Exhibit 10.1


 


SETTLEMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS


 


This
Settlement Agreement and General Release of Claims (“Agreement”)  is
made and entered into this 16th day of October, 2009, by and
between Kratos Defense & Security Solutions, Inc. (“KRATOS”), KeyBank National Association (“KEYBANK”), Field Point III, Ltd. (“FIELD POINT”), and SPF CDO I, Ltd. (“SPF”). 
The parties to this Agreement are collectively referred to below as “Parties.”


 


RECITALS


 


A.            On December 31, 2007,
Kratos and KeyBank entered into a First Lien Credit Agreement and a Second Lien
Credit Agreement (collectively, the “Credit Facilities”).


 


B.            On January 2, 2008,
KeyBank syndicated a portion of the First Lien Credit Agreement to Field Point
and SPF.


 


C.            On June 4, 2009, Kratos
filed a lawsuit against KeyBank, Field Point and SPF captioned Kratos Defense &
Security Solutions, Inc. v. Field Point III, Ltd., et al., Case No. 09-cv-1284
in the United States District Court for the Northern District of Ohio (the “Ohio
Action”).  The complaint filed in the
Ohio Action alleged, inter alia,
the existence of an error in Schedule 7.12(c) to the Credit Facilities,
and sought, inter alia,
reformation of the Credit Facilities.


 


D.            On August 5, 2009,
Field Point and SPF filed a lawsuit against Kratos and KeyBank captioned Field
Point III, Ltd., et al. v. Kratos Defense & Security Solutions, Inc.,
et al., Case No. 09-cv-6921 in the United States District Court for the
Southern District of New York (the “New York Action”).  The complaint filed in the New York action
alleged, inter alia, that Kratos
improperly characterized certain insurance proceeds as EBITDA, and sought, inter alia, declaratory relief that the
financial covenants referred to in Schedule 7.12(c) to the Credit
Facilities were enforceable as written.


 


E.             Each of the Parties to this
Agreement denies any wrongdoing by them, and they make no admissions of
liability of any kind whatsoever.  Field
Point and SPF deny that they are subject to personal jurisdiction in the Northern
District of Ohio, and all parties acknowledge and agree that this settlement is
without waiver of or prejudice to Field Point’s and SPF’s position, and that
nothing related in any way to this Agreement or the settlement shall be
admissible in any proceeding or otherwise used to argue that such personal
jurisdiction exists.


 


F.             The Parties recognize the
uncertainties and costs of litigation and now desire amicably to resolve,
compromise and settle any and all claims and controversies  between them of whatever type (collectively
“the  Claims”), including but not limited to those claims asserted
in the Ohio Action and the New York Action, and to provide for certain
agreements upon certain terms and conditions.


 


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G.            The Parties are executing
contemporaneously with this Agreement the Third Amendment to First Lien Credit
Agreement, attached hereto as Exhibit A, and the Third Amendment to Second
Lien Credit Agreement, attached hereto as Exhibit B.


 


NOW,
THEREFORE, in order to settle the Claims and in consideration of the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the Parties, and intending to be legally bound, the Parties hereby voluntarily,
intentionally and upon the advice and guidance of their own counsel, execute
this Agreement and  agree as
follows:


 


SETTLEMENT TERMS


 


1.             Incorporation of Recitals.  The recitals set forth above are incorporated
into this Agreement as essential and binding terms.


 


2.             Dismissal of Pending Actions.  Kratos acknowledges and consents to the
dismissal with prejudice of the Ohio Action entered by the United States
District Court for the Northern District of Ohio on August 27, 2009.  Field Point and SPF agree to dismiss the New
York Action with prejudice within ten(10) calendar days after execution of
this Agreement.  Each party in the Ohio
Action and the New York Action will bear its own costs.


 


3.             Reformation of Schedule
7.12(c).  KEYBANK, FIELD
POINT and SPF, agree to reformation of Schedule 7.12(c) to the Credit
Facilities, to include the current portion of long term debt in the denominator
of the computation for all periods as provided in the KRATOS Complaint in the
Ohio Action, as set forth in Exhibits D and E, thereto.


 


4.             Amendment to Credit
Facilities.  The Parties
agree to execute the Third Amendment to First Lien Credit Agreement, attached
hereto as Exhibit A, and the Third Amendment to Second Lien Credit
Agreement, attached hereto as Exhibit B, contemporaneously with this
Agreement.


