Document:

Exhibit 10(g)

                AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

      AGREEMENT made this 12th day of June, 2007 by and between EDO Corporation,
a New York Corporation having its office and principal place of business at 60
East 42nd Street, Suite 4200, New York, NY 10165 (the "Company") and Lisa
Palumbo, 10 Kenilworth Road, Rye, NY 10580 ("Executive").

                               W I T N E S E T H:
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      WHEREAS, the Company considers it essential to the best interests of the
Company and its stockholders that its management (including Executive) be
encouraged to remain with the Company and to continue to devote full attention
to the Company's business in the event of a change in control or potential
change in control of the Company.

      WHEREAS, the Company recognizes that the possibility of a Change in
Control or a Potential Change in Control and the uncertainty and questions,
which either event may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and its
stockholders;

      WHEREAS, the Company's Board of Directors (the "Board") has determined
that appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of the Company's management to their
assigned duties without distraction in the face of the potentially disturbing
circumstances arising from a Change in Control or a Potential Change in Control;

      WHEREAS, the Company believes Executive has made and will continue to make
valuable contributions to the productivity and profitability of the Company;

      WHEREAS, should a Potential Change in Control occur, the Board believes it
imperative that the Company and the Board be able to rely upon the Executive to
continue in his position, and that the Company be able to receive and rely upon
his advice as to the best interests of the Company and its stockholders without
concern that he might be distracted by the personal uncertainties and risks
created by such event; and

      WHEREAS, should a Potential Change in Control occur, in addition to the
Executive's regular duties, he may be called upon to assist in the assessment of
any proposals of any person concerning the possible business combination of the
Company or acquisition of equity securities of the Company, advise management
and the Board as to whether such proposals would be in the best interests of the
Company and its stockholders, and to take such other actions as the Board might
determine to be appropriate;

      WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended
(the "Code"), imposes certain restrictions and requirements upon the payment of
amounts treated as deferred compensation for such purposes, in order to avoid
immediate taxation at a rate of federal income taxation at least 20% in excess
of the otherwise applicable rate of income taxation;

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      WHEREAS, certain payments that may become due and payable under this
Agreement may be treated as such deferred compensation and the Company and the
Executive desire to satisfy the applicable conditions specified under such
Section 409A:

      NOW, THEREFORE, in consideration of the recitals and for other good and
valuable consideration, the Company and Executive agree as follows:

                                     GENERAL

      1. Purpose. The purpose of this Agreement is to provide Executive with
Special Severance Pay Benefits in the event of certain terminations of
Executive's employment in connection with a Change in Control, as such terms are
defined in this Agreement.

      2. Term. This Agreement will be effective as of the date first set forth
above (the "Effective Date"), but no compensation or benefits will be payable
hereunder unless the Executive experiences a Qualifying Termination of
employment following a Potential Change in Control or Change in Control. In
addition, no compensation or benefits will be payable to the Executive under
this Agreement, and this Agreement will be without further force or effect, if a
Potential Change in Control or a Change in Control does not occur on or before
the end of the initial Term or any extended Term. The initial "Term" of this
Agreement shall begin on the Effective Date and end on December 31, 2007;
provided that, the Term may be extended for additional one year periods (each,
an extended Term) upon the lapse of the initial Term or the then current
extended Term by the Company's written notice of extension to the Executive and
the Executive's written acknowledgement of such notice.

                                    ARTICLE 1
                              PRINCIPAL UNDERTAKING

      1.1. Special Severance Upon a Qualifying Termination. If (a) following a
Potential Change in Control but prior to a Change in Control (provided a Change
in Control occurs within twelve months after the Potential Change in Control) or
(b) within a one and one-half (1-1/2) year period after a Change in Control,
Executive's employment shall have been terminated by the Company without Cause
or by Executive in a Termination for Good Reason (either, a "Qualifying
Termination"), then Executive shall be paid by the Company subject to adjustment
as provided in Article 4, the following "Special Severance Pay Benefits":

      -     Current Salary and Other Compensation Benefits (Article 2);

      -     Other Salary and Incentive Compensation Benefits (Article 3); and

      -     Tax Adjustment (Article 4).

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      1.2. Timing of Payment. Except as provided in Article 4, the Special
Severance Pay Benefits, subject to any taxes required to be withheld therefrom,
shall be paid to Executive in a lump sum, on or before the fifth day following
the later of the "Date of Employment Termination" or the date the Change in
Control is consummated (the "Payment Date"); provided, however, that, if
Executive is a "specified employee" of the Company or any member of its
affiliated group of corporations (within the meaning of Section 409A of the
Code), as of the Date of Employment Termination and any payment of deferred
compensation payable under this Agreement or any other deferred compensation
arrangement with the Company and its subsidiaries (including, but not limited
to, the payments provided for under Article 4) is required to be delayed to
avoid incurring "additional tax" under Section 409A of the Code and the
regulations promulgated thereunder, then each such payment shall be delayed
until the date which is six months and one day following the Date of Employment
Termination.

      1.3. Loans and Advances. The amount of any loan or advance to Executive
shall be due and payable as of the Date of Employment Termination. The Company
shall have no right of setoff against any amount due Executive under this
Agreement, except that the Company may set off against such amount the balance
of any loan or advance which remains unpaid after the third day following the
Date of Employment Termination.

                                    ARTICLE 2
             CURRENT SALARY AND OTHER COMPENSATION BENEFITS

      Payment of this portion of Special Severance Pay Benefits shall consist of
the following:

      - Executive's full base salary through the Date of Employment Termination,
      at the rate in effect ten (10) days prior to the Date of Employment
      Termination; plus

      - Executive's full base salary earned from the beginning of the calendar
      year in which the Date of Employment Termination occurs through the Date
      of Employment Termination multiplied by the greater of (a) twenty percent
      (20%) or (b) the percentage which is equal to the highest percentage of
      base salary paid as a bonus to Executive for any of the three calendar
      years preceding the calendar year in which the Date of Employment
      Termination occurs, in either case, reduced by any installment of cash
      bonus previously paid by the Company to Executive for the calendar year in
      which the Date of Employment Termination occurs, plus

      - The full amount, if any, of any incentive or special award, which
      Executive earned but which, has not yet been paid.

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                                    ARTICLE 3
            OTHER SALARY AND INCENTIVE COMPENSATION BENEFITS

      Payment of this portion of Special Severance Pay Benefits shall consist of
an amount equal to one and one-half (1 1/2) times the sum of (a) Executive's
annual base salary, at the highest rate in effect at any time up to Date of
Employment Termination (the "Highest Base Salary") and (b) and amount equal to
the Highest Base Salary multiplied by the greater of (i) twenty percent (20%) or
(ii) the percentage which is equal to the highest percentage of base salary paid
as a bonus to Executive for any of the three calendar years preceding the
calendar year in which the Date of Employment Termination occurs.

