo,
      london, beijing,
shanghai,
      hong kong,
singapore,
      brussels
June 28,
2010
Kratos
Defense & Security Solutions, Inc.
4820
Eastgate Mall
San
Diego, CA 92121
Re:           Registration
Statement on Form S-8
Ladies
and Gentlemen:
At your
request, we have examined the registration statement on Form S-8 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended, of an aggregate of: (i) 625,000 shares of Common Stock which will be
issuable under the 1999 Employee Stock Purchase Plan (the "ESPP"); and (ii)
1,200,000 shares of Common Stock which will be issuable under the Amended and
Restated 2005 Equity Incentive Plan (the "2005 Plan," and together with the
ESPP, the "Plans").
As your
counsel in connection with the Registration Statement, we have examined the
proceedings taken and proposed to be taken by you in connection with the
adoption of the Plans and the authorization, issuance and sale of an aggregate
of 1,825,000 shares of Common Stock under the Plans (the "Plan Shares"), and
such documents, matters of fact and questions of law as we have deemed necessary
to render this opinion.  For the purpose of the opinion rendered
below, we have assumed that such proceedings are timely completed in the manner
presently proposed by you and that, upon each issuance of Plan Shares, the
Company will receive the consideration for such Plan Shares required by the
terms of the respective Plan(s) under which they are issued.
Based
upon and subject to the foregoing, we are of the opinion that the Plan Shares,
when issued and outstanding pursuant to the terms of the Plans, will be legally
issued, fully paid and nonassessable.
We
consent to the use of this opinion as an exhibit to the Registration
Statement.
Very
truly yours,
/s/
Morrison & Foerster LLP
Exhibit
23.1
Consent
of Independent Registered Public Accounting Firm
We have
issued our reports dated March 10, 2010 with respect to the consolidated
financial statements and internal control over financial reporting of Kratos
Defense & Security Solutions, Inc. included in the Annual Report on Form
10-K for the year ended December 27, 2009, which are incorporated by reference
in this Registration Statement.  We consent to the incorporation by
reference of the aforementioned reports in this Registration Statement on Form
S-8.
/s/ GRANT THORNTON LLP
San
Diego, California
June 28,
2010
Exhibit
23.2
Consent
of Independent Registered Public Accounting Firm
We
consent to the incorporation by reference in this Registration Statement of
Kratos Defense & Security Solutions, Inc. on Form S-8 of our report dated
March 24, 2010 on the financial statements of Gichner Holdings, Inc. and
Subsidiaries as of and for the periods ending December 31, 2009 and 2008, and
our report dated April 4, 2008 on the financial statements of Gichner Holdings,
Inc. and Subsidiaries as of and for the period ending December 31, 2007, each of
which appears in the Current Report on Form 8-K dated May 19, 2010 of Kratos
Defense & Security Solutions, Inc.
/s/
Plante & Moran, PLLC
Cleveland,
Ohio
June 28,
2010
Exhibit 99.1
KRATOS
DEFENSE & SECURITY SOLUTIONS, INC.
AMENDED
AND RESTATED
EMPLOYEE
STOCK PURCHASE PLAN
ADOPTED
BY THE BOARD OF DIRECTORS ON AUGUST 16, 1999
APPROVED
BY THE STOCKHOLDERS ON SEPTEMBER 9, 1999
AMENDED
AND RESTATED AS OF MARCH 17, 2010
1.   PURPOSE.
(a)  The
purpose of this Employee Stock Purchase Plan (the "Plan") is to provide a means
by which employees of Kratos Defense & Security Solutions, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.
(b)  The
word "Affiliate" as used in the Plan means any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424(e) and
(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code").
(c)  The
Company, by means of the Plan, seeks to retain the services of its employees, to
secure and retain the services of new employees, and to provide incentives for
such persons to exert maximum efforts for the success of the
Company.
(d)  The
Company intends that the rights to purchase stock of the Company granted under
the Plan be considered options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Code.
2.   ADMINISTRATION.
(a)  The
Plan shall be administered by the Board of Directors (the "Board") of the
Company unless and until the Board delegates administration to a Committee, as
provided in subparagraph 2(c).  Whether or not the Board has delegated
administration, the Board shall have the final power to determine all questions
of policy and expediency that may arise in the administration of the
Plan.
(b)  The
Board shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:
(i)  To
determine when and how rights to purchase stock of the Company shall be granted
and the provisions of each offering of such rights (which need not be
identical).
(ii)  To
designate from time to time which Affiliates of the Company shall be eligible to
participate in the Plan.
(iii)
To construe and interpret the Plan and rights granted under it, and to
establish, amend and revoke rules and regulations for its
administration.  The Board, in the exercise of this power, may correct
any defect, omission or inconsistency in the Plan, in a manner and to the extent
it shall deem necessary or expedient to make the Plan fully
effective.
(iv)
To amend the Plan as provided in paragraph 13.
(v)  Generally,
to exercise such powers and to perform such acts as the Board deems necessary or
expedient to
promote
the best interests of the Company and its Affiliates and to carry out the intent
that the Plan be treated as an "employee stock purchase plan" within the meaning
of Section 423 of the Code.
(c)  The
Board may delegate administration of the Plan to a Committee composed of one (1)
or more members of the Board (the "Committee").  If administration is
delegated to a Committee, the Committee shall have, in
connection
with the administration of the Plan, the powers theretofore possessed by the
Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the
Board.  The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.
(d)  Any
interpretation of the Plan by the Board of any decision made by it under the
Plan shall be final and binding on all persons.
3.  SHARES
SUBJECT TO THE PLAN.
(a)  Subject
to the provisions of paragraph 12 relating to adjustments upon changes in stock,
the stock that may be sold pursuant to rights granted under the Plan shall not
exceed in the aggregate one million sixty thousand (1,060,000) shares of the
Company's common stock (the "Common Stock"). If any right granted under the Plan
shall for any reason terminate without having been exercised, the Common Stock
not purchased under such right shall again become available for the
Plan.
(b)  The
stock subject to the Plan may be unissued shares or reacquired shares, bought on
the market or otherwise.
4.  GRANT
OF RIGHTS; OFFERING.
(a)  The
Board or the Committee may from time to time grant or provide for the grant of
rights to purchase Common Stock of the Company under the Plan to eligible
employees (an "Offering") on a date or dates (the "Offering Date(s)")selected by
the Board or the Committee.  Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges.  The terms and conditions
of an Offering shall be incorporated by reference into the Plan and treated as
part of the Plan.  The provisions of separate Offerings need not be
identical, but each Offering shall include (through incorporation of the
provisions of this Plan by reference in the document comprising the Offering or
otherwise) the period during which the Offering shall be effective, which period
shall not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in paragraphs 5 through 8,
inclusive.
(b)  If
an employee has more than one (1) right outstanding under the Plan, unless he or
she otherwise indicates in agreements or notices delivered hereunder, a right
with a lower exercise price (or an earlier-granted right if two (2) rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right if two (2)
rights have identical exercise prices) will be exercised.
5.  ELIGIBILITY.
(a)  Rights
may be granted only to employees of the Company or, as the Board or the
Committee may designate as provided in subparagraph 2(b), to employees of any
Affiliate of the Company.  Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be greater than two (2)
years.  In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b)  The
Board or the Committee may provide that each person who, during the course of an
Offering, first becomes an eligible employee of the Company or designated
Affiliate will, on a date or dates specified in the Offering which coincides
with the day on which such person becomes an eligible employee or occurs
thereafter, receive a right under that Offering, which right shall thereafter be
deemed to be a part of that Offering.  Such right shall have the same
characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i)   the
date on which such right is granted shall be the "Offering Date" of such right
for all purposes, including determination of the exercise price of such
right;
(ii)  the
period of the Offering with respect to such right shall begin on its Offering
Date and end coincident with the end of such Offering; and
(iii)
the Board or the Committee may provide that if such person first becomes an
eligible employee within a specified period of time before the end of the
Offering, he or she will not receive any right under that Offering.
(c)  No
employee shall be eligible for the grant of any rights under the Plan if,
immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate.  For
purposes of this subparagraph 5(c), the rules of Section 424(d) of the Code
shall apply in determining the stock ownership of any employee, and stock which
such employee may purchase under all outstanding rights and options shall be
treated as stock owned by such employee.
(d)  An
eligible employee may be granted rights under the Plan only if such rights,
together with any other rights granted under "employee stock purchase plans" of
the Company and any Affiliates, as specified by Section 423(b)(8) of the Code,
do not permit such employee's rights to purchase stock of the Company or any
Affiliate to accrue at a rate which exceeds twenty five thousand
dollars($25,000) of fair market value of such stock (determined at the time such
rights are granted) for each calendar year in which such rights are outstanding
at any time.
(e)  Officers
of the Company and any designated Affiliate shall be eligible to participate in
Offerings under the Plan; provided, however, that the Board may provide in an
Offering that certain employees who are highly compensated employees within the
meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
participate.
6.   RIGHTS;
PURCHASE PRICE.
(a)  On
each Offering Date, each eligible employee, pursuant to an Offering made under
the Plan, shall be granted the right to purchase up to the number of shares of
Common Stock of the Company purchasable with a percentage designated by the
Board or the Committee not exceeding fifteen percent (15%) of such employee's
Earnings (as defined in subparagraph 7(a)) during the period which begins on the
Offering Date (or such later date as the Board or the Committee determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering.  The Board or the
Committee shall establish one (1) or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such
Offering.
(b)  In
connection with each Offering made under the Plan, the Board or the Committee
may specify a maximum number of shares that may be purchased by any employee as
well as a maximum aggregate number of shares that may be purchased by all
eligible employees pursuant to such Offering.  In addition, in
connection with each Offering that contains more than one (1) Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering.  If the aggregate purchase of shares upon exercise of rights
granted under the Offering would exceed any such maximum aggregate number, the
Board or the Committee shall make a pro rata allocation of the shares available
in as nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c)  The
purchase price of stock acquired pursuant to rights granted under the Plan shall
be not less than the lesser of:
(i)  an
amount equal to eighty-five percent (85%) of the fair market value of the stock
on the Offering Date; or
(ii)
an amount equal to eighty-five percent (85%) of the fair market value of the
stock on the Purchase Date.
7.   PARTICIPATION;
WITHDRAWAL; TERMINATION.
