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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1996

REGISTRATION NO. 333-13183
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VIASAT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 3663 33-0174996
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)

2290 COSMOS COURT
CARLSBAD, CALIFORNIA 92009
(619) 438-8099
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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MARK D. DANKBERG
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
VIASAT, INC.
2290 COSMOS COURT
CARLSBAD, CALIFORNIA 92009
(619) 438-8099
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:

THOMAS A. EDWARDS, ESQ. GREGORY D. MONAHAN, ESQ. GARY APFEL, ESQ.
LATHAM & WATKINS VICE PRESIDENT, CHIEF FINANCIAL KAYE, SCHOLER, FIERMAN,
701 "B" STREET, SUITE 2100 OFFICER HAYS & HANDLER, LLP
SAN DIEGO, CALIFORNIA 92101 AND GENERAL COUNSEL 1999 AVENUE OF THE STARS, SUITE 1600
(619) 236-1234 VIASAT, INC. LOS ANGELES, CALIFORNIA 90067
2290 COSMOS COURT (310) 788-1000
CARLSBAD, CALIFORNIA 92009
(619) 438-8099

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
boxand list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE

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PROPOSED
AMOUNT MAXIMUM PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE(3)

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Common Stock, $.0001 par value........... 2,530,000 shares $12.00 $30,360,000 $10,469
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(1) Includes 330,000 shares subject to Underwriters' option to cover
over-allotments.

(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457 under the Securities Act of 1933.

(3) Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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VIASAT, INC.

CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM S-1

REGISTRATION STATEMENT
ITEM AND HEADING PROSPECTUS CAPTIONS
------------------------------------------ ------------------------------------------

1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges........ Prospectus Summary; Risk Factors; Selected
Financial Data
4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price........... Outside Front Cover; Risk Factors;
Underwriting
6. Dilution.................................. Dilution
7. Selling Security Holders.................. Principal and Selling Stockholders
8. Plan of Distribution...................... Outside Front Cover Page of Prospectus;
Underwriting
9. Description of Securities to be
Registered................................ Description of Capital Stock
10. Interests of Named Experts and Counsel.... Not Applicable
11. Information with Respect to the
Registrant................................ Prospectus Summary; Risk Factors; Dividend
Policy; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Description of Capital
Stock; Shares Eligible for Future Sale;
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1996

PROSPECTUS

2,200,000 SHARES

LOGO

COMMON STOCK

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Of the 2,200,000 shares of Common Stock ("Common Stock") offered hereby,
1,650,000 shares are being sold by ViaSat, Inc. ("ViaSat" or the "Company") and
550,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). The Company will not receive any of the proceeds from
the sale of shares by the Selling Stockholders. See "Principal and Selling
Stockholders."

Prior to this offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $10.00 and $12.00. See "Underwriting" for information relating to the
determination of the initial public offering price. The Common Stock has been
approved for quotation and trading on The Nasdaq National Market, subject to
official notice of issuance, under the symbol "VSAT."

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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 7.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY (2) STOCKHOLDERS

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Per Share................................. $ $ $ $
Total (3)................................. $ $ $ $
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(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting offering expenses payable by the Company, estimated to be
$650,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 330,000 shares of Common Stock solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be $ , $ and $ ,
respectively.
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The shares of Common Stock are offered severally by the Underwriters when,
as and if delivered to and accepted by them, subject to their right to withdraw,
cancel or reject orders in whole or in part and subject to certain other
conditions. It is expected that delivery of the certificates representing the
shares will be made against payment on or about , 1996
at the office of Oppenheimer & Co., Inc., Oppenheimer Tower, World Financial
Center, New York, New York 10281.
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OPPENHEIMER & CO., INC.
NEEDHAM & COMPANY,
INC.
UNTERBERG HARRIS

The date of this Prospectus is , 1996.
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[PHOTOGRAPHS AND CHARTS OF
THE COMPANY'S PRODUCTS AND SERVICES]

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AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the Common Stock offered hereby, reference is hereby
made to such Registration Statement, exhibits and schedules filed as part of the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement or such other
document. Each such statement is qualified in all respects by such reference to
such exhibit.

After consummation of the offering, the Company will be subject to the
informational and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and in accordance therewith, will be required
to file reports, proxy and information statements, and other information with
the Commission. Such reports, proxy statements and other information, as well as
the Registration Statement of which this Prospectus is a part and the exhibits
and schedules thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as at the following regional offices: 7
World Trade Center, Suite 1300, New York, New York 10048, and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials also can
be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Electronic reports, proxy and information statements, and other information
filed through the Commission's Electronic Data Gathering, Analysis and Retrieval
system are publicly available through the Commission's Web site
(http://www.sec.gov).

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus. Except as otherwise noted, all information in this Prospectus (i)
assumes no exercise of the Underwriters' over-allotment option, (ii) reflects
the conversion of all outstanding shares of the Company's Preferred Stock
("Preferred Stock") into Common Stock upon the closing of this offering and
(iii) has been adjusted to give effect to the 0.7335-for-one reverse stock split
of the Common Stock effected on November 4, 1996. See "Glossary of Selected
Terms" for definitions of certain terms used in this Prospectus.
THE COMPANY

ViaSat designs, produces and markets advanced digital satellite
telecommunications and wireless signal processing equipment. The Company has
achieved ten consecutive years of internally generated revenue growth and nine
consecutive years of profitability, primarily through defense-related
applications. More recently, the Company has been developing and marketing its
technology through strategic alliances for emerging commercial markets, such as
rural telephony, alternative carrier access and Internet/Intranet access by
satellite to multiple servers. ViaSat is a leading provider of Demand Assigned
Multiple Access ("DAMA") technology, which allows a large number of Very Small
Aperture Terminal ("VSAT") subscribers to economically share common satellite
transponders for high-performance voice, fax or data communications.

The Company believes that DAMA satellite technology is superior to other
existing VSAT networking technologies. The existing Time Division Multiplex/Time
Division Multiple Access ("TDM/TDMA") networking technology features a "hub and
spoke" architecture which requires all transmissions to be routed through a
central terrestrial hub. Unlike TDM/TDMA systems, DAMA provides direct,
on-demand switched networking capabilities which do not require a terrestrial
hub and allow faster and more efficient use of expensive satellite transponder
resources. In addition, the Company believes that its DAMA products,
commercially marketed under the tradename StarWire(TM), offer greater network
flexibility and permit up to 50% greater satellite capacity than competing DAMA
systems. See "Business -- The ViaSat Advantage" and "-- Technology."

ViaSat's DAMA products include satellite modems, networking processors and
network control systems for managing large numbers of network subscribers. The
Company's DAMA technology consists of proprietary real-time firmware and
software designed to run on industry-standard digital signal processors. The
Company also has developed DAMA network control software that operates on
IBM-compatible personal computers running Windows NT(TM) operating systems. The
Company's DAMA technology operates on satellites in the military UHF and SHF
frequency bands, and commercial C and K(u) bands. In addition to DAMA products,
the Company offers network information security products, communications
simulation and test equipment, and spread spectrum digital radios for satellite
and terrestrial data networks.

The wireless communications industry has experienced significant worldwide
growth in both the government and commercial markets during the past decade,
primarily as a result of cost reductions and improvements in quality and
performance. Although there can be no assurance that such growth will continue
at a comparable rate or at all, service providers continue to expand the
infrastructure associated with the wireless communications industry. A growing
segment of such industry involves networked VSAT communication systems. The
Company believes DAMA products offer customers using VSAT networks a more cost-
effective opportunity than other existing VSAT networking technologies to expand
and better utilize existing satellite capacity. The Company believes it can
capitalize on this market opportunity through its leadership position with
respect to DAMA technology and related networking and software products.

BUSINESS STRATEGY

ViaSat's objective is to become a leading developer and supplier of
DAMA-based products to commercial markets and to retain a leadership position in
developing and supplying DAMA-based products to the government market. See
"Business -- Strategy." The Company's strategy incorporates the following key
elements:

Maintain and Enhance Technology Leadership Position. The Company's
strategy is to maintain and enhance its leadership position in DAMA-based
satellite technology by continuing its participation in selected programs with
the U.S. Department of Defense and its prime contractors (collectively, the
"DOD") involving

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networking technology and other related real-time signal processing and
networking software. The Company is also investing in proprietary research for
commercial applications.

Develop Strategic Alliances. The Company's strategy is to develop
strategic alliances with leading prime defense contractors and major
international telecommunications companies and equipment suppliers. The Company
has entered into strategic alliances with defense companies, such as Hughes
Defense Communications, formerly Magnavox Electronic Systems Co. ("Hughes
Defense Communications"), and Lockheed Martin Corporation ("Lockheed Martin"),
and commercial telecommunications companies, such as AT&T acting through its
Tridom division ("AT&T Tridom"), Hutchison Corporate Access (HK) Limited
("Hutchison Telecommunications") and HCL Comnet Systems and Services Limited
("HCL Comnet").

Establish Global Presence. The Company's strategy is to develop its
products so that they may be marketed and used throughout the world. The Company
believes its focus on meeting applicable international communication standards
and establishing key international strategic alliances will enable it to
effectively penetrate foreign markets.

Address Rural Telephony Market. The Company believes there is a
substantial unmet demand for rural telephony services, especially in developing
countries. The Company's strategy is to capitalize on its networking software
expertise to develop technology for establishing regional rural telephony
network infrastructures of strategically located VSAT terminals capable of
handling multiple satellite telephone calls ("Point-of-Entry Terminals"). The
Company's strategy also includes seeking partnerships with regional and local
service providers to create distribution channels for rural telephony
infrastructures and to provide related retail distribution services, including
sales of Company-designed subscriber terminals, installation and maintenance, as
well as customer service, billing and revenue collection. To this end, the
Company has recently entered into a contract with Hutchison Telecommunications
for satellite telephony equipment which can serve as rural telephony
infrastructure.

The Company was incorporated in California in 1986 and reincorporated in
Delaware in 1996. Its principal executive offices are located at 2290 Cosmos
Court, Carlsbad, California 92009, and its telephone number is (619) 438-8099.

THE OFFERING

Common Stock Offered by the Company.......... 1,650,000 Shares
Common Stock Offered by the Selling
Stockholders............................... 550,000 Shares
Common Stock to be Outstanding After the
Offering................................... 7,531,503 Shares(1)
Use of Proceeds.............................. For working capital and general corporate
purposes. See "Use of Proceeds."
Nasdaq National Market Symbol................ VSAT

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(1) Based on shares outstanding as of October 25, 1996. Does not include 330,000
shares of Common Stock issuable upon the full exercise of the Underwriters'
over-allotment option. Also does not include 369,348 shares of Common Stock
issuable upon the exercise of outstanding options. See "Capitalization."

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SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

SIX MONTHS ENDED
YEARS ENDED MARCH 31, -----------------------------
--------------------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1995 1996 1995 1996
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(UNAUDITED)

STATEMENT OF INCOME DATA:
Revenues.................. $4,019 $5,072 $11,579 $22,341 $29,017 $14,156 $21,582
Cost of revenues.......... 3,006 3,939 9,033 16,855 20,983 10,110 15,333
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Gross profit........... 1,013 1,133 2,546 5,486 8,034 4,046 6,249
Operating expenses:
Selling, general and
administrative....... 503 740 1,554 2,416 3,400 1,762 2,313
Independent research
and development...... -- 59 134 788 2,820 1,186 2,218
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Income from operations.... 510 334 858 2,282 1,814 1,098 1,718
Interest income
(expense).............. 7 (17) (45) (87) (231) (86) (56)
------ ------ ------- ------- ------- ------ ------
Income before income
taxes.................. 517 317 813 2,195 1,583 1,012 1,662
Provision (benefit) for
income taxes........... 159 93 328 888 (50) (32) 580
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Net income................ $ 358 $ 224 $ 485 $ 1,307 $ 1,633 $ 1,044 $ 1,082
====== ====== ======= ======= ======= ====== ======
Pro forma net income per
share(1)............... $ 0.28 $ 0.18
======= ======
Shares used in per share
calculations(1)........ 5,876 6,121

SEPTEMBER 30, 1996
MARCH 31, ---------------------
------------------------------------------- AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(2)
------ ------ ------ ------ ------- ------- -----------
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents....... $ 101 $ 75 $ 9 $2,731 $ 2,297 $ 1,186 $17,416
Working capital................. 912 964 1,486 2,808 4,651 4,969 21,199
Total assets.................... 1,750 2,550 4,986 9,377 13,262 16,412 32,642
Long-term debt, less current
portion...................... 50 124 297 1,220 1,747 1,512 1,512
Total stockholders' equity...... 1,226 1,465 1,956 3,413 5,217 6,477 22,707

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(1) For an explanation of the determination of the number of shares used in
computing pro forma net income per share, see Note 1 of Notes to Financial
Statements.

(2) As adjusted to reflect the sale of 1,650,000 shares of Common Stock offered
by the Company hereby at an assumed offering price of $11.00 per share,
based on the midpoint of the offering price range set forth on the cover
page of this Prospectus, and the application of the net proceeds therefrom
as described under "Use of Proceeds." If the Company issues 1,980,000 shares
of Common Stock upon the full exercise of the Underwriters' option to cover
over-allotments, Cash and cash equivalents, Working capital, Total assets
and Total stockholders' equity would be $20,791, $24,574, $36,017 and
$26,082, respectively. See "Use of Proceeds" and "Capitalization."

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RISK FACTORS

This Prospectus contains forward-looking statements within the meaning of
the Securities Act. Discussions containing such forward-looking statements may
be found throughout this Prospectus, including without limitation in the
materials set forth under "Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business." Actual events or
results may differ materially from those discussed in the forward-looking
statements as a result of various factors, including without limitation the risk
factors set forth below and the matters set forth in this Prospectus generally.

DEPENDENCE ON DEFENSE MARKET

Over 95% of the Company's revenues for the fiscal year ended March 31, 1996
and the six months ended September 30, 1996 were derived from U.S. government
defense applications. Although the Company has invested heavily in developing
commercial satellite products, there can be no assurance that the percentage of
the Company's commercial business will increase. In addition, there can be no
assurance that the Company's revenues from its government business will continue
to increase at historical rates or at all. U.S. government business is subject
to various risks including (i) unpredictable contract or project terminations,
reductions in funds available for the Company's projects due to government
policy changes, budget cuts and contract adjustments and penalties arising from
post-award contract audits, and incurred cost audits in which the value of the
contract may be reduced, (ii) risks of underestimating ultimate costs,
particularly with respect to software and hardware development, for work
performed pursuant to fixed-price contracts where the Company commits to achieve
specified deliveries for a predetermined fixed price, (iii) limited
profitability from cost-reimbursement contracts under which the amount of profit
attainable is limited to a specified negotiated amount and (iv) unpredictable
timing of cash collections of certain unbilled receivables as they may be
subject to acceptance of contract deliverables by the customer and contract
close-out procedures, including government approval of final indirect rates. See
"Business -- Government Contracts." In addition, substantially all of the
Company's backlog scheduled for delivery can be terminated at the convenience of
the government since orders are often made well in advance of delivery, and the
Company's contracts typically provide that orders may be terminated with limited
or no penalties. See "Business -- Backlog."

Certain of the Company's contracts individually contribute a significant
percentage of the Company's revenues. For the fiscal year ended March 31, 1996
and the six months ended September 30, 1996, the Company's largest contracts (by
revenues) were contracts related to the Company's UHF DAMA technology, which
generated approximately 42.8% and 71.2% of the Company's total revenues for such
periods, respectively, including a contract with Hughes Defense Communications
which generated approximately 9.4% and 26.5% of the Company's total revenues for
such periods, respectively. Scheduled deliveries pursuant to firm purchase
orders under this contract are to be completed in June 1997. Hughes Defense
Communications is an affiliate of Hughes Network Systems (HNS), which is the
Company's principal competitor in the commercial DAMA market. See
"Business -- Competition." The Company's five largest contracts (by revenues)
generated approximately 36.5% and 62.7% of the Company's total revenues for the
fiscal year ended March 31, 1996 and the six months ended September 30, 1996,
respectively. The Company expects revenues to continue to be concentrated in a
relatively small number of large U.S. government contracts. Termination or
disruption of such contracts, especially the Company's largest contract, or the
Company's inability to renew or replace such contracts when they expire, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

PENETRATION OF COMMERCIAL MARKETS; NEW PRODUCT INTRODUCTIONS

The Company's ability to grow will depend substantially on its and its
customers' ability to apply its expertise and technologies to existing and
emerging commercial wireless communications markets. The Company's efforts to
penetrate commercial markets has resulted, and the Company anticipates that it
will continue to result, in increased sales and marketing and research and
development expenses. If the Company's net revenues do not correspondingly
increase, the Company's business, financial condition and results of operations
could be materially adversely affected. The Company's success in penetrating
commercial markets

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also depends upon the success of new product introductions by the Company, which
will be dependent upon several factors, including timely completion and
introduction of new product designs, achievement of acceptable product costs,
establishment of close working relationships with major customers for the design
of their new wireless communications systems incorporating the Company's
products and market acceptance. Sales of the Company's commercial StarWire(TM)
products (see "Business -- Commercial Markets, Products and
Customers -- Commercial Products") have not yet achieved profitability. The
Company believes that as the market expands for the StarWire(TM) products,
average production costs for such products should decrease and sales of such
products should become profitable. However, there can be no assurance that the
market for such products will expand or that average production costs will
decrease. If the Company is unable to design, manufacture and market profitable
new products for existing or emerging commercial markets, its business,
financial condition and results of operations will be adversely affected. No
assurance can be given that the Company's product development efforts for
commercial products will be successful or that any new commercial products it
develops will achieve market acceptance. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Business -- Commercial Markets, Products and Customers."