                                    ARTICLE 4
                                      TAXES

      4.1. Application of Article 4. In the event that any amount or benefit
paid or distributed to Executive pursuant to this Agreement, taken together with
any amounts or benefits otherwise paid or distributed to Executive by the
Company or any affiliated company (collectively, the "Covered Payments"), would
be an "excess parachute payment" as defined in Section 280G of the Code and
would thereby subject Executive to the tax (the "Excise Tax") imposed under
Section 4999 of the Code (or any similar tax that may hereafter be imposed), the
provisions of this Article 4 shall apply to determine the amounts payable to
Executive pursuant to this Agreement.

      4.2. Determination of Payment Cap or Tax Adjustment. On or before the
Payment Date, the Company shall notify Executive of the aggregate present value
of all termination benefits to which he would be entitled under this Agreement
and any other plan, program or arrangement as of the Payment Date, together with
the projected maximum payments, determined as of the Payment Date that could be
paid without Executive being subject to the Excise Tax.

            (a) Payment Cap. If the aggregate value of all compensation payments
      or benefits to be paid or provided to Executive under this Agreement and
      any other plan, agreement or arrangement with the Company is less than
      105% of the amount which can be paid to Executive without Executive
      incurring an Excise Tax, then the amounts payable to Executive under this
      Agreement may, in the discretion of the Company, be reduced (but not below
      zero), to the maximum amount which may be paid hereunder without Executive
      becoming subject to such an Excise Tax (such reduced payments to be
      referred to as the "Payment Cap"). In the event that Executive receives
      reduced payments and benefits hereunder, Executive shall have the right to
      designate which of the payments and benefits otherwise provided for in
      this Agreement that he will receive in connection with the application of
      the Payment Cap.

            (b) Tax Adjustment. If the aggregate value of all compensation
      payments or benefits to be paid or provided to Executive under this
      Agreement and any other plan, agreement or arrangement with the Company is
      greater than 105% of the amount which can be paid to Executive without
      Executive incurring an Excise Tax, the Company shall pay to Executive
      immediately following Executive's termination of employment an additional
      amount (the "Tax Adjustment") such that the net amount retained by
      Executive with respect to such Covered Payments, after deduction of any
      Excise Tax on the Covered Payments and any Federal, state and local income
      tax and Excise Tax on the Tax Adjustment provided for by this Article 4,
      but before deduction for any Federal, state or local income or employment
      tax withholding on such Covered Payments, shall be equal to the amount of
      Covered Payments.

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      4.3. Assumptions. For purposes of determining whether any of the Covered
Payments will be subject to the Excise Tax, and the amount of such Excise Tax,

            (a) Such Covered Payments will be treated as "parachute payments"
      within the meaning of Section 280G of the Code, and all "parachute
      payments" in excess of the "base amount" (as defined under Section
      280G(b)(3) of the Code) shall be treated as subject to the Excise Tax,
      unless and except to the extent that, in the good faith judgment of the
      Company's independent certified public accountants appointed prior to the
      Effective Date or tax counsel selected by such accountants (the
      "Accountants"), the Company has a reasonable basis to conclude that such
      Covered Payments (in whole or in part) either do not constitute "parachute
      payments" or represent reasonable compensation for personal services
      actually rendered (within the meaning of Section 280G(b)(4)(B) of the
      Code) in excess of the "base amount," or such "parachute payments" are
      otherwise not subject to such Excise Tax, and

            (b) The value of any non-cash benefits or any deferred payment or
      benefit shall be determined by the Accountants in accordance with the
      principles of Section 280G of the Code.

            (c) For purposes of determining whether Executive would receive a
      greater net after-tax benefit were the amounts payable under this
      Agreement reduced in accordance with Paragraph 4.2, Executive shall be
      deemed to pay:

                  (i) Federal income taxes at the highest applicable marginal
            rate of federal income taxation for the calendar year in which the
            first amounts are to be paid hereunder, and

                  (ii) Any applicable state and local income taxes at the
            highest applicable marginal rate of taxation for such calendar year,
            net of the maximum reduction in Federal income taxes which could be
            obtained from the deduction of such state or local taxes if paid in
            such year.

      4.4. Correction Following Determination.

            (a) Corrections For Payment Cap. If Executive receives reduced
      payments and benefits under this Article 4, or this Article 4 is
      determined not to be applicable to Executive because the Accountants
      conclude that Executive is not subject to any Excise Tax, and in either
      case it is thereafter established pursuant to a final determination and
      non-appealable settlement or other resolution of litigation or an Internal
      Revenue Service proceeding (a "Final Determination") that, notwithstanding
      the good faith of Executive and the Company in applying the terms of this
      Agreement, the aggregate of the "parachute payments" within the meaning of
      Section 280G of the Code paid to Executive or for his benefit are in an
      amount that would result in Executive being subject to an Excise Tax,
      then, to the extent not prohibited by applicable law, the amount equal to
      such excess parachute payments shall be deemed for all purposes to be a
      loan to Executive made on the date of receipt of such excess payments,
      which Executive shall have an obligation to repay to the Company on
      demand, together with interest on such amount at the applicable Federal
      rate (as defined in Section 1274(d) of the Code) from the date of the
      payment hereunder to the date of repayment by Executive.

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                  If this Article 4 is not applied to reduce Executive's
      entitlements because the Accountants determine that Executive would not
      receive a greater net-after-tax benefit by applying this Article 4 and it
      is established pursuant to a Final Determination that, notwithstanding the
      good faith of Executive and the Company in applying the terms of this
      Agreement, Executive would have received a greater net-after-tax benefit
      by subjecting his payments and benefits hereunder to the Payment Cap, then
      the aggregate "parachute payments" paid to Executive or for his benefit in
      excess of the Payment Cap shall, to the extent not prohibited by
      applicable law, be deemed for all purposes a loan to Executive made on the
      date of receipt of such excess payments, which Executive shall have an
      obligation to repay to the Company on demand, together with interest on
      such amount at the applicable Federal rate (as defined in Section 1274(d)
      of the Code) from the date of the payment hereunder to the date of
      repayment by the Executive.

                  If Executive receives reduced payments and benefits by reason
      of this Article 4 and it is established pursuant to a Final Determination
      that Executive could have received a greater amount without exceeding the
      Payment Cap, then the Company shall promptly thereafter (but in no event
      later than the end of the Executive's taxable year in which such Final
      Determination occurs) pay Executive the aggregate additional amount which
      could have been paid without exceeding the Payment Cap, together with
      interest on such amount at the applicable Federal rate (as defined in
      Section 1274(d) of the Code) from the original payment due date to the
      date of actual payment by the Company.

