Document:

Exhibit

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into by and between Kratos Defense & Security Solutions, Inc., a Delaware corporation (“Company”) and Phil Carrai, an individual (“Executive”), effective as of January 1, 2020 (“Effective Date”).  Certain terms used in this Agreement denoted by initial capital letters are defined in Section 17, to the extent not defined elsewhere in the Agreement.

     RECITALS
A.    The Company wishes to continue to employ Executive upon the terms and conditions contained in this Agreement, and Executive wishes to enter into the Agreement and agrees to perform his obligations hereunder in consideration of his employment and salary, benefits and other terms described herein.

NOW, THEREFORE, in the consideration of the mutual covenants and agreements set forth herein, the Company and Executive, intending to be legally bound, hereby agree as follows:    

AGREEMENT
      1. Employment.  The Company shall employ Executive as President of the Company’s Space, Training & Cyber (“STC”) Division (the “Position”), and Executive accepts such employment and agrees to perform services for the Company, for the period and upon the terms and conditions set forth in this Agreement. 

      2. Term. The term of Executive’s employment hereunder shall be for a period commencing on the Effective Date and ending on December 31, 2022 (the “Term”), subject to earlier termination as hereinafter specified.  

      3. Position and Duties.  During the term of this Agreement, Executive shall perform all duties and functions customarily performed by the Position of a business of the size and nature similar to that of the Company, and such other related employment duties as the President and CEO of the Company or his designee (the “President”) shall reasonably assign to him from time to time.  Executive shall perform his duties principally at the executive offices of STC, with such travel to such other locations from time to time as the President may reasonably require.  Except as may otherwise be approved in advance by the President, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or other disability, Executive shall devote his full working time to the services required of him hereunder.  Executive shall use his reasonable best efforts, judgment and energy to improve and advance the business and interest of the Company and its subsidiaries and Affiliates, if applicable, in a manner consistent with the duties of the Position and with the Company’s Code of Legal and Ethical Conduct.  Executive hereby confirms that he is under no contractual commitments inconsistent with his obligations set forth in this Agreement, and that during his employment, he will not render or perform services, or enter into any contract to do so, for any other corporation, firm, entity or person which are inconsistent with the provisions of this Agreement.

      4. Compensation.
            4.1 Base Salary.  As compensation for all services to be rendered by Executive under this Agreement, the Company shall pay to Executive a base annual salary of Four Hundred Fifty Thousand Dollars ($450,000.00) (the “Base Salary”), which shall be paid on a regular basis in accordance with the Company’s customary payroll procedures and policies.  Executive will be eligible for annual increases to the Base Salary in accordance with the Company’s then current compensation policies.

            4.2 Incentive Compensation.  As incentive compensation for services rendered hereunder, Executive may, at the sole and absolute discretion of the Company, be entitled to receive additional annual compensation of up to sixty percent (60%) of the Base Salary (“Incentive Compensation”).

            4.3 Equity Incentives. Executive will be eligible for equity incentive grants at the discretion of Kratos’ President and the Compensation Committee of the Board of Directors. 

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            4.4 Participation in Benefit Plans.  Executive and eligible family members shall be eligible to participate in, subject to his affirmative election to enroll in such plans requiring enrollment and to the extent eligible thereunder, any and all plans of the Company providing general benefits for the Company’s employees, including, but not limited to, any group life insurance, hospitalization, disability, paid time off, medical, dental, pension, profit sharing, savings and stock bonus plans.  Executive’s participation in any such plan or program shall be subject to the provisions, rules, and regulations applicable thereto.  Nothing in this Agreement shall impose on the Company any affirmative obligation to establish any benefit plan.  The Company reserves the right to prospectively terminate or change benefit plans and programs it offers to its employees at any time. 

            4.5 Expenses.  In accordance with the Company’s policies established from time to time, the Company will pay or reimburse Executive for all reasonable and necessary out-of-pocket expenses incurred by him in the performance of the Position, subject to the presentment of appropriate receipts or expense reports in connection with the Company’s policies and procedures.  The following provisions shall be in effect for any reimbursements (and in-kind benefits) to which Executive otherwise becomes entitled under this Agreement, in order to assure that such reimbursements (and benefits) do not create a deferred compensation arrangement subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code”):

            (a)    The amount of reimbursements (or in-kind benefits) to which Executive may become entitled in any one calendar year shall not affect the amount of expenses eligible for reimbursement (or in-kind benefits) hereunder in any other calendar year.
            (b)    Each reimbursement to which Executive becomes entitled shall be made by the Company as soon as administratively practicable following Executive’s submission of the supporting documentation, but in no event later than the close of business of the calendar year following the calendar year in which the reimbursable expense is incurred.
           (c)    Executive’s right to reimbursement (or in-kind benefits) cannot be liquidated or exchanged for any other benefit or payment.

            4.6 Taxes and Other Withholding.  The Company may withhold from any benefits or amounts payable (including any Severance Payment or Change in Control Severance Payment, as defined below) under this Agreement all federal, state, city or other taxes and other amounts as shall be required pursuant to any law or governmental regulation or ruling or as elected by Executive.  

      5. Annual Leave.  Executive shall earn paid time off and shall maintain paid time off balances in accordance with the Company’s standard policies. 