DEVELOPMENT CONTRACTS

The telecommunications industry is characterized by rapid technological
change. As a result, many companies involved in the telecommunications industry,
including the Company, are often parties to governmental and commercial
contracts which involve development of various products. Pursuant to such
contracts, the company performing the development services typically must agree
to meet strict performance covenants and project milestones which there is a
risk it may not be able to satisfy. Under the terms of such contracts, the
failure by a company to meet such performance covenants and milestones permit
the other party to terminate the contract and, under certain circumstances,
recover liquidated damages or other penalties from the breaching party. The
Company is currently a party to a number of such contracts with a number of
customers including, but not limited to, Hutchison Telecommunications, HCL
Comnet, Hughes Defense Communications and the DOD. See "Business -- Commercial
Markets, Products and Customers -- Commercial Customers" and " -- Government
Markets, Products and Customers -- Government Customers." In substantially all
of these contracts, the Company is not currently or in the past has not been in
compliance with every outstanding performance covenant and project milestone.
While the Company's past experience has been that in situations where the
Company has not met all performance covenants and project milestones generally
the other party has not elected to terminate such contracts or seek liquidated
damages from the Company, there can be no assurance that this will not occur in
the future with respect to current or future contracts and that such termination
or damages would not have a material adverse effect on the Company.

FLUCTUATIONS IN RESULTS OF OPERATIONS

The Company has experienced and expects to continue to experience
significant fluctuations in quarterly and annual revenues, gross margins and
operating results. The procurement process for most of the Company's current and
potential customers is complex and lengthy, and the timing and amount of
revenues is difficult to predict reliably. The Company recognizes a majority of
its revenues under the percentage of completion method which requires estimates
regarding costs that will be incurred over the life of a specific contract.
Actual results may differ from those estimates. In such event, the Company has
been and may in the future be required to adjust revenues in subsequent periods
relating to revisions of prior period estimates, resulting in fluctuations in
the Company's results of operations from period to period. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Results of Operations." In addition, a single customer's
order scheduled for delivery in a quarter can represent a significant portion of
the Company's potential revenues for such quarter. The Company has at times
failed to receive expected orders, and delivery schedules have been deferred as
a result of, among other factors, changes in customer requirements or parts
shortages. Currently, approximately 26.5% of the Company's revenues are
dependent on its largest contract. Any disruption with respect to this contract
could have a material adverse effect on the Company in any period where such a
disruption occurs. See "Business -- Government Markets, Products and
Customers -- Government Customers." As a result of the foregoing and other
factors, the Company's operating results for

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particular periods have in the past been and may in the future be materially
adversely affected by a delay, rescheduling or cancellation of even one purchase
order. Moreover, purchase orders are often received and accepted substantially
in advance of delivery, and the failure to reduce actual costs to the extent
anticipated or an increase in anticipated costs before delivery could materially
adversely affect the gross margins for such orders, and as a result, the
Company's results of operations. There can be no assurance that the Company will
continue to realize positive gross margins or operating results in the future,
and even if so realized, there can be no assurance as to the level of such gross
margins and operating results.

A large portion of the Company's expenses are fixed and difficult to reduce
should revenues not meet the Company's expectations, thus magnifying the
material adverse effect of any revenue shortfall. Furthermore, announcements by
the Company or its competitors of new products and technologies could cause
customers to defer or cancel purchases of the Company's products and services,
which could materially adversely affect the Company's business, financial
condition and results of operations or result in fluctuations in the Company's
results of operations from period to period. Additional factors that may cause
the Company's revenues, gross margins and results of operations to vary
significantly from period to period include mix of products and services sold;
manufacturing efficiencies, costs and capacity; price discounts; market
acceptance and the timing of availability of new products by the Company or its
customers; usage of different distribution and sales channels; warranty and
customer support expenses; customization of products and services; and general
economic and political conditions. In addition, the Company's results of
operations are influenced by competitive factors, including the pricing and
availability of, and demand for, competitive products. All of the above factors
are difficult for the Company to forecast, and these and other factors could
materially adversely affect the Company's business, financial condition and
results of operations or result in fluctuations in the Company's results of
operations from period to period. As a result, the Company believes that
period-to-period comparisons are not necessarily meaningful and should not be
relied upon as indications of future performance. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Quarterly
Results of Operations."

CONTRACT PROFIT EXPOSURE

The Company's products and services are provided primarily through three
types of contracts: fixed-price, time-and-materials and cost-reimbursement
contracts. Approximately 56.3% and 56.9% of the Company's total revenues for the
fiscal year ended March 31, 1996 and for the six months ended September 30,
1996, respectively, were derived from fixed-price contracts which require the
Company to provide products and services under a contract at a stipulated price.
The Company derived approximately 5.0% and 5.8% of its revenues during such
periods from time-and-materials contracts which reimburse the Company for the
number of labor hours expended at an established hourly rate negotiated in the
contract, plus the cost of materials utilized in providing such products or
services. The remaining 38.7% and 37.3% of the Company's revenues for the fiscal
year ended March 31, 1996 and the six months ended September 30, 1996,
respectively, were derived from cost-reimbursement contracts under which the
Company is reimbursed for actual costs incurred in performing the contract to
the extent that such costs are within the contract ceiling and allowable,
allocable and reasonable under the terms of the contract, plus a fee or profit.
See "Business -- Government Contracts."

The Company assumes greater financial risk on fixed-price contracts than on
either time-and-materials or cost-reimbursement contracts. As the Company
increases its manufacturing business, it believes that an increasing percentage
of its contracts will be fixed-priced. Failure to anticipate technical problems,
estimate costs accurately or control costs during performance of a fixed-price
contract may reduce the Company's profit or cause a loss. In addition, greater
risks are involved under time-and-materials contracts than under cost-
reimbursement contracts because the Company assumes the responsibility for the
delivery of specified products or services at a fixed hourly rate. Although
management believes that it adequately estimates costs for fixed-price and
time-and-materials contracts, no assurance can be given that such estimates are
adequate or that losses on fixed-price and time-and-materials contracts will not
occur in the future.

To compete successfully for business, the Company must satisfy client
requirements at competitive rates. Although the Company continually attempts to
lower its costs, there are other companies that may provide the same or similar
products or services at comparable or lower prices than the Company. There can
be no

9
12

assurance that the Company will be able to compete effectively on pricing or
other requirements, and as a result, the Company could lose clients or be unable
to maintain historic gross margin levels or to operate profitably. See
"Business -- Competition."

DECLINING AVERAGE SELLING PRICES; FLUCTUATIONS IN GROSS MARGINS

Average selling prices for the Company's products may fluctuate from period
to period due to a number of factors, including product mix, competition and
unit volumes. In particular, the average selling prices of a specific product
tend to decrease over that product's life. To offset such decreases, the Company
intends to rely primarily on obtaining yield improvements and corresponding cost
reductions in the manufacture of existing products and on introducing new
products that incorporate advanced features and therefore can be sold at higher
average selling prices. However, there can be no assurance that the Company will
be able to obtain any such yield improvements or cost reductions or introduce
any such new products in the future. To the extent that such cost reductions and
new product introductions do not occur in a timely manner or the Company's or
its customers' products do not achieve market acceptance, the Company's
business, financial condition and results of operations could be materially
adversely affected. See "Business -- Manufacturing."

The Company's gross margins in any period are affected by a number of
different factors. Because of the different gross margins on various products,
changes in product mix can impact gross margins in any particular period. In
addition, in the event that the Company is not able to adequately respond to
pricing pressures, the Company's current customers may decrease, postpone or
cancel current or planned orders, and the Company may not be able to secure new
customers or orders. As a result, the Company may not be able to achieve desired
production volumes or gross margins.

GOVERNMENT REGULATIONS

The Company's products are incorporated into wireless communications
systems that are subject to various government regulations. Regulatory changes,
including changes in the allocation of available frequency spectrum and in the
military standards and specifications ("MIL-STDs") which define the current
satellite networking environment, could significantly impact the Company's
operations by restricting development efforts by the Company's customers, making
current products obsolete or increasing the opportunity for additional
competition. There can be no assurance that regulatory bodies will not
promulgate new regulations that could have a material adverse effect on the
Company's business, financial condition and results of operations. Changes in,
or the failure by the Company to comply with, applicable domestic and
international regulations could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
increasing demand for wireless communications has exerted pressure on regulatory
bodies worldwide to adopt new standards for such products and services,
generally following extensive investigation of and deliberation over competing
technologies. The delays inherent in this governmental approval process have
caused and may continue to cause the cancellation, postponement or rescheduling
of the installation of communications systems by the Company's customers, which
in turn may have a material adverse effect on the sale of products by the
Company to such customers. See "Business -- Government Regulations."

The Company has benefitted and continues to benefit from the Small Business
Innovation Research ("SBIR") program, through which the government provides
research and development funding for companies with fewer than 500 employees.
While the Company has already harvested significant benefits from the SBIR
program throughout the initial developmental stages of its core technology base,
the Company believes that its business, financial condition and results of
operations would not be materially adversely affected if the Company were to
lose its SBIR funding status. See "Business -- Research and Development."

EMERGING MARKETS IN WIRELESS COMMUNICATIONS

A number of the commercial markets for the Company's products in the
wireless communications area, including its DAMA products, have only recently
begun to develop. Because these markets are relatively new, it is difficult to
predict the rate at which these markets will grow, if at all. If the markets for
the Company's

10
13

products in the commercial wireless communications area fail to grow, or grow
more slowly than anticipated, the Company's business, financial condition and
results of operations could be materially adversely affected. Conversely, to the
extent that growth in these markets results in capacity limitations in the
wireless communications area, the Company's business, financial condition and
results of operations could also be materially adversely affected. See
"Business -- Commercial Markets, Products and Customers."

RURAL TELEPHONY MARKET

The Company's strategy includes focusing on establishing rural telephony
networking infrastructure for developing countries through strategic alliances
with regional and local service providers (see "Business -- Strategy -- Address
Rural Telephony Market"). There can be no assurance that a substantial market
for rural telephony equipment in developing countries will ever develop, or if
such a market does develop that fixed-site DAMA VSAT-based equipment will
capture a significant portion of that market. The Company's ability to penetrate
such markets will be dependent upon its ability to develop equipment and
software which can be utilized by the regional and local service providers to
develop and implement such infrastructure and for such service providers to
market and sell the use of such systems. Furthermore, there can be no assurance
that the regional and local service providers will be able to successfully
market subscriber terminals to rural subscribers. The development and
implementation of such rural telephony systems will be dependent upon, among
other things, the continued development of the necessary hardware and software
technologies (including the necessary expenditures of a large amount of funds
and resources), the implementation of cost-effective systems, market acceptance
for such systems and approval by the appropriate regulatory agencies. There can
be no assurance that the Company will be able to develop equipment and software
which can be utilized in such rural telephony systems and accepted by regional
and local service providers or that any regional or local service providers will
be able to develop, implement and market rural telephony systems. Furthermore,
if the Company successfully introduces such products and the regional and local
service providers successfully develop and implement such systems, there is no
assurance that the Company will generate enough revenues to cover the Company
expenditures in the development and marketing of such products. Even if the
Company is able to realize sales of such products, the Company believes it is
not likely that the Company will realize any significant revenues from rural
telephony applications any time in the foreseeable future, including at least
the next two years.

DEPENDENCE ON CONTRACT MANUFACTURERS; RELIANCE ON SOLE OR LIMITED SOURCES OF
SUPPLY

The Company's internal manufacturing capacity is limited. The Company has
recently begun to utilize contract manufacturers to produce its products and
expects to rely increasingly on such manufacturers in the future. The Company
also relies on outside vendors to manufacture certain components and
subassemblies, including printed wiring boards. Certain components,
subassemblies and services necessary for the manufacture of the Company's
products are obtained from a sole supplier or a limited group of suppliers. In
particular, Texas Instruments is a sole source supplier of digital signal
processing chips, which are critical components used by the Company in
substantially all of its products. There can be no assurance that the Company's
internal manufacturing capacity and that of its contract manufacturers and
suppliers will be sufficient to timely fulfill the Company's orders. See
"Business -- Manufacturing."

The Company's reliance on contract manufacturers and on sole suppliers or a
limited group of suppliers involves several risks, including a potential
inability to obtain an adequate supply of required components, and reduced
control over the price, timely delivery, reliability and quality of finished
products. From time to time, the Company enters into long-term supply agreements
with its manufacturers and suppliers. See Note 9 of Notes to Financial
Statements. Manufacture of the Company's products and certain of its components
and subassemblies is an extremely complex process, and the Company has from time
to time experienced and may in the future experience delays in the delivery of
and quality problems with products and certain components and subassemblies from
vendors. Certain of the Company's suppliers have relatively limited financial
and other resources. Any inability to obtain timely deliveries of components and
subassemblies of acceptable quality or any other circumstance that would require
the Company to seek alternative sources of supply, or to manufacture its
finished products or such components and subassemblies internally, could delay
or prevent the

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Company from timely delivery of its systems or raise issues regarding quality,
which could damage relationships with current or prospective customers and have
a material adverse effect on the Company's business, financial condition and
results of operations.

COMPETITION

The markets for the Company's products and services are extremely
competitive, and the Company expects that competition will increase in such
markets. Many of the Company's competitors have entrenched market positions,
established patents, copyrights, tradenames, trademarks, service marks and
intellectual property rights and substantial technological capabilities. The
Company's existing and potential competitors include large and emerging domestic
and international companies, many of which have significantly greater financial,
technical, manufacturing, marketing, sales and distribution resources and
management expertise than the Company. The Company believes that its ability to
compete successfully in the markets for its products and services depends upon a
number of factors within and outside its control, including price, quality,
availability, product performance and features, timing of new product
introductions by the Company, its customers and competitors, and customer
service and technical support. The Company's customers continuously evaluate
whether to develop and manufacture their own products and could elect to compete
with the Company at any time. Price competition in the markets in which the
Company currently competes is likely to increase, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Competition."

LIMITED PROTECTION OF THE COMPANY'S INTELLECTUAL PROPERTY

The Company's ability to compete may depend, in part, on its ability to
obtain and enforce intellectual property protection for its technology in the
United States and internationally. The Company relies on a combination of trade
secrets, copyrights, trademarks, service marks and contractual rights to protect
its intellectual property. There can be no assurance that the steps taken by the
Company will be adequate to deter misappropriation or impede third party
development of the Company's technology. In addition, the laws of certain
foreign countries in which the Company's products are or may be sold do not
protect the Company's intellectual property rights to the same extent as do the
laws of the United States. The failure of the Company to protect its proprietary
information could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Intellectual
Property."

Litigation may be necessary to protect the Company's intellectual property
rights and trade secrets, to determine the validity and scope of the proprietary
rights of others or to defend against claims of infringement or invalidity. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on the Company's business, financial
condition and results of operations. There can be no assurance that
infringement, invalidity, right to use or ownership claims by third parties or
claims for indemnification resulting from infringement claims will not be
asserted against the Company in the future. If any claims or actions are
asserted against the Company, the Company may seek to obtain a license under a
third party's intellectual property rights. There can be no assurance, however,
that a license will be available under reasonable terms or at all. In addition,
should the Company decide to litigate such claims, such litigation could be
extremely expensive and time consuming and could materially adversely affect the
Company's business, financial condition and results of operations, regardless of
the outcome of the litigation. If the Company's products are found to infringe
upon the rights of third parties, the Company may be forced to incur substantial
costs to develop alternative products. There can be no assurance that the
Company would be able to develop such alternative products or that if such
alternative products were developed, they would perform as required or be
accepted in the applicable markets.

REQUIREMENT FOR RESPONSE TO RAPID TECHNOLOGICAL CHANGE AND REQUIREMENT FOR
FREQUENT NEW PRODUCT INTRODUCTIONS

The wireless communications market is subject to rapid technological
change, frequent new product introductions and enhancements, product
obsolescence and changes in end-user requirements. The Company's ability to be
competitive in this market will depend in significant part upon its ability to
successfully develop,

12
15

introduce and sell new products and enhancements on a timely and cost-effective
basis that respond to changing customer requirements. Any success of the Company
in developing new and enhanced products will depend upon a variety of factors,
including new product selection, integration of the various elements of its
complex technology, timely and efficient completion of product design, timely
and efficient implementation of manufacturing and assembly processes and its
cost reduction efforts, development and completion of related software tools,
product performance, quality and reliability and development of competitive
products by competitors. The Company may experience delays from time to time in
completing development and introduction of new products. Moreover, there can be
no assurance that the Company will be successful in selecting, developing,
manufacturing and marketing new products or enhancements. There can be no
assurance that errors will not be found in the Company's products after
commencement of deliveries, which could result in the loss of or delay in market
acceptance. The inability of the Company to introduce in a timely manner new
products that achieve market acceptance and thereby contribute to revenues could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Research and Development."

INTERNATIONAL OPERATIONS; RISKS OF DOING BUSINESS IN DEVELOPING COUNTRIES

The Company anticipates that international sales will account for an
increasing percentage of its revenues for the foreseeable future. The Company's
international sales may be denominated in foreign or U.S. currencies. The
Company does not currently engage in foreign currency hedging transactions. As a
result, a decrease in the value of foreign currencies relative to the U.S.
dollar could result in losses from transactions denominated in foreign
currencies. With respect to the Company's international sales that are U.S.
dollar-denominated, such a decrease could make the Company's products less
price-competitive. Additional risks inherent in the Company's international
business activities include various and changing regulatory requirements, cost
and risks of localizing systems in foreign countries, increased sales and
marketing and research and development expenses, availability of suitable export
financing, timing and availability of export licenses, tariffs and other trade
barriers, political and economic instability, difficulties in staffing and
managing foreign operations, difficulties in managing distributors, potentially
adverse taxes, complex foreign laws and treaties and the possibility of
difficulty in accounts receivable collections. Certain of the Company's customer
purchase agreements are governed by foreign laws, which may differ significantly
from U.S. laws. Therefore, the Company may be limited in its ability to enforce
its rights under such agreements and to collect damages, if awarded. There can
be no assurance that any of these factors will not have a material adverse
effect on the Company's business, financial condition and results of operations.

ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that a viable public market for the Common
Stock will develop or be sustained after this offering. The Company believes
that factors such as announcements of developments related to the Company's
business, announcements of technological innovations or new products or
enhancements by the Company or its competitors, developments in the Company's
relationships with its customers, partners, distributors and suppliers, changes
in analysts' estimates, regulatory developments, fluctuations in results of
operations and general conditions in the Company's market or the markets served
by the Company's customers or the economy could cause the price of the Common
Stock to fluctuate, perhaps substantially. In addition, in recent years the
stock market in general, and technology companies in particular have been
subject to significant price fluctuations, which have often been unrelated to
the operating performance of affected companies. Such fluctuations could
adversely affect the market price of the Common Stock. There can be no assurance
that the market price of the Common Stock will not experience significant
fluctuations in the future, including fluctuations that are unrelated to the
Company's performance.

CONTROL BY EXISTING STOCKHOLDERS

Following the completion of this offering, members of the Board of
Directors and the executive officers of the Company, together with members of
their families and entities that may be deemed affiliates of or related

13
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to such persons or entities, will beneficially own approximately 36.4% of the
outstanding shares of Common Stock of the Company. Accordingly, these
stockholders may be able to elect all members of the Company's Board of
Directors and determine the outcome of corporate actions requiring stockholder
approval, such as mergers and acquisitions. This level of ownership may have a
significant effect in delaying, deferring or preventing a change in control of
the Company and may adversely affect the voting and other rights of other
holders of the Common Stock. See "Management -- Executive Officers and
Directors" and "Principal and Selling Stockholders."

BENEFITS OF OFFERING TO EXISTING STOCKHOLDERS

The existing stockholders of the Company will receive certain benefits from
the sale of the Common Stock offered hereby. The offering will establish a
public market for the Common Stock and provide increased liquidity to the
existing stockholders for the shares of Common Stock they will own after the
offering, subject to certain limitations. See "Shares Eligible for Future Sale."
The Selling Stockholders are selling 550,000 shares of Common Stock in the
offering and, at an assumed offering price of $11.00 per share, will receive
approximately $6.1 million. See "Principal and Selling Stockholders -- Benefits
of Offering to Existing Stockholders." In addition, immediately following the
offering existing stockholders, assuming an offering price of $11.00 per share,
will have an average unrealized gain over the original cost of the shares that
will continue to be held by them of $10.76 per share or an aggregate unrealized
gain of approximately $57.3 million. See "Dilution."

ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS

Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws could discourage potential acquisition proposals, could
delay or prevent a change in control of the Company and could make removal of
management more difficult. Such provisions could diminish the opportunities for
a stockholder to participate in tender offers, including tender offers that are
priced above the then current market value of the Common Stock. The provisions
also may inhibit increases in the market price of the Common Stock that could
result from takeover attempts. Additionally, the Board of Directors of the
Company, without further stockholder approval, may issue up to 5,000,000 shares
of Preferred Stock, in one or more series, with such terms as the Board of
Directors may determine, including rights such as voting, dividend and
conversion rights which could adversely affect the voting power and other rights
of the holders of Common Stock. Preferred Stock may be issued quickly with terms
which delay or prevent the change in control of the Company or make removal of
management more difficult. Also, the issuance of Preferred Stock may have the
effect of decreasing the market price of the Common Stock. Other than as set
forth under "Description of Capital Stock," the Company does not currently
intend to adopt any anti-takeover provisions. See "Description of Capital
Stock -- Preferred Stock" and "-- Business Combinations; Certain Charter and
Bylaw Provisions."

DEPENDENCE ON KEY PERSONNEL

The Company's future success depends in large part on the continued service
of its key technical, marketing and management personnel and on its ability to
continue to attract and retain qualified employees, particularly its Chief
Executive Officer, Mark D. Dankberg, and those highly skilled design, process
and test engineers involved in the manufacture of existing products and the
development of new products and processes. The competition for such personnel is
intense, and the loss of key employees could have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company does not have employment agreements with any of its officers or
employees. The Company has obtained, however, a key man insurance policy on the
life of Mr. Dankberg in the amount of $500,000, of which the Company is the sole
beneficiary. See "Business -- Employees" and "Management."

MANAGEMENT'S DISCRETION OVER PROCEEDS OF THE OFFERING

The Company has no current specific plan for the net proceeds of this
offering, other than for working capital and general corporate purposes. As a
consequence, the Company's management will have discretion over the proceeds for
the foreseeable future. There can be no assurance that the proceeds can or will
be

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invested to yield a return as great as the Company has historically experienced
or any significant return at all. See "Use of Proceeds."

DILUTION

The initial public offering price is expected to be substantially higher
than the net tangible book value per share of the Common Stock. Investors
purchasing shares of Common Stock in this offering will therefore incur
immediate and substantial net tangible book value dilution. To the extent that
stock options (currently outstanding or subsequently granted) to purchase Common
Stock are exercised, there will be further dilution. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of shares in the public market or the prospect
of such sales could adversely affect the market price of the Common Stock. Upon
completion of this offering, the Company will have outstanding 7,531,503 shares
of Common Stock. Immediately upon the effectiveness of this offering, the
2,200,000 shares offered hereby (plus any shares issued upon exercise of the
Underwriters' over-allotment option) will be freely tradeable. Of the remaining
shares, 4,491,822 are subject to lock-up agreements pursuant to which the
holders of such shares have agreed not to sell or otherwise dispose of such
shares for a period of 180 days after the date of the offering without the prior
written consent of the representatives of the Underwriters. The shares not
subject to lock-up agreements may be freely sold after the offering, subject to
certain volume and other limitations of Rule 144 under the Securities Act. The
Company intends to file a registration statement under the Securities Act after
this offering covering the sale of 1,369,348 shares of Common Stock under the
Company's 1993 Stock Option Plan, 1996 Equity Participation Plan and Employee
Stock Purchase Plan. See "Management -- 1993 Stock Option Plan," "-- 1996 Equity
Participation Plan," "-- Employee Stock Purchase Plan," "Shares Eligible for
Future Sale" and "Underwriting."

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CAPITALIZATION

The following table sets forth as of September 30, 1996 (i) the Company's
actual capitalization (as if the 0.7335-for-one reverse stock split of the
Common Stock effected on November 4, 1996 had occurred prior to September 30,
1996) and (ii) capitalization as adjusted to reflect the conversion of all
outstanding shares of Preferred Stock into Common Stock upon the closing of this
offering, the amendments to the Company's Certificate of Incorporation to
increase the Company's authorized capital stock and the sale of the 1,650,000
shares of Common Stock offered by the Company hereby at an assumed offering
price of $11.00 per share, based on the midpoint of the offering price range set
forth on the cover page of this Prospectus (after deduction of the underwriting
discounts and commissions and estimated offering expenses), and the application
of the net proceeds therefrom as described under "Use of Proceeds."

AS OF SEPTEMBER 30, 1996
-----------------------------
ACTUAL AS ADJUSTED(2)
---------- --------------

Total long-term debt, less current portion........................ $1,512,000 $ 1,512,000
Stockholders' equity(1):
Preferred stock, $.0001 par value, 3,225,000 shares authorized,
3,225,000 shares issued and outstanding actual; 5,000,000
shares authorized, no shares issued or outstanding as
adjusted..................................................... 32,000 --
Common stock, $.0001 par value, 7,335,000 shares authorized,
3,509,804 shares issued and outstanding actual; 25,000,000
shares authorized, 7,525,342 shares issued and outstanding as
adjusted..................................................... 48,000 80,000
Paid-in capital................................................. 1,224,000 17,454,000
Stockholders' notes receivable.................................. (311,000) (311,000)
Retained earnings............................................... 5,484,000 5,484,000
---------- -----------
Total stockholders' equity...................................... 6,477,000 22,707,000
---------- -----------
Total capitalization.................................... $7,989,000 $ 24,219,000
========== ===========

- ---------------
(1) Excludes 330,000 shares of Common Stock issuable by the Company upon the
full exercise of the Underwriters' over-allotment option. Also excludes
375,509 shares of Common Stock issuable upon exercise of options outstanding
as of September 30, 1996 at an average exercise price of $1.87 per share.
See "Management -- 1993 Stock Option Plan," "-- 1996 Equity Participation
Plan" and Note 6 of Notes to Financial Statements.

(2) Common Stock, Paid-in capital, Total stockholders' equity and Total
capitalization would be $80,000, $20,829,000, $26,082,000 and $27,594,000,
respectively, if the Underwriters' over-allotment option is exercised in
full.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,650,000 shares of
Common Stock being offered by the Company are estimated to be $16,230,000
($19,605,000 if the Underwriters' over-allotment option is exercised in full),
based on an assumed offering price of $11.00 per share and after deducting the
underwriting discounts and commissions and estimated offering expenses payable
by the Company. The Company intends to use the net proceeds of this offering for
working capital and general corporate purposes. Pending their use, the proceeds
will be invested in short-term, investment-grade, interest-bearing securities.
The Company will not receive any of the proceeds from the sale of Common Stock
by the Selling Shareholders. See "Principal and Selling Stockholders."

DIVIDEND POLICY

To date, the Company has neither declared nor paid any dividends on the
Common Stock. The Company currently intends to retain all future earnings, if
any, for use in the operation and development of its business and, therefore,
does not expect to declare or pay any cash dividends on the Common Stock in the
foreseeable future. In addition, an equipment financing agreement of the Company
prohibits the payment of any cash dividends on the Company's capital stock.

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DILUTION

The pro forma net tangible book value of the Company as of September 30,
1996 was $6,352,000 or $1.08 per share. Pro forma net tangible book value per
share represents the amount of total tangible assets of the Company reduced by
the amount of its total liabilities, divided by the total number of shares of
Common Stock outstanding, including shares of Common Stock resulting from the
conversion of the Preferred Stock. After giving effect to the net proceeds from
the sale of 1,650,000 shares of Common Stock offered by the Company at an
assumed offering price of $11.00 per share, the pro forma net tangible book
value of the Company as of September 30, 1996 would have been $22,707,000 or
$3.02 per share of Common Stock. This represents an immediate increase in net
tangible book value of $1.94 per share to existing stockholders and an immediate
dilution of $7.98 per share to new investors. See "Risk Factors -- Benefits of
Offering to Existing Stockholders." The following table illustrates the per
share dilution in net tangible book value to new investors.

Assumed initial public offering price per share..................... $11.00
Net tangible book value per share................................... $1.08
Increase per share attributable to new investors.................... 1.94
-----
Pro forma net tangible book value per share after the offering(1)... 3.02
------
Dilution per share to new investors(1).............................. $ 7.98
======

- ---------------
(1) If the Underwriters had exercised their over-allotment option at September
30, 1996, pro forma net tangible book value per share after the offering
would have been $3.32, representing an increase in pro forma net tangible
book value per share of $2.24 to existing stockholders and an immediate
dilution of $7.68 per share to new investors. Additionally, had all options
for the purchase of Common Stock outstanding at September 30, 1996 been
exercised at such date, pro forma net tangible book value per share after
the offering (and the assumed exercise of the Underwriters' over-allotment
option) would have been $3.26, representing an increase in pro forma net
tangible book value per share of $2.18 to existing stockholders and an
immediate dilution of $7.74 per share to new investors.

The following table summarizes, on a pro forma basis, as of September 30,
1996, the differences in total consideration paid and the average price per
share paid by existing stockholders and new investors with respect to the number
of shares of Common Stock purchased from the Company assuming an offering price
of $11.00 per share:

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ----------

Existing stockholders(1).............. 5,875,342 78% $ 1,304,000 7% $ 0.22
New investors(2)...................... 1,650,000 22 18,150,000 93 11.00
--------- ---- ----------- ----
Total(2).................... 7,525,342 100% $19,454,000 100%
========= ==== =========== ====

- ---------------
(1) Sales by Selling Stockholders in this offering will reduce the number of
shares of Common Stock held by existing stockholders to 5,325,342 or
approximately 70.8% (5,325,342 shares or approximately 67.8% if the
Underwriters' over-allotment option is exercised in full) and will increase
the number of shares of Common Stock held by new investors to 2,200,000 or
approximately 29.2% (2,530,000 shares or approximately 32.2% if the
Underwriters' over-allotment option is exercised in full) of the total
number of shares of Common Stock outstanding after the closing of this
offering.

(2) The Company has granted the Underwriters an option to purchase up to 330,000
shares of Common Stock to cover over-allotments, if any. If the
Underwriters' over-allotment option is exercised in full, the Company will
issue an aggregate of 1,980,000 shares of Common Stock to new investors
(25.2% of the total of 7,855,342 shares outstanding) and the total
consideration from new investors will be $21,780,000 (94.4% of the total of
$23,084,000 consideration paid for all shares outstanding).

The information presented with respect to existing stockholders assumes no
exercise of the Underwriters' over-allotment option and no exercise of
outstanding options after September 30, 1996. As of September 30, 1996, options
to purchase 375,509 shares of Common Stock were outstanding. An additional
750,000 shares of Common Stock are reserved for issuance under the 1996 Equity
Participation Plan and 250,000 shares are reserved for issuance under the
Employee Stock Purchase Plan. The issuance of Common Stock under these plans
could result in further dilution to new investors. See "Management -- 1993 Stock
Option Plan," "-- 1996 Equity Participation Plan" and "-- Employee Stock
Purchase Plan."

17
20

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected financial data as of March 31, 1995 and 1996 and for
the years ended March 31, 1994, 1995 and 1996 have been derived from, and are
qualified by reference to, the audited financial statements of the Company
included elsewhere in this Prospectus. The selected financial data as of March
31, 1992, 1993 and 1994 and for the years ended March 31, 1992 and 1993 have
been derived from the audited financial statements of the Company not included
herein. The selected financial data as of September 30, 1996 and for the six
months ended September, 30, 1995 and 1996 have been prepared on a basis
consistent with the audited financial statements and derived from unaudited
financial statements also appearing herein which, in the opinion of management,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position and results of
operations of the Company for the unaudited interim periods. The statement of
operations data for any particular period are not necessarily indicative of the
results of operations for any future period, including the Company's fiscal year
ending March 31, 1997. The data set forth below are qualified by reference to,
and should be read in conjunction with, the Financial Statements and Notes
thereto and the discussion thereof included elsewhere in this Prospectus.

STATEMENT OF INCOME DATA:
Revenues.......................... $4,019 $5,072 $11,579 $22,341 $29,017 $14,156 $21,582
Cost of revenues.................. 3,006 3,939 9,033 16,855 20,983 10,110 15,333
------ ------ ------- ------- ------- ------ ------
Gross profit.................... 1,013 1,133 2,546 5,486 8,034 4,046 6,249
Operating expenses:
Selling, general and
administrative................ 503 740 1,554 2,416 3,400 1,762 2,313
Independent research and
development................... -- 59 134 788 2,820 1,186 2,218
------ ------ ------- ------- ------- ------ ------
Income from operations............ 510 334 858 2,282 1,814 1,098 1,718
Interest income (expense)......... 7 (17) (45) (87) (231) (86) (56)
------ ------ ------- ------- ------- ------ ------
Income before income taxes........ 517 317 813 2,195 1,583 1,012 1,662
Provision (benefit) for income
taxes........................... 159 93 328 888 (50) (32) 580
------ ------ ------- ------- ------- ------ ------
Net income........................ $ 358 $ 224 $ 485 $ 1,307 $ 1,633 $ 1,044 $ 1,082
====== ====== ======= ======= ======= ====== ======
Pro forma net income per
share(1)........................ $ 0.28 $ 0.18
======= ======
Shares used in per share
calculations(1)................. 5,876 6,121

MARCH 31, SEPTEMBER 30, 1996
------------------------------------------- ------------------------
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED(2)
------ ------ ------ ------ ------- ------- --------------
(UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 101 $ 75 $ 9 $2,731 $ 2,297 $ 1,186 $ 17,416
Working capital........................ 912 964 1,486 2,808 4,651 4,969 21,199
Total assets........................... 1,750 2,550 4,986 9,377 13,262 16,412 32,642
Long-term debt, less current portion... 50 124 297 1,220 1,747 1,512 1,512
Total stockholders' equity............. 1,226 1,465 1,956 3,413 5,217 6,477 22,707

- ---------------
(1) For an explanation of the determination of the number of shares used in
computing pro forma net income per share, see Note 1 of Notes to Financial
Statements.

(2) As adjusted to reflect the sale of 1,650,000 shares of Common Stock offered
by the Company hereby at an assumed offering price of $11.00 per share, and
the application of the net proceeds therefrom as described under "Use of
Proceeds." If the Company issues 1,980,000 shares of Common Stock upon the
full exercise of the Underwriters' option to cover over-allotments, Cash and
cash equivalents, Working capital, Total assets and Total stockholders'
equity would be $20,791, $24,574, $36,017 and $26,082, respectively. See
"Use of Proceeds" and "Capitalization."

18
21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This Prospectus contains forward-looking statements within the meaning of
the Securities Act. Discussions containing such forward-looking statements may
be found throughout this Prospectus, including without limitation in the
materials set forth under "Summary," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business." Actual events or
results may differ materially from those discussed in the forward-looking
statements as a result of various factors, including without limitation the
risks set forth under "Risk Factors" and the matters set forth in this
Prospectus generally.

Historically, the Company's revenues have been principally derived from
contracts with the DOD. The Company's DOD revenues have continued to grow
significantly despite government budgetary constraints. Since 1992, such
revenues have grown at a compounded annual growth rate of 63.9%. DOD revenues
amounted to $11.1 million, $21.2 million and $28.3 million for the fiscal years
ended March 31, 1994, 1995 and 1996, respectively, and $13.9 million and $21.4
million for the six months ended September 30, 1995 and 1996, respectively. The
Company has achieved this growth rate entirely through internal growth, and not
through acquisitions. See "Risk Factors -- Fluctuations in Results of
Operations."