      (b) Corrections for Tax Adjustment. In the event that the Excise Tax is
      subsequently determined by the Accountants or pursuant to any proceeding
      or negotiations with the Internal Revenue Service to be less that the
      amount taken into account hereunder in calculating the Tax Adjustment
      made, Executive shall, to the extent not prohibited by applicable law,
      repay to the Company, at the time that the amount of such reduction in the
      Excise Tax is finally determined, the portion of such prior Tax Adjustment
      that would not have been paid if such Excise Tax had been applied in
      initially calculating such Tax Adjustment, plus interest on the amount of
      such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
      Notwithstanding the foregoing, in the event any portion of the Tax
      Adjustment to be refunded to the Company has been paid to any Federal,
      state or local tax authority, repayment thereof shall not be required
      until actual refund or credit of such portion has been made to Executive,
      and interest payable to the Company shall not exceed interest received or
      credited to Executive by such tax authority for the period it held such
      portion. Executive and the Company shall mutually agree upon the course of
      action to be pursued (and the method of allocating the expenses thereof)
      if Executives good faith claim for refund or credit is denied.

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                  In the event that the Excise Tax is later determined by the
      Accountants or pursuant to any proceeding or negotiations with the
      Internal Revenue Service to exceed the amount taken into account hereunder
      at the time the Tax Adjustment is made (including, but not limited to, by
      reason of any payment the existence or amount of which cannot be
      determined at the time of the Tax Adjustment), the Company shall make an
      additional Tax Adjustment in respect of such excess (plus any interest or
      penalty payable with respect to such excess) at the time that the amount
      of such excess is the subject of a Final Determination, but in no event
      later than (A) the end of the taxable year next following the year of the
      Final Determination if there was no additional payment required to the
      taxing authority by the Executive or (B) the end of the year next
      following the year in which the taxes that are the subject of the Final
      Determination are remitted to the taxing authority by the Executive.

      4.5. Timing of Payment of Tax Adjustment. Except as provided in section
4.4, any Tax Adjustment (or portion thereof) provided for in Article 4 shall be
paid to Executive not later than 10 business days following the Payment Date;
provided, however, that if the amount of such Tax Adjustment (or portion
thereof) cannot be finally determined on or before the date on which payment is
due, the Company shall pay to Executive by such date an amount estimated in good
faith by the Accountants to be the minimum amount of such Tax Adjustment and
shall pay the remainder of such Tax Adjustment (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than the end of the Executive's
taxable year following the year in which the Executive remits the related taxes
to the applicable taxing authority or by such later time as is provided for
above in the case of a Final Determination. In the event that the amount of the
estimated Tax Adjustment exceeds the amount subsequently determined to have been
due, such excess shall, to the extent not prohibited by applicable law,
constitute a loan by the Company to Executive, payable on the fifth business day
after written demand by the Company for payment (together with interest at the
rate provided in Section (1274(b)(2)(B) of the Code.)

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                                    ARTICLE 5
                                  BENEFIT PLAN

      If (a) following a Potential Change in Control but prior to a Change in
Control (provided a Change in Control occurs within twelve months after the
Potential Change in Control) or (b) within a one and one-half (1 1/2 ) year
period after a Change In Control shall have occurred, Executive's employment
shall have terminated for any reason, including, but not limited to, Termination
for good Reason, except for death, voluntary retirement or for Cause, then, for
one year after the Payment Date, the Company shall maintain in full force and
effect and Executive shall continue to participate in all group life, health and
accident and disability insurance, and other employee welfare benefit plans,
programs and arrangements in which Executive was entitled to participate
immediately prior to the Date of Employment Termination, provided that continued
participation is possible under the general terms and provisions of such plans,
programs and arrangements. If participation is barred, or an applicable plan,
program or arrangement is discontinued or the benefits thereunder are materially
reduced, the Company shall arrange to provide Executive with benefits
substantially similar to those which he was entitled to receive immediately
prior to the Date of Employment Termination. The foregoing shall not be deemed
to apply to the EDO Corporation Employees Pension Plan or the EDO Corporation
Employee Stock Ownership and Employee Investment Plan.

                                    ARTICLE 6
                             NO MITIGATION REQUIRED

      Executive shall not be required to mitigate the amount of any payment or
benefit provided for in this Agreement by seeking other employment or otherwise,
nor shall the amount of any payment or benefit so provided for be reduced by any
compensation earned by him as the result of employment by another employer after
the Date of Employment Termination, or otherwise.

                                    ARTICLE 7
  DEFINITION OF "CHANGE IN CONTROL" AND "POTENTIAL CHANGE IN CONTROL"

      7.1. Change in Control. A "Change in Control" occurs on the first to occur
of any of the following:

            (a) The date that any one person, or more than one person acting as
      a Group (other than the Company, its subsidiaries, or any employee benefit
      plan of the Company or its subsidiaries) (a "person"), acquires ownership
      of stock of the Company that, together with stock held by such person or
      Group, constitutes more than 50 percent of the total fair market value or
      total voting power of the stock of the Company; provided that, if any one
      person, or Group owns more than 50 percent of the total fair market value
      or total voting power of the stock of the Company, the acquisition of
      additional stock by the same person or persons in the Group is not a
      subsequent Change in Control;

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            (b) The date any person, or Group, acquires (or has acquired during
      the 12-month period ending on the date of the most recent acquisition by
      such person or Group) ownership of stock of the Company possessing 30
      percent or more of the total voting power of the stock of the Company, or

            (c) The date a majority of members of the Company's board of
      directors is replaced during any 12-month period by directors whose
      appointment or election is not endorsed by a majority of the members of
      the Company's board of directors before the date of the appointment or
      election.

      For purposes of this Paragraph 7.1, an increase in the percentage of stock
owned by any one person, or Group as a result of a transaction in which the
Company acquires its own stock in exchange for property will be treated as an
acquisition of stock of the Company by a person or Group. The transfer of stock
of the Company (or issuance of stock by the Company) will be considered only if
such stock remains outstanding after the applicable transaction. Notwithstanding
the foregoing, no event set forth in this Section 7.1 shall be a Change in
Control unless such even constitutes a "change in control" within the meaning of
Section 409A of the Code and the regulations promulgated thereunder.

      7.2   Potential Change in Control.  A "Potential Change in
Control" occurs if:

            (a) A person hereafter becomes the beneficial owner of securities of
      the Company having at least 25% of the total number of votes that may be
      cast for the election of directors of the Company, or

            (b) any person holds a 15% beneficial ownership interest on the date
      hereof and there occurs an increase in such person's beneficial ownership
      of such number of securities of the Company as shall increase the
      beneficial ownership by such person by an additional 1% of the total
      number of votes that may be cast for the election of directors of the
      Company, or

            (c) a Person commences a tender offer for at least 25% of the
      outstanding shares of the Company's common stock, or

            (d) approval of any corporate transaction is requested of
      shareholders, which, if obtained, would result in a Change in Control
      occurring, or

            (e) any person solicits proxies for the election of more than one
      member of the Board (other than for any such election or nomination for
      election that is approved by the then current Board).

      7.3 Group. Determination of the existence of a "Group" for purposes of
this Article 7 shall be determined under the provisions of Treasury Regulation
ss. 1.409A-3(i)(5)(v)(B). The terms herein shall be interpreted in a manner
consistent with the provisions of Treasury Regulation ss. 1.409A-3.