      6. Compensation upon Termination.  Executive shall be entitled to the following payments, if any, upon the termination of his employment by the Company.  The compensation described in this Section 6 shall be in lieu of any separation or severance compensation offered to Executive under any general policies of the Company.

            6.1 Cause.  In the event Executive is terminated by the Company for Cause pursuant to Section 11.1, Executive shall not be entitled to any compensation other than Base Salary accrued through the date of termination, plus accrued but unused paid time off.

            6.2 Resignation.  In the event Executive resigns from the Company voluntarily pursuant to Section 11.2, Executive shall be entitled to receive Executive’s Base Salary accrued through the effective date of termination, plus accrued but unused paid time off. Should Executive resign his employment upon thirty (30) days’ advance written notice, Company reserves the right to immediately relieve Executive of all job duties and provide Executive with payment of thirty (30) days Base Salary in lieu of any portion of the notice period.

            6.3 Without Cause.  In the event Executive is terminated by the Company Without Cause pursuant to Section 11.3, the Company shall pay to Executive (i) any Base Salary accrued through the date of termination, (ii) any accrued but unused paid time off; (iii) continued payment of the Base Salary for a period of twelve (12) months (the “Severance Period”); and (iv) any Incentive Compensation which is earned as of the date of termination pursuant to the terms of any then existing Incentive Compensation Agreement.  The payment provided by Subsection (iii) of this Section 6.3 

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shall be referred to as a “Severance Payment.”  Except as otherwise provided herein, the Severance Payment shall be paid to Executive on a regular basis in accordance with the Company’s regular payroll procedures and policies.

            6.4 Disability.  If Executive becomes physically, mentally disabled during the term of this Agreement and such disability continues for a period of three hundred and sixty five (365)  days, the Company may, to the extent permitted by applicable law after the expiration of such period, terminate this Agreement by giving written notice to Executive.  For purpose of this Agreement, the term “disabled” shall be defined as Executive’s inability through physical, or mental illness, to perform all of the duties which Executive is required to perform under this Agreement with or without reasonable accommodation as such terms are defined under the Americans with Disabilities Act.  In the event that the Executive is terminated pursuant to this section, the Company shall pay to Executive (i) Executive’s Base Salary through the date that he is terminated; and (ii) any accrued but unused paid time off.  

            6.5 Upon Change of Control.  In the event Executive’s employment is terminated by the Company without Cause upon a Change of Control of the Company as defined in the Company’s Restricted Stock Agreement, the Company shall pay to Executive: (i) any Base Salary accrued through the date of termination, (ii) any accrued but unused vacation time; and (iii) continued payment of the Base Salary for a period of twelve (12) months (the “Change of Control Severance Period”).  Subsection (iii), above, of this Section 6.5 shall be referred to as a “Change in Control Severance Payment.” 

            6.6 Release. The receipt of the Severance Payment, Change in Control Severance Payment or other benefits pursuant to this Section 6 will be subject to Executive signing and not revoking a customary and standard employee release of claims agreement in a form prescribed by the Company, and such release becoming effective and irrevocable within forty-five (45) days of Executive’s termination.  No severance or other benefits will be paid or provided until the release of claims agreement becomes effective, and any severance amounts or benefits otherwise payable between the date of Executive’s termination and the date such release becomes effective shall be paid on the effective date of such release, subject to the delay in the following paragraph.  If the termination occurs after November 15, no payments shall be made until the first payroll date of the following calendar year, after the release has become effective, subject to the delay in the following paragraph.

      6.7    Delay of Payment; Other 409A Matters.   Notwithstanding any other provision of this Agreement whatsoever, the Company, in its sole discretion, shall have the right to construe this Agreement in a manner that complies with Section 409A of the Code (relating to deferred compensation arrangements) and any related administrative guidance issued by the Internal Revenue Service.  Notwithstanding any inconsistent provision of this Agreement, if Executive is a “specified employee” within the meaning of Section 409A of the Code at the time of Executive’s termination, then only that portion of the Severance Payment or Change in Control Severance Payment, together with any other severance payments or benefits that, in each case, are non-qualified deferred compensation under Code Section 409A, which (a) do not exceed the Section 409A Limit (as defined below), and (b) which qualify as separation pay under Treasury Regulation Section 1. 409A-1(b)(9)(iii), may be paid within the first six (6) months following Executive’s termination. Otherwise, the portion of the Severance Payment or Change in Control Severance Payment, together with any other severance payments or benefits that, in each case, are non-qualified deferred compensation under Section 409A, that would otherwise be payable within the six (6) month period following Executive’s termination will instead be paid in a lump sum on the date six (6) months and one (1) day following the date of Executive’s termination (or the next business day if such date is not a business day), provided Executive has complied with the requirements for such payment. For purposes of this Agreement, “Section 409A Limit” means the lesser of two (2) times: (i)Executive’s “annualized compensation” as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1), or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year of the termination, or such successor limit as may apply. Each payment specified hereunder is designated a separate payment for purposes of Section 409A.  The Company shall have no liability to Executive for any adverse tax or other consequences related to the payments provided hereunder and to the extent any payment or benefit would result in adverse or other tax consequences under Section 409A, Executive shall have no legally enforceable right to such payment or benefit.  For purposes of this Agreement, termination of employment and similar phrases mean a “separation from service” within the meaning of Section 409A.
      