(a)  An
eligible employee may become a participant in the Plan pursuant to an Offering
by delivering an enrollment agreement to the Company within the time specified
in the Offering, in such form as the Company provides.  Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering.  "Earnings" is defined as an employee's regular salary or
wages(including amounts thereof elected to be deferred by the employee, that
would otherwise have been paid, under any arrangement established by the Company
that is intended to comply with Section 125, Section 401(k), Section 402(e)(3),
Section 402(h) or section 403(b) of the Code, and also including any deferrals
under a non-qualified deferred compensation plan or arrangement established by
the Company), and also, if determined by the Board or the Committee and set
forth in the terms of the Offering, may include any or all of the following:
(i)overtime pay, (ii) commissions, (iii) bonuses, incentive pay, profit sharing
and other remuneration paid directly to the employee, and/or (iv) other items of
remuneration not specifically excluded pursuant to the Plan.  Earnings
shall not include the cost of employee benefits paid for by the Company or an
Affiliate, education or tuition reimbursements, imputed income arising under any
group insurance or benefit program, traveling expenses, business and moving
expense reimbursements, income received in connection with stock options,
contributions made by the Company or an Affiliate under any employee benefit
plan, and similar items of compensation, as determined by the Board or the
Committee. Notwithstanding the foregoing, the Board or Committee may modify the
definition of "Earnings" with respect to one or more Offerings as the Board or
Committee determines appropriate.  The payroll deductions made for
each participant shall be credited to an account for such participant under the
Plan and shall be deposited with the general funds of the Company.  A
participant may reduce(including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering.  A participant
may make additional payments into his or her account only if specifically
provided for in the Offering and only if the participant has not had the maximum
amount withheld during the Offering.
(b)  At
any time during an Offering, a participant may terminate his or her payroll
deductions under the Plan and withdraw from the Offering by delivering to the
Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Offering except as
provided by the Board or the Committee in the Offering.  Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated.  A
participant's withdrawal from an Offering will have no effect upon such
participant's eligibility to participate in any other Offerings under the Plan
but such participant will be required to deliver a new enrollment agreement in
order to participate in subsequent Offerings under the Plan.
(c)  Rights
granted pursuant to any Offering under the Plan shall terminate immediately upon
cessation of any participating employee's employment with the Company and any
designated Affiliate, for any reason, and the Company shall distribute to such
terminated employee all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.
(d)  Rights
granted under the Plan shall not be transferable by a participant other than by
will or the laws of descent and distribution, or by a beneficiary designation as
provided in paragraph 14, and during a participant's lifetime, shall be
exercisable only by such participant.
8.   EXERCISE.
(a)  On
each Purchase Date specified therefor in the relevant Offering, each
participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of Common Stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase one or more whole shares of
Common Stock on the final Purchase Date of an Offering shall be distributed in
full to the participant after such Purchase Date, without interest.
(b)  No
rights granted under the Plan may be exercised to any extent unless the shares
to be issued upon such exercise under the Plan (including rights granted
thereunder) are covered by an effective registration statement pursuant to the
Securities Act of 1933, as amended (the "Securities Act") and the Plan is in
material compliance with all applicable state, foreign and other securities and
other laws applicable to the Plan.  If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date.  If on the Purchase Date of any Offering hereunder, as delayed
to the maximum extent permissible, the Plan is not registered and in such
compliance, no rights granted under the Plan or any Offering shall be exercised
and all payroll deductions accumulated during the Offering (reduced to the
extent, if any, such deductions have been used to acquire stock) shall be
distributed to the participants, without interest.
9.   COVENANTS
OF THE COMPANY.
(a)  During
the terms of the rights granted under the Plan, the Company shall keep available
at all times the number of shares of Common Stock required to satisfy such
rights.
(b)  The
Company shall seek to obtain from each federal, state, foreign or other
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of the rights
granted under the Plan.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10.  USE
OF PROCEEDS FROM STOCK.
Proceeds
from the sale of stock pursuant to rights granted under the Plan shall
constitute general funds of the Company.
11.  RIGHTS
AS A STOCKHOLDER.
A
participant shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to rights granted under
the Plan unless and until the participant's shareholdings acquired upon exercise
of rights under the Plan are recorded in the books of the Company (or its
transfer agent).
12.  ADJUSTMENTS
UPON CHANGES IN STOCK.
(a)  If
any change is made in the stock subject to the Plan, or subject to any rights
granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and outstanding rights will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights.  Such adjustments shall be made by the
Board or the Committee, the determination of which shall be final, binding and
conclusive.  (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b)  In
the event of:  (1) a dissolution or liquidation of the Company; (2) a
sale of all or substantially all of the assets of the Company; (3) a merger or
consolidation in which the Company is not the surviving corporation; (4) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; (5) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act,
or comparable successor rule) of securities of the Company representing at least
fifty percent (50%) of the combined voting power entitled to vote in the
election of directors; or (6) the individuals who, as of the date of the
adoption of this Plan, are members of the Board (the "Incumbent Board";(if the
election, or nomination for election by the Company's stockholders, of a new
director was approved by a vote of at least fifty percent (50%) of the members
of the Board then comprising the Incumbent Board, such new director shall upon
his or her election be considered a member of the Incumbent Board) cease for any
reason to constitute at least fifty percent (50%) of the Board; then the Board
in its sole discretion may take any action or arrange for the taking of any
action among the following: (i) any surviving or acquiring corporation may
assume outstanding rights or substitute similar rights for those under the Plan,
(ii) such rights may continue in full force and effect, or (iii) all
participants' accumulated payroll deductions may be used to purchase Common
Stock immediately prior to or within a reasonable period of time following the
transaction described above and the participants' rights under the ongoing
Offering terminated.
13.  AMENDMENT
OF THE PLAN OR OFFERINGS.
(a)  The
Board at any time, and from time to time, may amend the Plan or the terms of one
or more Offerings. However, except as provided in paragraph 12 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the stockholders of the Company within twelve (12) months before or
after the adoption of the amendment, where the amendment will:
(i)   Increase
the number of shares reserved for rights under the Plan;
(ii)  Modify
the provisions as to eligibility for participation in the Plan or an Offering
(to the extent such modification requires stockholder approval in order for the
Plan to obtain employee stock purchase plan treatment under Section 423 of the
Code or to comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, or any comparable successor rule ("Rule 16b-3"); or
(iii)
Modify the Plan or an Offering in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock purchase
plan treatment under Section 423 of the Code or to comply with the requirements
of Rule 16b-3.
It is
expressly contemplated that the Board may amend the Plan or an Offering in any
respect the Board deems necessary or advisable to provide eligible employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to employee stock
purchase plans and/or to bring the Plan and/or rights granted under an Offering
into compliance therewith.
(b)  The
Board may, in its sole discretion, submit any amendment to the Plan or an
Offering for stockholder approval.
(c)  Rights
and obligations under any rights granted before amendment of the Plan or
Offering shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as necessary
to comply with any laws or governmental regulations, or except as necessary to
ensure that the Plan and/or rights granted under an Offering comply with the
requirements of Section 423 of the Code.
14.  DESIGNATION
OF BENEFICIARY.
(a)  A
participant may file a written designation of a beneficiary who is to receive
any shares and cash, if applicable, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b)  Such
designation of beneficiary may be changed by the participant at any time by
written notice in the form prescribed by the Company. In the event of the death
of a participant and in the absence of a beneficiary validly designated under
the Plan who is living (or if an entity, is otherwise in existence) at the time
of such participant's death, the Company shall deliver such shares and/or cash
to the executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its sole discretion, may deliver such shares and/or cash to the
spouse or to any one (1) or more dependents or relatives of the participant, or
if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may determine.
15.  TERMINATION
OR SUSPENSION OF THE PLAN.
(a)  The
Board in its discretion, may suspend or terminate the Plan at any
time.  The Plan shall automatically terminate if all the shares
subject to the Plan pursuant to subparagraph 3(a) are issued.  No
rights may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b)  Rights
and obligations under any rights granted while the Plan is in effect shall not
be impaired by suspension or termination of the Plan, except as expressly
provided in the Plan or with the consent of the person to whom such rights were
granted, or except as necessary to comply with any laws or governmental
regulation, or except as necessary to ensure that the Plan and/or rights granted
under an Offering comply with the requirements of Section 423 of the
Code.
16.  EFFECTIVE
DATE OF PLAN.
The
Plan shall become effective on the same day on which the Company's registration
statement under the Securities Act with respect to the initial public offering
of shares of the Company's Common Stock becomes effective (the "Effective
Date"), but no rights granted under the Plan shall be exercised unless and until
the Plan had been approved by the stockholders of the Company within twelve (12)
months before or after the date the Plan is adopted by the Board or the
Committee, which date may be prior to the Effective Date.
17.  CHOICE
OF LAW.
All
questions concerning the construction, validity and interpretation of this Plan
shall be governed by the law of the State of California, without regard to such
state's conflict of laws rules.
Exhibit
99.2
KRATOS
DEFENSE & SECURITY SOLUTIONS, INC.
AMENDED
AND RESTATED
2005
EQUITY INCENTIVE PLAN
AMENDED
AND RESTATED AS OF MARCH 17, 2010
1.
Establishment, Purpose and
Term of Plan
.
1.1
Establishment
.
The
Kratos Defense & Security Solutions, Inc. 2005 Equity Incentive Plan (the
"
Plan
"
) is hereby established
effective as of May 18, 2005, the date of its approval by the stockholders of
the Company (the
"
Effective
Date
"
).
1.2
Purpose
.
The
purpose of the Plan is to advance the interests of the Participating Company
Group and its stockholders by providing an incentive to attract, retain and
reward persons performing services for the Participating Company Group and by
motivating such persons to contribute to the growth and profitability of the
Participating Company Group.  The Plan seeks to achieve this purpose
by providing for Awards in the form of Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares, Performance Units, Restricted Stock Units,
Deferred Stock and Other Stock-Based Awards.
1.3
Term of Plan.
The
Plan shall continue in effect until the earlier of its termination by the Board
or the date on which all of the shares of Stock available for issuance under the
Plan have been issued and all restrictions on such shares under the terms of the
Plan and the agreements evidencing Awards granted under the Plan have
lapsed.  However, all Incentive Stock Options shall be granted, if at
all, within ten (10) years from the Effective Date.
2.
Definitions and
Construction
.
2.1
Definitions.
Whenever used
herein, the following terms shall have their respective meanings set forth
below:
(a)
"
Affiliate
"
means (i) an entity,
other than a Parent Corporation, that directly, or indirectly through one or
more intermediary entities, controls the Company or (ii) an entity, other
than a Subsidiary Corporation, that is controlled by the Company directly, or
indirectly through one or more intermediary entities.  For this
purpose, the term "control" (including the term "controlled by") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of the relevant entity, whether through the
ownership of voting securities, by contract or otherwise; or shall have such
other meaning assigned such term for the purposes of registration on Form S-8
under the Securities Act.