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                                    ARTICLE 8
                              TERMINATION FOR CAUSE

      10.1. If the Executive's employment is terminated by the Company for
Cause, the Company shall pay the Executive his full base salary through the Date
of Employment Termination (at the rate in effect as of the Date of Employment
Termination), and the Company shall have no further obligations to the Executive
under this Agreement.

      10.2. The following are the only reasons for which the Company may
terminate Executive's service for Cause without further obligations under this
Agreement:

      -     for failure to consistently meet the performance objectives
      set for the Executive as determined in the reasonable discretion
      of the Board of Directors

      -     for providing the Company with materially false reports
      concerning Executive's business interests or employment-related
      activities;

      -     for making materially false representations relied upon by
      the Company in furnishing information to shareholders, a stock
      exchange, or the Securities and Exchange Commission;

      -     for maintaining an undisclosed, unauthorized and material
      conflict of interest in the discharge of duties owed by Executive
      to the Company;

      -     for misconduct causing a serious violation by the Company
      of state or federal laws or violation of a material written
      policy of the Company;

      -     for theft of Company funds or corporate assets; or

      -     for conviction of a crime (excluding traffic violations or
      similar misdemeanors).

                                    ARTICLE 9
                   DEFINITION OF "TERMINATION FOR GOOD REASON"

      "Termination for Good Reason" shall mean termination of Executive's
employment by Executive following or in connection with:

      (i) without the express advance written consent of Executive, (a) the
      assignment to Executive of any duties inconsistent in any substantial
      respect with the position, authority or responsibilities of Executive
      immediately prior to the earlier to occur of a Potential Change in Control
      or a Change in Control or (b) any other substantial change in such
      position, including titles, authority or responsibilities, or

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      (ii) during the one and one-half (1-1/2) year period following a Change in
      Control or during a period of Potential Change in Control, any reduction
      in Executive's salary or any reduction in bonus or incentive compensation
      targets (based upon the highest dollar amount or other rate of salary,
      bonus and incentive compensation in effect at any time up to Date of
      Employment Termination), a termination, reduction or alteration of
      disability policies or life or disability insurance benefits maintained
      for Executive, any alteration or reduction of expense allowances or
      reimbursement policies or a significant reduction in scope or value of the
      aggregate other benefits to which Executive was entitled immediately prior
      to the earlier to occur of a Potential Change in Control or a Change in
      Control, or

      (iii) the Company's requiring Executive to be based at any office or
      location more than 50 miles from the one where he worked immediately prior
      to the earlier to occur of a Potential Change in Control or a Change in
      Control, except for travel reasonably required in the performance of
      Executives responsibilities, or

      (iv) any purported termination by the Company of Executive's employment
      otherwise than as permitted by this Agreement, it being understood that
      any such purported termination shall not be effective for any purpose of
      this Agreement, or

      (v) any failure by the Company to obtain the assumption and agreement to
      perform this Agreement by a successor as contemplated by paragraph
      11.1.

                                   ARTICLE 10
                 SPECIAL CORPORATE RELOCATION PROVISION

In event that the Company should relocate its principal Corporate office to a
location more than 100 miles outside of the current New York City (Manhattan)
location, and the executive is either not offered relocation to the location or
elects of her own accord to not relocate to the new location, Executive shall be
entitled to elect "Termination for Good Reason" and receive separation pay equal
to 36 months of salary in effect at the time of separation, as well as the other
benefits as stated specifically in this agreement. This relocation provision
does not require a Change-in-Control, nor potential Change-in-Control to have
occurred. It remains in effect in the event of a Change-in-Control, however, the
36-month benefit is in place of the 18-month provision, not in addition to. All
other benefits would remain in place as stated.

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                                   ARTICLE 11
                          SUCCESSORS, BINDING AGREEMENT

      11.1. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from the Company in the same amount and on the same terms as
Executive would be entitled hereunder if the Company had terminated Executive's
employment other than for Cause after a Change in Control occurring at the time
of succession, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Employment Termination.

      11.2. As used in this Agreement, "Company" shall include any successor to
this business and/or assets as aforesaid which executes and delivers the
agreement provided for in paragraph 10.1 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.

      11.3. This Agreement shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees. If Executive should die
while any amounts would still be payable if he had continues to live, all such
amounts shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee, or other designee or, if there be no such
designee, to his estate.

                                   ARTICLE 12
                            MISCELLANEOUS PROVISIONS

      12.1. Date of Employment Termination is the date on which Executive
experiences a "separation from service" within the meaning of Treasury
Regulation ss.1.409A-1(h) (1).

      12.2. Notice and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first page of
this Agreement, provided that all notices to the Company shall be directed to
the attention of the corporate counsel, or to such other address as either party
may have furnished to the other in writing in accordance herewith. Notices of
change of address shall be effective only upon receipt.

      12.3. This Agreement supersedes any other agreement on the subject matter
hereof executed by the parties hereto. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
agreed to in writing signed by Executive and, on behalf of the Company, by such
officer as may be specifically designated by the Board.

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      12.4. All benefits provided for in this Agreement are provided on an
unfunded basis and are not intended to meet the qualification requirements of
Section 401 of the Code. The Company shall not be deemed to be a trustee of any
amounts to be paid under this Agreement and shall not be required to segregate
any assets with respect to benefits under this Agreement. Such benefits shall be
payable solely from the general assets of the Company.

      12.5. Any failure at any time of either party to enforce any provision of
this Agreement shall not constitute a waiver of such provision, or prejudice the
right of either party to enforce such provision at any subsequent time.

      12.6. No agreements or representations, oral or otherwise, expressed or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.

      12.7. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York.

      12.8. The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

      12.9. In the event of any action or proceeding between the parties arising
out of this agreement, the Company will pay the costs of any such legal
proceedings including, but not limited to, the costs of Executive for all
expenses, including attorneys' fees, incurred in such action or proceeding. Such
costs and expenses shall be advanced to Executive currently as reasonably
required to continue such action or proceeding.

                                            EDO CORPORATION

                                            By: /s/ Patricia D. Comiskey
                                                --------------------------------
                                                Patricia D. Comiskey
                                                Senior Vice President - Human
                                                Resources

                                              EXECUTIVE:

                                              /s/ Lisa Palumbo
                                              ----------------------------------
                                              Lisa Palumbo

                                       13Exhibit 10.1

            

            

            
            QUALITY SYSTEMS, INC.

             

            
            AMENDED AND RESTATED

            
            1998 STOCK OPTION PLAN

             

            
            NOTICE: QUALIFIED OPTIONS UNDER THIS PLAN BEAR RESTRICTIONS GOVERNED BY
            SECTION 422 OF THE INTERNAL REVENUE CODE. PLAN PARTICIPANTS ARE URGED TO READ SECTION
            422 AND TO UNDERSTAND THE RESTRICTIONS CONTAINED THEREIN. NOT ALL SECTION 422
            RESTRICTIONS ARE REFERENCED IN THIS PLAN. OPTIONS GRANTED HEREUNDER MAY BEAR
            RESTRICTIONS IMPOSED BY FEDERAL AND STATE SECURITIES LAWS. PLAN PARTICIPANTS ARE URGED
            TO CONSULT WITH THEIR TAX AND LEGAL ADVISORS CONCERNING THE NATURE AND RESTRICTIONS
            UPON THE OPTIONS GOVERNED HEREBY.