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      7. Proprietary Matter; Ownership.
            7.1 Except as permitted or directed by the Company or as required by law, Executive shall not during the term of his employment or at any time thereafter knowingly divulge, furnish, disclose or make accessible (other than in the ordinary course of the business of the Company) to anyone for use in any way any confidential, secret, or proprietary knowledge or information of the Company or its Affiliates that is not in the public domain (“Proprietary Matter”) which Executive has acquired or become acquainted with or will acquire or become acquainted with during his employment with the Company and its Affiliates, whether developed by himself or by others, including, but not limited to, any trade secrets, confidential or secret designs, processes, formulae, software or computer programs, plans, devices, or material (whether or not patented or patentable, copyrighted or copyrightable) directly or indirectly useful in any aspect of the business of the Company and its Affiliates, any confidential customer, distributor or supplier lists of the Company or its Affiliates, any confidential or secret development or research work of the Company or its Affiliates, or other confidential, secret or non-public aspects of the business of the Company or its Affiliates.  Executive acknowledges that the Proprietary Matter constitutes a unique and valuable asset of the Company or its Affiliates, acquired at great time and expense by the Company or such Affiliates, and that any disclosure or other use of the Proprietary Matter other than for the sole benefit of the Company  or such Affiliates would be wrongful and could cause irreparable harm to the Company or such Affiliates.  The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which is now published or which subsequently becomes generally publicly known, other than as a direct or indirect result of the breach of this Agreement by Executive or the breach of any obligation of confidentiality by any other person. 

            7.2 Executive agrees that he will fully inform and disclose to the Company from time to time all inventions, designs, improvements, enhancements, developments and discoveries which he now has, or may hereafter have, during the Term which pertain or relate to the business of the Company or its Affiliates or to any experimental work carried on by the Company or its Affiliates.  All such inventions, designs, improvements, enhancements, developments and discoveries shall be the exclusive property of the Company or its Affiliates.  Executive hereby assigns the rights to all such inventions, designs, improvements, enhancements, developments and discoveries to the Company or its Affiliates.  Executive shall reasonably assist the Company or its Affiliates in obtaining patents on all such inventions, designs, improvements, enhancements, developments and discoveries deemed patentable by the Company or its Affiliates and shall execute all documents (including assignments and related affidavits) and do all things reasonably necessary to obtain such patents.  This provision shall not apply to any inventions for which no equipment, supplies, facilities or trade secret information of the Company or its Affiliates was used and which was developed on Executive’s own time without using any of the Company’s or its Affiliates’ equipment, supplies, facilities or trade secret information, except for those inventions which either: (a) related at the time of conception or reduction to practice of the invention to the Company’s or its Affiliates’ respective businesses, or actual or demonstrably anticipated research or development of the Company or its Affiliates, or (b) resulted from any work performed by Executive for the Company or its Affiliates.

            7.3 Executive acknowledges and understands that, pursuant to the Defend Trade Secrets Act, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  Further, if an employee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the employee may disclose the trade secret to the employee’s attorney and use the trade secret information in the court proceeding, if the employee (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.  In the event that disclosure of Company trade secrets was not done in good faith pursuant to the above, the employee may be subject to substantial damages, including punitive damages and attorneys’ fees.

      8. Ventures.  If, during the term of this Agreement, Executive is engaged in or associated with the planning or implementing of any project, program or venture directly related to the business of the Company or its Affiliates and a third party or parties, all rights in the project, program or venture shall belong to the Company and shall constitute a corporate opportunity belonging exclusively to the Company.  Except as expressly approved in writing by the Company, Executive shall not be entitled to any interest in such project, program or venture or to any commission, 

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finder’s fee or other compensation in connection therewith, other than the compensation to be paid to Executive as provided in this Agreement.

      9. Noninterference With Business.   

            9.1 During his employment and for the Restricted Period (as defined in Section 17.5), Executive agrees not to, whether on his own behalf or as a partner, officer, director, employee, agent or consultant of any other person or entity,  directly or indirectly, engage or attempt to engage in any business that is similar to the type of business conducted by the STC Division  for the purpose of improperly diverting or taking away business from the STC Division or the Company in any geographic area in which the STC Division was engaged in business as of the date of termination of  Executive’s employment with the Company (except by ownership of five percent (5%) or less of the outstanding stock of any publicly held corporation).  

            9.2 During his employment and for the Restricted Period, Executive agrees not to (a) directly or indirectly contact any of the STC Division’s then current customers or prospective customers with whom the STC Division is then engaged in discussions or proposal negotiations for the purpose of improperly diverting or taking away business from the STC Division or the Company; or (b) otherwise interfere with, impair, disrupt or damage the STC Division or the Company’s relationship with any of its then current or prospective customers with whom the STC Division was engaged in discussions or proposal negotiations during Executive’s employment with the Company. 

            9.3 During his employment and for two (2) years following the termination of his employment for any reason, Executive agrees not to knowingly directly or indirectly solicit, induce or encourage any employee of the Company to terminate or breach an employment relationship with the Company.  