(b)
"
Award
"
means any Option, SAR,
Restricted Stock, Performance Share, Performance Unit, Restricted Stock Unit,
Deferred Stock or Other Stock-Based Award granted under the Plan.
(c)
"
Award
Agreement
"
means
a written agreement between the Company and a Participant setting forth the
terms, conditions and restrictions of the Award granted to the
Participant.  An Award Agreement may be an "Option Agreement," a "SAR
Agreement," a "Restricted Stock Agreement," a "Performance Share Agreement," a
"Performance Unit Agreement," a "Restricted Stock Unit Agreement," a "Deferred
Stock Unit Agreement," or an "Other Stock-Based Award Agreement."
(d)
"
Board
"
means the Board of Directors of the Company.  If one or more
Committees have been appointed by the Board to administer the Plan,
"
Board
"
also means such Committee(s).
(e)
"
Code
"
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.
(f)
"
Committee
"
means the Compensation Committee or other committee of the Board duly appointed
to administer the Plan and having such powers as shall be specified by the
Board.  Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law.
(g)
"
Company
"
means Kratos Defense & Security Solutions, Inc., a Delaware corporation, or
any successor corporation thereto.
(h)
"
Consultant
"
means a person engaged to provide consulting or advisory services (other than as
an Employee or a Director) to a Participating Company, provided that the
identity of such person, the nature of such services or the entity to which such
services are provided would not preclude the Company from offering or selling
securities to such person pursuant to the Plan in reliance on a Form S-8
Registration Statement under the Securities Act.
(i)
"
Covered
Employee
"
means
an Employee who is, or could be, a "covered employee" within the meaning of
Section 162(m).
(j)
"
Deferred
Stock
"
means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 9.3 of the Plan to receive a share of Stock on a date determined in
accordance with the Plan and the Participant's Award Agreement.
(k)
"
Director
"
means a member of the Board or of the board of directors of any other
Participating Company.
(l)
"
Disability
"
means the inability of the Participant, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Participant's
position with the Participating Company Group because of the sickness or injury
of the Participant.
(m)
"
Dividend
Equivalent
"
means a credit, made at the discretion of the Board or as otherwise provided by
the Plan, to the account of a Participant in an amount equal to the cash
dividends paid on one share of Stock for each share of Stock represented by an
Award held by such Participant.
(n)
"
Employee
"
means any person treated as an employee (including an Officer or a Director who
is also treated as an employee) in the records of a Participating Company and,
with respect to any Incentive Stock Option granted to such person, who is an
employee for purposes of Section 422 of the Code; provided, however, that
neither service as a Director nor payment of a director's fee shall be
sufficient to constitute employment for purposes of the Plan.  The
Company shall determine in good faith and in the exercise of its discretion
whether an individual has become or has ceased to be an Employee and the
effective date of such individual's employment or termination of employment, as
the case may be.  For purposes of an individual's rights, if any,
under the Plan as of the time of the Company's determination, all such
determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination.
(o)
"
Exchange
Act
"
means the Securities Exchange Act of 1934, as amended.
(p)
"
Fair Market
Value
"
means, as of any date, the value of a share of Stock or other property as
determined by the Board, in its discretion, or by the Company, in its
discretion, if such determination is expressly allocated to the Company herein,
subject to the following:
(i)
If, on
such date, the Stock is listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Stock shall be the closing
price of a share of Stock (or the mean of the closing bid and asked prices of a
share of Stock if the Stock is so quoted instead) as quoted on the Nasdaq
National Market, The Nasdaq SmallCap Market or such other national or regional
securities exchange or market system constituting the primary market for the
Stock, as reported in
The Wall Street
Journal
or such other source as the Company deems reliable.  If
the relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be determined
by the Board, in its discretion.
(ii)
If, on
such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as
determined by the Board in good faith without regard to any restriction other
than a restriction which, by its terms, will never lapse.
(q)
"
Incentive Stock
Option
"
means an Option intended to be (as set forth in the Award Agreement) and which
qualifies as an incentive stock option within the meaning of Section 422(b)
of the Code.
(r)
"
Indexed
Option
"
means an
Option with an exercise price which either increases by a fixed percentage over
time or changes by reference to a published index, as determined by the Board
and set forth in the Option Agreement.
(s)
"
Insider
"
means an Officer, a Director of the Company or other person whose transactions
in Stock are subject to Section 16 of the Exchange Act.
(t)
"
Net-Exercise
"
means a procedure by which
the Participant will be issued a number of shares of Stock determined in
accordance with a formula X + Y(A-B) / A, where:
X = the
number of shares of Stock to be issued to the Participant upon exercise of the
Option;
Y = the
total number of shares with respect to which the Participant has elected to
exercise the Option;
A = the
Fair Market Value of one (1) share of Stock;
B = the
exercise price per share (as defined in the Participant's Award
Agreement).
(u)
"
Nonstatutory
Stock Option
"
means an Option not intended to be (as set forth in the Award Agreement) or
which does not qualify as an Incentive Stock Option.
(v)
"
Officer
"
means any person designated
by the Board as an officer of the Company.
(w)
"
Option
"
means a right to purchase Stock pursuant to the terms and conditions of the
Plan.  An Option may be either an Incentive Stock Option, a
Nonstatutory Stock Option or an Indexed Option.
(x)
"
Option Exchange
Program
"
means
any program instituted by the Board which would permit either (i) Participants
the opportunity to transfer any outstanding Options and/or SARs to a financial
institution selected by the Board or (ii) the cancellation of outstanding
Options and/or SARs and the grant in substitution therefore of any new Awards or
cash awards, including specifically any new Options and/or SARs having a lower
exercise price.
(y)
"
Other Stock-Based
Award
"
means an
Award granted or denominated in Stock or units of Stock pursuant to Section 9.5
of the Plan.
(z)
"
Parent
Corporation
"
means any present or future "parent corporation" of the Company, as defined in
Section 424(e) of the Code.
(aa)
"
Participant
"
means any eligible person
who has been granted one or more Awards.
(bb)
"
Participating
Company
"
means the Company or any Parent Corporation or Subsidiary Corporation or
Affiliate.
(cc)
"
Participating
Company Group
"
means, at any point in time, all corporations collectively which are then
Participating Companies.
(dd)
"
Performance-Based
Award
"
means an
Award granted to selected Covered Employees pursuant to Sections 8 and 9, but
which are subject to the terms and conditions set forth in Section
10.  All Performance-Based Awards are intended to qualify as qualified
performance-based compensation under Section 162(m).
(ee)
"
Performance Bonus
Award
"
means the
cash award set forth in Section 9.6
(ff)
"
Performance
Goal
"
means the
criteria that the Committee uses to establish qualified performance-based
compensation under Section 162(m) and the formulas for determining whether such
performance targets have been obtained.  Such Performance Goals may be
based upon one or more Performance Measures, subject to the
following:  Performance Measures shall have the same meanings as used
in the Company's financial statements, or, if such terms are not used in the
Company's financial statements, they shall have the meaning applied pursuant to
generally accepted accounting principles, or as used generally in the Company's
industry.  Performance Measures shall be calculated with respect to
the Company and each Subsidiary Corporation consolidated therewith for financial
reporting purposes or such division or other business unit as may be selected by
the Committee.  For purposes of the Plan, the Performance Measures
applicable to a Performance-Based Award shall be calculated in accordance with
generally accepted accounting principles, but prior to the accrual or payment of
any Performance-Based Award for the same Performance Period and excluding the
effect (whether positive or negative) of any change in accounting standards or
any extraordinary, unusual or nonrecurring item, as determined by the Committee,
occurring after the establishment of the Performance Goals applicable to the
Performance-Based Award.  Performance targets may include a minimum,
maximum, target level and intermediate levels of performance, with the final
value of a Performance-Based Award determined under the applicable
Performance-Based Award formula by the level attained during the applicable
Performance Period.  A Performance target may be stated as an absolute
value or as a value determined relative to a standard selected by the
Committee.
(gg)
"
Performance
Measures
"
may be
one or more of the following, or a combination of the any of the following, as
determined by the Committee: (i) revenue; (ii) gross margin; (iii) operating
margin; (iv) operating income; (v) pre-tax profit; (vi) earnings before
interest, taxes, depreciation and amortization; (vii) net income; (viii) cash
flow; (ix) expenses; (x) the market price of the Stock; (xi) earnings per share;
(xii) return on stockholder equity; (xiii) return on capital; (xiv) return on
net assets; (xv) economic value added; (xvi) number of customers; (xvii) market
share; (xviii) return on investment; (xix) profit after tax; (xx) customer
satisfaction; (xxi) growth of earnings before interest and taxes; and (xxii)
days sales outstanding ("DSOs").
(hh)
"
Performance
Period
"
means a
period established by the Committee pursuant to Section 10 of the Plan at the
end of which one or more Performance Goals are to be measured.
(ii)
"
Performance
Share
"
means a
right granted to a Participant pursuant to Section 9.1, to receive Stock, the
payment of which is contingent upon achieving certain Performance Goals or other
performance based targets established by the Committee.
(jj)
"
Performance
Unit
"
means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 9.2 of the Plan to receive a payment equal to the value of a Performance
Unit, as determined by the Committee, based upon achieving certain Performance
Goals or other performance based targets.
(kk)
"
Restricted
Stock
"
means
Stock granted to a Participant pursuant to Section 8 of the Plan that is
subject to certain conditions (including any applicable Vesting Conditions), and
may be subject to risk of forfeiture.
(ll)
"
Restricted Stock
Unit
"
or
"
Stock
Unit
"
means a
bookkeeping entry representing a right granted to a Participant pursuant to
Section 9.4 of the Plan to receive the value associated with a share of Stock on
a date determined in accordance with the provisions of the Plan and the
Participant's Award Agreement.
(mm)
"
Restriction
Period
"
means
the period established in accordance with Section 8 of the Plan during which
shares subject to a Restricted Stock Award are subject to Vesting
Conditions.
(nn)
"
Rule
16b-3
"
means Rule 16b-3 under the Exchange Act, as amended from time to time, or
any successor rule or regulation.
(oo)
"
SAR
"
or
"
Stock
Appreciation Right
"
means a bookkeeping entry
representing, for each share of Stock subject to such SAR, a right granted to a
Participant pursuant to Section 7 of the Plan to receive payment in Stock of an
amount equal to the excess, if any, of the Fair Market Value of a share of Stock
on the date of exercise of the SAR over the exercise price.
(pp)
"
Section
162(m)
"
means
Section 162(m) of the Code.
(qq)
"
Securities
Act
"
means the Securities Act of 1933, as amended.