            
                	
                            
                            1.

                        	
                            
                            Purposes.

                        

            

            
            (a)           The
            purpose of the Plan is to provide a means by which selected Employees, Directors and
            Consultants of the Company and its Affiliates, may be given an opportunity to benefit
            from increases in value of the stock of the Company through the granting of Incentive
            Stock Options and Nonstatutory Stock Options, as defined below.

            
            (b)           The
            Company, by means of the Plan, seeks to retain the services of persons who are now
            Employees, Directors or Consultants of the Company or its Affiliates, to secure and
            retain the services of new Employees, Directors and Consultants, and to provide
            incentives for such persons to exert maximum efforts for the success of the Company and
            its Affiliates.

            
            (c)           The
            Company intends that the Options issued under the Plan shall, in the discretion of the
            Board or any Committee to which responsibility for administration of the Plan has been
            delegated pursuant to Section 3(c),
            be either Incentive Stock Options or Nonstatutory Stock Options. All Options shall be
            separately designated Incentive Stock Options or Nonstatutory Stock Options at the time
            of grant, and in such form as issued pursuant to
            Section 6, and a certificate or
            certificates will be issued for shares purchased on exercise of such
            Options.

            
                	
                            
                            2.

                        	
                            
                            Definitions.

                        

            

            
            (a)           “Affiliate” means any parent
            corporation or subsidiary corporation, whether now or hereafter existing, as those
            terms are defined in Sections 424(e) and (f) respectively, of the Code.

            
                	
                             

                        	
                            
                            (b)

                        	
                            
                            “Board” means the Board of Directors of the
                            Company.

                        

            

            
                	
                             

                        	
                            
                            (c)

                        	
                            
                            “Code
                            ” means the Internal Revenue Code of 1986, as
                            amended.

                        

            

             

            
            

            

            

            

            
            (d)           “Committee” means a Committee appointed
            by the Board in accordance with Section 3(c)
            of the Plan.

            
                	
                             

                        	
                            
                            (e)

                        	
                            
                            “Company” means Quality Systems, Inc., a California
                            corporation.

                        

            

            
            (f)            “Consultant” means any person, including
            an advisor, engaged by the Company or an Affiliate to render consulting or advisory
            services and who is compensated for such services, provided that the term
            “Consultant” shall not include Directors who are paid only a
            director’s fee by the Company or who are not compensated by the Company for their
            services as Directors.

            
            (g)           “Continuous Status as an Employee, Director or
            Consultant” means the employment or relationship as a
            Director or Consultant is not interrupted or terminated. The Board, in its sole
            discretion, may determine whether Continuous Status as an Employee, Director or
            Consultant shall be considered interrupted in the case of: (i) any leave of absence
            approved by the Board, including sick leave, military leave or any other personal
            leave; provided, however, that for purposes of Incentive Stock Options, any such leave
            may not exceed three (3) months, unless reemployment upon the expiration of such leave
            is guaranteed by contract, Company policies or statute; or (ii) transfers between
            locations of the Company or between the Company, Affiliates or their
            successors.

            
                	
                             

                        	
                            
                            (h)

                        	
                            
                            “Director
                            ” means a member of the Board.

                        

            

            
            (i)            “Employee” means any person, including
            Officers and Directors, employed by the Company or any Affiliate of the Company.
            Neither service as a Director nor payment of a director’s fee by the Company
            shall be sufficient to constitute “employment” by the Company.

            
                	
                             

                        	
                            
                            (j)

                        	
                            
                            “Exchange
                            Act” means the Securities Exchange Act
                            of 1934, as amended.

                        

            

            
            (k)           “Fair Market Value” means, as of any
            date, the value of the Common Stock of the Company determined as follows:

            
            (i)            If
            the Common Stock is listed on any established stock exchange or market
            or is quoted on a system of automated dissemination of quotations of
            securities prices in common use, the Fair Market Value of a share of Common Stock shall
            be the closing sales price for such stock as quoted on such system or exchange on the
            day the Option is granted, or the last preceding date on which there was a sale of such
            Common Stock on such exchange or market if no sale occurred on the day the Option is
            granted, if said closing prices are reported;

            
            (ii)           In
            the case that the Common Stock is listed on any established stock exchange or
            market or is quoted on a system of automated dissemination of
            quotations of securities prices in common use but selling prices
            are not reported, the Fair Market Value of a share of Common Stock shall be the mean
            between the closing bid and asked prices for the Common Stock on the day the Option is
            granted, as reported in the Wall Street Journal or such other source as the Board deems
            reliable;

            
                	
                             

                        	
                            

                        

            

            

            
            -2-

             

            
            

            

            

            
            (iii)           In
            the absence of an established market for
            the Common Stock, the Fair Market Value shall be determined in good faith by the Board,
            provided that such valuation shall take into account all available information material
            to the value of the company, including but not limited to the value of the tangible and
            intangible assets of the company, the present value of its anticipated future cash
            flows, the market value of the stock or equity interests in other entities engaged in
            substantially the same business, recent arm’s length transactions involving the
            sale of such stock, and other relevant factors.

            
            (l)            “Incentive Stock Option” means an Option
            intended to qualify as an incentive stock option within the meaning of Section 422 of
            the Code and the regulations promulgated thereunder.

            
                	
                             

                        	
                            
                            (m)

                        	
                            
                            “Non-Employee
                            Director” shall mean a Director
                            who:

                        

            

            
            (i)            Is
            not currently an officer (as defined in Rule 16a-1(f) of the Exchange Act) of the
            Company or a parent or subsidiary of the Company, or otherwise currently employed by
            the Company or a parent or subsidiary of the Company;

            
            (ii)           Does
            not receive compensation, either directly or indirectly, from the Company or a parent
            or subsidiary of the Company, for services rendered as a consultant or in any capacity
            other than as a Director, except for an amount that does not exceed the dollar amount
            for which disclosure would be required pursuant to Rule 404(a) of the Exchange
            Act;

            
            (iii)          Does
            not possess an interest in any other transaction for which disclosure would be required
            pursuant to Rule 404(a) of the Exchange Act; and

            
            (iv)          Is not
            engaged in a business relationship for which disclosure would be required pursuant to
            Rule 404(b) of the Exchange Act.

            
            (n)           “Nonstatutory Stock Option” means an
            Option not intended to qualify as an Incentive Stock Option.

            
            (o)           “Officer” means a person who is an
            officer of the Company within the meaning of Section 16 of the Exchange Act and the
            rules and regulations promulgated thereunder.

            
                	
                             

                        	
                            
                            (p)

                        	
                            
                            “Option
                            ” means a stock option granted pursuant to the
                            Plan.