            9.4 Executive and the Company agree that the restrictions in this Section 9 are reasonably necessary to protect the Company’s legitimate business interests, including, without limitation, the preservation of its valuable trade secret and confidential information and the preservation of its goodwill and customer relationships.  Executive and the Company further agree that the geographic scope stated herein is reasonable because the STC Division operates throughout the United States and in various places throughout the world.

      10. Non-Disparagement.  Executive expressly agrees that during his employment by the Company and for two (2) years following the termination of such employment for any reason, he will make no statement and take no actions of any kind, verbal or written, that directly or indirectly disparages the Company or the Related Parties, injures their general reputation or interferes with the Company’s or its Affiliates’ operations, except as required by applicable law.  Nothing in this Section 10 shall restrict Executive from cooperating or communicating with any government or listing entity.

      11. Termination Prior to Expiration of the Term.

            11.1 Termination for Cause.  The Company may terminate Executive’s employment at any time for “Cause” (each as defined in Section 17) immediately upon written notice to Executive.  Such written notice shall set forth with reasonable specificity the Company’s basis for such termination.

            11.2 Resignation.  Executive’s employment shall be terminated on the earlier of the date that is thirty (30) days following the submission of Executive’s written resignation to the Company or the date such resignation is accepted by the Company.

            11.3 Termination Without Cause.  The Company may terminate Executive’s employment Without Cause upon written notice to Executive.  Termination “Without Cause” shall mean termination of employment by the Company on any basis other than termination of Executive’s employment hereunder pursuant to 11.1 or 11.2.

      12. Surrender of Records and Property.  Upon termination of his employment for any reason, Executive shall deliver promptly to the Company all records, manuals, books, blank forms, documents, letters, licenses, briefings, memoranda, 

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notes, notebooks, reports, data, tables, and calculations or copies thereof, which are the property of the Company and which relate in any way to the business, customers, products, practices or techniques of the Company, and all other property of the Company and Proprietary Matter, including, but not limited to, all documents which in whole or in part, contain any trade secrets or confidential information of the Company, which in any of these cases are in his possession or under his control.  If Executive purchases any record book, ledger, or similar item to be used for keeping records of or information regarding the business of the Company or its customers, Executive shall immediately notify the Company and provide documentation of such purchase, which shall then immediately reimburse Executive for the expense of such purchase.

      13. Assignment.  This Agreement shall not be assignable, in whole or in part, by Executive.  The Company may, upon notice to Executive, assign its rights and obligations under this Agreement to an Affiliate of the Company or any purchaser of substantially all of the Company’s assets.  

      Upon such assignment by the Company, this Agreement shall be enforceable by the Executive and the assignee respectively.  After any such assignment by the Company, Executive and the Company shall be discharged from all further liability hereunder to each other.

      14. Injunctive Relief.  Executive agrees that it would be difficult to compensate the Company fully for damages for any violation of the provisions of this Agreement, including, without limitation, the provisions of Sections 7, 9, 10 and 12. Accordingly, Executive specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforce the provisions of this Agreement.  This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claim and recover damages in addition to injunctive relief. 

      15. Arbitration.

            15.1 Claims Covered.  The parties shall resolve by arbitration all statutory, contractual and/or common law claims or controversies (“Claims”) that the Company may have against Executive, or that Executive may have against the Company or any of its officers, directors, employees or agents in their capacity as such or otherwise.  Claims subject to arbitration include claims for breach of any contract (express or implied).

           15.2 Claims Not Covered.  The arbitration of Claims shall not apply to (i) claims by Executive for workers’ compensation or unemployment insurance; (ii) claims which even in the absence of these arbitration provisions could not have been litigated in court or before any administrative proceeding under applicable federal, state or local law; (iii) claims by the Company for injunctive and/or other equitable relief;  (iv) claims for which arbitration is prohibited under applicable rules in the Federal Acquisition Regulation or the Defense Federal Acquisition Regulation Supplement and (v) claims for employee benefits under any employee benefit plan subject to ERISA.

            15.3 Procedures.  Claims shall be settled by arbitration by a single, neutral arbitrator in accordance with the employment arbitration rules then in effect of Judicial Arbitration and Mediation Services (JAMS) which can be found at www.jamsadr.com/rules-employment-arbitration.  The arbitrator shall determine all questions of fact and law relating to any Claim, including but not limited to, whether or not any such Claim is subject to the arbitration provisions contained herein.  The parties shall be permitted to engage in such pre-hearing discovery as the arbitrator shall permit.  The arbitrator shall issue a written arbitration decision which shall include essential findings and conclusions on which any award is based.  The decision shall remain confidential between the parties and shall not be published by the arbitrator or JAMS.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  Each party shall pay the fees of its own attorneys, the expenses of its witnesses and all other expenses connected with presenting its case, except insofar as such fees or expenses are otherwise recoverable pursuant to a statutory claim or cause of action.  The Company shall bear the other costs of the arbitration, including the cost of any record or transcript of the arbitration, administrative fees, the fee of the arbitrator, and all other fees and costs.

            15.4 Remedies; Waiver of Jury Trial.  Executive understands that Executive is waiving the right to seek certain remedies in court, including the right to a jury trial.  The arbitrator shall be empowered to award any relief which might have been available in a court of law or equity.