The Company's products and services are provided primarily through three
types of contracts: fixed-price, time-and-materials and cost-reimbursement
contracts. Approximately 56.3% and 56.9% of the Company's total revenues for the
fiscal year ended March 31, 1996 and for the six months ended September 30,
1996, respectively, were derived from fixed-price contracts which require the
Company to provide products and services under a contract at a stipulated price.
The Company derived approximately 5.0% and 5.8% of its revenues during such
periods from time-and-materials contracts which reimburse the Company for the
number of labor hours expended at an established hourly rate negotiated in the
contract, plus the cost of materials utilized in providing such products or
services. The remaining 38.7% and 37.3% of the Company's revenues for the fiscal
year ended March 31, 1996 and the six months ended September 30, 1996,
respectively, were derived from cost-reimbursement contracts under which the
Company is reimbursed for all actual costs incurred in performing the contract
to the extent that such costs are within the contract ceiling and allowable
under the terms of the contract, plus a fee or profit. See "Risk
Factors -- Contract Profit Exposure."

As of September 30, 1996, the Company had firm backlog of $43.5 million, of
which $40.1 million was funded. Of the $43.5 million in firm backlog,
approximately $24.0 million is expected to be delivered in the fiscal year
ending March 31, 1997, approximately $17.4 million is expected to be delivered
in the fiscal year ending March 31, 1998 and the balance is expected to be
delivered in the fiscal year ending March 31, 1999. Such backlog includes $37.6
million in awards received during the six months ended September 30, 1996,
consisting of $24.8 million in UHF DAMA satellite communications awards, $4.5
million in awards for the defense simulator business, $5.6 million in other
defense awards and $2.7 million in commercial satellite communications awards.
The Company's $43.5 million in firm backlog does not include an additional $26.9
million of customer options. See "Business -- Backlog."

Historically, a significant portion of the Company's revenue has been
derived from research and development contracts with the DOD. The research and
development efforts are conducted in direct response to the specific
requirements of a customer's order and, accordingly, expenditures related to
such efforts are included in cost of sales when incurred and the related funding
(which includes a profit component) is included in net revenues at such time.
Revenues are recognized using the percentage of completion method on these
long-term development contracts. Revenues for funded research and development
during the fiscal years ended March 31, 1994, 1995 and 1996 and the six months
ended September 30, 1996 were approximately $9.7 million, $20.7 million, $19.5
million and $11.6 million, respectively. See "Business -- Research and
Development."

Beginning in fiscal 1995, production contracts for delivery of previously
developed equipment became a more significant percentage of total revenues.
Production contracts amounted to approximately 6.5% of fiscal 1995 total
revenues, approximately 19.4% of fiscal 1996 total revenues and approximately
35.1% of total revenues for the six months ended September 30, 1996.

19
22

The Company invests in independent research and development ("IR&D"), which
is not directly funded by a third party. The Company expenses IR&D costs as they
are incurred. IR&D expenses consist primarily of salaries and other
personnel-related expenses, supplies and prototype materials related to research
and development programs. IR&D expenses for governmental and commercial
applications were minimal prior to fiscal 1995. In the fourth quarter of fiscal
1995, the Company began investing a significant amount of IR&D funds primarily
in the development of satellite telephony and other satellite DAMA products. The
Company expended 9.7% and 10.3% of revenues in IR&D, respectively, in the fiscal
year ended March 31, 1996 and for the six months ended September 30, 1996. The
Company expects that IR&D expenditures will continue to increase in order to
fund growth in governmental and commercial applications. As a government
contractor, the Company is able to recover a portion of its IR&D expenses
pursuant to its government contracts.

RESULTS OF OPERATIONS

The following table sets forth, as a percentage of total revenues, certain
income data for the periods indicated.

SIX MONTHS
FISCAL YEARS ENDED ENDED
MARCH 31, SEPTEMBER 30,
------------------------- ---------------
1994 1995 1996 1995 1996
----- ----- ----- ----- -----

Revenues........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues................................... 78.0 75.4 72.3 71.4 71.0
----- ----- ----- ----- -----
Gross profit....................................... 22.0 24.6 27.7 28.6 29.0
Operating expenses:
Selling, general and administrative................ 13.4 10.8 11.7 12.4 10.7
Independent research and development............... 1.2 3.5 9.7 8.4 10.3
----- ----- ----- ----- -----
Income from operations............................. 7.4 10.3 6.3 7.8 8.0
Income before income taxes......................... 7.0 9.9 5.5 7.1 7.7
Net income......................................... 4.2 5.9 5.6 7.4 5.0

SIX MONTHS ENDED SEPTEMBER 30, 1996 VS. SIX MONTHS ENDED SEPTEMBER 30, 1995

Revenues. Revenues increased 52.5% from $14.2 million for the six months
ended September 30, 1995 to $21.6 million for the six months ended September 30,
1996. This increase was primarily due to a $6.6 million increase in revenues
generated by contracts with the U.S. Air Force for UHF DAMA network control
stations and modems, and Enhanced Manpack UHF Terminal ("EMUT") DAMA modem
production of $5.7 million, offset in part by reduced activity in other product
lines and the completion of certain contracts.

Gross Profit. Gross profit increased 54.4% from $4.0 million (28.6% of
revenues) for the six months ended September 30, 1995 to $6.2 million (29.0% of
revenues) for the six months ended September 30, 1996.

Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased 31.3% from $1.8 million (12.4% of
revenues) for the six months ended September 30, 1995 to $2.3 million (10.7% of
revenues) for the six months ended September 30, 1996. This decrease in SG&A
expenses as a percentage of revenues reflects an increased expense in connection
with a large bid and proposal effort in the six months ended September 30, 1995
and the impact of a 52.5% growth in revenues between the two periods. SG&A
expenses consist primarily of personnel costs and expenses for business
development, marketing and sales, finance, contract administration and general
management. They also include bid and proposal costs. Certain SG&A expenses are
difficult to predict and vary based on specific government and commercial sales
opportunities.

20
23

Independent Research and Development. IR&D expenses increased 87.0% from
$1.2 million (8.4% of revenues) in the six months ended September 30, 1995 to
$2.2 million (10.3% of revenues) in the six months ended September 30, 1996.
This increase resulted primarily from higher IR&D expenses related to the
Company's StarWire(TM) DAMA product, which represented approximately 87.6% of
total IR&D.

Interest Expense. Interest expense increased 20.2% from $104,000 for the
six months ended September 30, 1995 to $125,000 for the six months ended
September 30, 1996. Interest expense relates to loans for the purchase of
capital equipment, which are generally four year fixed-rate term loans, and to
short-term borrowings under the Company's line of credit to cover working
capital requirements. Total outstanding equipment loans were $2.2 million at
September 30, 1995 and $2.5 million at September 30, 1996. The Company had a
zero balance on its line of credit at the end of both periods.

Interest Income. Interest income increased 283.3% from $18,000 for the six
months ended September 30, 1995 to $69,000 for the six months ended September
30, 1996. Interest income related to interest earned on short-term deposits of
cash.

Provision (Benefit) for Income Taxes. The income tax benefit in the six
months ended September 30, 1995 was primarily attributable to the utilization of
research and development credits generated during the period and the impact of a
United States Federal judicial decision which clarified the tax law related to
the utilization of research and development credits generated from funded
research and development. As of September 30, 1996, the unutilized income tax
benefit was zero. The Company's effective tax rate for the six months ended
September 30, 1996 was 35.0%.

FISCAL YEAR ENDED MARCH 31, 1996 VS. FISCAL YEAR ENDED MARCH 31, 1995

Revenues. The Company's revenues increased 29.9% from $22.3 million in
fiscal 1995 to $29.0 million in fiscal 1996. This increase reflects the growth
in defense related production contracts, primarily associated with the Company's
EMUT DAMA modem products, which experienced a $5.3 million increase, and
Advanced Data Controller ("ADC") products, which experienced a $1.5 million
increase. Revenues from production orders (compared to funded research and
development) increased from $1.4 million (6.5% of revenues) in fiscal 1995 to
$5.6 million (19.4% of revenues) in fiscal 1996.

Revenues from UHF DAMA satellite communications products increased to 42.8%
of revenues in fiscal 1996. This increase was due to the first EMUT DAMA modem
production deliveries in the fourth quarter of 1996. UHF DAMA business area
revenues grew from $7.1 million (31.7% of revenues) in fiscal 1995 to $12.4
million (42.8% of revenues) in fiscal 1996.

Gross Profit. Gross profit increased 46.4% from $5.5 million (24.6% of
revenues) in fiscal 1995 to $8.0 million (27.7% of revenues) in fiscal 1996.
This increase primarily reflects higher prices related to the recovery of
allowable IR&D costs under certain government contracts and improved contract
profitability under certain production contracts.

Selling, General and Administrative Expenses. SG&A expenses increased
40.7% from $2.4 million (10.8% of revenues) in fiscal 1995 to $3.4 million
(11.7% of revenues) in fiscal 1996. Increased spending was offset somewhat by
the continuing revenue growth. The Company continued to increase staff to
support IR&D related to its StarWire(TM) DAMA product, increased its business
development staff for defense programs, and added to finance and administrative
staffing. Bid and proposal efforts increased from $321,000 in fiscal 1995 to
$1.0 million in fiscal 1996.

Independent Research and Development. IR&D expenses increased 257.9% from
$788,000 (3.5% of revenues) in fiscal 1995 to $2.8 million (9.7% of revenues) in
fiscal 1996. Expenditures on the development of the Company's StarWire(TM) DAMA
product began in the last quarter of fiscal 1995 and have been steadily
increasing.

Interest Expense. Interest expense increased 128.1% from $114,000 in
fiscal 1995 to $260,000 in fiscal 1996. Total outstanding equipment loans for
the periods were $1.7 million at the end of fiscal 1995 and $2.5

21
24

million at the end of fiscal 1996. There were no amounts outstanding under the
Company's line of credit at the end of either fiscal year.

Interest Income. Interest income increased 7.4% from $27,000 in fiscal
1995 to $29,000 in fiscal 1996. Interest income related to interest earned on
short-term deposits of cash.

Provision (Benefit) for Income Taxes. The income tax provision in fiscal
1995 approximated the combined federal and state statutory rate of 40.0%. The
income tax benefit in fiscal 1996 was primarily attributable to the utilization
of research and development credits generated during the current period and the
impact of a United States Federal judicial decision which clarified the tax law
related to the utilization of research and development credits generated from
funded research and development.

FISCAL YEAR ENDED MARCH 31, 1995 VS. FISCAL YEAR ENDED MARCH 31, 1994

Revenues. The Company's revenues increased 92.9% from $11.6 million in
fiscal 1994 to $22.3 million in fiscal 1995. Funded development in the UHF DAMA
business area had the largest impact on revenue growth. Revenues for the UHF
DAMA business area increased 317.1% from $1.7 million (14.7% of revenues) in
fiscal 1994 to $7.1 million (31.7% of revenues) in fiscal 1995. Other increases
occurred in the simulator business area which increased from $2.2 million (18.9%
of revenues) in fiscal 1994 to $4.0 million (18.0% of revenues) in fiscal 1995,
and in the Joint Tactical Information Distribution System ("JTIDS") business
area which increased from $1.3 million (10.9% of revenues) in fiscal 1994 to
$2.6 million (11.8% of revenues) in fiscal 1995.

Gross Profit. Gross profit increased 115.5% from $2.5 million (22.0% of
revenues) in fiscal 1994 to $5.5 million (24.6% of revenues) in fiscal 1995.
This increase primarily reflects higher prices related to the recovery of
allowable IR&D costs under certain government contracts and improved contract
profitability under certain contracts.

Selling, General and Administrative Expenses. SG&A expenses increased
55.5% from $1.6 million (13.4% of revenues) in fiscal 1994 to $2.4 million
(10.8% of revenues) in fiscal 1995. This decrease in SG&A expenses as a
percentage of revenues was due to the larger growth in revenues during the
period. Near the end of fiscal 1995 the Company added administrative staff to
support increasing revenue and the associated increase in direct labor. The
Company added other indirect staff in both years to support the commercial DAMA
business. Bid and proposal efforts in fiscal 1995 were minimal due to the
concentration on performance in the existing defense backlog.

Independent Research and Development. IR&D expenses increased 488.1% from
$134,000 (1.2% of revenues) in fiscal 1994 to $788,000 (3.5% of revenues) in
fiscal 1995. Expenditures on the development of the Company's StarWire(TM) DAMA
product began in the last quarter of fiscal 1995, accounting for most of the
increase.

Interest Expense. Interest expense increased 142.6% from $47,000 in fiscal
1994 to $114,000 in fiscal 1995. Total outstanding equipment loans for the
periods were $392,000 at the end of fiscal 1994 and $1.7 million at the end of
fiscal 1995, reflecting an increase in purchases of capital equipment to support
the increased requirements of development programs. There was $350,000
outstanding under the Company's line of credit at the end of fiscal 1994, and a
zero balance at the end of fiscal 1995.

Interest Income. There was no material interest income in fiscal 1994 and
$27,000 of interest income in fiscal 1995, which related to interest earned on
short-term deposits of cash.

Provision (Benefit) for Income Taxes. The income tax provisions in fiscal
1994 and 1995 approximated the combined federal and state statutory rate of
40.0%.

22
25

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain financial information for each of
the Company's last ten quarters. The information for each of these quarters is
unaudited but includes all adjustments, consisting only of normal recurring
adjustments, which the Company considers necessary for a fair presentation of
this information when read in conjunction with the Financial Statements and
Notes thereto appearing elsewhere in this Prospectus. The results of operations
for any quarter and any quarter-to-quarter trends are not necessarily indicative
of the results to be expected for any future periods.

QUARTERS ENDED
-------------------------------------------------------------------------------------------------------------------
FISCAL YEAR
FISCAL YEAR 1995 FISCAL YEAR 1996 1997
------------------------------------------- ------------------------------------------- -----------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1994 1994 1994 1995 1995 1995 1995(1) 1996 1996 1996
-------- --------- -------- --------- -------- --------- -------- --------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues..... $4,726 $ 5,489 $5,641 $ 6,485 $6,768 $ 7,388 $5,755 $ 9,106 $ 9,732 $11,850
Cost of
revenues... 3,718 4,319 4,330 4,488 4,830 5,280 4,042 6,831 6,862 8,471
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Gross
profit..... 1,008 1,170 1,311 1,997 1,938 2,108 1,713 2,275 2,870 3,379
Operating
expenses:
SG&A....... 478 576 639 723 918 844 815 823 1,040 1,272
IR&D....... 54 95 184 455 467 719 769 865 1,058 1,160
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
operations.. 476 499 488 819 553 545 129 587 772 947
Income before
income
taxes...... 454 479 466 796 524 488 68 503 740 922
Net income... 271 286 278 472 541 503 70 519 478 604

- ---------------
(1) The Company experienced reduced revenues, gross profit and income from
operations for the third quarter of fiscal 1996 due primarily to delays on
the EMUT contract. Production deliveries were scheduled to begin in the
third quarter of fiscal 1996, but were delayed at the customer's request.
Deliveries began instead in the fourth quarter of fiscal 1996.

The following table sets forth the above unaudited quarterly financial
information as a percentage of total net revenues.

QUARTERS ENDED
----------------------------------------------------------------------------------------------------------------
FISCAL YEAR
FISCAL YEAR 1995 FISCAL YEAR 1996 1997
------------------------------------------- ------------------------------------------- --------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1994 1994 1994 1995 1995 1995 1995 1996 1996 1996
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues........ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of
revenues...... 78.7 78.7 76.8 69.2 71.4 71.5 70.2 75.0 70.5 71.5
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Gross profit.... 21.3 21.3 23.2 30.8 28.6 28.5 29.8 25.0 29.5 28.5
Operating
expenses:
SG&A.......... 10.1 10.5 11.3 11.1 13.6 11.4 14.2 9.0 10.7 10.7
IR&D.......... 1.1 1.7 3.3 7.0 6.9 9.7 13.4 9.5 10.9 9.8
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Income from
operations.... 10.1 9.1 8.6 12.7 8.1 7.4 2.2 6.5 7.9 8.0
Income before
income
taxes......... 9.6 8.7 8.3 12.3 7.7 6.6 1.2 5.6 7.6 7.8
Net income...... 5.7 5.2 4.9 7.3 8.0 6.8 1.2 5.7 4.9 5.1

Historically, development contracts have been a significant source of
revenue. The Company recognizes a majority of its revenues under the percentage
of completion method which requires engineering estimates and assumptions
regarding costs that will be incurred over the life of a specific contract.
Actual results may differ from those estimates. In such event, the Company has
been required to adjust revenues in subsequent periods relating to revisions of
prior period estimates, resulting in fluctuations in the Company's results of
operations from period to period. See "Risk Factors -- Fluctuations in Results
of Operations."

23
26

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations to date primarily from cash flow
from operations, bank line of credit financing and loans for the purchase of
capital equipment. Cash provided from operations for the fiscal years ended
March 31, 1994, 1995 and 1996 was $183,000, $3.3 million and $456,000,
respectively, and cash used in operating activities was $39,000 for the six
months ended September 30, 1996. The relative decrease in cash generated from
operations in fiscal 1996 compared to fiscal 1995 was due to higher levels of
accounts receivable and inventory. The increase in accounts receivable resulted
from an increase in revenues. The growing share of revenues from production
contracts led to the need to build inventory levels to support production
demands. The Company anticipates that in future periods the level of inventories
will be higher than historical levels.