(rr)
"
Service
"
means a Participant's employment or service with the Participating Company
Group, whether in the capacity of an Employee, a Director or a
Consultant.  A Participant's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders Service to the Participating Company Group or a change in the
Participating Company for which the Participant renders such Service, provided
that there is no interruption or termination of the Participant's
Service.  Furthermore, an Participant's Service with the Participating
Company Group shall not be deemed to have terminated if the Participant takes
any military leave, sick leave, or other bona fide leave of absence approved by
the Company; provided, however, that if any such leave exceeds ninety (90) days,
on the ninety-first (91st) day of such leave the Participant's Service shall be
deemed to have terminated unless the Participant's right to return to Service
with the Participating Company Group is guaranteed by statute or
contract.  Notwithstanding the foregoing, unless otherwise designated
by the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Participant's Option
Agreement.  The Participant's Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Participant performs Service ceasing to be a Participating
Company.  Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant's Service has terminated and the
effective date of such termination.
(ss)
"
Stock
"
means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2.
(tt)
"
Subsidiary
Corporation
"
means any present or future "subsidiary corporation" of the Company, as defined
in Section 424(f) of the Code.
(uu)
"
Ten Percent Owner
Participant
"
means an Participant who, at the time an Option is granted to the Participant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of a Participating Company (other than an
Affiliate) within the meaning of Section 422(b)(6) of the
Code.
(vv)
"
Vesting
Conditions
"
mean
those conditions established in accordance with the Plan prior to the
satisfaction of which shares subject to a Restricted Stock Award or Restricted
Stock Unit Award, respectively, remain subject to forfeiture or a repurchase
option in favor of the Company upon the Participant's termination of
Service.
2.2
Construction.
Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan.  Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular.  Use of the term "or" is not
intended to be exclusive, unless the context clearly requires
otherwise.
3.
Administration
.
3.1
Administration by the
Board.
The Plan shall be administered by the
Board.  All questions of interpretation of the Plan or of any Award
shall be determined by the Board, and such determinations shall be final and
binding upon all persons having an interest in the Plan or such
Award.
3.2
Authority of
Officers.
Any Officer shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.  The
Board may, in its discretion, delegate to a committee comprised of one or more
Officers the authority to grant one or more Awards, without further approval of
the Board or the Committee, to any Employee, other than a person who, at the
time of such grant, is an Insider; provided, however, that (a) such Awards
shall not be granted for shares in excess of the maximum aggregate number of
shares of Stock authorized for issuance pursuant to Section 4.1, (b) the
exercise price per share of each Option shall be not less than the Fair Market
Value per share of the Stock on the effective date of grant (or, if the Stock
has not traded on such date, on the last day preceding the effective date of
grant on which the Stock was traded), and (iii) each such Award shall be
subject to the terms and conditions of the appropriate standard form of Award
Agreement approved by the Board or the Committee and shall conform to the
provisions of the Plan and such other guidelines as shall be established from
time to time by the Board or the Committee.
3.3
Powers of the Board
.
In
addition to any other powers set forth in the Plan and subject to the provisions
of the Plan, the Board shall have the full and final power and authority, in its
discretion:
(a)
to
determine the persons to whom, and the time or times at which, Awards shall be
granted and the number of shares of Stock or units to be subject to each
Award;
(b)
to
designate Options as Incentive Stock Options, Nonstatutory Stock Options or
Indexed Options;
(c)
to
determine the type(s) of Other Stock-Based Awards, and their terms and
conditions that may be granted under the Plan;
(d)
to
determine the Fair Market Value of shares of Stock or other
property;
(e)
to
determine the terms, conditions and restrictions applicable to each Award (which
need not be identical) and any shares acquired upon the exercise thereof,
including, without limitation, (i) the exercise or purchase price of shares
purchased pursuant to any Award, (ii) the method of payment for shares purchased
pursuant to any Award, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Award, including by the withholding or
delivery of shares of Stock, (iv) the timing, terms and conditions of the
exercisability of the Award or the vesting of any Award of any shares acquired
pursuant thereto, (v) the Performance Goals applicable to any Award and the
extent to which such Performance Goals have been attained, (vi)  the
time of the expiration of any Award, (vii) the effect of the Participant's
termination of Service with the Participating Company Group on any of the
foregoing, and (viii) all other terms, conditions and restrictions applicable to
any Award or shares acquired pursuant thereto not inconsistent with the terms of
the Plan;
(f)
to
determine whether an Award will be settled in shares of Stock, cash, or in any
combination thereof;
(g)
to
approve one or more forms of Award Agreement;
(h)
to amend,
modify, extend, cancel or renew any Award or to waive restrictions or conditions
applicable to any Award or any shares acquired pursuant thereto, provided that
the Board does not have the authority to accelerate or waive the restriction
periods of any of the stock-based Awards itemized in Section 9 of the Plan,
except with respect to the death, disability or retirement of such Award
holder(s) or under such circumstances as set forth in Section 12.2 of the
Plan;
(i)
to
accelerate, continue, extend or defer the exercisability of any Award or any
shares acquired pursuant thereto, including with respect to the period following
a Participant's termination of Service with the Participating Company Group,
provided that the Board does not have the authority to accelerate or waive the
restriction periods of any of the stock-based Awards itemized in Section 9 of
the Plan, except with respect to the death, disability or retirement of such
Award holder(s) or under such circumstances as set forth in Section 12.2 of the
Plan;
(j)
to
prescribe, amend or rescind rules, guidelines and policies relating to the Plan,
or to adopt sub-plans or supplements to, or alternative versions of, the Plan,
including, without limitation, as the Board deems necessary or desirable to
comply with the laws or regulations of, or to accommodate the tax policy,
financial accounting or custom of, foreign jurisdictions whose citizens may be
granted Awards;
(k)
to
authorize, in conjunction with any applicable Company deferred compensation
plan, that the receipt of cash or Stock subject to any Award under this Plan,
may be deferred under the terms and conditions of such Company deferred
compensation plan; and
(l)
to
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Award as the Board may deem
advisable to the extent not inconsistent with the provisions of the Plan or
applicable law.
3.4
Administration with Respect to
Insiders.
With respect to participation by Insiders in the
Plan, at any time that any class of equity security of the Company is registered
pursuant to Section 12 of the Exchange Act, the Plan shall be administered
in compliance with the requirements, if any, of Rule 16b-3.
3.5
Committee Complying with
Section 162(m).
If the Company is a "publicly held
corporation" within the meaning of Section 162(m), the Board may establish
a Committee of "outside directors" within the meaning of Section 162(m) to
approve the grant of any Option which might reasonably be anticipated to result
in the payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section 162(m).
3.6
No Repricings, Exchanges or
Buyouts.
Without the affirmative vote of holders of a majority
of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all
outstanding shares of Stock is present or represented by proxy, the Board shall
not approve (i) a program providing for the amendment of outstanding Options
and/or SARs to reduce the exercise price thereof or (ii) an Option Exchange
Program.  This paragraph shall not be construed to apply to, and a
stockholder approval shall not be required for, the following
actions:  (x) "issuing or assuming a stock option in a transaction to
which section 424(a) applies," within the meaning of Section 424 of the Code,
(ii) adjusting outstanding Awards pursuant to Section 4.6 of the Plan in
connection with certain changes in the capital structure of the Company, or
(iii) the treatment of outstanding Awards pursuant to Section 12 of the Plan in
connection with a Change in Control.
3.7
Indemnification.
In
addition to such other rights of indemnification as they may have as members of
the Board or officers or employees of the Participating Company Group, members
of the Board and any officers or employees of the Participating Company Group to
whom authority to act for the Board or the Company is delegated shall be
indemnified by the Company against all reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan, or any right granted hereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
4.
Shares Subject to
Plan
.
4.1
Maximum Number of Shares
Issuable.
Subject to adjustment as provided in
Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan shall be One Million Nine Hundred Thousand
(1,900,000).  This share reserve shall consist of authorized but
unissued or reacquired shares of Stock or any combination thereof.  If
any outstanding Award for any reason expires or is terminated or canceled
without having been exercised or settled in full, or if shares of Stock acquired
pursuant to an Award subject to forfeiture or repurchase are forfeited or
repurchased by the Company, the shares of Stock allocable to the terminated
portion of such Award, or such forfeited or repurchased shares of Stock shall
again be available for grant under the Plan.  Notwithstanding anything
in the Plan, or any Award Agreement to the contrary, shares underlying Options
transferred under any Option Exchange Program described in Section 2.1(x)(i)
shall not be again available for grant under the Plan.  Shares of
Stock shall not be deemed to have been granted pursuant to the Plan
(a) with respect to any portion of an Award that is settled in cash or
(b) to the extent such shares are withheld in satisfaction of tax
withholding obligations pursuant to Section 15.  Upon payment in
shares of Stock pursuant to the exercise of a SAR, the number of shares
available for grant under the Plan shall be reduced only by the number of shares
actually issued in such payment.  If the exercise price of an Option
is paid by tender to the Company, or attestation to the ownership, of shares of
Stock owned by the Participant, the number of shares available for grant under
the Plan shall be reduced by the net number of shares for which the Option is
exercised.
4.2
Adjustments for Changes in Capital
Structure
.
In
the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the capital
structure of the Company, appropriate adjustments shall be made in the number
and class of shares subject to the Plan and to any outstanding Awards, in the
Section 162(m) Grant Limit set forth in Section 5.4 and in the exercise price or
purchaser price of any outstanding Awards.  If a majority of the
shares which are of the same class as the shares that are subject to outstanding
Awards are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event, as defined in Section 12.1) shares
of another corporation (the
"
New
Shares
"
),
the Board may unilaterally amend the outstanding Awards to provide that such
Awards are accurately reflected for New Shares.  In the event of any
such amendment, the number of shares subject to, and the exercise price and/or
purchase price per share of, the outstanding Awards (if any) shall be adjusted
in a fair and equitable manner as determined by the Board, in its
discretion.  Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded
down to the nearest whole number, and in no event may the exercise price and/or
purchase price of any Award be decreased to an amount less than the par value,
if any, of the stock subject to the Award.  The adjustments determined
by the Board pursuant to this Section 4.2 shall be final, binding and
conclusive.
5.
Eligibility and Award
Limitations
.
5.1
Persons Eligible for
Awards
.
Awards
may be granted only to Employees, Consultants, and Directors.  For
purposes of the foregoing sentence,
"
Employees,
"
"
Consultants
"
and
"
Directors
"
shall include
prospective Employees, prospective Consultants and prospective Directors to whom
Awards are granted in connection with written offers of an employment or other
service relationship with the Participating Company Group; provided, however,
that no Stock subject to any such Award shall vest, become exercisable or be
issued prior to the date on which such person commences Service.