 


5.             Releases.  Effective upon both (1) the execution of
this Agreement by the Parties, and (2) the Effective Date of the Third
Amendment to First Lien Credit Agreement (the “Effective Date”);


 


(a)          Subject to the last
paragraph of this Section 4(a), Kratos, its affiliates and their
respective representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns hereby releases and forever discharges KeyBank, Field
Point, SPF, their affiliates, including but not limited to Silver Point
Capital, L.P.,  and their respective
representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns of and from any and all claims, demands, obligations,
indebtedness, breaches of duty or any relationship, acts, omissions,
misfeasance, actions, causes of action, choses in action,


 


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suits, controversies,
disputes, challenges, sums of money, accounts, controversies, promises,
damages, costs, expenses, attorneys’ fees, losses and expenses, injuries,
debts, rights, rights to payment, rights to equitable remedies, rights to legal
or equitable relief, allegations, counterclaims, cross-claims, contracts,
covenants, agreements, promises, trespasses, torts, tortious conduct, dues,
accounts, bonds, bills, notices, judgments, executions, liens, encumbrances,
contribution rights, indemnity rights, and liabilities of every type, kind,
nature, description or character whatsoever in law, equity or otherwise,
whether known or unknown, suspected or unsuspected, asserted or unasserted,
liquidated or unliquidated, fixed or contingent, matured or unmatured, accrued
or inchoate, which have existed or which do exist, each as though fully set
forth herein at length, that Kratos, its affiliates and their respective
representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns at any time had, owned or held from the beginning of the
world through the date of this Agreement against any of KeyBank, Field Point,
SPF, their affiliates , including but not limited to Silver Point Capital, L.P.
,and their respective representatives, attorneys, agents, employees, officers,
directors, shareholders, predecessors, successors, parent and sister companies,
partners, affiliates and assigns, including but not limited to any claims
raised or which could have been raised in the Ohio Action or the New York
Action.


 


Without limiting the
foregoing, as of the Effective Date, Kratos further waives and relinquishes to
the fullest extent permitted by law, any and all provisions, rights and
benefits conferred by any law of the United States or any state or territory of
the United States, or principle of common law, which governs or limits a person’s
release of unknown claims; further, (i) Kratos shall be deemed to waive,
and hereby expressly waives and relinquishes, to the fullest extent permitted
by law, the provisions, rights and benefits of Section 1542 of the
California Civil Code, which provides as follows:


 


A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR;


 


(ii) Kratos also shall
be deemed to waive, and hereby expressly waives and relinquishes, any and all
provisions, rights and benefits conferred by any law of any state or territory
of the United States, or principle of common law, which is similar, comparable
or equivalent to California Civil Code § 1542.


 


Notwithstanding the
foregoing, neither this Release nor this settlement Agreement shall have the
effect of releasing, impairing, or in any way affecting the Parties’ rights and
obligations under the Credit Facilities going forward.  For the avoidance of any doubt, the Credit
Facilities and any related loan documents will remain in full force and effect
as reformed and amended by this Agreement and the Third Amendment to First Lien
Credit Agreement, attached hereto as Exhibit A, and the Third Amendment to
Second Lien Credit Agreement, attached hereto as Exhibit B, and all
amounts due and owing with respect to the loans made thereunder shall remain in
full force and effect and 


 


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the releases set forth above
shall not apply to such indebtedness or any obligation, for repayment or
otherwise, associated therewith.  The
Administrative Agent and the Lenders confirm that as of the date hereof, and
upon receipt by the Administrative Agent and the Lenders of the amounts
described in Sections 11(a)(iv) and 11(b) of the Third Amendment,
they are not aware of any amounts due or payable as of the date hereof in
connection with the Credit Facilities (excluding, for the avoidance of doubt, any
accrued but not yet due and payable interest thereunder and the earned but not
yet due and payable portion of any commitment, agency or other fee thereunder).


 