                        

            

            
            (q)           “Option Agreement” means a written
            agreement between the Company and an Optionee evidencing the terms and conditions of an
            individual Option grant. Each Option Agreement shall be subject to the terms and
            conditions of the Plan.

            
                	
                             

                        	
                            
                            (r)

                        	
                            
                            “Optionee
                            ” means an Employee, Director or Consultant who
                            holds an outstanding Option.

                        

            

            
                
                               (s)           “Participant” means
                an Employee, Director or Consultant who is granted Options.

                 

            

            

            
            -3-

             

            
            

            

            

            
                	
                             

                        	
                            
                            (t)

                        	
                            
                            “Plan
                            ” means this 1998 Stock Option Plan.

                        

            

            
            (u)           “Rule 16b-3” means Rule 16b-3 of the
            Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being
            exercised with respect to the Plan.

            
                	
                             

                        	
                            
                            (v)

                        	
                            
                            “Securities
                            Act” means the Securities Act of 1933,
                            as amended.

                        

            

            
                	
                            
                            3.

                        	
                            
                            Administration.

                        

            

            
            (a)           The
            Plan shall be administered by the Board unless and until the Board delegates
            administration to a Committee, as provided in Section
            3(c).

            
            (b)           The
            Board shall have the power, subject to, and within the limitations of, the express
            provisions of the Plan:

            
            (i)            To
            determine from time to time which of the persons eligible under the Plan shall be
            granted Options; when and how Options shall be granted; whether an Option will be an
            Incentive Stock Option or a Nonstatutory Stock Option, the provisions of each Option
            granted (which need not be identical), including the vesting schedule for the Options,
            and the number of shares underlying such Options to be granted to each such
            person;

            
            (ii)           To
            construe and interpret the Plan and Options 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 or in any
            Option Agreement, in a manner and to the extent it shall deem necessary or expedient to
            make the Plan fully effective;

            
                	
                             

                        	
                            
                            (iii)

                        	
                            
                            To amend the Plan as provided in
                            Section 12; and

                        

            

            
            (iv)          Generally,
            to exercise such powers and to perform such acts as the Board deems necessary or
            advisable to promote the best interests of the Company.

            
            (c)           The
            Board may delegate administration of the Plan to a committee composed of not fewer than
            two (2) members of the Board (the
            “Committee”), all of the
            members of which Committee shall be Non-Employee Directors. 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 (and
            references in this Plan to the Board shall thereafter be to the Committee), 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.

            
                	
                            
                            4.

                        	
                            
                            Shares Subject to the
                            Plan.

                        

            

            
            Subject to the provisions of Section
            11 relating to adjustments upon changes in stock, the stock
            that may be issued pursuant to Options shall not exceed in the aggregate One
            Million

             

            
            -4-

             

            
            

            

            

            
            (1,000,000) shares of the Company’s Common Stock. If any Option
            shall for any reason expire or otherwise terminates, in whole or in part, without
            having been exercised in full, the stock not acquired under such Option shall revert to
            and again become available for issuance under the Plan.

            
                	
                            
                            5.

                        	
                            
                            Eligibility.

                        

            

            
            (a)           Incentive
            Stock Options may be granted only to Employees. Nonstatutory Stock Options may be
            granted only to Employees, Directors or Consultants.

            
            (b)           A
            Director shall be eligible for the benefits of the Plan provided that such
            Director’s participation conforms to the requirements of Rule 16b-3, if
            applicable.

            
            (c)           No
            person shall be eligible for the grant of an Incentive Stock Option if, at the time of
            grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code)
            stock possessing more than ten percent (10%) of the total combined voting power of all
            classes of stock of the Company or of any of its Affiliates unless the exercise price
            of such Incentive Stock Option is at least one hundred ten percent (110%) of the Fair
            Market Value of such stock at the date of grant.

            
            (d)           No
            person shall be eligible to receive an Option with respect to the stock of an Affiliate
            that is a subsidiary of the entity to which such person is providing direct services on
            the date of grant.

            
                	
                            
                            6.

                        	
                            
                            Option
                            Provisions.

                        

            

            
            Each Option shall cover a fixed number of shares of stock as of the date
            of grant, and shall be in such form and shall contain such terms and conditions as the
            Board shall deem appropriate. The provisions of separate Options need not be identical,
            but each Option shall include (through incorporation of provisions hereof by reference
            in the Option or otherwise) the substance of each of the following
            provisions:

            
            (a)           
            Term. No Option shall be exercisable
            after the expiration of ten (10) years from the date it was granted. In addition, any
            Option granted to a person who owns (or is deemed to own pursuant to Section 424(d) of
            the Code) stock possessing more than ten percent (10%) of the total combined voting
            power of all classes of stock of the Company or of any Affiliate may not be made
            exercisable after the expiration of five (5) years from the date the Option is
            granted.

            
            (b)           
            Price. The exercise price of each
            Option shall be not less than one hundred percent (100%) of the Fair Market Value of
            the stock subject to the Option on the date the Option is granted. Notwithstanding the
            foregoing, the exercise price of any Incentive Stock Option granted hereunder to any
            stockholder possessing at least 10% of the total combined voting power of all classes
            of stock of the Company shall be not less than one hundred ten percent (110%) of the
            Fair Market Value of the stock subject to the Option on the date the Option is
            granted.

            
            (c)           
            Consideration. The purchase price of
            stock acquired pursuant to an Option shall be paid, to the extent permitted by
            applicable statutes and regulations, either (i) in cash at the

             

            
            -5-

             

            
            

            

            

            time
            the Option is exercised, (ii) at the discretion of the Board or the Committee, either
            at the time of the grant or exercise of the Option, by delivering to the Company other
            shares of Common Stock of the Company (provided that the shares have been held for the
            period required to avoid a charge to the Company’s reported earnings), (iii) at
            the discretion of the Board or the Committee, either at the time of the grant or
            exercise of the Option, by delivering to the Company all or any part of an Option
            granted under this Plan for a cashless exercise (provided that such cashless exchange
            will not result in a charge to the Company’s reported earnings), or (iv) by
            tendering any other form of legal consideration that may be acceptable to the
            Board.

            
            (d)           
            Transferability. An Incentive Stock
            Option shall not be transferable except by will or by the laws of descent and
            distribution, and shall be exercisable during the lifetime of the person to whom the
            Incentive Stock Option is granted only by such person. A Nonstatutory Stock Option
            granted to an Optionee subject to Section 16 of the Exchange Act on the date of grant
            shall not be transferable except by will or by the laws of descent and distribution,
            and shall be exercisable during the lifetime of the person to whom the Option is
            granted only by such person. A Nonstatutory Stock Option granted to an Optionee who is
            not subject to Section 16 of the Exchange Act on the date of grant may not be
            transferable except by will or by the laws of descent and distribution, unless
            otherwise permitted by the Board, and shall be exercisable during the lifetime of the
            person to whom the Option is granted only by such person or, subsequent to any
            permitted transfer, only by a permitted transferee. The person to whom the Option is
            granted may, by delivering written notice to the Company, in a form satisfactory to the
            Company, designate a third party who, in the event of the death of the Optionee or in
            the case of a permitted transfer of a Nonstatutory Stock Option during the
            Optionee’s lifetime, shall thereafter be entitled to exercise the
            Option.