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            15.5 Required Notice and Statute of Limitations.  Arbitration shall be initiated by serving or mailing a written notice to the other party within the applicable statutory limitations period.  Any notice to be sent to the Company shall be delivered to the Company President with a mandatory copy to Kratos’ General Counsel, 10680 Treena Street, 6th Floor, San Diego, CA 92131, facsimile 858-812-7303.  The notice shall identify and describe the nature of all claims asserted and the facts upon which such claims are based.

      16. Miscellaneous.

            16.1 Governing Law and Venue.  This Agreement is made under and shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflicts of law provisions, and all proceedings shall be brought in the courts or arbitral forums located in located in Northern Virginia (Washington, D.C. metropolitan area), San Diego, California, or some other location as agreed by the parties.

            16.2 Prior Agreements.  This Agreement, coupled with Executive’s Proprietary Information Agreement, contains the entire agreement of the parties relating to the subject matter hereof and supersedes all prior agreements and understandings with respect to such subject matter. The parties have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein.

            16.3 Successors.  The terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees on the one hand, and by any successor or assignee of the Company on the other hand.

            16.4 Amendments.  No amendment or modification of this Agreement shall be deemed effective unless made in writing signed by the parties.

            16.5 No Waiver.  No term or condition of this Agreement shall be deemed to have been waived nor shall there be any estoppel to enforce any provisions of this Agreement, except by a statement in writing signed by the party against whom enforcement of the waiver or estoppel is sought.  Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

            16.6 Severability and Reformation.  To the extent any provision of this Agreement shall be considered by a court or arbitrator to be invalid or unenforceable, the provision shall be considered deleted here from and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.  Each of the parties recognizes that the restrictions contained in this Agreement are properly required for the adequate protection of the Company’s business and that in the event any covenant or other provision contained herein shall be deemed to be illegal, unenforceable or unreasonable by a court or other tribunal of competent jurisdiction, each of the parties agrees and submits to the reduction of said restrictions to such duration and/or scope as said court or tribunal shall deem reasonable.

            16.7 Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all which together shall be deemed to be one and the same instrument.

            16.8 Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given or received: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient upon confirmed receipt, if not, then on the next business day, (c) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company and Executive at their respective 

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addresses as set forth on the signature page hereof or at such other address as the Company or Executive may designate by ten (10) days advance written notice to the other party.

      17. Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:
            17.1 Affiliate.  “Affiliate” with respect to any person or entity, means a person or entity that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such person or entity.

            17.2 Cause.  Termination for “Cause” means termination due to any of the following reasons: (i) Executive’s Misconduct; (ii) Executive’s willful violation of posted policy or rules of the Company; (iii) Executive’s willful refusal to follow the lawful directions given by Executive’s direct supervisor or the President of the Company from time to time or breach of any material covenant or obligation under this Agreement or other agreement with the Company; or (iv) Executive’s breach of the duty of loyalty to the Company that causes or is reasonably likely to cause injury to the Company.

            17.3 Misconduct.  “Misconduct” means:
                  17.3.1 Indictment or conviction of a felony or for an act of fraud, embezzlement or other act of gross misconduct against the Company in the performance of duties hereunder.

                  17.3.2 Misuse, misappropriation or disclosure of any of the Proprietary Matter, directly or indirectly, or use of it in any way, except as required or permitted in the course of Executive’s employment.

                  17.3.3 Knowing misappropriation, concealment, or conversion of any money or property of the Company that causes or could cause injury to the Company.

                  17.3.4 Reckless conduct which endangers or is reasonably likely to endanger the safety of persons or property during the course of employment or while on Company premises.

                  17.3.5 A material violation of the Company’s Code of Legal and Ethical Conduct.

            17.4 Related Parties.  “Related Parties” means each of the Company’s present and former directors, officers, employees, trustees, agents, attorneys, insurers, shareholders, representatives, predecessors, successors and assigns, and if any, its parent corporations, subsidiaries, divisions, related and affiliated companies and entities.

            17.5 Restricted Period.  The “Restricted Period” means a period of (a) two (2)  years after the termination of Executive’s employment  for Cause or (b) one (1) year after the termination of Executive’s employment for any other reason.  

(Signatures on following page)

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      IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the Effective Date.
    
THE COMPANY:                    EXECUTIVE:
Kratos Defense & Security Solutions, Inc.

By: /s/ Eric DeMarco                    /s/ Phil Carrai                        
Name:  Eric DeMarco                    Phil Carrai    
Title:  President and CEO                Title:  President, STC

Date:    12/11/2019         
        
Address for Notice:                    Address for Notice:

10680 Treena Street, 6th Floor                1259 Cobble Pond Way
San Diego, CA 92131                    Vienna, VA 22182
Attn:    Law Department    

9Exhibit

 

ENBRIDGE INC. 
2019 LONG TERM INCENTIVE PLAN
STOCK OPTION GRANT NOTICE
Pursuant to the Enbridge Inc. 2019 Long Term Incentive Plan (the “Plan”), Enbridge Inc. (the “Company”), has granted to the participant listed below (“Participant”) the stock option (the “Option”) described in this Stock Option Grant Notice (the “Grant Notice”), subject to the terms and conditions of the Plan and the Stock Option Award Agreement, attached hereto as Exhibit A (the “Agreement”), both of which are incorporated into this Grant Notice by reference.  Capitalized terms not specifically defined in this Grant Notice shall have the meanings given to them in the Agreement, and if not defined in the Agreement, the meanings given to them in the Plan.
	