(b)          Subject to the last
paragraph of this Section 4(b), KeyBank, its affiliates and their respective
representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns hereby releases and forever discharges Kratos, its
affiliates and their respective representatives, attorneys, agents, employees,
officers, directors, shareholders, predecessors, successors, parent and sister
companies, partners, affiliates and assigns of and from any and all claims,
demands, obligations, indebtedness, breaches of duty or any relationship, acts,
omissions, misfeasance, actions, causes of action, choses in action, suits,
controversies, disputes, challenges, sums of money, accounts, controversies,
promises, damages, costs, expenses, attorneys’ fees, losses and expenses,
injuries, debts, rights, rights to payment, rights to equitable remedies,
rights to legal or equitable relief, allegations, counterclaims, cross-claims,
contracts, covenants, agreements, promises, trespasses, torts, tortious
conduct, dues, accounts, bonds, bills, notices, judgments, executions, liens,
encumbrances, contribution rights, indemnity rights, and liabilities of every
type, kind, nature, description or character whatsoever in law, equity or
otherwise, whether known or unknown, suspected or unsuspected, asserted or
unasserted, liquidated or unliquidated, fixed or contingent, matured or
unmatured, accrued or inchoate, which have existed or which do exist, each as
though fully set forth herein at length, that KeyBank, its affiliates and their
respective representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns at any time had, owned or held from the beginning of the
world through the date of this Agreement against Kratos, its affiliates and
their respective representatives, attorneys, agents, employees, officers,
directors, shareholders, predecessors, successors, parent and sister companies,
partners, affiliates and assigns, including but not limited to any claims
raised or which could have been raised in the Ohio Action or the New York
Action.


 


KeyBank, its affiliates and
their respective representatives, attorneys, agents, employees, officers,
directors, shareholders, predecessors, successors, parent and sister companies,
partners, affiliates and assigns hereby release and forever discharge Field
Point, SPF, their affiliates, including but not limited to Silver Point
Capital, L.P., and their respective representatives, attorneys, agents, employees,
officers, directors, shareholders, predecessors, successors, parent and sister
companies, partners, affiliates and assigns of and from any and all claims,
demands, obligations, indebtedness, breaches of duty or any relationship, acts,
omissions, misfeasance, actions, causes of action, choses in action, suits,
controversies, disputes, challenges, sums of money, accounts, controversies,
promises, damages, costs, expenses, attorneys’ fees, losses and expenses,
injuries, debts, rights, rights to payment, rights to equitable remedies,
rights to legal or 


 


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equitable relief,
allegations, counterclaims, cross-claims, contracts, covenants, agreements,
promises, trespasses, torts, tortious conduct, dues, accounts, bonds, bills,
notices, judgments, executions, liens, encumbrances, contribution rights,
indemnity rights, and liabilities of every type, kind, nature, description or
character whatsoever in law, equity or otherwise, whether known or unknown,
suspected or unsuspected, asserted or unasserted, liquidated or unliquidated,
fixed or contingent, matured or unmatured, accrued or inchoate, which have
existed or which do exist, each as though fully set forth herein at length,
that KeyBank, its affiliates and their respective representatives, attorneys,
agents, employees, officers, directors, shareholders, predecessors, successors,
parent and sister companies, partners, affiliates and assigns at any time had,
owned or held from the beginning of the world through the date of this
Agreement against Field Point, SPF, their affiliates, including but not limited
to Silver Point Capital, L.P., and their respective representatives, attorneys,
agents, employees, officers, directors, shareholders, predecessors, successors,
parent and sister companies, partners, affiliates and assigns, arising from or
in connection with the Credit Facilities.


 


Without limiting the
foregoing, as of the Effective Date, KeyBank further waives and relinquishes to
the fullest extent permitted by law, any and all provisions, rights and
benefits conferred by any law of the United States or any state or territory of
the United States, or principle of common law, which governs or limits a person’s
release of unknown claims; further, (i) KeyBank shall be deemed to waive,
and hereby expressly waives and relinquishes, to the fullest extent permitted
by law, the provisions, rights and benefits of Section 1542 of the
California Civil Code, which provides as follows:


 


A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR;


 


(ii) KeyBank also shall
be deemed to waive, and hereby expressly waives and relinquishes, any and all
provisions, rights and benefits conferred by any law of any state or territory
of the United States, or principle of common law, which is similar, comparable
or equivalent to California Civil Code § 1542.


 


Notwithstanding the
foregoing, neither this Release nor this settlement Agreement shall have the
effect of releasing, impairing, or in any way affecting the Parties’ rights and
obligations under the Credit Facilities going forward.  For the avoidance of any doubt, the Credit
Facilities and any related loan documents will remain in full force and effect
as reformed and amended  by this
Agreement and the Third Amendment to First Lien Credit Agreement, attached
hereto as Exhibit A, and the Third Amendment to Second Lien Credit
Agreement, attached hereto as Exhibit B, and all amounts due and owing
with respect to the loans made thereunder shall remain in full force and effect
and the releases set forth above shall not apply to such indebtedness or any obligation,
for repayment or otherwise, associated therewith.  The Administrative Agent and the Lenders
confirm that as of the date hereof, and upon receipt by the Administrative
Agent and the Lenders of the amounts described in Sections 11(a)(iv) and
11(b) of the Third 


 


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Amendment, they are not
aware of any amounts due or payable as of the date hereof in connection with
the Credit Facilities (excluding, for the avoidance of doubt, any accrued but
not yet due and payable interest thereunder and the earned but not yet due and
payable portion of any commitment, agency or other fee thereunder).