5.2
Participation.
Awards
are granted solely at the discretion of the Board.  Eligible persons
may be granted more than one (1) Award.  However, eligibility in
accordance with this Section shall not entitle any person to be granted an
Award, or, having been granted an Award, to be granted an additional
Award.
5.3
Incentive Stock Option
Limitations
.
(a)
Persons
Eligible
.
An Incentive
Stock Option may be granted only to a person who, on the effective date of
grant, is an Employee of the Company, a Parent Corporation or a Subsidiary
Corporation (each being an
"
ISO-Qualifying
Corporation
"
).  Any person who
is not an Employee of an ISO-Qualifying Corporation on the effective date of the
grant of an Option to such person may be granted only a Nonstatutory Stock
Option.  An Incentive Stock Option granted to a prospective Employee
upon the condition that such person become an Employee of an ISO-Qualifying
Corporation shall be deemed granted effective on the date such person commences
Service with an ISO-Qualifying Corporation, with an exercise price determined as
of such date in accordance with Section 6.1.
(b)
Fair Market Value
Limitation
.
To
the extent that options designated as Incentive Stock Options (granted under all
stock option plans of the Participating Company Group, including the Plan)
become exercisable by a Participant for the first time during any calendar year
for stock having a Fair Market Value greater than One Hundred Thousand dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options.  For purposes of this Section,
options designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is
granted.  If the Code is amended to provide for a different limitation
from that set forth in this Section, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code.  If an Option is
treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option
in part by reason of the limitation set forth in this Section, the Participant
may designate which portion of such Option the Participant is
exercising.  In the absence of such designation, the Participant shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first.  Upon exercise, shares issued pursuant to each such portion
shall be separately identified.
5.4
Section 162(m) Award
Limits.
The following limits shall apply to the grant of any
Award if, at the time of grant, the Company is a "publicly held corporation"
within the meaning of Section 162(m).
(i)
Options and
SARs.
Subject to adjustment as provided in Section 4.2,
no Employee shall be granted within any fiscal year of the Company one or more
Options or Freestanding SARs which in the aggregate are for more than Two
Million (2,000,000) shares of Stock, provided, however, that the Company may
make an additional one-time grant to any newly-hired Employee of an Option
and/or SAR for the purchase of up to an additional One Million (1,000,000)
shares of Stock.  An Option which is canceled (or a Freestanding SAR
as to which the exercise price is reduced to reflect a reduction in the Fair
Market Value of the Stock) in the same fiscal year of the Company in which it
was granted shall continue to be counted against such limit for such fiscal
year.
(ii)
Restricted Stock and Restricted Stock
Units.
Subject to adjustment as provided in Section 4.2,
no Employee shall be granted within any fiscal year of the Company one or more
Restricted Stock Awards or Restricted Stock Units, subject to Vesting Conditions
based on the attainment of Performance Goals, for more than Two Million
(2,000,000) shares of Stock, provided, however, that the Company may make an
additional one-time grant to any newly-hired Employee of a Restricted Stock
Award or Restricted Stock Units of up to an additional One Million (1,000,000)
shares of Stock.
(iii)
Performance Shares and Performance
Units.
Subject to adjustment as provided in Section 4.2, no
Employee shall be granted (A) Performance Shares which could result in such
Employee receiving more than Two Million (2,000,000) shares of Stock for each
full fiscal year of the Company contained in the Performance Period for such
Award, or (B) Performance Units which could result in such Employee
receiving more than $1,000,000 for each full fiscal year of the Company
contained in the Performance Period for such Award.  No Participant
may be granted more than one Performance Share or Performance Unit for the same
Performance Period.
(iv)
Performance Bonus
Awards.
No Employee shall be paid a Performance Bonus Award
pursuant to Section 9.6 which is greater than $1,000,000 for each full fiscal
year of the Company contained in the Performance Period for such
award.
6.
Terms
and Conditions of Options
.
Options shall be evidenced by Award
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish.  No Option or
purported Option shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Options may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:
6.1
Exercise Price
.
The
exercise price for each Option shall be established in the discretion of the
Board; provided, however, that (a) the exercise price per share for an
Option shall be not less than the Fair Market Value of a share of Stock on the
effective date of grant of the Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Participant shall have an exercise price per
share less than one hundred ten percent (110%) of the Fair Market Value of a
share of Stock on the effective date of grant of the Option, and (c)
notwithstanding anything to the contrary in this Section 6.1, in the case of an
Indexed Option, the Board shall determine the exercise price of such Indexed
Option and the terms and conditions that affect, if any, any adjustments to the
exercise price of such Indexed Option.  Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than the minimum exercise
price set forth above if such Option is granted pursuant to an assumption or
substitution for another option in a manner qualifying under the provisions of
Section 424(a) of the Code.
6.2
Exercisability and Term of
Options
.
Options
shall be exercisable at such time or times, or upon such event or events, and
subject to such terms, conditions, performance criteria and restrictions as
shall be determined by the Board and set forth in the Award Agreement evidencing
such Option; provided, however, that (a) no Option shall be exercisable
after the expiration of ten (10) years after the effective date of grant of such
Option, (b) no Incentive Stock Option granted to a Ten Percent Owner shall
be exercisable after the expiration of five (5) years after the effective date
of grant of such Option, and (c) no Option granted to a prospective
Employee, prospective Consultant or prospective Director may become exercisable
prior to the date on which such person commences Service with a Participating
Company.  Subject to the foregoing, unless otherwise specified by the
Board in the grant of an Option, any Option granted hereunder shall terminate
ten (10) years after the effective date of grant of the Option, unless earlier
terminated in accordance with its provisions.
6.3
Payment
of Exercise Price.
(a)
Forms of
Consideration Authorized.
Except as otherwise provided below,
payment of the exercise price for the number of shares of Stock being purchased
pursuant to any Option shall be made (i) in cash, by check or cash
equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice of
exercise together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a
"
Cashless
Exercise
"
),
(iv) provided that the Participant is an Employee (unless otherwise not
prohibited by law, including, without limitation, any regulation promulgated by
the Board of Governors of the Federal Reserve System) and in the Company's sole
discretion at the time the Option is exercised, by delivery of the Participant's
promissory note in a form approved by the Company for the aggregate exercise
price, provided that, if the Company is incorporated in the State of Delaware,
the Participant shall pay in cash that portion of the aggregate exercise price
not less than the par value of the shares being acquired, (v) by delivery of a
properly executed notice of exercise electing a Net-Exercise, (vi) by such other
consideration as may be approved by the Board from time to time to the extent
permitted by applicable law, or (vii) by any combination
thereof.  The Board may at any time or from time to time, by approval
of or by amendment to the standard forms of Award Agreement described in
Section 11, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.
(b)
Limitations
on Forms of Consideration.
(i)
Tender of
Stock.
Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the Company's stock.  Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the
Participant for more than six (6) months (and not used for another Option
exercise by attestation during such period) or were not acquired, directly or
indirectly, from the Company.
(ii)
Cashless
Exercise.
The Company reserves, at any and all times, the
right, in the Company's sole and absolute discretion, to establish, decline to
approve or terminate any program or procedures for the exercise of Options by
means of a Cashless Exercise, including with respect to one or more Participants
specified by the Company notwithstanding that such program or procedures may be
available to other Participants.
(iii)
Payment by Promissory
Note.
No promissory note shall be permitted if the exercise of
an Option using a promissory note would be a violation of any
law.  Any permitted promissory note shall be on such terms as the
Board shall determine.  The Board shall have the authority to permit
or require the Participant to secure any promissory note used to exercise an
Option with the shares of Stock acquired upon the exercise of the Option or with
other collateral acceptable to the Company.  Unless otherwise provided
by the Board, if the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Company's securities, any promissory note shall comply with such applicable
regulations, and the Participant shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.
(iv)
Net-Exercise.
The
Company reserves, at any and all times, the right, in the Company's sole and
absolute discretion, to grant Incentive Stock Options (or to grant, or amend,
any Nonstatutory Options) to provide that such Options may be exercised by the
means of a Net-Exercise, including with respect to one or more Participants
specified by the Company notwithstanding that such program or procedures may be
available to other Participants.  No Option will be granted (or
amended in the case of a Nonstatutory Stock Option) to permit a Net-Exercise
prior to the effectiveness of the Financial Accounting Standards Board Statement
of Financial Accounting Standards No. 123R.
6.4
Effect of Termination of
Service.
An Option shall be exercisable after a Participant's
termination of Service to such extent and during such period as determined by
the Board, in its discretion, and set forth in the Award Agreement evidencing
such Option.
6.5
Transferability of
Options.
During the lifetime of the Participant, an Option
shall be exercisable only by the Participant or the Participant's guardian or
legal representative.  Prior to the issuance of shares of Stock upon
the exercise of an Option, the Option shall not be subject in any manner to
anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant's
beneficiary, except transfer by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, to the extent permitted
by the Board, in its discretion, and set forth in the Award Agreement evidencing
such Option, a Nonstatutory Stock Option shall be assignable or transferable
subject to the applicable limitations, if any, described in the General
Instructions to Form S-8 Registration Statement under the Securities
Act.  Notwithstanding any of the foregoing, the Board may permit
further transferability of any Option, on a general or specific basis, and may
impose conditions and limitations on any permitted
transferability.  Notwithstanding any of the foregoing, the Board may
permit further transferability of any Option, on a general or specific basis, to
third parties in connection with an Option Exchange Program established and
approved by the Board pursuant to which Participant's may receive a cash
payment, or other consideration, in exchange for the transfer of such Option,
and the Board may impose any conditions and limitations on any permitted
transferability and may amend, without Participant consent, any outstanding
Option as may be necessary to facilitate the transfer of such Option under any
Option Exchange Program.
7.
Terms and Conditions of
Stock Appreciation Rights
.
Stock
Appreciation Rights shall be evidenced by Award Agreements specifying the number
of shares of Stock subject to the Award, in such form as the Board shall from
time to time establish.  No SAR or purported SAR shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement.  Award Agreements evidencing SARs may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
7.1
Types of SARs
Authorized.
SARs may be granted in tandem with all or any
portion of a related Option (a
"
Tandem
SAR
"
) or may be
granted independently of any Option (a
"
Freestanding
SAR
"
).  A Tandem SAR
may be granted either concurrently with the grant of the related Option or at
any time thereafter prior to the complete exercise, termination, expiration or
cancellation of such related Option.
7.2
Exercise Price and Other
Terms.