		
	Participant:
	____

	Grant Date:
	____

	Grant Price per Share:
	____

	Shares Subject to the Option:
	____

	Final Expiration Date:
	____

	Vesting and Exercise Schedule:
	See Sections 2.1(a) and 2.4      

	 
	 

By Participant’s signature below, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement effective as of the Grant Date.  Participant has reviewed the Plan, this Grant Notice and the Agreement in their entireties, and acknowledges that the Company hereby advises Participant to obtain the advice of counsel prior to executing this Grant Notice.  Participant fully understands and accepts all provisions of the Plan, this Grant Notice and the Agreement.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.  Participant agrees that the Grant Notice, the Agreement and the Plan constitute the entire agreement with respect to the Option.
Enbridge Inc.:                        Participant:

By:                                                    
Name:                            Name:                         
Title:                            

Exhibit A
STOCK OPTION AWARD AGREEMENT
ARTICLE I.

GENERAL
1.1    Grant of Option.  Subject to the terms and conditions of this Agreement and the Plan, the Company has granted to Participant, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”) an award of Options as set forth in the Grant Notice.  
1.2    Nature of Award.  The Options granted to Participant pursuant to the Grant Notice and this Agreement are prospective in nature such that the Award is not in respect of service rendered in a year prior to the year that includes the Grant Date.
1.3    Incorporation of Terms of Plan.  The Option is subject to the terms and conditions set forth in this Agreement and the Plan. The Plan is incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.
1.4    Defined Terms.  Capitalized terms not specifically defined in this Agreement shall have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.
ARTICLE II. 
VESTING AND EXERCISABILITY
2.1    Vesting and Exercisability.  
(a)    General.  Subject to the limitations contained herein and Section 2.1(b), the Option will vest and become exercisable according to the following Vesting Schedule (the “Vesting Schedule”): the total number of Shares subject to the Option shall vest in [twenty-five percent (25%)] increments (rounded down to the next whole number of Shares) on each of the [first, second, third and fourth] anniversaries of the Grant Date.
(b)    Accelerated Vesting.  
(i)    CIC Termination.  In the event that Participant has a Termination of Service within two years following a Change in Control, due to (1) involuntary Termination of Service by the Company or a Subsidiary without Cause or (2) Termination of Service by Participant for Good Reason (in each case, a “CIC Termination”), then the unvested portion of the Option will become immediately 100% vested upon the date of such Termination of Service.
(ii)    Death. In the event that Participant has a Termination of Service due to the Participant’s death, then the unvested portion of the Option will become immediately 100% vested upon the date of the Participant’s death. 
(iii)    Disability.  In the event that Participant has a Termination of Service due to the Participant’s Disability, then the Option shall continue to vest in accordance with its terms, as specified herein and in the Plan, and subject to the earlier expiration of the Option in accordance with Sections 2.3 and 2.4(b), as if Participant did not have a Termination of Service. 
(iv)    Retirement. In the event that Participant has a Termination of Service due to the Participant’s Retirement, then the Option shall continue to vest in accordance with its terms, as specified herein and in the Plan, and subject to the earlier expiration of the Option in accordance with Sections 2.3 and 2.4(b), as if the Participant did not have a Termination of Service. Notwithstanding the foregoing, if the Participant is eligible for Retirement at a time when the Participant incurs an involuntary Termination of Service by the Company or a Subsidiary without Cause, then Section 2.1(b)(v) shall apply and govern the vesting and exercise of the Option.
(v)    Involuntary Termination Without Cause. In the event that Participant has a Termination of Service due to the Participant’s involuntary Termination of Service by the Company or a Subsidiary without Cause (other than a CIC Termination), then the Option shall continue to vest in accordance with its terms, as specified herein and in the Plan, and subject to the earlier expiration of the Option in accordance with Sections 2.3 and 2.4(b), as if the Participant did not have a Termination of Service.  For purposes of this Section 2.3(b), if a Participant’s employment terminates due to the constructive dismissal of the Participant or if a Participant ceases to be employed by a Subsidiary of the Company because such Participant’s employer ceases to be a Subsidiary of the Company, then such termination or cessation of employment shall be treated as an Termination of Service due to the Participant’s involuntary Termination without Cause.
2.2    Company’s Obligation.  Unless and until the Option vests and is exercised, Participant will have no right to receive Shares under the Option.  Prior to actual distribution of Shares pursuant to any vested and exercised Option, such Option will represent an unsecured obligation of the Company.
2.3    Duration of Exercisability.  Any portion of the Option that vests and becomes exercisable will remain vested and exercisable until the Option expires in accordance with Section 2.4. 
2.4    Expiration of Option. 
(a)    Except as otherwise provided in Section 2.1(b), the unvested portion of the Option will terminate and expire automatically without further notice immediately upon the Participant’s Termination of Service.
(b)    The Option (to the extent not earlier terminated and expired as provided in Section 2.4(a)) will terminate and expire automatically and without further notice on the earliest of the dates set forth below:
		