 


(c)          Subject to the last
paragraph of this Section 4(c), Field Point, SPF, their affiliates,
including but not limited to Silver Point Capital, L.P., and their respective
representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns hereby release and forever discharge Kratos, its
affiliates and their respective representatives, attorneys, agents, employees,
officers, directors, shareholders, predecessors, successors, parent and sister
companies, partners, affiliates and assigns of and from any and all claims,
demands, obligations, indebtedness, breaches of duty or any relationship, acts,
omissions, misfeasance, actions, causes of action, choses in action, suits,
controversies, disputes, challenges, sums of money, accounts, controversies,
promises, damages, costs, expenses, attorneys’ fees, losses and expenses,
injuries, debts, rights, rights to payment, rights to equitable remedies,
rights to legal or equitable relief, allegations, counterclaims, cross-claims,
contracts, covenants, agreements, promises, trespasses, torts, tortious
conduct, dues, accounts, bonds, bills, notices, judgments, executions, liens,
encumbrances, contribution rights, indemnity rights, and liabilities of every
type, kind, nature, description or character whatsoever in law, equity or
otherwise, whether known or unknown, suspected or unsuspected, asserted or
unasserted, liquidated or unliquidated, fixed or contingent, matured or
unmatured, accrued or inchoate, which have existed or which do exist, each as
though fully set forth herein at length, that Field Point, SPF, their
affiliates and their respective representatives, attorneys, agents, employees,
officers, directors, shareholders, predecessors, successors, parent and sister
companies, partners, affiliates and assigns at any time had, owned or held from
the beginning of the world through the date of this Agreement against any of
Kratos, its affiliates and their respective representatives, attorneys, agents,
employees, officers, directors, shareholders, predecessors, successors, parent
and sister companies, partners, affiliates and assigns, including but not
limited to any claims raised or which could have been raised in the Ohio Action
or the New York Action.


 


Field Point, SPF their
affiliates, including but not limited to Silver Point Capital, L.P., and their
respective representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns hereby release and forever discharge KeyBank, its
affiliates and their respective representatives, attorneys, agents, employees,
officers, directors, shareholders, predecessors, successors, parent and sister
companies, partners, affiliates and assigns of and from any and all claims,
demands, obligations, indebtedness, breaches of duty or any relationship, acts,
omissions, misfeasance, actions, causes of action, choses in action, suits,
controversies, disputes, challenges, sums of money, accounts, controversies,
promises, damages, costs, expenses, attorneys’ fees, losses and expenses,
injuries, debts, rights, rights to payment, rights to equitable remedies,
rights to legal or equitable relief, allegations, counterclaims, cross-claims,
contracts, covenants, agreements, promises, trespasses, torts, tortious
conduct, dues, accounts, bonds, bills, notices, judgments, executions, liens,
encumbrances, contribution rights, indemnity 


 


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rights, and liabilities of
every type, kind, nature, description or character whatsoever in law, equity or
otherwise, whether known or unknown, suspected or unsuspected, asserted or
unasserted, liquidated or unliquidated, fixed or contingent, matured or
unmatured, accrued or inchoate, which have existed or which do exist, each as
though fully set forth herein at length, that Field Point, SPF, their
affiliates, including but not limited to Silver Point Capital, L.P.,  and their respective representatives,
attorneys, agents, employees, officers, directors, shareholders, predecessors,
successors, parent and sister companies, partners, affiliates and assigns at
any time had, owned or held from the beginning of the world through the date of
this Agreement against any of KeyBank, its affiliates and their respective
representatives, attorneys, agents, employees, officers, directors,
shareholders, predecessors, successors, parent and sister companies, partners,
affiliates and assigns, arising from or in connection with the Credit
Facilities.