The Board, subject to the provisions of the Plan, will
have complete discretion to determine the terms and conditions of each SAR
granted under the Plan; provided, however, that (a) the exercise price per
share subject to a Tandem SAR shall be the exercise price per share under the
related Option and (b) the exercise price per share subject to a
Freestanding SAR shall be not less than the Fair Market Value of a share of
Stock on the effective date of grant of the SAR.
7.3
Exercise of
SARs.
SARs will be exercisable on such terms and conditions as
the Board, in its sole and absolute discretion, will determine.
7.4
Award
Agreement.
Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the Board, in its
sole discretion, will determine.
7.5
Expiration of
SARs.
Each SAR grant under the Plan will expire upon the date
determined by the Board, in its sole discretion, and set forth in the Award
Agreement.  Notwithstanding the foregoing, the requirements of
Sections 6.2, 6.3, 6.4 and 6.5 also will apply to SARs to the extent not
replaced or superseded by the terms of any Award Agreement.
8.
Terms and Conditions of
Restricted Stock Awards
.
Restricted
Stock Awards shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Board shall from time
to time establish.  No Restricted Stock Award or purported Restricted
Stock Award shall be a valid and binding obligation of the Company unless
evidenced by a fully executed Award Agreement.  Award Agreements
evidencing Restricted Stock Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:
8.1
Grant of Restricted
Stock.
The Board is authorized to make Awards of Restricted
Stock to any Participant selected by the Board in such amounts and subject to
such terms and conditions as determined by the Board.
8.2
Issuance and
Restrictions.
Restricted Stock Awards will be subject to such
restrictions on transferabilty and other restrictions as the Board may impose
(inlcuding, without limitation, limitations on the right to vote shares of Stock
or the right to receive dividends on the Stock).  These restrictions
may lapse separately or in combination at such times, pursuant to such
circumstances, in such installments, or otherwise, as the Board determines at
the time of the grant of the Award or thereafter.
8.3
Forfeiture.
Except
as otherwise determined by the Board at the time of grant of the Award or
thereafter, upon termination of Service during the applicable Restriction
Period, Restricted Stock that is at that time subject to restrictions will be
forefeited; provided, however, that the Board may (a) provide in any Restricted
Stock Award Agreement that restrictions or forfeiture conditions will be waived
in whole or in part in the event of terminations resulting from specified
causes, and (b) in other cases waive in whole or in part restrictions or
forfeiture conditions.
8.4
Voting Rights; Dividends and
Distributions.
Except as may be provided in any Award
Agreement, during the Restriction Period applicable to shares subject to a
Restricted Stock Award, the Participant shall have all of the rights of a
stockholder of the Company holding shares of Stock, including the right to vote
such shares and to receive all dividends and other distributions paid with
respect to such shares.  However, in the event of a dividend or
distribution paid in shares of Stock or any other adjustment made upon a change
in the capital structure of the Company as described in Section 4.2, then any
and all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant is entitled by reason of the
Participant's Restricted Stock Award shall be immediately subject to the same
Vesting Conditions as the shares subject to the Restricted Stock Award with
respect to which such dividends or distributions were paid or adjustments were
made.
9.
Terms and Conditions of
Other Types of Awards
.
Other
types of Awards, such as Performance Shares, Performance Units, Deferred Stock,
Restricted Stock Units, Other Stock-Based Awards and Performance Bonus Awards
(collectively a
"
Other Types of
Award
"
) shall be
evidenced by Award Agreements specifying the type of Award and the number of
shares of Stock subject to the Award, in such form as the Board shall from time
to time establish.  No Other Type of Award or purported Award shall be
a valid and binding obligation of the Company unless evidenced by a fully
executed Award Agreement.  Award Agreements evidencing any Other Type
of Award may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and
conditions:
9.1
Performance
Shares.
Any Participant selected by the Committee may be
granted one or more Performance Share awards which will be denominated in a
number of shares of Stock and which may be linked to any one or more of the
Performance Goals or other specific performance criteria determined appropriate
by the Committee, in each case on a specified date or dates or over any period
or periods determined by the Committee.  In making such
determinations, the Committee will consider (among other such factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular
Participant.
9.2
Performance
Units.
Any Participant selected by the Committee may be
granted one or more Performance Unit awards which will be denominated in units
of value, which, without limitation, may include the dollar value of shares of
Stock, and which may be linked to any one or more of the Performance Goals or
other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee.  In making such determinations, the Committee will
consider (among other such factors as it deems relevant in light of the specific
type of Award) the contributions, responsibilities and other compensation of the
particular Participant.
9.3
Deferred Stock.
Any
Participant selected by the Board may be granted an award of Deferred Stock in
the manner determined from time to time by the Board.  The number of
shares of Deferred Stock will be determined by the Board and may be linked to
the Performance Goals or other specific performance criteria determined to be
appropriate by the Board, in each case on a specified date or dates or over any
period or periods determined by the Board.  Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee, or upon such settlement date as may be elected by the
Participant.  Unless otherwise provided by the Board, a Participant
awarded Deferred Stock will have no rights as a Company stockholder with respect
to such Deferred Stock until such time as the Award has vested and the Stock
underlying such Award has been issued.  In addition, Deferred Stock
may be granted automatically with respect to such number of shares of Stock and
upon such other terms and conditions as established by the Board in lieu
of:
(a)
cash or
shares of Stock otherwise issuable to such Participant upon the exercise or
settlement of a Restricted Stock Award or Performance Award; or
(b)
any cash
to be otherwise paid to the Participant in the form of salary, bonus,
commissions, or such other compensation program maintained by the
Company.
9.4
Restricted Stock
Units.
The Board is authorized to make Awards of Restricted
Stock Units to any Participant selected by the Board in such amounts and subject
to such terms and conditions as determined by the Board.  The number
of Restricted Stock Units will be determined by the Board and may be linked to
the Performance Goals or other specific performance criteria determined to be
appropriate by the Board, in each case on a specified date or dates or over any
period or periods determined by the Board.  At the time of grant, the
Board will specify the date or dates on which the Restricted Stock Units will
become fully vested and nonforfeitable, and may specify such conditions to
vesting as it deems appropriate.  At the time of grant, the Board will
specify the settlement date applicable to each grant of Restricted Stock Units
which will be no earlier than the vesting date or dates of the Award and may be
determined at the election of the Participant.  On the settlement
date, the Company will transfer to the Participant either (i) one unrestricted,
fully transferable share of Stock or (ii) cash equal to the value of one such
share of Stock for each Restricted Stock Unit scheduled to be paid out on such
date and which was not previously forfeited.  The Board will specify
the purchase price, if any, to be paid by the Participant to the Company for
such shares of Stock.
9.5
Other Stock-Based
Awards.
Any Participant selected by the Board may be granted
one or more awards that provide Participants with shares of Stock or the right
to purchase shares of Stock or that have a value derived from the value of, or
an exercise or conversion privilege at a price related to, or that are otherwise
payable in shares of Stock and which may be linked to any one or more of the
Performance Goals or other specific performance criteria determined appropriate
by the Board, in each case on a specified date or dates or over any period or
periods determined by the Board.  In making such determinations, the
Board will consider (among such other factors as it deems relevant in light of
the specific type of award) the contributions, responsibilities and other
compensation to the particular Participant.
9.6
Performance Bonus
Awards.
Any Participant selected by the Committee may be
granted one or more Performance-Based Award in the form of a cash bonus payable
upon the attainment of Performance Goals that are established by the Committee,
in each case on a specified date or dates or over any period or periods
determined by the Committee.  Any such Performance Bonus Award paid to
a Covered Employee will be based upon objectively determinable bonus formulas
established in accordance with Section 10.
9.7
Term of Other Type
Awards.
Except as otherwise provided herein, the term of any
Other Type Award will be set by the Board in its sole and absolute discretion
and set forth in any applicable Award Agreement, provided that and except for a
de minimus number of awards (as defined below), Other types Awards shall be
subject to restriction periods of not less than one year for any performance
based Awards and not less than three years for any time based
Awards.  If 5% or fewer of the shares currently authorized for grant
under the Plan are unrestricted, the de minimus requirement set forth above
shall be met.
9.8
Exercise or Purchase
Price.
The Board may establish the exercise or purchase price,
if any, of any Other Type Award; provided, however, that such price will not be
less that the par value of a share of Stock on the date of grant, unless
otherwise permitted by applicable law.
9.9
Exercise Upon Termination of
Service.
Any Other Type of Award will only be exercisable or
payable while the Participant is an Employee, Consultant or Director, as
applicable; provided, however, that the Board in its sole and absolute
discretion may provide that any Other Type of Award may be exercised or paid
subsequent to a termination of Service, as applicable, or following a Change in
Control, or because of the Participant's retirement, death or disability, or
otherwise; provided, however, that any such provision with respect to
Performance Shares, Performance Units or Performance Bonus Awards will be
subject to the requirements of Section 162(m) that apply to such award and/or
compensation.
9.10
Form of
Payment.
Payments with respect to any Other Type of Award will
be made in cash, in Stock or a combination of both, as determined by the Board
and as set forth in any applicable Award Agreement.
9.11
Award
Agreement.
All Other Types of Awards will be subject to such
additional terms and conditions as determined by the Board and will be evidenced
by a written Award Agreement.
9.12
Voting Rights; Dividend Equivalent
Rights and Distributions.
Participants shall have no voting
rights with respect to shares of Stock represented by any Other Type of Award
until the date of the issuance of such shares, if any (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  However, the Board, in its discretion, may
provide in the Award Agreement evidencing any Other Type of Award that the
Participant shall be entitled to receive Dividend Equivalents with respect to
the payment of cash dividends on Stock having a record date prior to the date on
which such shares of Stock underlying any such award are settled or
forfeited.  Such Dividend Equivalents, if any, shall be credited to
the Participant in the form of additional whole shares of Stock, or such cash
equivalent, depending on the type of award, as of the date of payment of such
cash dividends on Stock.  The number of additional shares of Stock
(rounded to the nearest whole number) to be so credited shall be determined by
dividing (a) the amount of cash dividends paid on such date with respect to
the number of shares of Stock represented by the shares of Stock underlying such
award previously credited to the Participant by (b) the Fair Market Value
per share of Stock on such date.  Dividend Equivalents may be paid
currently or may be accumulated and paid to the extent that such award become
nonforfeitable, as determined by the Board.  Settlement of Dividend
Equivalents may be made in cash, shares of Stock, or a combination thereof as
determined by the Board, and may be paid on the same basis as settlement of the
related award.  In the event of a dividend or distribution paid in
shares of Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 4.2, appropriate adjustments
shall be made in the Participant's Other Type of Awards so that it represents
the right to receive upon settlement any and all new, substituted or additional
securities or other property (other than normal cash dividends) to which the
Participant would entitled by reason of the shares of Stock issuable upon
settlement of the award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.