Cash provided by financing activities, principally from equipment financing
and to a lesser extent from the sale of Common Stock, was $262,000 in fiscal
1994, $1.1 million in fiscal 1995, $1.0 million in fiscal 1996 and $188,000 for
the six months ended September 30, 1996. Purchases of property and equipment,
primarily consisting of test equipment and computers, were $511,000, $1.7
million and $1.9 million, respectively, in fiscal 1994, 1995 and 1996, and $1.3
million in the six months ended September 30, 1996.

At September 30, 1996, the Company had $1.2 million in cash and cash
equivalents, $4.9 million in working capital and $2.5 million in long-term debt,
consisting of equipment financing, and a zero balance under the Company's line
of credit. In September 1995, the Company entered into a credit facility with
Union Bank, which includes a $4.0 million line of credit and $4.0 million in
commitments for equipment financing. The line of credit allows the Company to
borrow, for general working capital purposes, the greater of $1.0 million or
80.0% of eligible accounts receivable plus 50.0% of the Company's eligible
inventory. It accrues interest at the bank's prime rate, which was 8.25% at
September 30, 1996, and expires on September 15, 1997. The Company is required
to pay a fee equal to 0.25% of the unused portion of the line of credit on an
annual basis.

The equipment line consists of two loans, each of which allows the Company
to borrow, for purchases of equipment, machinery and software directly related
to the Company's principal line of business, up to $2.0 million while limiting
borrowings to an 80.0% advance against the purchase price, net of sales tax,
delivery and insurance. The aggregate borrowings under the first loan totaled
$1.1 million at September 15, 1996, at which time all unpaid principal under
such loan was converted into a fully amortizing loan for a period of 36 months
with a maturity date of September 15, 1999. All borrowings under the second loan
must be made before September 15, 1997, at which time all unpaid principal under
such loan will be converted into a fully amortizing loan for a period of 36
months with a maturity date of September 15, 2000. As of September 30, 1996,
there was approximately $1.1 million outstanding under the first loan and a zero
balance under the second loan. The equipment loans accrue interest at the bank's
prime rate plus 0.35% per annum, or 8.6% as of September 30, 1996.

The credit agreement with Union Bank contains affirmative and negative
covenants, including, among others, financial covenants regarding the
maintenance of stated net worth amounts, net income levels and specific
liquidity and long-term solvency ratios. In addition, the credit agreement
restricts the Company's ability to borrow money, except in the ordinary course
of business or pursuant to agreements made with Union Bank. Amounts borrowed are
secured by substantially all of the Company's assets.

In October 1996, the Company received a commitment for a new credit
facility with Union Bank, which includes a $6.0 million line of credit and $4.5
million in commitments for equipment financing. The line of credit allows the
Company to borrow, for general working capital purposes, the greater of $2.0
million or 80.0% of eligible accounts receivable, plus 50.0% of the Company's
eligible inventory to a maximum of $2.0 million. It is an interest only loan
which matures on September 15, 1998. The equipment line consists of two loans,
each of which limits borrowings to an 80.0% advance against the purchase price,
net of sales tax, delivery and insurance. All borrowings under the first loan,
which may not exceed $2.0 million, must be made before September 15, 1997, at
which time all unpaid principal under such loan will be converted into a fully

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amortizing loan for a period of 36 months with a maturity date of September 15,
2000. All borrowings under the second loan, which may not exceed $2.5 million,
must be made before September 15, 1998, at which time all unpaid principal under
such loan will be converted into a fully amortizing loan for a period of 36
months with a maturity date of September 15, 2001.

The Company's future capital requirements, which management anticipates
will not exceed $10.0 million over the next 12 months, will depend upon many
factors, including the progress of the Company's research and development
efforts, expansion of the Company's marketing efforts, and the nature and timing
of commercial orders. The Company believes that the net proceeds from the sale
of the Common Stock offered hereby, together with its current cash balances,
amounts available under its credit facility and net cash provided by operating
activities, will be sufficient to meet its working capital and capital
expenditure requirements for at least the next 12 months. Management intends to
invest the Company's cash in excess of current operating requirements in
short-term, interest-bearing, investment-grade securities.

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BUSINESS

INTRODUCTION

ViaSat designs, produces and markets advanced digital satellite
telecommunications and wireless signal processing equipment. The Company has
achieved ten consecutive years of internally generated revenue growth and nine
consecutive years of profitability, primarily through defense-related
applications. More recently, the Company has been developing and marketing its
technology through strategic alliances for emerging commercial markets, such as
rural telephony, alternative carrier access and Internet/Intranet access by
satellite to multiple servers. ViaSat is a leading provider of DAMA technology,
which allows a large number of VSAT subscribers to economically share common
satellite transponders for high-performance voice, fax or data communications.

The Company believes that DAMA satellite technology is superior to other
existing VSAT networking technologies. The existing TDM/TDMA networking
technology features a "hub and spoke" architecture which requires all
transmissions to be routed through a central terrestrial hub. Unlike TDM/TDMA
systems, DAMA provides direct, on-demand switched networking capabilities which
do not require a terrestrial hub and allow faster and more efficient use of
expensive satellite transponder resources. In addition, the Company believes
that its DAMA products, commercially marketed under the tradename StarWire(TM),
offer greater network flexibility and permit up to 50% greater satellite
capacity than competing DAMA systems. See "-- The ViaSat Advantage" and
"-- Technology."

INDUSTRY BACKGROUND

A broad array of new consumer, business and government markets, as well as
the development of new technologies, have driven the significant expansion of
the wireless communications industry. In addition to common consumer
applications such as paging, cellular telephony and new Personal Communications
Services ("PCS"), there is a wide range of other specialized terrestrial- and
space-based wireless applications. Such wireless applications include government
fixed and mobile wireless networking and commercial fixed-site, switched
satellite services, ViaSat's principal lines of business. The growth in
software-intensive wireless equipment markets stems from, among other things,
increasing dependence on voice and data networks of all types, regulatory
reform, advances in technology, decreasing costs of equipment and services,
economic growth in developing nations, the increasing importance of
communications infrastructure as a catalyst of economic growth, and increasing
user acceptance of and confidence in wireless solutions. This growth in wireless
equipment markets corresponds to a transition away from mere point to point
radio links connecting remote or mobile users towards offering more
comprehensive wireless network services. Market demands for wireless services
are being addressed by both terrestrial- and satellite-based systems.

Government Applications. Historically, the military has driven development
of many new wireless technologies -- pioneering applications of satellite
communications, digital radios, spread spectrum and mobile wireless networks to
connect widely dispersed operations. In many cases these technologies have been
extended and increased in scale for broader non-defense use. Defense
applications of wireless technologies also have evolved over the same time
period. The break-up of the Soviet Union has caused a de-emphasis on strategic
missions and a shift towards more localized tactical roles such as
peace-keeping, counter-terrorism, counter-insurgency and drug enforcement. These
missions create new demands for rapidly deployable, mobile connectivity. Overall
reductions in the defense budget have led to a numerically smaller, more
technologically-advanced force structure. As a result, defense networks
increasingly build around real-time transmission of

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digital tactical data. Defense systems also are adopting and extending low cost
commercial technologies to meet their needs.

There has been a constantly shifting flow of technology between government
and commercial network applications. Both government and commercial users
developed fixed-site, long-haul applications. The government pioneered mobile
satellite terminals, as well as non-geosynchronous, high power and extremely
high frequency satellites. Commercial users adopted elements of these
technologies for Low Earth Orbit ("LEO") mobile telephony and high-powered
Direct Broadcast Satellite ("DBS") television systems. Now government agencies
are planning to integrate these technologies into still more advanced military
networks. Often, companies with both government and commercial expertise have
facilitated such technology transitions.

Commercial Applications. The recent worldwide trend toward privatization
of public telephone operators and deregulation of local telephone ("local loop")
services has resulted in increased competition in the delivery of telephone
services from alternative access providers. Many of these new access providers,
such as long-distance telephone carriers, must install or upgrade infrastructure
to support basic and enhanced services. In addition, worldwide demand for basic
telephone service has grown, especially in developing countries. As new
infrastructure is established to deliver local telephone service, the technology
exists to provide cost-effective, satellite-based wireless transmission systems,
instead of a traditional wired approach, to connect subscribers to the public
telephone network.

A growing segment of the wireless communications industry involves VSATs,
which are communications systems utilizing fixed-site satellite terminals.
Historically, these systems were primarily designed for certain specific data
applications. But recent improvements in VSAT technology for satellite-based
wireless voice and data networks have led to their increasing use in a variety
of broader, higher system throughput commercial applications such as mobile and
rural telephony and more complicated data transmissions. Satellite telephony
systems are being utilized by developing countries that lack a terrestrial-based
telecommunication infrastructure, and which seek to provide telephone service
for large areas fairly rapidly and on a cost-effective basis. Additionally, even
where terrestrial systems exist, satellite systems are used to fill in coverage
for remote areas.

Evolution of VSAT Technology. The commercial VSAT business began with U.S.
customers who operated large, sophisticated private terrestrial networks using
TDM/TDMA technology. Customers such as chain retailers, hotels and auto dealers
operated private data networks with hundreds or thousands of sites and a high
flow of transactions from remote terminals to host mainframe computers for
credit card validations, point-of-sale data collection, reservations or similar
applications. Customers who used VSATs for data networking still relied on
terrestrial providers for telephone service and possibly other
telecommunications needs for their sites. Sales of such VSAT systems are often
quite sensitive to prices from telephone carriers for equivalent packet
transaction services. Users with large networks generally are the only ones who
can justify the significant one-time cost of a VSAT network management hub.

TDM/TDMA technology, while more established than DAMA technology, features
a "hub and spoke" architecture which requires all transmissions to be routed
through a central hub and is most useful for remote to mainframe network
connections. Remote-to-remote TDM/TDMA connections require two satellite hops.
DAMA is better suited for remote-to-remote connections than TDM/TDMA because the
voice quality is better and DAMA networks use expensive satellite transponders
more efficiently. DAMA satellite technology allows individual subscribers to
request links on demand directly to any other subscriber with a single satellite
hop. DAMA allows users to make exactly the connections needed, lasting only for
the duration of a voice call, fax, electronic mail or digital file transfer.
DAMA technology has been under development for many years by the DOD to serve
large networks of fixed and mobile subscribers sharing a limited amount of
satellite capacity, but is only recently being deployed in significant
quantities by the DOD.

The Company believes the opportunities for government and commercial ground
station equipment sales are increasing. The government is investing over $1.0
billion over several years in the UHF space segment alone for tactical
communications. DAMA is applicable to several different satellite bands,
including government UHF and SHF and commercial C, K(u) and K(a) bands. DAMA is
also being required by

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commercial customers who believe that it is better suited for their applications
than the earlier VSAT technologies.

THE VIASAT ADVANTAGE

In light of the limitations of the TDM/TDMA architecture, and the magnitude
of the potential market for primary telecommunications services compared to the
more limited market for data transaction services, ViaSat believes that DAMA
networks will better serve the emerging international market for VSAT, voice and
data services. Virtually all of the VSAT equipment makers are now adding DAMA
products to their line of products. This represents a discontinuity in the VSAT
market. VSAT vendors are now developing new transmission waveforms, multiple
access techniques, DAMA protocols, DAMA control software, subscriber terminals
and interface protocols to support the targeted applications (voice, fax,
dial-up data, video conferencing or others), which creates an opportunity for
new equipment suppliers such as the Company.

The Company believes that its DAMA-based products have technological
advantages over competing DAMA products in offering practical solutions for
telecommunications applications through several means:

Flexibility

Since communications networks are evolving so quickly, a system such
as the Company's that can be easily extended and configured has a
competitive advantage.

- REAL-TIME DIGITAL SIGNAL PROCESSING FIRMWARE. The Company's
technology involves extensive use of real-time digital signal
processing firmware to implement both signal processing and DAMA
networking protocol functions. This approach was developed and proven
under several government programs, especially UHF DAMA. The Company
believes that digital signal processing firmware offers great
flexibility in adding new features, because it allows modification
without more expensive hardware changes, and that product costs should
decrease if prices of Texas Instruments digital signal processing
chips and associated peripherals continue to decline. The Company's
digital signal processing design allows common hardware to be applied
to both government and commercial markets.

- WINDOWS NT(TM)-BASED NETWORK CONTROL. ViaSat believes that it is the
only company using an Intel PC/Windows NT(TM) computer platform for
its network control system. Most vendors still use Unix platforms.
ViaSat developed and proved Windows NT(TM) as a viable network control
platform under government funded UHF and SHF DAMA programs. Windows
NT(TM) has several advantages which the Company believes support its
technical leadership position:

-- True real-time multi-tasking, allowing many functions to be moved
from specialized VSAT hardware into an industry-standard personal
computer. Such functions can be developed more quickly and are more
easily modified to support new communications applications and
interfaces.

-- Lower overall costs and faster time to market in terms of
development hardware and software tools, a more readily available
pool of experienced software engineers, lower recurring cost of
network control computer platforms, less expensive networking and
communications interfaces and lower operator training costs than
Unix-based systems.

-- DOD approved access-control is built directly into the
network-controller computer operating system. This includes secure
remote-access via many built-in communication paths. The Company
believes computer security is essential technology for mission
critical telecommunication tasks such as billing.

- STANDARD VSAT PLATFORM. ViaSat believes that it is the only company
building on a standard "open systems" VSAT platform for commercial and
SHF DAMA products. Open systems enable mix and match of satellite
equipment and baseband terrestrial interfaces on a circuit by circuit
basis. The architecture supports third party interface cards for
faster time to market for specialized

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terrestrial interfaces. While open systems architecture does not offer
the lowest possible manufacturing cost for any single fixed terminal
configuration, it is consistent with two other strategic objectives:
(i) rapid time to market by building on industry standard third-party
hardware and software and (ii) flexibility to support a broad array of
services and applications consistent with the Company's target
distribution channels of service providers.

- INTERNALLY-DEVELOPED TECHNOLOGY. Many competing VSAT providers are
primarily systems integrators with little internally-developed
technology, particularly in the software and firmware areas. The
Company believes its extensive internal technology development
capability gives it an advantage in flexibility, time-to-market and
product quality.

Capacity

ViaSat's narrow-spacing technology, developed during the course of its
government DAMA contracts, results in less unused bandwidth between voice
channels than other DAMA systems, and this, along with more precise
power-usage control software, allows ViaSat's DAMA products to achieve up
to 50% greater satellite capacity than competing DAMA systems. For example,
the ViaSat DAMA system can space toll-quality voice carriers 14 kHz apart,
compared to 20 kHz for competing systems.

Certification

ViaSat believes it is currently the only provider of DAMA products
which has received certification from the U.S. government that one of its
DAMA products meets the required military specifications for 5 kHz products
in accordance with MIL-STD 188-182. The rigorous military certification
process may take up to several months to complete.

STRATEGY

ViaSat's objective is to become a leading developer and supplier of
DAMA-based products to commercial markets and to retain a leadership position in
developing and supplying DAMA-based products to the government market. The
Company's strategy incorporates the following key elements:

Maintain and Enhance Technology Leadership Position. The Company's
strategy is to maintain and enhance its leadership position in DAMA-based
satellite technology by continuing its participation in selected DOD programs
involving networking technology and other related real-time signal processing
and networking software. The Company is also investing in proprietary research
for commercial applications. The Company's objective is to continue to offer
high-performance, software-oriented products which provide the most effective
use of satellite power and bandwidth as well as offering the most flexible
platform for continued growth.

Leverage Technological Expertise into Commercial Markets. The Company's
strategy is to continue using its technological expertise developed in defense
applications to develop and market products to respond to the increasing demand
for DAMA-based VSAT solutions for commercial voice and data applications. The
Company is targeting commercial markets which it believes will offer high growth
potential and where it believes ViaSat's technology will have competitive
advantages, such as rural telephony, alternative carrier access and
Internet/Intranet access by satellite to multiple servers. The Company believes
its products are competitive largely because of their technological advantages
over competing products. The Company's strategy is to capitalize on these
technological advantages by utilizing a "cost of ownership" marketing approach
that emphasizes the overall lower cost to customers over the operating life of
the Company's products because of the products' adaptability and more efficient
use of limited satellite capacity.

Develop Broad Base of Innovative Proprietary Products. The Company's
strategy is to continue to develop and market to both defense and commercial
customers a broad variety of signal processing and networking software products.
The Company has over 150 research engineers on staff and emphasizes offering
technologically-superior products. The Company generally retains certain
proprietary rights from the government-funded research and development of its
defense products and is also devoting a significant amount of its own resources
to independent product development.

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Develop Strategic Alliances. The Company's strategy is to develop
strategic alliances with leading prime defense contractors and major
international telecommunications companies and equipment suppliers. The Company
targets those companies whose financial and technological resources and
established customer bases allow them to jointly introduce new technologies and
penetrate new markets sooner and at a lower cost than the Company could alone.
The Company has entered into strategic alliances with defense companies, such as
Hughes Defense Communications and Lockheed Martin, and commercial
telecommunications companies, such as AT&T Tridom, Hutchison Telecommunications
and HCL Comnet.

Establish Global Presence. The Company's strategy is to develop its
products so that they may be marketed and used throughout the world. The Company
is a market leader in DAMA-based defense products for the United States and its
allies. The Company believes that the commercial market opportunities for the
Company's products are greater internationally. The Company believes its focus
on meeting applicable international communication standards and establishing key
international strategic alliances will enable it to effectively penetrate
foreign markets.