 


Without limiting the
foregoing, as of the Effective Date, Field Point and SPF further waive and
relinquish to the fullest extent permitted by law, any and all provisions,
rights and benefits conferred by any law of the United States or any state or
territory of the United States, or principle of common law, which governs or
limits a person’s release of unknown claims; further, (i) Field Point and
SPF shall be deemed to waive, and hereby expressly waive and relinquish, to the
fullest extent permitted by law, the provisions, rights and benefits of Section 1542
of the California Civil Code, which provides as follows:


 


A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR;


 


(ii) Field Point and
SPF also shall be deemed to waive, and hereby expressly waive and relinquish,
any and all provisions, rights and benefits conferred by any law of any state
or territory of the United States, or principle of common law, which is
similar, comparable or equivalent to California Civil Code § 1542.


 


Notwithstanding the
foregoing, neither this Release nor this settlement Agreement shall have the
effect of releasing, impairing, or in any way affecting the Parties’ rights and
obligations under the Credit Facilities going forward.  For the avoidance of any doubt, the Credit
Facilities and any related loan documents will remain in full force and effect  as reformed and amended by this Agreement
and  the Third Amendment to First
Lien Credit Agreement, attached hereto as Exhibit A, and the Third
Amendment to Second Lien Credit Agreement, attached hereto as Exhibit B,
and all amounts due and owing with respect to the loans made thereunder shall
remain in full force and effect and the releases set forth above shall not
apply to such indebtedness or any obligation, for repayment or otherwise,
associated therewith.  The Administrative
Agent and the Lenders confirm that as of the date hereof, and upon receipt by
the Administrative Agent and the Lenders of the amounts described in Sections
11(a)(iv) and 11(b) of the Third Amendment, they are not aware of any
amounts due or payable as of the date hereof in connection with the Credit
Facilities (excluding, for the avoidance of doubt, any accrued 


 


7

















 


but not yet due and payable
interest thereunder and the earned but not yet due and payable portion of any
commitment, agency or other fee thereunder).


 


6.             Compromise of Disputed
Claims.  This Agreement constitutes the
compromise and settlement of disputed claims and is not an admission of
liability on the part of any of the Parties.


 


7.             Representations and
Warranties.  Each Party
hereby makes the following representations and warranties to induce each of the
other Parties to enter into this Agreement, and each Party acknowledges that
each of the other Parties are reasonably relying upon each of these
representations and warranties as a material inducement to execution of this Agreement,
and each Party further agrees that any breach of these representations and
warranties would be a basis on which to rescind this Agreement, including
without limitation the Parties’ releases:


 


(a)           All Parties
represent and warrant that Kratos’s financial statements dated June 28,
2009 are material to this Agreement.


 


(b)           Kratos
represents and warrants that Kratos’s financial statements dated June 28,
2009 are not fraudulent.


 


(c)           Each Party
represents and warrants that it has not committed any fraud in connection with
the Credit Facilities.


 


(d)           Each Party
represents and warrants that it has no reason or evidence to believe that
Kratos’s financial statements dated June 28, 2009 were fraudulent or a
basis to invalidate this Agreement.


 


(e)           Each Party represents
and warrants that it has no reason or evidence to believe that any other Party
has committed fraud in connection with the Credit Facilities.


 


(f)            Each Party
represents and warrants that it has all requisite power and authority to enter
into this Agreement, and to perform all of its obligations hereunder.


 


(g)           Each Party
represents and warrants that it has duly authorized the execution, delivery,
and performance of this Agreement, and no other approval or authorization is
required by it or on its behalf.


 


(h)           Each Party
represents and warrants that it is not prohibited or restricted from
consummating the transactions memorialized by or contemplated in this Agreement
under or by any agreement, law, regulation, restriction, order or judgment.


 


(i)            Each Party
represents and warrants that this Agreement has been duly executed by it, and
that this Agreement constitutes a legal, valid, and binding obligation
enforceable in accordance with its terms.


 


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(j)            Each of the
Parties represents and warrants that it had competent and qualified legal
counsel of its own choosing review and advise it with regard to the scope and
legal effect and all aspects of this Agreement, and has relied solely on the
express terms of this Agreement, its own judgment and the advice of its legal
counsel in executing this Agreement.


 


8.           Representation.  Kratos hereby makes the following
representation to induce each of the other Parties to enter into this
Agreement, and each Party acknowledges that each of the other Parties are
reasonably relying upon the following representation as a material inducement
to execution of this Agreement, and each Party further agrees that if the
following representation were knowingly false when made, then that would
be a basis on which to rescind this Agreement, including without limitation the
Parties’ releases:


 


a.             Kratos represents that
Kratos’s financial statements dated June 28, 2009 are properly stated, and
that there have been no material changes thereto since that time.