            
            (e)           
            Vesting. The total number of shares
            of stock subject to an Option may, but need not, be allotted in periodic installments
            (which may, but need not, be equal). The Option Agreement may provide that from time to
            time during each of such installment periods, the Option may become exercisable
            (“vest”) with respect to
            some or all of the shares allotted to that period, and may be exercised with respect to
            some or all of the shares allotted to such period and/or any prior period as to which
            the Option became vested but was not fully exercised. The Option may be subject to such
            other terms and conditions on the time or times when it may be exercised (which may be
            based on performance or other criteria) as the Board may deem appropriate. The
            provisions of this Section 6(e) are
            subject to any Option provisions governing the minimum number of shares as to which an
            Option may be exercised.

            
            (f)           
            Termination of Employment or Relationship as a Director or
            Consultant Other than by Disability or Death. In the
            event that an Optionee’s Continuous Status as an Employee, Director or Consultant
            is terminated either by the voluntary resignation by the Optionee or for cause by the
            Company, all Options granted to the Optionee shall terminate immediately. In the event
            an Optionee’s Continuous Status as an Employee, Director or Consultant is
            terminated without cause by the Company, the Optionee may exercise his or her Option
            (to the extent that the Optionee was entitled to exercise it at the date of
            termination) but only within such period of time ending on the earlier of (i) the date
            thirty (30) days after the termination of the Optionee’s Continuous Status as an
            Employee, Director or Consultant (or such longer period specified in the Option
            Agreement), or (ii) the expiration of the term of the Option as set forth in the Option
            Agreement. If, at the date of termination, the Optionee is not entitled to exercise his
            or her entire Option or the Option terminated as specified above, the shares covered by
            the unexercisable portion of the Option or terminated Option shall revert to and again
            become

             

            
            -6-

             

            
            

            

            

            
            available for issuance under the Plan. If, after termination, the
            Optionee does not exercise his or her Option within the time specified in the Option
            Agreement, the Option shall terminate, and the shares covered by such Option shall
            revert to and again become available for issuance under the Plan.

            
            (g)           
            Disability of Optionee. In the event
            an Optionee’s Continuous Status as an Employee, Director or Consultant terminates
            as a result of the Optionee’s disability, the Optionee may exercise his or her
            Option (to the extent that the Optionee was entitled to exercise it at the date of
            termination), but only within such period of time ending on the earlier of (i) the date
            three hundred sixty-five (365) days following such termination (or such longer period
            specified in the Option Agreement), or (ii) the expiration of the term of the Option as
            set forth in the Option Agreement. If, at the date of termination, the Optionee is not
            entitled to exercise his or her entire Option, the shares covered by the unexercisable
            portion of the Option shall revert to and again become available for issuance under the
            Plan. If, after termination, the Optionee does not exercise his or her Option within
            the time specified herein, the Option shall terminate, and the shares covered by such
            Option shall revert to and again become available for issuance under the
            Plan.

            
            (h)           
            Death of Optionee. In the event of
            the death of an Optionee during, or within a period specified in the Option after the
            termination of, the Optionee’s Continuous Status as an Employee, Director or
            Consultant, the Option may be exercised (to the extent the Optionee was entitled to
            exercise the Option at the date of death) by the Optionee’s estate, by a person
            who acquired the right to exercise the Option by bequest or inheritance or by a person
            designated to exercise the option upon the Optionee’s death pursuant to
            Section 6(d), but only within the period
            ending on the earlier of (i) the date three hundred sixty-five (365) days following the
            date of death (or such longer period specified in the Option Agreement), or (ii) the
            expiration of the term of such Option as set forth in the Option Agreement. If, at the
            time of death, the Optionee was not entitled to exercise his or her entire Option, the
            shares covered by the unexercisable portion of the Option shall revert to and again
            become available for issuance under the Plan. If, after death, the Option is not
            exercised within the time specified herein, the Option shall terminate, and the shares
            covered by such Option shall revert to and again become available for issuance under
            the Plan.

            
                	
                            
                            7.

                        	
                            
                            Cancellation and Regrant of
                            Option.

                        

            

            
            The Board or the Committee shall have the authority to effect, at any
            time and from time to time, (i) the repricing of any outstanding Options under the
            Plan, and/or (ii) with the consent of the affected holders of Options, the cancellation
            of any outstanding Options under the Plan and the grant in substitution therefor of new
            Options under the Plan covering the same or different numbers of shares of stock, but
            having an exercise price per share not less than one hundred percent (100%) of the Fair
            Market Value or, in the case of a ten percent (10%) stockholder (as described in
            Section 5(c)) not less than one hundred ten
            percent (110%) of the Fair Market Value in the case of an Incentive Stock Option.
            Nothwithstanding the foregoing, the Board shall not modify or amend any outstanding
            Option in such a way as to extend the Option period beyond the original term of the
            Option at a time when the fair market value of the stock underlying the option is
            greater than the Exercise Price or to otherwise provide for the deferral of
            compensation under Section 409A of the Code.

            
                 
            

            

            
            -7-

            

            

            

   8.          
    Covenants of the Company.

            
            (a)           During
            the terms of the Options, the Company shall keep available at all times the number of
            shares of stock which would be issuable under such outstanding Options.

            
            (b)           The
            Company shall seek to obtain from each 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 Options; provided, however, that this undertaking shall
            not require the Company to register under the Securities Act either the Plan, any
            Options or any stock issued or issuable pursuant to any such Options. 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 Options unless and
            until such authority is obtained.

            
                	
                            
                            9.

                        	
                            
                            Use of Proceeds from
                            Stock.

                        

            

            
            Proceeds from the sale of Common Stock upon exercise of the Options
            shall constitute general funds of the Company.

            
                	
                            
                            10.

                        	
                            
                            Miscellaneous.

                        

            

            
            (a)           Neither
            an Optionee nor any person to whom an Option is transferred under
            Section 6(d) shall be deemed to be the
            holder of, or to have any of the rights of a holder with respect to, any shares subject
            to such Option unless and until such person has satisfied all requirements for exercise
            of the Option pursuant to its terms.

            
            (b)           Nothing
            in the Plan or any Option granted pursuant thereto shall confer upon any Employee,
            Director, Consultant or other holder of Options any right to continue in the employ of
            the Company or any Affiliate (or to continue acting as a Director or Consultant) or
            shall affect the right of the Company or any Affiliate to terminate the employment or
            relationship as a Director or Consultant of any Employee, Director, Consultant or other
            holder of Options with or without cause.

            
            (c)           To
            the extent that the aggregate Fair Market Value (determined at the time of grant) of
            stock with respect to which Incentive Stock Options are granted are exercisable for the
            first time by an Optionee during any calendar year under all plans of the Company and
            its Affiliates exceeds One Hundred Thousand Dollars ($100,000), the Options or portions
            thereof which exceed such limit (according to the order in which they were granted)
            shall be treated as Nonstatutory Stock Options.