	(i)
	The Final Expiration Date set forth in the Grant Notice;

		
	(ii)
	The expiration of thirty (30) days from the date of Participant’s Termination of Service (or any longer period that the Administrator may otherwise approve); provided that this Section 2.4(b)(ii) shall not apply if the vesting set forth in Section 2.1(b)(i)-(v) applies; 

		
	(iii)
	One (1) year following the Participant’s Termination of Service due to the Participant’s death; 

		
	(iv)
	Five (5) years following the Participant’s Termination of Service due to the Participant’s Retirement; 

		
	(v)
	The expiration of thirty (30) days from the Participant’s Termination of Service plus any applicable Notice Period for an involuntary Termination of Service by the Company or a Subsidiary without Cause (other than a CIC Termination); and

		
	(vi)
	Immediately upon the date of Participant’s Termination of Service for Cause.

IT IS PARTICIPANT’S RESPONSIBILITY TO BE AWARE OF THE DATE ON WHICH THE OPTION EXPIRES. 
ARTICLE III. 
EXERCISE OF OPTION
3.1    Persons Eligible to Exercise.  During Participant’s lifetime, only Participant may exercise the Option.  After Participant’s death, any vested and exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participant’s designated beneficiary as provided in the Plan; provided that, if no beneficiary has been designated by Participant, then the vested and exercisable portion of the Option may be exercised by the personal representative of Participant’s estate, or by the persons to whom the Option is transferred pursuant to Participant’s will or in accordance with the laws of descent and distribution, after receipt and acceptance of proper instructions from the estate by the Administrator.
3.2    Partial Exercise.  Any exercisable portion of the Option, or the entire Option if then wholly exercisable, may be exercised, in whole or in part, at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.  Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option by the number of Shares as to which the Option is exercised.
3.3    Procedure for Exercise.  Participant may exercise the Option by giving written or electronic notice to the Company, in form and substance satisfactory to the Company (the “Exercise Notice”), which will state the election to exercise the Option, specify the number of Shares for which Participant is exercising the Option and provide such other representations and agreements as the Company may require pursuant to the provisions of the Plan.  The Exercise Notice must be accompanied by an amount equal to the Grant Price multiplied by the number of Shares specified in the Exercise Notice.  Such payment may be made (a) by certified check, bank draft or money order payable to the order of the Company or (b) by surrendering Shares then issuable upon the Option’s exercise (with the Fair Market Value of such Shares determined as of the exercise date in the sole discretion of the Administrator, in each case, subject to and in accordance with the Company’s policies in effect from time to time concerning Options and other awards granted under the Plan). 
3.4    Tax Withholding.  
(a)    No Shares shall be delivered to Participant or any other person until Participant or such other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., U.S.-federal, U.S.-state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares. Upon exercise of the Option, the Company shall withhold or collect from Participant an amount sufficient to satisfy such tax obligations, including, but not limited to, by surrender of Shares covered by the Option sufficient to satisfy the withholding obligations.  The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the Option as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Option.
(b)    Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Option.  Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option, or the subsequent sale of Shares.  The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.
(c)    Participant acknowledges that the Company has advised Participant to obtain independent legal and tax advice regarding the grant and exercise of the Option and the disposition of any Shares acquired thereby.
3.5    Issuance of Shares; Rights as Shareholder.  The Company shall issue (or cause to be issued) the respective Shares promptly after the Option is exercised and full payment is received. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) and Participant becomes the record owner of the Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to the Option, notwithstanding the exercise of the Option.  No adjustment shall be made for a dividend or other right for which the record date is prior to the date Participant becomes the record owner of the Shares.  Participant agrees to execute any documents requested by the Company in connection with the issuance of any Shares.
ARTICLE IV. 
OTHER PROVISIONS
4.1    Adjustments.  Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.
4.2    Limited Transferability.  Except as may be permitted under the Plan in certain circumstances, the Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution.
4.3    Regulatory Restrictions on Shares.  Notwithstanding the other provisions of this Agreement, if at any time the Administrator determines, in its sole discretion, that the listing, registration or qualification of Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to Participant, such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company.  The Company shall be under no obligation to Participant to (a) register for offering or resale, (b) qualify for exemption under federal securities law, (c) register or qualify under the laws of any state or foreign jurisdiction, any Shares, security or interest in a security paid or issued under, or created by, the Plan, or (d) continue in effect any such registrations or qualifications if made.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary or appropriate to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority has not been obtained.
4.4    Conformity to Applicable Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed to be amended to the minimum extent necessary to conform to Applicable Laws.  Any determination in this regard that is made by the Administrator will be final, binding, and conclusive on all interested persons.  The obligations of the Company and the rights of Participant are subject to compliance with all Applicable Laws.
Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b‐3) that are requirements for the application of such exemptive rule.  To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.
4.5    Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer set forth in the Plan and herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
4.6    Notices.  
(a)    General.  Any document relating to participation in the Plan, or any notice required or permitted hereunder, shall be given in writing and shall be deemed effectively given upon personal delivery, electronic delivery at the electronic mail address, if any, provided for Participant by the Company, or, upon deposit in the U.S. Post Office or Canada Post, by registered or certified mail, or with a nationally recognized overnight courier service with postage and fees prepaid, addressed to the Company (c/o Secretary of the Company) at the Company’s principal office, and to Participant at the address appearing on the employment records of the Company, or at such other address as such party may designate in writing from time to time to the other party.