 


9.             Confidentiality.    No Party to this Agreement, nor any other
individual or entity under their control or influence, shall disclose or reveal
directly or indirectly, orally or in writing, spontaneously or in response to
inquiry, to any person or entity the Parties’ negotiations over the matters
released by this Agreement.  The Parties
agree that they will instruct their agents and attorneys not to discuss or
disclose the Parties negotiations over the matters released by this Agreement.


 


10.          Nondisparagement.  The
Parties each hereby covenant and agree that no one who is part of the
management control group, i.e., those persons with authority to make decisions
on behalf of any Party, shall directly or indirectly make any statement that
disparages any other Party and results in damage to that Party.  Further,
no Party will knowingly permit or encourage anyone else, over whom they have
control, to disparage any other Party.


 


11.           Entire Agreement.  This Agreement (including the Credit Facilities
and any related loan documents, as amended) constitutes the entire Agreement
between the Parties, and contain all of the terms, covenants, conditions, and
agreements between the Parties hereto relative to the subject matter hereof.  This Agreement may not be contradicted by
evidence of prior or contemporaneous agreements or statements or by subsequent
oral agreements between the Parties. 
This Agreement merges and supersedes all prior discussions, oral or written
agreements and understandings of every kind and nature among and between the
Parties relative to the subject matter hereof. 
In making the decision to enter into this Agreement, no Party has relied
upon any representation, promise, assurance, covenant, omission, statement or
agreement which is not expressly set forth and included in the terms hereof.


 


12.           Amendment.  This Agreement may only be changed, modified,
supplemented, discharged or terminated by an instrument in writing, signed by
all Parties.  For clarity, and without
limiting the foregoing, the rights of and available to each of the 


 


9

















 


Parties under this Agreement cannot be waived
or released orally, and may be waived or released only by an instrument in
writing, signed by the Party whose rights will be diminished or adversely
affected by the waiver.


 


13.           Governing Law.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
without considering any choice of law rules that may point to the
application of the substantive law of any other jurisdiction.


 


14.           Dispute Resolution.  The Parties each agree to and submit
themselves to the exclusive jurisdiction of Judge Dan Aaron Polster, United
States District Judge of the Northern District of Ohio for any action to
enforce this Agreement.  The Parties
further agree that, in the event of future litigation filed in another court
between any of the parties hereto regarding the Credit Facilities, the matter
shall be submitted to Judge Polster for non-binding mediation at the earliest
opportunity.  The submission of this
Settlement Agreement and any mediation to Judge Polster shall not be construed
as support of any claim of personal jurisdiction over any Party in Ohio.


 


15.           Invalidity.  Each provision and term of this Agreement is
intended to be and shall be deemed effective, operative, made, entered into and
enforced to the fullest extent allowed by law. 
If, after such construction, any one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable, the same shall not affect any other provisions of this
Agreement, but the term at issue shall be construed as effective to the fullest
extent allowed by law and as if such invalid, illegal, or unenforceable part of
the provision had not been contained herein, while still effectuating the
Parties’ intent to the fullest extent allowed by law.


 


16.           Costs, Expenses, and
Attorneys’ Fees.  The Parties
hereto shall bear their own respective costs, expenses, and attorneys’ fees
incurred in connection with the actions, claims and disputes that are the
subject of this Agreement, and in connection with the negotiation, preparation,
execution, and performance of this Agreement. 
In any action or litigation arising out of this Agreement or the Credit
Facilities, the prevailing party shall be entitled to recover from the party
not prevailing all of its reasonable costs, expenses, and attorneys’ fees
incurred in that action or litigation. Nothing in this Section 15 shall be
interpreted to amend or limit the payment and reimbursement requirements set
forth in Section 10.3 of the Credit Facilities, to the extent set forth in
the Third Amendment to First Lien Credit Agreement.


 


17.           Waiver.  Acceptance by any Party of any performance
less than required hereby shall not be deemed to be a waiver of the rights of
such party to enforce all of the terms and conditions hereof.  No waiver of any such right hereunder shall
be binding unless reduced to writing and signed by the Party to be charged
therewith.


 


18.           Counterparts.  This Agreement may be signed in any number of
counterparts with the same effect as if the signatures upon any counterpart
were all upon the same instrument, and all signed counterparts shall be deemed
to be an original.  A faxed signature
shall have the same effect as though it were signed in the original.


 


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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
shown above.


 


	
   

  	
  KRATOS
  DEFENSE & SECURITY SOLUTIONS, INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KEYBANK
  NATIONAL ASSOCIATION,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIELD
  POINT III, LTD.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPF
  CDO I, LTD.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  



 


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