            
            (d)           The
            Company may require any person to whom an Option is granted, or any person to whom an
            Option is transferred under Section
            6(d), as a condition of exercising any Option, (1) to give
            written assurances satisfactory to the Company as to such person’s knowledge and
            experience in financial and business matters and/or to employ a purchaser
            representative reasonably satisfactory to the Company who is knowledgeable and
            experienced in financial and business matters, and that he or she is capable of
            evaluating, alone or together with the purchaser representative, the merits and risks
            of exercising the Option; and (2) to give written

             

            
            -8-

             

            
            

            

            

            
            assurances satisfactory to the Company stating that such person is
            acquiring the stock subject to the Option for such person’s own account and not
            with any present intention of selling or otherwise distributing the stock. The
            foregoing requirements, and any assurances given pursuant to such requirements, shall
            be inoperative if (i) the issuance of the shares upon the exercise or acquisition of
            stock under the Option has been registered under a then currently effective
            registration statement under the Securities Act, or (ii) as to any particular
            requirement, a determination is made by counsel for the Company that such requirement
            need not be met in the circumstances under the then applicable securities laws. The
            Company may, upon advice of counsel to the Company, place legends on stock certificates
            issued under the Plan as such counsel deems necessary or appropriate in order to comply
            with applicable securities laws, including, but not limited to, legends restricting the
            transfer of the stock.

            
            (e)           To
            the extent provided by the terms of an Option Agreement, the person to whom an Option
            is granted may, at the discretion of the Board, satisfy any mandatory federal, state or
            local tax withholding obligation relating to the exercise or acquisition of stock under
            an Option by any of the following means or by a combination of such means: (1)
            tendering cash payment; (2) authorizing the Company to withhold shares from the shares
            of the Common Stock otherwise issuable to the Participant as a result of the exercise
            or acquisition of stock under the Option provided that such arrangement will not result
            in a charge to the Company’s reported earnings; or (3) delivering to the Company
            owned and unencumbered shares of the Common Stock of the Company that have been held
            for the period required to avoid a charge to the Company’s reported earnings. The
            exercise of the Option may be conditioned upon the receipt by the Company of
            satisfactory evidence of the Participant’s satisfaction of any withholding
            obligations.

            
                	
                            
                            11.

                        	
                            
                            Adjustments Upon Changes in
                            Stock.

                        

            

            
            (a)           Subject
            to any required action by stockholders, the number and type of (i) shares which have
            been authorized for issuance under this Plan but as to which Options have not yet been
            granted or that have been returned to the Plan upon cancellation or expiration of an
            Option, and (ii) shares which may be purchased upon the exercise of each outstanding
            Option, shall be appropriately changed and proportionately increased or decreased upon
            the occurrence of any change, increase or decrease in the number and type of issued
            shares of Common Stock of the Company, without receipt of consideration by the Company,
            which change results from a stock split, stock dividend, merger, consolidation,
            reorganization, reincorporation, recapitalization, combination of shares, change in
            corporate structure or other like capital adjustment. As a result of the foregoing
            adjustment, appropriate adjustment shall be made in the number and type of shares for
            which Options may be granted under this Plan and, upon the exercise of each then
            outstanding Option, the holders of such Options shall receive the number and type of
            securities which the holders would have received had the Options been exercised on the
            date preceding such change, increase or decrease. In the event of any such adjustment,
            the exercise price for each share shall be likewise adjusted in inverse proportion to
            the increase or decrease in the number of shares purchasable.

            
            (b)           In
            the event of: (1) a dissolution, liquidation or sale of substantially all of the assets
            of the Company; (2) a merger or consolidation in which the Company is not the surviving
            corporation; or (3) a reverse merger in which the Company is the surviving corporation
            but the

             

            
            -9-

             

            
            

            

            

            
            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, then to the extent permitted by
            applicable law: (i) any surviving corporation shall assume any Options outstanding
            under the Plan or shall substitute similar Options for those outstanding under the
            Plan, or (ii) such Options shall continue in full force and effect. In the event any
            surviving corporation refuses to assume or continue such Options, or to substitute
            similar options for those outstanding under the Plan, then, with respect to Options
            held by persons then performing services as Employees, Directors or Consultants, the
            time during which such Options vest may, at the discretion of the Board, be accelerated
            and the Options terminated if not exercised prior to such event.

            
                	
                            
                            12.

                        	
                            
                            Amendment of the
                            Plan.

                        

            

            
            (a)           The
            Board at any time, and from time to time, may amend the Plan provided that the
            implementation of such amendment by the Company complies with all applicable
            law.

            
            (b)           The
            Board may in its sole discretion submit any amendment to the Plan for stockholder
            approval, including, but not limited to, amendments to the Plan intended to satisfy the
            requirements of Section 162(m) of the Code and the regulations promulgated thereunder
            regarding the exclusion of performance-based compensation from the limit on corporate
            deductibility of compensation paid to certain executive officers.

            
            (c)           It
            is expressly contemplated that the Board may amend the Plan in any respect the Board
            deems necessary or advisable to provide eligible Employees, Directors or Consultants
            with the maximum benefits provided or to be provided under the provisions of the Code
            and the regulations promulgated thereunder relating to Incentive Stock Options and/or
            to bring the Plan and/or Incentive Stock Options granted under it into compliance
            therewith.

            
            (d)           Rights
            and obligations under any Option granted before amendment of the Plan shall not be
            altered or impaired by any amendment of the Plan unless (i) the Company requests the
            consent of the person to whom the Option was granted, and (ii) such person consents in
            writing.

            
                	
                            
                            13.

                        	
                            
                            Termination or Suspension of the
                            Plan.

                        

            

            
            (a)           The
            Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan
            shall terminate on December 31, 2007, which shall be within ten (10) years from the
            date the Plan is adopted by the Board or approved by the stockholders of the Company,
            whichever is earlier. No Options may be granted under the Plan while the Plan is
            suspended or after it is terminated.

            
            (b)           Rights
            and obligations under any Option granted while the Plan is in effect shall not be
            altered or impaired by suspension or termination of the Plan, except with the consent
            of the person to whom the Option was granted.

             

            
            -10-

             

            
            

            

            

            

            
                	
                            
                            14.

                        	
                            
                            Effective Date of
                            Plan.

                        

            

            
            The Plan shall become effective as determined by the Board, but no
            Options granted under the Plan shall be exercised unless and until the Plan has been
            approved by the stockholders of the Company, which approval shall be within twelve (12)
            months before or after the date the Plan is adopted by the Board.

            
                	
                            
                            15.

                        	
                            
                            Financial
                            Information.

                        

            

            
            The Company will provide to each Optionee financial statements of the
            Company at least annually in accordance with Section 260.140.46 of Title 10 of the
            California Code of Regulations.

             

            
            -11-

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