Address Rural Telephony Market. The Company believes there is a
substantial unmet demand for rural telephony services, especially in developing
countries. The Company's strategy is to capitalize on its networking software
expertise to develop technology for establishing regional rural telephony
network infrastructures of strategically located VSAT terminals capable of
handling multiple satellite telephone calls ("Point-of-Entry Terminals"). The
Company believes such an infrastructure would have a competitive advantage over
a single Point-of-Entry system by minimizing the ground transmission cost of
each satellite telephone call by permitting such calls to enter the Public
Switched Telephone Network (PSTN) through the Point-of-Entry Terminal closest to
the call's destination. The Company's strategy also includes seeking
partnerships with regional and local service providers to create distribution
channels for rural telephony infrastructures and to provide related retail
distribution services, including sales of Company-designed subscriber terminals,
installation and maintenance, as well as customer service, billing and revenue
collection. To this end, the Company has recently entered into a contract with
Hutchison Telecommunications for satellite telephony equipment which can serve
as rural telephony infrastructure.

TECHNOLOGY

The Company's VSAT technology is focused on DAMA which allows individual
subscribers to request links on demand to any other subscriber through one
satellite hop. TDM/TDMA technology, while more established than DAMA technology,
features a "hub and spoke" architecture which requires all transmissions to be
routed through a central hub and is most useful for remote to mainframe network
connections. Remote-to-remote TDM/TDMA connections require two satellite hops.
DAMA is better suited for remote-to-remote connections than TDM/TDMA because the
voice quality is better and DAMA networks use expensive satellite transponders
more efficiently.

DAMA technology has been under development for many years by the DOD, but
is only recently being deployed in significant quantities. DAMA is applicable to
several different satellite bands, including government UHF and SHF and
commercial C, K(u) and K(a) bands. A major objective for the DOD is to improve
capacity of extremely expensive government-owned satellite transponders. The
government expects DAMA to increase capacity for UHF tactical users by as much
as a factor of ten, depending on the application and traffic usage, compared to
dedicated non-DAMA links.

A DAMA system consists of (i) a set of subscribers with DAMA-capable
terminals, (ii) a network management terminal which orchestrates access to a
shared satellite resource, and (iii) satellite transponder capacity managed by
the network controller and shared by subscribers. DAMA subscribers use
networking protocols to interact with the controller and each other. The essence
of DAMA is that the network controller allocates a shared satellite resource to
a particular combination of subscribers only when they request it, and then
terminates the connection when they are finished.

DAMA protocols may be either "open" or "proprietary." Open standards are
published so that multiple manufacturers can develop equipment that works
together. The DOD has designated two different open DAMA standards defining
over-the-air interfaces for narrowband UHF satellite communications channels.

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MIL-STD 188-182 defines an interoperable waveform for channels with 5 kHz
bandwidth, and MIL-STD 188-183 defines the 25 kHz channel waveform. The DOD is
currently defining open standards for SHF channels and for government DAMA use
of commercial C and K(u) band transponders. There are no widely accepted
commercial open DAMA standards, and no open standards have evolved for TDM/TDMA
VSATs.

DAMA vs. TDM/TDMA. DAMA is being sought by customers who see that it is a
better fit than TDM/TDMA VSATs for non-transaction applications such as voice
and fax. The principal limitations of TDM/TDMA for non-transaction applications
are:

Capacity Limitations and Costs

- The TDM/TDMA hub and spoke architecture is primarily designed for
rapid service for sporadic, short, burst transactions between a remote
site and a mainframe computer. The hubs typically only support a
maximum instantaneous aggregate data rate of 256 kbps to approximately
1 Mbps divided among the entire subscriber population (often several
thousand terminals). This is a severe bottleneck for sustained
circuit-type services like telephony, fax or peer-to-peer file
transfers, which often dominate when the VSAT becomes the primary
communication means for a site, as in telephony uses. In contrast, a
comparable DAMA system has a much higher aggregate capacity. For small
networks the TDM/TDMA hub performance is not a capacity bottleneck,
but the typical hub price of approximately $1.0 million, amortized
over a small number of subscribers, is usually prohibitively
expensive. The equipment cost for a comparable DAMA system for voice
use, in contrast, would be significantly less.

Transmission Time

- The hub and spoke architecture requires all calls (voice or data)
between two remote nodes to be routed through the hub. This causes
each call to traverse two separate satellite hops in each direction
(remote A-to-satellite-to-hub and then hub-to-satellite-to-remote B,
with the return path from remote B to remote A also traversing two
satellite hops). The additional time delay due to the extra satellite
hops is striking for voice communications and is unacceptable to many
users. Plus, the two satellite hops consume more expensive transponder
resources per call than a single hop DAMA connection.

DAMA vs. Dedicated SCPC. In contrast to DAMA, which allows individual
subscribers to request links to other subscribers on demand, dedicated Single
Channel Per Carrier ("SCPC")-based systems maintain dedicated, unswitched links
between subscribers, such as for long distance trunk lines. Dedicated links
provide high quality transmissions, but only between particular subscriber sets.
In order to provide connections among many sites, an SCPC-based system would
require a dedicated link between each subscriber and each other subscriber,
which would be prohibitively expensive. As a result, DAMA is a much more
attractive solution for managing large numbers of network subscribers, as DAMA
provides transmissions of equally high quality, without restricting the
subscribers' ability to establish links on demand to any other subscriber.

Mobile Satellite vs. Fixed-site DAMA. The obvious advantage of commercial
mobile satellite systems, such as Iridium(TM) and GlobalStar(TM), is that they
allow subscribers to be mobile. A mobile satellite terminal can be used by
either a mobile or a fixed subscriber, while a fixed terminal cannot be used by
a mobile subscriber. However, in order to gain mobility, mobile terminals employ
an omni-directional antenna which operates at lower frequencies and provides
less bandwidth than is available in the fixed-site DAMA satellite bands. Less
bandwidth corresponds to less capacity and fewer voice circuits. Also, mobile
satellite systems typically require a greater investment in unique space-based
satellite resources than fixed-site DAMA systems which use existing capacity on
general purpose communication satellites. The combination of lower capacity plus
higher capital investments means that mobile service providers are projecting
per-minute service costs that are five to ten times higher than that possible
through fixed-site DAMA-based systems. Therefore, the Company believes that
customers who require satellite telephony services at fixed locations will find
fixed-site DAMA services to be much more economical than using mobile satellite
phones -- even if they already own mobile satellite phones for mobile use.

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Non-DAMA Technology. The Company offers products outside of DAMA and
satellite communications that benefit from the Company's wireless networking
software and related technology. Important non-DAMA applications include:

- Spread spectrum digital radios for real-time tactical data networks
among ground and airborne users. The JTIDS (Joint Tactical Information
Distribution System) radio builds on the Company's software, firmware
and hardware technology. The government is investing in "digitized
battlefield" communications in an effort to obtain greater
effectiveness from expensive tactical aircraft.

- Information security modules that encrypt classified information that
can be broadcasted and routed across unclassified wired or wireless
networks. This technology allows the government to make better use of
commercial networks for securely transmitting classified information.

- Equipment that tests wireless receivers in the presence of complex,
simulated radio wave environments. This technology allows the
government to thoroughly test sophisticated airborne radio equipment
without expensive flight exercises.

GOVERNMENT MARKETS, PRODUCTS AND CUSTOMERS

Government Markets

The Company believes it has an opportunity to build on its government DAMA
technology, software, hardware design and manufacturing base to capture
significant revenues in the government markets.

UHF DAMA Markets. The Company is considered a leader in the UHF DAMA
market. The Company believes its DAMA manpack subcontract is the largest
outstanding DAMA contract in terms of quantity of units sold. The Company also
believes that it was the first to develop and market a stand-alone airborne DAMA
modem. The DOD requires all UHF satellite communications terminals to meet open
DAMA standards. This mandate has helped stimulate the UHF DAMA market. ViaSat is
active in the following business segments:

- UHF DAMA NETWORK CONTROL INFRASTRUCTURE. As of September 30, 1996,
ViaSat had over $30.0 million in contracts with the U.S. Air Force for
an initial network control system. This includes development,
production, installation and support for four global sites. Each site
serves as a primary controller for seven channels and as an alternate
for seven channels. Each satellite has 38 channels, offering a
potential market for additional production, installation and support
services.

- MANPACK TERMINALS. ViaSat has a contract with Hughes Defense
Communications for over 3,000 DAMA modems for manpacks. The contract
has options which allow the DOD in its discretion to purchase up to an
additional 4,000 of such modems. As of September 30, 1996, the funded
contract value was $16.8 million, which did not include options of
$20.9 million.

- AIRBORNE DAMA TERMINALS. The 5 kHz channel DAMA protocols were
designed to support U.S. Air Force aircraft. The U.S. Navy is also a
major user of airborne UHF terminals. ViaSat equipment has been
designed into a number of platforms, including P-3, S-3, Air Force
One, EP-3, ES-3, Tomahawk cruise missiles and others.

- INTERNATIONAL UHF DAMA MARKET. Cooperative efforts among multiple
nations, such as in the Gulf War and Bosnia, require that allies have
a standard communications platform. There are requirements for some
units of NATO and other allies to have UHF DAMA capable satellite
terminals.

The Company's strategy includes actively working to expand the UHF DAMA
market as a whole, while sustaining its leading market share. Increasing the
market means extending UHF satellite communications capability to new users. UHF
satellite communications access and market size is limited in the following
ways:

- AVAILABILITY OF SATELLITE CAPACITY. Without DAMA, many users are
denied access because higher priorities consume all channels. DAMA
expands capacity. The Company anticipates

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increases in the UHF market, versus pre-DAMA levels, over the next
seven years due to pent-up demand for service.

- EQUIPMENT SIZE AND WEIGHT. Most users are mobile and thus size and
weight sensitive. They carry equipment in back-packs, or airframes
where communication gear displaces weapons or mission critical
payloads. Easier to carry, smaller, lighter equipment may expand the
market beyond a core group who require DAMA to complete their mission.

- EQUIPMENT PRICE. The Company believes that the UHF DAMA market can
expand by reducing the price of DAMA equipment. Embedded DAMA radios
are less expensive than stand-alone models, and offer reduced size and
weight.

- IMPROVED DAMA SUBSCRIBER SERVICES. The current DAMA system is a data
"pipe." The Company anticipates that demand for DAMA can grow by
increasing the value of the content sent over the pipes. Several areas
are being explored, including improved secure voice quality, increased
message routing capability, higher data rates and improved service
set-up times.

- DAMA SIGNAL PROCESSING. Airborne DAMA is currently limited to large,
slow aircraft for surveillance, airlift, command and control, or
similar missions. High performance aircraft are excluded because
current satellite communications antennas degrade mission performance
or safety. A promising solution is to use low profile, conformal
antennas with active antenna combiners. The Company has a contract for
such active antenna combiners with Lockheed Martin which, if
successful, opens the possibility of extending the UHF DAMA market to
high performance aircraft, potentially resulting in an increase of up
to 100% in the airborne DAMA market.

ViaSat is also applying the market expansion strategy to its Advanced Data
Controller ("ADC") products. ADC conforms to MIL-STD 188-184 for packet
processing. It provides error-free data transmission over noisy channels. ADC
works for terrestrial and satellite communications wireless links. The Company
is working to reduce size, weight and price for ADC products, and potentially
licensing other manufacturers to embed ViaSat's ADC digital signal processing
firmware directly into their radios.

Tri-band DAMA Markets. The U.S. government is a major consumer of leased
commercial satellite capacity in the C and K(u) bands. Since satellite
availability is limited, the government has specified the purchase of "tri-band"
terminals (i.e., terminals which can operate on any of three bands, SHF (X
band), C or K(u) band). This makes it easier for subscribers to use available
capacity in any band, as a function of time and location. The government
established the Commercial Satellite Communications Initiative program to
manage:

- Long term leases for commercial satellite transponders.

- Contracts to purchase tri-band satellite terminals.

- Bandwidth Management Centers to act as network controllers for the
tri-band terminals.

The DOD is defining an "open" standard for DAMA in SHF and commercial
satellite bands. The government owns and operates the Defense Satellite
Communication System constellation at SHF. Bandwidth at SHF is much greater than
at UHF -- over 200 MHz per satellite compared to less than 2 MHz at UHF. Still,
SHF capacity is insufficient and could be improved via DAMA. More effective SHF
use should reduce the government's monthly lease on commercial satellites used
for overflow. The potential market for SHF DAMA capable terminals may be as
large as that for UHF DAMA terminals.

Extending DAMA to commercial satellites vastly increases the bandwidth
available for government users. Increased bandwidth should support many more
terminals, increasing the potential DAMA user equipment market.

In 1994, ViaSat was awarded a $2.0 million contract by the U.S. Air Force
for prototype demonstration of a draft SHF DAMA standard. This contract is still
underway. In February 1996, the Company delivered and installed equipment which
performs many, but not all, of the protocols in the draft. The DOD has not yet

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designated a final version of SHF DAMA, nor has the DOD yet issued a mandate for
DAMA in SHF terminals.

The government tri-band DAMA market is very immature. This market will
likely not grow substantially until the DOD adopts a final standard and mandates
its use. However, there can be no assurance that the Company's products will be
procured by the government or prime contractors, even if a final standard
similar to the draft version is adopted. The Company is working to position its
SHF DAMA products through participation in government-industry standards working
groups and by providing proof-of-concept equipment through an existing SHF DAMA
contract with the U.S. Air Force. ViaSat also has been working with terminal
manufacturers to help ensure that its DAMA equipment integrates easily into
their products. Finally, the Company is working to maintain a prudent level of
commonality between the government and commercial DAMA modem platforms. The
benefit of commonality is that the larger commercial market offers economies of
scale that reduce manufacturing costs for the smaller government market. There
is a potential disadvantage if unique government product requirements increase
the cost of commercial products. The Company considers issues arising from this
trade-off on a case-by-case basis.

Government Products

ViaSat's DAMA products for the government market include:

- EMUT (ENHANCED MANPACK UHF TERMINAL) is a battery-operated UHF
satellite radio which Hughes Defense Communications builds for the
U.S. Army. ViaSat provides a DAMA modem to Hughes under subcontract.
EMUT is used to send encrypted voice, electronic mail, fax or other
data via satellite. The DAMA modem allows the operator to
automatically request a portion of a satellite channel to a selected
destination whenever the operator asks to send a message or make a
call. The EMUT radio, combined with a portable satellite antenna, can
be used to make a secure voice or data call almost anywhere in the
world.

- INCS (INITIAL NETWORK CONTROL SYSTEM) is the DAMA network management
system for the U.S. Air Force. There are four sites worldwide (Guam,
Hawaii, Naples and Virginia) that manage automatic DAMA access to 5
kHz band with UHF satellite channels. The network control computer
automatically allocates satellite resources to subscriber terminals
(such as EMUT) whenever a subscriber requests a voice or data service.
The INCS also keeps track of which satellite terminals are active, how
much capacity is used and how much is available. ViaSat designs,
installs and supports the whole system at each site.

- VM-200 (ALSO CALLED MD-1324) is ViaSat's stand-alone UHF DAMA modem
product. The modem can be used with many UHF satellite radios having
an industry standard 70 MHz interface. The VM-200 enables a satellite
radio to connect to a DAMA network. VM-200 modems also are used in the
INCS to communicate with subscribers. The modems connect to external
voice coders, computers or encryption equipment and provide network
access for those devices.

ViaSat's other government wireless networking products include:

- JTIDS (JOINT TACTICAL INFORMATION DISTRIBUTION SYSTEM) is an anti-jam
radio and message protocol standard for communicating real-time data
among aircraft and ground units. It connects to sensors (like radar),
computers, and targeting systems and provides information used for
navigation, target identification, tracking and fire control. JTIDS is
currently used as the wireless communication system for "digital
battlefields." It allows individual fighter planes to obtain a broad
view of the battlefield that is synthesized based on many different
views from many different participants.

- CES/JCS (COMMUNICATION ENVIRONMENT SIMULATOR/JOINT COMMUNICATION
SIMULATOR) is used to simulate a realistic radio environment which can
be used to test how well surveillance or other radio systems work in
the presence of various and changing signals. It can simulate friendly
military signals, neutral signals, commercial signals and enemy
signals. The government uses the

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simulated total environment to verify that a system under test can
correctly analyze specific target signals within a complicated and
cluttered composite signal.

- EIP (EMBEDDABLE INFOSEC PRODUCT) is a plug-in module that encrypts
classified information so that it can be broadcast over wireless
systems (terrestrial or satellite) or sent over unclassified
wirelines. EIP is unique because it can work for packet data systems
instead of on circuits. For instance, EIP can encrypt information for
the Internet (or government equivalents). EIP also can separate the
addressing and routing information from a packet and allow such
information to remain unencrypted so that the network can correctly
route the packet to its destination.

- ADC (ADVANCED DATA CONTROLLER) is a packet processing system which
provides error-free data transmission over noisy channels. ADC works
for terrestrial and satellite communications wireless lines.

Government Customers

The Company's major customers in the government DAMA market include:

- Hughes Defense Communications is the customer for the EMUT DAMA modem.
Approximately 26.5% of the Company's revenues in the first six months
of fiscal 1997 were derived from this contract. Hughes is also a
customer for the Tomahawk Baseline Improvement Program which includes
adding a UHF DAMA satellite link to Tomahawk cruise missiles.

- The U.S. Air Force Electronics System Center ("ESC") is the customer
for the 5 kHz UHF DAMA Global Initial Network Control System. ESC also
procures stand-alone DAMA modems and Control/Indicators for various
Air Force user agencies.

- Lockheed Martin is the customer for the VM-200 under the
Communications Improvement Program.

- Lockheed Martin is the customer for the airborne DAMA-capable UHF
satellite communications antenna combiner.

- The U.S. Air Force Rome Labs has entered into a contract with the
Company for SHF and tri-band DAMA development and production.

- The Company also has entered into a number of smaller contracts with
the DOD for UHF DAMA and ADC satellite equipment.

The Company's major government customers for other wireless networking
products include:

- Lockheed Martin, the U.S. Air Force and Logicon Tactical Systems
Division are the customers for JTIDS.