(b)    Description of Electronic Delivery.  The Plan documents, which may include, but do not necessarily include, the Plan, the Grant Notice, this Agreement, and any prospectus or other report of the Company provided generally to the Company’s shareholders, may be delivered to Participant electronically.  In addition, if permitted by the Company, Participant may deliver electronically the Grant Notice to the Company or to such third party involved in administering the Plan as the Company may designate from time to time.  Such means of electronic delivery may include, but do not necessarily include, the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via electronic mail, or such other means of electronic delivery as may be specified by the Company.
(c)    Consent to Electronic Delivery.  Participant hereby acknowledges that Participant has read and understands this Section 4.6, and hereby consents to the electronic delivery of any Plan documents as described in Section 4.6(b).  Participant may receive from the Company a paper copy of any documents delivered electronically at no cost to Participant by providing written notice of such request to the Company.  Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Participant understands and hereby agrees that Participant must provide the Company or any designated third party administrator with a paper copy of any document if the attempted electronic delivery of such documents fails.  Participant may change the electronic mail address to which such documents are to be delivered at any time by notifying the Company in writing of such revised electronic mail address.
4.7    Administrator Authority; Decisions Conclusive and Binding.  Participant hereby acknowledges (a) that a copy of the Plan has been made available for Participant’s review by the Company, (b) represents that Participant is familiar with the terms and provisions thereof, and (c) accepts the Option subject to all the terms and provisions thereof.  The Administrator will have the power to (i) interpret this Agreement, the Grant Notice and the Plan, (ii) adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith, and (iii) interpret or revoke any such rules.  Participant hereby agrees to accept as binding, conclusive, and final all decisions of the Administrator upon any questions arising under the Plan, this Agreement or the Grant Notice.  No employee of the Company who is acting with the requisite authority on behalf of the Administrator will be personally liable for any action, determination or interpretation that is made in good faith with respect to the Plan, this Agreement or the Grant Notice.
4.8    Share Ownership Guidelines. If on exercise of any Options the number of Shares held by the Participant is less than the number of Shares to be held by the Participant pursuant to any share ownership guidelines of the Corporation in effect from time to time and applicable to such Participant, then the Participant shall be required to retain Shares acquired on exercise of Options (net of Shares that are required to be sold by the Participant to meet any tax liabilities arising on exercise of the Options) to meet the requirements of such share ownership guidelines.
4.9    Entire Agreement.  The Plan, the Grant Notice and this Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.  All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement and the Grant Notice.  Each party to this Agreement and the Grant Notice acknowledges that (a) no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party, or by anyone acting on behalf of any party, which are not embodied in this Agreement, the Grant Notice or the Plan, and (b) any agreement, statement, or promise that is not contained in this Agreement, the Grant Notice or the Plan shall not be valid or binding or of any force or effect.  
4.10    Severability.  Notwithstanding any contrary provision of the Grant Notice or this Agreement to the contrary, if any one or more of the provisions (or any part thereof) of the Grant Notice or this Agreement shall be held invalid, illegal, or unenforceable in any respect, such provision shall be modified so as to make it valid, legal, and enforceable, and the validity, legality, and enforceability of the remaining provisions (or any part thereof) of the Grant Notice or this Agreement, as applicable, shall not in any way be affected or impaired thereby.
4.11    Survival of Certain Provisions.  Wherever appropriate to the intention of the parties hereto, the respective rights and obligations of the parties hereunder shall survive any termination or expiration of this Agreement or the Participant’s Termination of Service.
4.12    Limitation on Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided.  This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets. 
4.13    Compensation Recoupment.  The Option (and all Shares issuable thereunder) are subject to the Company’s ability to recover incentive-based compensation from Participant, as is or may be required by (a) the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any regulations or rules promulgated thereunder, (b) any other clawback provision required by Applicable Laws or the listing standards of any applicable stock exchange or national market system, (c) any clawback policies adopted by the Company to implement any such requirements, or (d) any other compensation recovery policies as may be adopted from time to time by the Company, all to the extent determined by the Administrator in its discretion to be applicable to Participant.
4.14    Construction.  Headings in this Agreement are included for convenience and shall not be considered in the interpretation of this Agreement.  Reference to any statute, rule, or regulation includes any amendment thereto or any replacement thereof, as well as the authoritative guidance issued thereunder by the appropriate governmental entity. Pronouns shall be construed to include the masculine, feminine, neutral, singular or plural as the identity of the antecedent may require.  A reference to any party to this Agreement shall include such party’s successors and permitted assigns.  This Agreement shall be construed according to its fair meaning and shall not be strictly construed against the Company.
4.15    Counterparts.  The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Laws, each of which will be deemed an original and all of which together will constitute one instrument.
4.16    Modification. Any modification of this Agreement shall be binding only if evidenced in writing and signed by the Administrator, or its delegate. The Participant’s consent to such modification shall be required unless (i) the action does not materially and adversely affect the Participant’s rights under the Agreement and Grant Notice, or (ii) the change is permitted under Article X or pursuant to Section 12.5 of the Plan.
[End.]

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