9.13
Nontransferability of
Awards.
Prior to settlement or payment of any Other Type of
Award in accordance with the provisions of the Plan, no such award shall be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant's beneficiary, except transfer by will or by the laws of
descent and distribution.  All rights with respect to such award
granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant's guardian or legal
representative.
10.
Terms and Conditions of Any
Performance-Based Award
.
10.1
Purpose.
The
purpose of this Section 10 is to provide the Committee the ability to qualify
Awards (other than Options and SARs) that are granted pursuant to Sections 8 and
9 as qualified performance-based compensation under Section
162(m).  If the Committee, in its discretion, decides to grant a
Performance-Based Award subject to Performance Goals to a Covered Employee, the
provisions of this Section 10 will control over any contrary provision in the
Plan; provided, however, that the Committee may in its discretion grant Awards
to such Covered Employees that are based on Performance Goals or other specific
criteria or goals but that do not satisfy the requirements of this Section
10.
10.2
Applicability.
This
Section 10 will apply to those Covered Employees which are selected by the
Committee to receive any Award subject to Performance Goals.  The
designation of a Covered Employee as being subject to Section 162(m) will not in
any manner entitle the Covered Employee to receive an Award under the
Plan.  Moreover, designation of a Covered Employee subject to Section
162(m) for a particular Performance Period will not require designation of such
Covered Employee in any subsequent Performance Period and designation of one
Covered Employee will not require designation of any other Covered Employee in
such period or in any other period.
10.3
Procedures with Respect to
Performance Based Awards.
To the extent necessary to comply
with the performance-based compensation of Section 162(m), with respect to any
Award granted subject to Performance Goals, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m)), the Committee will, in writing, (a)
designate one or more Participants who are Covered Employees, (b) select the
Performance Goals applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (d) specify the relationship between
Performance Goals and the amounts of such Awards, as applicable, to be earned by
each Covered Employee for such Performance Period.  Following the
completion of each Performance Period, the Committee will certify in writing
whether the applicable Performance Goals have been achieved for such Performance
Period.  In determining the amounts earned by a Covered Employee, the
Committee will have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of individual or
corporate performance for the Performance Period.
10.4
Payment of Performance Based
Awards.
Unless otherwise provided in the applicable Award
Agreement, a Covered Employee must be employed by the Participating Company
Group on the day a Performance-Based Award for such Performance Period is paid
to the Covered Employee.  Furthermore, a Covered Employee will be
eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are
achieved.
10.5
Additional
Limitations.
Notwithstanding any other provision of the Plan,
any Award which is granted to a Covered Employee and is intended to constitute
qualified performance based compensation under Section 162(m) will be subject to
any additional limitations set forth in the Code (including any amendment to
Section 162(m) or any regulations and ruling issued thereunder that are
requirements for qualification as qualified performance-based compensation as
described in Section 162(m), and the Plan will be deemed amended to the extent
necessary to conform to such requirements.
11.
Standard Forms of Award
Agreement
.
11.1
Award Agreements
.
Each
Award shall comply with and be subject to the terms and conditions set forth in
the appropriate form of Award Agreement approved by the Board and as amended
from time to time.  Any Award Agreement may consist of an appropriate
form of Notice of Grant and a form of Agreement incorporated therein by
reference, or such other form or forms as the Board may approve from time to
time.
11.2
Authority to Vary Terms
.
The
Board shall have the authority from time to time to vary the terms of any
standard form of Award Agreement either in connection with the grant or
amendment of an individual Award or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Award Agreement are
not inconsistent with the terms of the Plan.
12.
Change in
Control
.
12.1
Definitions.
(a)
An
"
Ownership Change
Event
"
shall be deemed to have occurred if any of the following occurs with respect to
the Company:  (i) the direct or indirect sale or exchange in a single
or series of related transactions by the stockholders of the Company of more
than fifty percent (50%) of the voting stock of the Company; (ii) a merger or
consolidation in which the Company is a party; (iii) the sale, exchange, or
transfer of all or substantially all of the assets of the Company (other than a
sale, exchange or transfer to one or more subsidiaries of the Company); or (iv)
a liquidation or dissolution of the Company.
(b)
A
"
Change in
Control
"
shall
mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, a
"
Transaction
"
) in which the stockholders
of the Company immediately before the Transaction do not retain immediately
after the Transaction, in substantially the same proportions as their ownership
of shares of the Company
'
s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of an Ownership
Change Event described in Section 12.1(a)(iii), the entity to which the assets
of the Company were transferred (the
"
Transferee
"
), as the case may
be.  For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business
entities which own the Company or the Transferee, as the case may be, either
directly or through one or more subsidiary corporations or other business
entities.  The Board shall have the right to determine whether
multiple sales or exchanges of the voting securities of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
12.2
Effect of Change in Control on
Options and SARs
.
(a)
Accelerated
Vesting
.  Notwithstanding any other provision of the Plan to
the contrary, the Board, in its sole discretion, may provide in any Award
Agreement or, in the event of a Change in Control, may take such actions as it
deems appropriate to provide for the acceleration of the exercisability and
vesting in connection with such Change in Control of any or all outstanding
Options and SARs and shares acquired upon the exercise of such Options and SARs
upon such conditions and to such extent as the Committee shall
determine.
(b)
Assumption or
Substitution
.  In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or other business
entity or parent corporation thereof, as the case may be (the
"
Acquiring
Corporation
"
),
may, without the consent of the Participant, either assume the Company's rights
and obligations under outstanding Options and SARs or substitute for outstanding
Options and SARs substantially equivalent options and stock appreciation rights
for the Acquiring Corporation's stock.  In the event that the
Acquiring Corporation elects not to assume or substitute for outstanding Options
and SARs in connection with a Change in Control, or if the Acquiring Corporation
is not a "publicly held corporation" within the meaning of Section 162(m),
the exercisability and vesting of each such outstanding Option, SAR and any
shares acquired upon the exercise thereof held by a Participant whose Service
has not terminated prior to such date shall be accelerated, effective as of the
date ten (10) days prior to the date of the Change in Control.  The
exercise or vesting of any Option, SAR and any shares acquired upon the exercise
thereof that was permissible solely by reason of this Section 12.2 and the
provisions of such applicable Award Agreement shall be conditioned upon the
consummation of the Change in Control.  Any Options and SARs which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Change in Control nor exercised as of the date of the Change in Control
shall terminate and cease to be outstanding effective as of the date of the
Change in Control.  Notwithstanding the foregoing, shares acquired
upon exercise of an Option prior to the Change in Control and any consideration
received pursuant to the Change in Control with respect to such shares shall
continue to be subject to all applicable provisions of the applicable Award
Agreement evidencing such Option or SAR except as otherwise provided in such
applicable Award Agreement.  Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the outstanding
Options and SARs immediately prior to an Ownership Change Event described in
Section 12.1(a)(i) constituting a Change in Control is the surviving or
continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code, the outstanding
Options and SARs shall not terminate unless the Committee otherwise provides in
its discretion.
(c)
Cash-Out
.  The
Committee may, in its sole discretion and without the consent of any
Participant, determine that, upon the occurrence of a Change in Control, each or
any Option or SAR outstanding immediately prior to the Change in Control shall
be canceled in exchange for a payment with respect to each vested share of Stock
subject to such canceled Option or SAR in (i) cash, (ii) stock of the Company or
of a corporation or other business entity a party to the Change in Control, or
(iii) other property which, in any such case, shall be in an amount having a
Fair Market Value equal to the excess of the Fair Market Value of the
consideration to be paid per share of Stock in the Change in Control over the
exercise price per share under such Option or SAR (the
"
Spread
"
).  In the event
such determination is made by the Committee, the Spread (reduced by applicable
withholding taxes, if any) shall be paid to Participants in respect of their
canceled Options and SARs as soon as practicable following the date of the
Change in Control.
12.3
Effect of Change in Control on
Restricted Stock and Other Type of Awards.
The Committee may,
in its discretion, provide in any Award Agreement evidencing a Restricted Stock
or Other Type of Award that, in the event of a Change in Control, the lapsing of
any applicable Vesting Condition, Restriction Period or Performance Goal
applicable to the shares subject to such Award held by a Participant whose
Service has not terminated prior to the Change in Control shall be accelerated
and/or waived effective immediately prior to the consummation of the Change in
Control to such extent as specified in such Award Agreement.  Any
acceleration, waiver or the lapsing of any restriction that was permissible
solely by reason of this Section 12.3 and the provisions of such Award
Agreement shall be conditioned upon the consummation of the Change in
Control.
13.
Provision
of Information
.
Each Participant shall be given access
to information concerning the Company equivalent to that information generally
made available to the Company's common stockholders.
14.
Compliance with Securities
Law
.
The grant of Options and the issuance
of shares of Stock upon exercise of Options shall be subject to compliance with
all applicable requirements of federal, state and foreign law with respect to
such securities.  Options may not be exercised if the issuance of
shares of Stock upon exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed.  In addition, no Option may be exercised unless
(a) a registration statement under the Securities Act shall at the time of
exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (b) in the opinion of legal counsel to the
Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained.  As a condition to the
exercise of any Option, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.
15.
Tax
Withholding
.
15.1
Tax Withholding in
General.
The Company shall have the right to deduct from any
and all payments made under the Plan, or to require the Participant, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise of an Option, to make adequate provision for, the federal, state, local
and foreign taxes, if any, required by law to be withheld by the Participating
Company Group with respect to an Award or the shares acquired pursuant
thereto.  The Company shall have no obligation to deliver shares of
Stock, to release shares of Stock from an escrow established pursuant to an
Award Agreement, or to make any payment in cash under the Plan until the
Participating Company Group's tax withholding obligations have been satisfied by
the Participant.
15.2
Withholding in
Shares.
The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group.  The Fair Market Value
of any shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.
16.
Termination
or Amendment of Plan
.
The Board may terminate or amend the
Plan at any time.  However, subject to changes in applicable law,
regulations or rules that would permit otherwise, without the approval of the
Company's stockholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section 4.2), (b) no change in the
class of persons eligible to receive Incentive Stock Options, and (c) no
other amendment of the Plan that would require approval of the Company's
stockholders under any applicable law, regulation or rule.  No
termination or amendment of the Plan shall affect any then outstanding Option
unless expressly provided by the Board.  In any event, no termination
or amendment of the Plan may adversely affect any then outstanding Option
without the consent of the Participant, unless such termination or amendment is
required to enable an Option designated as an Incentive Stock Option to qualify
as an Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.
17.
Stockholder
Approval
.