- The U.S. Navy and U.S. Air Force are the customers for CES/JCS.

- The U.S. Navy is the customer for EIP.

COMMERCIAL MARKETS, PRODUCTS AND CUSTOMERS

Commercial Markets

DAMA technology is increasingly being used in emerging commercial
telecommunications markets. In contrast to "pre-assigned" or "hub and spoke"
satellite networks, DAMA is well suited to primary "circuit-oriented"
telecommunication because it routes connections in real-time on a call-by-call
basis from any subscriber to any other subscriber with only one satellite hop.
See "-- Industry Background" and "-- Technology." DAMA commercial markets can be
segmented as follows:

- TURN-KEY PRIVATE NETWORK EQUIPMENT SALES for corporations and
government agencies in developing nations. These customers require
voice and/or data services. Users manage their own networks and/or
contract for management services. They lease satellite capacity in
bulk. DAMA

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equipment is selected based primarily on purchase and operating costs
for specific needs. Customers typically need to operate ten or more
sites for a turn-key private network to be economical.

- "SHARED HUB" PRIVATE NETWORK SERVICE PROVIDERS. Customers with small
networks may use a satellite service provider. The provider purchases
a DAMA network and obtains transponder capacity at wholesale rates.
The provider manages small "virtual" nets for its customers. Customers
buy capacity from the provider at retail daily, hourly or minute
rates. Service providers have different priorities than turn-key
operators. Breadth and depth of service offerings are more important
to providers since they must attract a broad base of customers. DAMA
terminals must support a range of telephone and data equipment.
Providers generally prefer flexible user terminal configurations to
meet varying customer needs. They profit from the spread between
wholesale transponder lease costs and retail minute prices, so DAMA
performance is important. Efficiency advantages (measured, for
example, by voice circuits per unit bandwidth) can offset a higher
initial terminal purchase price over the term of a service contract.

- PUBLIC NETWORK CARRIER SERVICE PROVIDERS. Many telecommunications
carriers use satellite links as part of their long distance networks.
However, the satellite segment usually consists of a pre-planned link
establishing a particular geographic connection at a fixed capacity. A
satellite DAMA network can reduce costs for independent carriers by
bypassing transit switching charges through a telecommunications hub
city. Satellite DAMA can serve as either a primary link or as a
back-up when terrestrial links are congested. DAMA satellite
technology provides an economical secondary connection because the
satellite pool of trunk lines can be quickly applied to any of the
primary terrestrial routes. The DAMA network's ability to reach many
different destinations offers a competitive advantage to a DAMA
operator whose business is selling wholesale minutes of long distance
service to national or regional carriers.

- PUBLIC NETWORK "LOCAL LOOP" SUBSCRIBER SERVICE PROVIDERS. Subscriber
services differ from the carrier services in that there is a local
loop interface between the DAMA satellite switch and a subscriber
telephone. This allows a subscriber with a small VSAT terminal to
connect directly into the public switched telephone network by using a
single dial-tone to call to other satellite subscribers or to
terrestrial phones through national (and/or international) switches.
While the Company believes the local loop subscriber service has, by
far, the greatest potential market volume for equipment manufacturers
and also represents the greatest opportunity for service providers,
there are numerous technical, regulatory and business management
hurdles to implementing this service.

Commercial Products

STARWIRE(TM) is a satellite networking system consisting of two major
elements, a network control system and a subscriber terminal. The network
control system sends and receives messages over the satellite, while the
subscriber terminal switches all user interface ports (voice and data)
individually and connects them call-by-call to an available satellite modem.
StarWire(TM) provides toll-quality voice circuits on a demand basis, efficiently
sharing satellite resources and thereby reducing costs to the end-user and the
network service provider.

StarWire(TM) products include:

- AURORA TERMINAL is a ten slot rack mountable chassis configured with
one VMM-101 and one TIM-201 (described below). The terminal is
expandable to six user traffic channels by inserting additional VMM
modems and TIM modules. Expansion beyond six channels is possible by
using additional Aurora chassis with VMM modems and TIM modules
installed.

- VMM-101 is a DAMA modem module designed for the Aurora. The VMM-101 is
a single modem used for both user-data transmission and order-wire
control channels.

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- TIM-201 is a dual channel voice encoder/decoder module designed for
the Aurora. The TIM-201 has a fax modem on board, along with an
integrated echo canceller.

- TMC-101 is a terminal monitor and control card designed for the
Aurora. The "EIP" version has an integrated LAN Ethernet port and
supports multiple daughter-cards for data communications and
additional external equipment control support.

- STARWIRE(TM) NETWORK CONTROL TERMINAL (NCT) is a ten slot rack
mountable Aurora chassis with one Network Control Computer (NCC)
interface card and two VMM-101 modems (operating as DAMA system
control channel modems).

- STARWIRE(TM) DAMA NETWORK CONTROL SOFTWARE (NCS) provides the
real-time network control and monitoring functions of the StarWire(TM)
DAMA networking system. The NCS software acts as a switch to route
calls through the network. In addition, the StarWire(TM) NCS monitors
all aspects of system operation as well as collecting historical
information about calls and maintaining detailed call records for
billing purposes.

- STARWIRE(TM) NETWORK CONTROL COMPUTER (NCC) is computing and
networking equipment designed to support the operation of the NCS
software. The non-redundant configuration (NCC-100) provides for one
operator workstation/server, Ethernet interface, Windows NT(TM)
operating system and back-up media. The redundant configuration
(NCC-200) provides two operator workstations/servers, Ethernet adapter
cards, Windows NT(TM) operating system and back-up media.

- EXTERNAL DEVICE INTERFACE DRIVER (EDID) supports third party modem and
RF terminal equipment.

Commercial Customers

The Company is in the early stages of establishing sales for its
StarWire(TM) commercial DAMA product. Activities to date have primarily focused
on establishing distribution agreements with "in-country" service providers,
distributors and original equipment manufacturers ("OEMs"). The Company also has
delivered several test versions of the StarWire(TM) product for customer
evaluation and demonstration purposes. To date, the Company has received
purchase orders from its commercial customers to purchase approximately $3.4
million, and commitments to purchase an additional $1.3 million, of its
products. The Company's major customers in the commercial DAMA market include:

- AT&T Tridom -- AT&T Tridom has the second largest VSAT revenues
(counting equipment and services) in the United States. AT&T Tridom
selected ViaSat as the private label manufacturer of an AT&T Tridom
"Clearlink"-labeled DAMA VSAT product through competitive bids. AT&T
Tridom has taken delivery of two test systems, one of which is
installed at a customer site in Indonesia.

- HCL Comnet -- HCL Comnet, located in India, operates the largest
single VSAT network in India for the national stock exchange. HCL
Comnet selected ViaSat's StarWire(TM) system for HCL Comnet's DAMA
private network products and services. ViaSat's contract with HCL
Comnet provides that HCL Comnet must use ViaSat as its exclusive
supplier of DAMA networks and that ViaSat may not supply DAMA networks
to any other India-based company, although ViaSat may supply such
networks to companies based in other areas which provide VSAT services
in India. HCL Comnet has placed an order for initial production
systems.

- Hutchison Telecommunications -- ViaSat and Hutchison
Telecommunications have recently entered into a contract for
intranational and international carrier satellite telephony equipment.
The contact also provides for advanced digital data capabilities for
public and private networks. The contract was awarded after
competition from many other DAMA vendors. Under the terms of the
contract, Hutchison Telecommunications has the right to terminate the
contract and, under certain circumstances, receive liquidated damages
from the Company of up to approximately $275,000, as well as other
damages. See "Risk Factors -- Development Contracts."

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- ViaSat also has executed distribution agreements and purchase
contracts with companies operating VSAT networks in Mexico, the
Caribbean, South America and other regions.

RESEARCH AND DEVELOPMENT

The Company believes that its future success depends on its ability to
adapt to the rapidly changing satellite communications and related real-time
signal processing and networking software environment, and to continue to meet
its customers' needs. Therefore, the continued timely development and
introduction of new products is essential in maintaining its competitive
position. The Company develops most of its products in-house and currently has a
research and development staff which includes over 150 engineers. A significant
portion of the Company's research and development efforts in the defense
industry have generally been conducted in direct response to the specific
requirements of a customer's order and, accordingly, such amounts are included
in the cost of sales when incurred and the related funding (which includes a
profit component) is included in net revenues at such time. Revenues for funded
research and development during the fiscal years ended March 31, 1994, 1995 and
1996 and the six months ended September 30, 1996 were approximately $9.7
million, $20.7 million, $19.5 million and $11.6 million, respectively. In
addition, the Company invested $134,000, $788,000 and $2.8 million,
respectively, during the fiscal years ended March 31, 1994, 1995 and 1996 on
independent research and development, which is not directly funded by a third
party. Funded research and development contains a profit component and is
therefore not directly comparable to independent research and development. As a
government contractor, the Company also is able to recover a portion of its
independent research and development expenses, consisting primarily of salaries
and other personnel-related expenses, supplies and prototype materials related
to research and development programs, pursuant to its government contracts.

The Company has benefitted and continues to benefit from the SBIR program,
through which the government provides research and development funding for
companies with fewer than 500 employees. While the Company has already harvested
significant benefits from the SBIR program throughout the initial developmental
stages of its core technology base, the Company believes that its business,
financial condition and results of operations would not be materially adversely
affected if the Company were to lose its SBIR funding status. The Company plans
to leverage from this technology base to further develop products for commercial
applications.

MANUFACTURING

The Company's manufacturing objective is to produce products that conform
to its specifications at the lowest possible manufacturing cost. The Company is
engaged in an effort to increase the standardization of its manufacturing
process in order to permit it to more fully utilize contract manufacturers. As
part of its program to reduce the cost of its manufacturing and to support an
increase in the volume of orders, the Company primarily utilizes contract
manufacturers in its manufacturing process. The Company conducts extensive
testing and quality control procedures for all products before they are
delivered to customers.

The Company also relies on outside vendors to manufacture certain
components and subassemblies used in the production of the Company's products.
Certain components, subassemblies and services necessary for the manufacture of
the Company's products are obtained from a sole supplier or a limited group of
suppliers. In particular, Texas Instruments is a sole source supplier of digital
signal processing chips, which are critical components used by the Company in
substantially all of its products. The Company intends to reserve its limited
internal manufacturing capacity for new products and products manufactured in
accordance with a customer's custom specifications or expected delivery
schedule. Therefore, the Company's internal manufacturing capability for
standard products has been, and is expected to continue to be, very limited, and
the Company intends to rely on contract manufacturers for large scale
manufacturing. There can be no assurance that the Company's internal
manufacturing capacity and that of its contract manufacturers and suppliers will
be sufficient to fulfill the Company's orders in a timely manner. Failure to
manufacture, assemble and deliver products and meet customer demands on a timely
and cost effective basis could damage relationships with customers and have a
material adverse effect on the Company's business, financial condition and
operating results.

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SALES AND MARKETING

The Company markets its products to the DOD and to commercial customers
worldwide primarily through the Company's internal sales and marketing staff of
nine people. After the Company has identified key potential customers in its
market segments, the Company makes sales calls with its sales, management and
engineering personnel. Many of the companies entering the wireless
communications markets possess expertise in digital processing and wired systems
but relatively little experience in DAMA wireless transmission. In order to
promote widespread acceptance of its products and provide customers with support
for their wireless transmission needs, the Company's sales and engineering teams
work closely with its customers to develop tailored solutions to their wireless
transmission needs. The Company believes that its customer engineering support
provides it with a key competitive advantage.

During the fiscal year ended March 31, 1996 and the six months ended
September 30, 1996, respectively, ViaSat sold products to approximately 42 and
26 customers of which DOD contracts accounted for approximately 97.5% and 99.1%
of total revenues.

BACKLOG

At September 30, 1996, the Company had firm backlog of $43.5 million, of
which $40.1 million was funded, not including options of $26.9 million. Of the
$43.5 million in firm backlog, approximately $24.0 million is expected to be
delivered in the fiscal year ending March 31, 1997, $17.4 million is expected to
be delivered in the fiscal year ending March 31, 1998 and the balance is
expected to be delivered in the fiscal year ending March 31, 1999. The Company
had firm backlog of $28.7 million, not including options of $28.0 million, at
March 31, 1996, compared to firm backlog of $31.7 million, not including options
of $27.3 million, at March 31, 1995. The Company includes in its backlog only
those orders for which it has accepted purchase orders. However, backlog is not
necessarily indicative of future sales. A majority of the Company's backlog
scheduled for delivery can be terminated at the convenience of the government
since orders are often made substantially in advance of delivery, and the
Company's contracts typically provide that orders may be terminated with limited
or no penalties. In addition, purchase orders may set forth product
specifications that would require the Company to complete additional product
development. A failure to develop products meeting such specifications could
lead to a termination of the related purchase order.

The backlog amounts as presented are comprised of funded and unfunded
components. Funded backlog represents the sum of contract amounts for which
funds have been specifically obligated by customers to contracts. Unfunded
backlog represents future contract or option amounts that customers may obligate
over the specified contract performance periods. The Company's customers
allocate funds for expenditures on long-term contracts on a periodic basis. The
Company is committed to produce products under its contracts to the extent funds
are provided. The funded component of the Company's backlog at September 30,
1996 was approximately $40.1 million, and the funded components of the Company's
backlog at March 31, 1995 and 1996 were $29.6 million and $26.3 million,
respectively. The ability of the Company to realize revenues from government
contracts in backlog is dependent upon adequate funding for such contracts.
Although funding of its government contracts is not within the Company's
control, the Company's experience indicates that actual contract fundings have
ultimately been approximately equal to the aggregate amounts of the contracts.

GOVERNMENT CONTRACTS

A substantial portion of the Company's revenues are derived from contracts
and subcontracts with the DOD and other federal government agencies. Many of the
Company's contracts are competitively bid and awarded on the basis of technical
merit, personnel qualifications, experience and price. The Company also receives
some contract awards involving special technical capabilities on a negotiated,
noncompetitive basis due to the Company's unique technical capabilities in
special areas. Future revenues and income of the Company could be materially
affected by changes in procurement policies, a reduction in expenditures for the
products and services provided by the Company, and other risks generally
associated with federal government contracts. See "Risk Factors -- Dependence on
Defense Market" and "-- Government Regulations."

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The Company provides products under federal government contracts that
usually require performance over a period of one to five years. Long-term
contracts may be conditioned upon continued availability of Congressional
appropriations. Variances between anticipated budget and Congressional
appropriations may result in a delay, reduction or termination of such
contracts. Contractors often experience revenue uncertainties with respect to
available contract funding during the first quarter of the government's fiscal
year beginning October 1, until differences between budget requests and
appropriations are resolved.

The Company's federal government contracts are performed under
cost-reimbursement contracts, time-and-materials contracts and fixed-price
contracts. Cost-reimbursement contracts provide for reimbursement of costs (to
the extent allowable, allocable and reasonable under Federal Acquisition
Regulations) and for payment of a fee. The fee may be either fixed by the
contract (cost-plus-fixed fee) or variable, based upon cost control, quality,
delivery and the customer's subjective evaluation of the work (cost-plus-award
fee). Under time-and-materials contracts, the Company receives a fixed amount by
labor category for services performed and is reimbursed (without fee) for the
cost of materials purchased to perform the contract. Under a fixed-price
contract, the Company agrees to perform certain work for a fixed price and,
accordingly, realizes the benefit or detriment to the extent that the actual
cost of performing the work differs from the contract price. Contract revenues
for the fiscal year ended March 31, 1996 and the six months ended September 30,
1996, respectively, were approximately 38.7% and 37.2% from cost-reimbursement
contracts, approximately 5.0% and 5.9% from time-and-materials contracts and
approximately 56.3% and 56.9% from fixed-price contracts. See "Risk
Factors -- Contract Profit Exposure."

The Company's allowable federal government contract costs and fees are
subject to audit by the Defense Contract Audit Agency. Audits may result in
non-reimbursement of some contract costs and fees. While the government reserves
the right to conduct further audits, audits conducted for periods through fiscal
1994 have resulted in no material cost recovery disallowances for the Company.

The Company's federal government contracts may be terminated, in whole or
in part, at the convenience of the government. If a termination for convenience
occurs, the government generally is obligated to pay the cost incurred by the
Company under the contract plus a pro rata fee based upon the work completed.
When the Company participates as a subcontractor, the Company is at risk if the
prime contractor does not perform its contract. Similarly, when the Company as a
prime contractor employs subcontractors, the Company is at risk if a
subcontractor does not perform its subcontract.

Some of the Company's federal government contracts contain options which
are exercisable at the discretion of the customer. An option may extend the
period of performance for one or more years for additional consideration on
terms and conditions similar to those contained in the original contract. An
option may also increase the level of effort and assign new tasks to the
Company. In the Company's experience, options are usually exercised.

The Company's eligibility to perform under its federal government contracts
requires the Company to maintain adequate security measures. The Company has
implemented security procedures which it believes are adequate to satisfy the
requirements of its federal government contracts.

GOVERNMENT REGULATIONS

Certain of the Company's products are incorporated into wireless
telecommunications systems that are subject to regulation domestically by the
Federal Communications Commission and internationally by other government
agencies. Although the equipment operators and not the Company are responsible
for compliance with such regulations, regulatory changes, including changes in
the allocation of available frequency spectrum and in the military standards
which define the current networking environment, could materially adversely
affect the Company's operations by restricting development efforts by the
Company's customers, making current products obsolete or increasing the
opportunity for additional competition. Changes in, or the failure by the
Company to manufacture products in compliance with, applicable domestic and
international regulations could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
increasing demand for wireless telecommunications has exerted pressure on
regulatory bodies worldwide to adopt new standards for such products, generally
following extensive

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investigation and deliberation over competing technologies. The delays inherent
in this governmental approval process have in the past caused and may in the
future cause the cancellation, postponement or rescheduling of the installation
of communication systems by the Company's customers, which in turn may have a
material adverse effect on the sale of products by the Company to such
customers.