The Plan or any increase in the maximum
aggregate number of shares of Stock issuable thereunder as provided in
Section 4.1 (the
"
Authorized
Shares
"
)
shall be approved by the stockholders of the Company within twelve (12) months
of the date of adoption thereof by the Board.  Options granted prior
to stockholder approval of the Plan or in excess of the Authorized Shares
previously approved by the stockholders shall become exercisable no earlier than
the date of stockholder approval of the Plan or such increase in the Authorized
Shares, as the case may be.
Kratos
Defense & Security Solutions, Inc.
2005
Equity Incentive Plan
Form
of Stock Option Agreement
(Incentive
and Nonstatutory Stock Options)
Pursuant
to your Stock Option Grant Notice ("Grant Notice") and this Stock Option
Agreement, Kratos Defense & Security Solutions, Inc. (the "Company") has
granted to you an Option under its 2005 Equity Incentive Plan (the "Plan") to
purchase the number of shares of the Company's Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice.  Defined
terms not explicitly defined in this Stock Option Agreement but defined in the
Plan shall have the same definitions as in the Plan.
The
details of your Option are as follows:
1.
Vesting
.  Subject
to the limitations contained herein, your Option will vest as provided in your
Grant Notice, provided that vesting will cease upon the termination of your
Service.
2.
Number of
Shares and Exercise Price
.  The number of shares of Stock
subject to your Option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for capitalization adjustments,
as provided in Section 4.2 of the Plan.
3.
Method of
Payment
.  Payment of the exercise price is due in full upon
exercise of all or any part of your Option.  You may elect to make
payment of the exercise price in cash or by check or in any other manner
permitted by your
Grant Notice
, which may include one or more of the
following:
(a)
Provided
that at the time of exercise the Stock is publicly traded and quoted regularly
in
The Wall Street
Journal
, by delivery of already-owned shares of Stock either that you
have held for the period required to avoid a charge to the Company's reported
earnings (generally six months) or that you did not acquire, directly or
indirectly from the Company, that are owned free and clear of any liens, claims,
encumbrances or security interests, and that are valued at Fair Market Value on
the date of exercise.  "Delivery" for these purposes, in the sole
discretion of the Company at the time you exercise your Option, shall include
delivery to the Company of your attestation of ownership of such shares of Stock
in a form approved by the Company.  Notwithstanding the foregoing, you
may not exercise your Option by tender to the Company of Stock to the extent
such tender would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock.
(b)
Provided
that at the time of exercise the Stock is publicly traded and quoted regularly
in
The Wall Street
Journal
, you may exercise your vested shares in a Cashless Exercise
transaction pursuant to the Company's electronic notice and exercise system by
delivery (on a form prescribed by the Company and the Company's licensed
securities broker) of an irrevocable direction to the Company's licensed
securities broker acceptable to the Company to sell Stock and to deliver all or
part of the sale proceeds to the Company in payment of the aggregate Option
price and any withholding taxes (if approved in advance by the Compensation
Committee of the Board if you are either an executive officer or a director of
the Company).
4.
Tax
Consequences.
This Option is
intended to have the tax status designated in the Grant Notice.
(a)
Incentive Stock
Option
.
If the Grant
Notice so designates, this Option is intended to be an Incentive Stock Option
within the meaning of Section 422(b) of the Code, but the Company does not
represent or warrant that this Option qualifies as such.  You should
consult with your own tax advisor regarding the tax effects of this Option and
the requirements necessary to obtain favorable income tax treatment under
Section 422 of the Code, including, but not limited to, holding period
requirements.  (NOTE: If the Option is exercised more than three (3)
months after the date on which you cease to be an Employee (other than by reason
of your death or permanent and total disability as defined in
Section 22(e)(3) of the Code), the Option will be treated as a Nonstatutory
Stock Option and not as an Incentive Stock Option to the extent required by
Section 422 of the Code.)
(b)
Nonstatutory
Stock Option.
If the Grant Notice so designates, this Option
is intended to be a Nonstatutory Stock Option and shall not be treated as an
Incentive Stock Option within the meaning of Section 422(b) of the
Code.
(c)
ISO Fair Market
Value Limitation
.
If the Grant
Notice designates this Option as an Incentive Stock Option, then to the extent
that the Option (together with all Incentive Stock Options granted to you under
all stock option plans of the Company and any Affiliate, including the Plan)
becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000),
the portion of such options which exceeds such amount will be treated as
Nonstatutory Stock Options.  For purposes of this Section, options
designated as Incentive Stock Options are taken into account in the order in
which they were granted, and the Fair Market Value of Stock is determined as of
the time the option with respect to such Stock is granted.  If the
Code is amended to provide for a different limitation from that set forth in
this Section, such different limitation shall be deemed incorporated herein
effective as of the date required or permitted by such amendment to the
Code.  If the Option is treated as an Incentive Stock Option in part
and as a Nonstatutory Stock Option in part by reason of the limitation set forth
in this Section, you may designate which portion of such Option you are
exercising.  In the absence of such designation, you shall be deemed
to have exercised the Incentive Stock Option portion of the Option
first.  Separate certificates representing each such portion shall be
issued upon the exercise of the Option.  (NOTE: If the aggregate
exercise price of the Option (that is, the exercise price multiplied by the
number of shares subject to the Option) plus the aggregate exercise price of any
other Incentive Stock Options you hold (whether granted pursuant to the Plan or
any other stock option plan of the Company or any Affiliate) is greater than
$100,000, you should contact the Chief Financial Officer of the Company to
ascertain whether the entire Option qualifies as an Incentive Stock
Option.)
5.
Whole
Shares; Minimum Purchase
.  You may exercise your Option only
for whole shares of Stock.  Unless you exercise your Option with
respect to all shares then vested, or unless otherwise permitted by the Company,
you may exercise your Option only for at least
one hundred (100)
shares on
any exercise date.
6.
Securities
Law Compliance
.  Notwithstanding anything to the contrary
contained herein, you may not exercise your Option unless the shares of Stock
issuable upon such exercise are then registered under the Securities Act or, if
such shares of Stock are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration requirements of
the Securities Act.  The exercise of your Option must also comply with
other applicable laws and regulations governing your Option, and you may not
exercise your Option if the Company determines that such exercise would not be
in material compliance with such laws and regulations.
7.
Term
.  The
term of your Option commences on the Date of Grant and expires upon the
earliest
of the following:
(a)
in the
sole discretion of the Board, immediately upon the termination of your Service
for Cause;
(b)
ninety
(90) days after the termination of your Service for any reason other than Cause,
Disability or death, provided that if during any part of such ninety (90) day
period you may not exercise your Option solely because of the condition set
forth in the preceding paragraph relating to "Securities Law Compliance," your
Option shall not expire until the earlier of the Expiration Date or until it
shall have been exercisable for an aggregate period of thirty (30) days after
the termination of your Service;
(c)
twelve
(12) months after the termination of your Service due to your
Disability;
(d)
eighteen
(18) months after your death if you die either during your Service or within
thirty (30) days after your Service terminates for reason other than
Cause;
(e)
the
Expiration Date indicated in your Grant Notice; or
(f)
the day
immediately preceding the tenth (10th) anniversary of the Date of
Grant.
For
purposes of your Option, "Cause" means that the Board determines in good faith
that you have engaged in misconduct, including but not limited
to:  (i) your commission of any felony or any crime involving
moral turpitude or dishonesty, (ii) your participation in a fraud or act of
dishonesty against or adversely affecting the Company, or (iii) your
intentional, material violation of any contract between the Company and you, any
statutory duty of yours to the Company or any policy of the Company which you do
not correct within thirty (30) days after written notice to you
thereof.  Your physical or mental disability shall not constitute
"Cause."
8.
Exercise.
(a)
You may
exercise the vested portion of your Option during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such
additional documents as the Company may then require.  However, your
Option shall not be exercisable at any time that the Company is investigating
whether it has grounds to terminate your Service for Cause.
(b)
By
exercising your Option you agree that, as a condition to any exercise of your
Option, the Company may require you to enter into an arrangement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of your Option, (2) the lapse of
any substantial risk of forfeiture to which the shares of Stock are subject at
the time of exercise, or (3) the disposition of shares of Stock acquired upon
such exercise.
(c)
If your
Option is an incentive stock Option, by exercising your Option you agree that
you will notify the Company in writing within fifteen (15) days after the date
of any disposition of any of the shares of the Stock issued upon exercise of
your Option that occurs within two (2) years after the date of your Option grant
or within one (1) year after such shares of Stock are transferred upon exercise
of your Option.
9.
Transferability
.  Your
Option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by
you.  Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
your Option.
10.
Option not
a Service Contract
.  Your Option is not an employment or
service contract, and nothing in your Option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or any obligation of the Company or an Affiliate to
continue your employment.  In addition, nothing in your Option shall
obligate the Company or an Affiliate, their respective shareholders, Boards of
Directors, Officers or Employees to continue any relationship that you might
have as a Director or Consultant for the Company or an Affiliate.
11.
Withholding
Obligations.
(a)
At the
time you exercise your Option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any
other amounts payable to you, and otherwise agree to make adequate provision for
(including by means of a Cashless Exercise), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with your Option.
(b)
Upon your
request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable conditions or restrictions of law, the Company
may withhold from fully vested shares of Stock otherwise issuable to you upon
the exercise of your Option a number of whole shares of Stock having a Fair
Market Value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by
law.  If the date of determination of any tax withholding obligation
is deferred to a date later than the date of exercise of your Option, share
withholding pursuant to the preceding sentence shall not be permitted unless you
make a proper and timely election under Section 83(b) of the Code, covering the
aggregate number of shares of Stock acquired upon such exercise with respect to
which such determination is otherwise deferred, to accelerate the determination
of such tax withholding obligation to the date of exercise of your
Option.  Notwithstanding the filing of such election, shares of Stock
shall be withheld solely from fully vested shares of Stock determined as of the
date of exercise of your Option that are otherwise issuable to you upon such
exercise.  Any adverse consequences to you arising in connection with
such share withholding procedure shall be your sole responsibility.
(c)
You may
not exercise your Option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied.  Accordingly, you may not be able
to exercise your Option when desired even though your Option is vested, and the
Company shall have no obligation to issue a certificate for such shares of Stock
or release such shares of Stock from any escrow provided for
herein.
12.
Notices
.  Any
notices provided for in your Option or the Plan shall be given in writing and
shall be deemed effectively given upon receipt or, in the case of notices
delivered by mail by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the last address you
provided to the Company.
13.
Governing
Plan Document
.  Your Option is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your Option, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the
Plan.  In the event of any conflict between the provisions of your
Option and those of the Plan, the provisions of the Plan shall
control.