The Company is also subject to a variety of local, state and federal
governmental regulations relating to the storage, discharge, handling, emission,
generation, manufacture and disposal of toxic or other hazardous substances used
to manufacture the Company's products. The failure to comply with current or
future regulations could result in the imposition of substantial fines on the
Company, suspension of production, alteration of its manufacturing processes or
cessation of operations. To date, these regulations have not had a material
effect on the Company, as the Company has neither incurred significant costs to
maintain compliance nor to remedy past noncompliance.

The Company believes that it operates its business in material compliance
with applicable government regulations. The Company is not aware of any pending
legislation which if enacted could have a material adverse effect on the
Company's business, financial condition and results of operations.

COMPETITION

The markets for the Company's products and services are extremely
competitive, and the Company expects that competition will increase in such
markets. See "Risk Factors -- Competition." The Company faces intense
competition in both government and commercial wireless networking markets.

Government DAMA Competition. Competition in the government DAMA market
consists primarily of other companies offering DAMA capable modem, radio or
network control equipment that is compatible with the open MIL-STD protocols.
The government DAMA competitors are significantly larger companies than ViaSat
and include Titan Corporation, Rockwell International, Raytheon Corporation and
GEC (UK). The Company believes that it is well-positioned among these
competitors because of its significant backlog of DAMA modem orders, its market
lead time with respect to 5 kHz DAMA product certification and its participation
in both the network control and subscriber terminal markets.

Government Non-DAMA Competition. There is also intense competition in
other wireless networking markets. The JTIDS market, in particular, is dominated
by two very large competitors (Rockwell and GEC-Marconi). The Company believes
its strategic alliance with Lockheed Martin provides the Company with a relative
advantage because Lockheed Martin is the single largest government contractor
and is also a large potential customer, as it manufactures and upgrades many
aircraft that are candidates for JTIDS radios.

The Company's simulation and test equipment and information security
products represent relatively new technologies in markets that are still small.
Most of the Company's competition in these markets stems from alternative
technologies that may or may not be applicable to any particular customer.

Commercial DAMA Competition. There is intense competition in the
commercial DAMA market from companies that have strong positions in the TDM/TDMA
VSAT business, as well as from other companies that seek to enter the VSAT
market using DAMA technology. Most of the leading TDM/TDMA VSAT companies are
offering DAMA products, including Hughes Network Systems, an affiliate of Hughes
Defense Communications (see "Risk Factors -- Dependence on Defense Market"),
Scientific Atlanta Inc., Gilat Satellite Networks Ltd., STM Wireless Inc. and
NEC. In addition, there are also other types of competing DAMA technologies
being developed.

AT&T Tridom, which is one of the largest VSAT equipment and service
providers and which offers TDM/TDMA products, has entered into a strategic
alliance with the Company to sell the Company's products under an OEM agreement.
The Company believes that this may allow it to compete for customers seeking
hybrid TDM/TDMA and DAMA VSAT solutions.

In different situations, DAMA products may be evaluated in comparison with
either TDM/TDMA technology, DAMA technology from other companies, dedicated SCPC
technology, mobile satellite technology or possibly terrestrial wireless
solutions. The Company believes that it has a good understanding of those

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situations where DAMA systems in general, and its technology in particular,
offer the best overall value to its customers, and tends to focus its marketing
and selling efforts on those applications. DAMA technology is most attractive
for customers with telephone, fax or other circuit-oriented applications. DAMA
technology also allows networks to achieve much higher total capacity, with
better voice quality than TDM/TDMA networks.

The Company seeks to establish strategic alliances with satellite service
providers which would most benefit from its particular technological advantages.
The Company has established such relationships with a few key companies,
including HCL Comnet in India. The Company believes that its products offer the
lowest total cost of ownership for service providers considering the flexibility
of its equipment, its transponder capacity advantages and the breadth of its
service offerings.

INTELLECTUAL PROPERTY

The Company relies on a combination of trade secrets, copyrights,
trademarks, service marks and contractual rights to protect its intellectual
property. The Company attempts to protect its trade secrets and other
proprietary information through agreements with its customers, suppliers,
employees and consultants, and through other security measures. Although the
Company intends to protect its rights vigorously, there can be no assurance that
these measures will be successful. In addition, the laws of certain countries in
which the Company's products are or may be developed, manufactured or sold may
not protect the Company's products and intellectual property rights to the same
extent as the laws of the United States.

While the Company's ability to compete may be affected by its ability to
protect its intellectual property, the Company believes that, because of the
rapid pace of technological change in the wireless personal communications
industry, its technical expertise and ability to introduce new products on a
timely basis will be more important in maintaining its competitive position than
protection of its intellectual property and that patent, trade secret and
copyright protections are important but must be supported by other factors such
as the expanding knowledge, ability and experience of the Company's personnel,
new product introductions and frequent product enhancements. Although the
Company continues to implement protective measures and intends to defend
vigorously its intellectual property rights, there can be no assurance that
these measures will be successful. See "Risk Factors -- Limited Protection of
the Company's Intellectual Property."

There can be no assurance that third parties will not assert claims against
the Company with respect to existing and future products. In the event of
litigation to determine the validity of any third party's claims, such
litigation could result in significant expense to the Company and divert the
efforts of the Company's technical and management personnel, whether or not such
litigation is determined in favor of the Company. The wireless communications
industry has been subject to frequent litigation regarding patent and other
intellectual property rights. Leading companies and organizations in the
industry have numerous patents that protect their intellectual property rights
in these areas. In the event of an adverse result of any such litigation, the
Company could be required to expend significant resources to develop
non-infringing technology or to obtain licenses to the technology which is the
subject of the litigation. There can be no assurance that the Company would be
successful in such development or that any such license would be available on
commercially reasonable terms.

EMPLOYEES

As of September 30, 1996, the Company had 257 employees (15 of which were
temporary employees), including over 150 in research and development, nine in
marketing and sales, 40 in production, and 53 in corporate, administration and
production coordination. The Company believes that its future prospects will
depend, in part, on its ability to continue to attract and retain skilled
engineering, marketing and management personnel, who are in great demand. In
particular, there is a limited supply of highly qualified engineers with
appropriate experience. See "Risk Factors -- Dependence on Key Personnel." Each
of the Company's employees is required to sign an Invention and Confidential
Disclosure Agreement upon joining the Company. Under such agreement, each
employee agrees that any inventions developed by such employee during the term
of employment are the exclusive property of the Company and that such employee
will not disclose or

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45

use in any way information related to the Company's business or products, either
during the term of such employee's employment or at any time thereafter. The
Company currently employs over 150 engineers, including 75 engineers who have
masters degrees and seven engineers who have doctorate degrees. None of the
Company's employees are covered by a collective bargaining agreement and the
Company has never experienced any strike or work stoppage. The Company believes
that its relations with its employees are good.

PROPERTIES

The Company's headquarters are located in an approximately 37,000 square
foot leased facility in Carlsbad, California. This facility houses the Company's
management, marketing and sales personnel. The lease for this facility
terminates in November 1998. The Company also leases another facility in
Carlsbad, California containing approximately 49,000 square feet for research
and development, application engineering and manufacturing coordination
activities. This lease terminates in August 1999 with options to renew for two
additional periods of two years each. In addition, the Company leases two
smaller sales facilities aggregating approximately 2,600 square feet located in
Boston, Massachusetts, and Melbourne, Florida. The Boston lease terminates in
May 1998 with an option to renew for one additional period of two years. The
Melbourne lease terminates in March 1997 with no renewal options. Annual leasing
costs of the Company totaled $387,000, $493,000 and $608,000 for the fiscal
years ended March 31, 1994, 1995 and 1996, respectively. The Company believes
that its existing facilities are adequate to meet its current needs and that
suitable additional or alternative space will be available on commercially
reasonable terms as needed.

LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings other than various
claims and lawsuits arising in the ordinary course of its business which, in the
opinion of the Company's management, are not individually or in the aggregate
material to its business.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers, directors and other principal officers of the
Company, and their ages as of September 30, 1996, are as follows:

NAME AGE POSITION
- ------------------------ --- ------------------------------------------------------

Mark D. Dankberg........ 41 Chairman of the Board, President and Chief Executive
Officer
Gregory D. Monahan...... 51 Vice President, Chief Financial Officer and General
Counsel
Thomas E. Carter........ 42 Vice President -- Engineering
Andrew M. Paul.......... 41 Vice President -- Commercial Operations
James P. Collins........ 53 Vice President -- Business Development
Mark J. Miller.......... 37 Vice President, Chief Technical Officer and Secretary
Steven R. Hart.......... 43 Vice President and Chief Technical Officer
Robert W. Johnson....... 47 Director
Jeffrey M. Nash......... 49 Director
B. Allen Lay............ 62 Director

Mr. Dankberg was a founder of the Company and has served as Chairman of the
Board, President and Chief Executive Officer of the Company since its inception
in May 1986. Prior to joining the Company, he was Assistant Vice President of
M/A-COM Linkabit, a manufacturer of satellite telecommunications equipment, from
1979 to 1986 and Communications Engineer for Rockwell International from 1977 to
1979. Mr. Dankberg holds B.S.E.E. and M.E.E. degrees from Rice University.

Mr. Monahan has served as Vice President, Chief Financial Officer and
General Counsel of the Company since December 1988. Prior to joining the
Company, Mr. Monahan was Assistant Vice President of M/A-COM Linkabit from 1978
to 1988. Mr. Monahan holds a J.D. degree from the University of San Diego and
B.S.M.E. and M.B.A. degrees from the University of California, Berkeley.

Dr. Carter has served as Vice President -- Engineering of the Company since
November 1990. Prior to joining the Company, Dr. Carter served in several
positions including Business Area Manager, Program Manager and System
Engineering Department Manager in the Military Electronics and Avionics Division
of TRW Inc. Dr. Carter holds a Ph.D. in Electrical Engineering from the
University of Southern California and B.S.E.E. and M.S.E.E. degrees from Rice
University.

Mr. Paul has served as Vice President -- Commercial Operations of the
Company since March 1993. Prior to joining the Company, Mr. Paul served as Vice
President and General Manager of the Western Region of Evernet Systems, Inc., a
computer network integrator, from 1992 to 1993. Previously, Mr. Paul was Vice
President of Sales at ComStream Corp. from 1989 to 1992. Mr. Paul holds a B.A.
degree from Stanford University.

Mr. Collins has served as Vice President -- Business Development of the
Company since December 1988. Prior to joining the Company, Mr. Collins was
Assistant Vice President of M/A-COM Linkabit from 1982 to 1988. Mr. Collins was
a Director of Marketing at General Dynamics from 1976 to 1982 and prior to that
served on active duty in the U.S. Army for ten years. Mr. Collins currently
serves in the U.S. Army Reserve and was recently selected for assignment as a
Brigadier General. He holds a B.A. degree from Hofstra University and an M.S.
degree in Geodetic Science from Ohio State University.

Mr. Miller was a founder of the Company and has served as Vice President
and Chief Technical Officer of the Company since 1993 and as Engineering Manager
and Secretary since 1986. Prior to joining the Company, Mr. Miller was a Staff
Engineer at M/A-COM Linkabit from 1983 to 1986. Mr. Miller holds a B.S.E.E.
degree from the University of California, San Diego and a M.S.E.E. degree from
the University of California, Los Angeles.

Mr. Hart was a founder of the Company and has served as Vice President and
Chief Technical Officer since 1993 and as Engineering Manager since 1986. Prior
to joining the Company, Mr. Hart was a Staff Engineer and Manager at M/A-COM
Linkabit from 1982 to 1986. Mr. Hart holds a B.S. in Mathematics

44
47

from the University of Nevada, Las Vegas and a M.A. in Mathematics from the
University of California, San Diego.

Mr. Johnson has been a director of the Company since 1986. Mr. Johnson has
been self-employed as a private investor from 1988 to the present. From 1983 to
1988, Mr. Johnson was a Principal of Southern California Ventures ("SCV"). Mr.
Johnson currently is a director of STAC Inc., a publicly-held company which
manufactures semiconductors and software for data storage and communications,
Proxima Corporation, a publicly-held company which manufactures computer display
equipment, and TransTech Information Management Systems, Inc., a privately-held
company which manufactures software for the towing and recovery industry.

Dr. Nash has been a director of the Company since 1987. Since August 1995,
he has been President, Chief Executive Officer and a director of TransTech
Information Management Systems, Inc., a privately-held company which
manufactures software for the towing and recovery industry. From 1994 to the
present, Dr. Nash has been Chairman of the Board of Digital Perceptions, Inc.,
and, from 1989 to 1994, was the Chief Executive Officer and President of Visqus
as well as Conner Technology, Inc., both subsidiaries of Conner Peripherals,
Inc. Dr. Nash is currently a director of REMEC, Inc., a publicly-held company
which manufactures microwave multi-function modules, Proxima Corporation, a
publicly-held company which manufactures computer display equipment, and Esscor,
Inc., a privately-held electrical utility simulation company.

Mr. Lay has been a director of the Company since 1996. Since 1983, he has
been a General Partner of SCV. Mr. Lay is Chief Executive Officer and a director
of Vestro Natural Foods Inc., a publicly-held natural foods marketing company.
Mr. Lay is also a director of Pair Gain Technology, Inc., a publicly-held
telecommunications company, Physical Optics Company, a privately-held optical
systems and subsystems company, Kofax Imaging Systems, a privately-held document
imaging systems company, and Medclone Inc., a privately-held biotech company.

The Company intends to recruit an additional outside director with
experience in industries complementary to the Company's business following the
closing of this offering.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee. Following the closing of this offering, the Board of
Directors will establish an audit committee (the "Audit Committee"), which will
consist of two or more independent directors. The Audit Committee will be
established to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans and
results of the audit engagement, approve professional services provided by the
independent public accountants, review the independence of the independent
public accounts, consider the range of audit and non-audit fees and review the
adequacy of the Company's internal accounting controls.

Compensation Committee. Following the closing of this offering, the Board
of Directors will establish a compensation committee (the "Compensation
Committee"), which will consist of two or more non-employee or independent
directors to the extent required by Rule 16b-3 under the Exchange Act, to
determine compensation for the Company's executive officers and awards under the
Company's 1996 Equity Participation Plan and Employee Stock Purchase Plan.

The Board of Directors initially will not have a nominating committee or
any other committee.

COMPENSATION OF DIRECTORS

During the fiscal year ended March 31, 1996, Messrs. Johnson, Nash and Lay
each received options to purchase 3,668 shares of Common Stock at an exercise
price of $1.36 per share. Other than such options, the directors of the Company
received zero compensation from the Company for services rendered as a director
during the fiscal year ended March 31, 1996. The Company expects that, following
the closing of this offering, its independent directors will be paid in a manner
and at a level consistent with industry practice.

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EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
for the fiscal year ended March 31, 1996 received by the Chief Executive Officer
and the five other most highly compensated executive officers of the Company
(collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
AWARDS
------------
FISCAL YEAR NUMBER OF
COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION(S) SALARY BONUS OPTIONS COMPENSATION(1)
- --------------------------------------------- --------- -------- ------------ ---------------

Mark D. Dankberg............................. $ 165,000 $ 35,000 14,670 $ 5,726
Chairman of the Board, President and Chief
Executive Officer
Thomas E. Carter............................. 131,500 10,000 40,343 4,723
Vice President -- Engineering
Gregory D. Monahan........................... 124,000 8,000 14,670 4,703
Vice President, Chief Financial Officer and
General Counsel
Andrew M. Paul............................... 125,938 5,000 8,802 2,274
Vice President -- Commercial Operations
Steven R. Hart............................... 112,500 8,000 3,668 4,716
Vice President and Chief Technical Officer
Mark J. Miller............................... 112,000 8,000 3,668 1,582
Vice President, Chief Technical Officer and
Secretary

- ---------------
(1) Includes contributions to the Company's 401(k) Plan.

The following table sets forth certain information concerning individual
grants of stock options made by the Company during the fiscal year ended March
31, 1996 to each of the Named Executive Officers.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME GRANTED FISCAL 1996 PER SHARE DATE 5% 10%
- ------------------------------ ---------- ------------ ----------- ---------- -------- --------

Mark D. Dankberg.............. 14,670 12.54% $1.50 6/26/00 $ 28,078 $ 35,439
Thomas E. Carter.............. 40,343 34.47 1.36 6/26/00 70,025 88,363
Gregory D. Monahan............ 14,670 12.54 1.36 6/26/00 25,463 32,132
Andrew M. Paul................ 8,802 7.52 1.36 6/26/00 15,278 19,279
Steven R. Hart................ 3,668 3.13 1.50 6/26/00 7,022 8,861
Mark J. Miller................ 3,668 3.13 1.36 6/26/00 6,367 8,034

- ---------------
(1) These amounts represent assumed rates of appreciation in the price of the
Common Stock during the terms of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of the Common
Stock and overall stock market conditions. There is no representation that
the rates of appreciation reflected in this table will be achieved.

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49

The following table sets forth certain information concerning exercises of
stock options by the Named Executive Officers during the fiscal year ended March
31, 1996, and the number of options and value of unexercised options held by
each of the Named Executive Officers at March 31, 1996.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT FISCAL
SHARES OPTIONS AT FISCAL YEAR-END YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------

Mark D. Dankberg............ -- -- -- 14,670 -- --
Thomas E. Carter............ -- -- 37,225 72,800 $34,738 $27,013
Gregory D. Monahan.......... 8,215 $ 5,705 -- 28,093 -- 8,720
Andrew M. Paul.............. -- -- 5,135 18,338 2,800 5,200
Steven R. Hart.............. -- -- -- 3,668 -- --
Mark J. Miller.............. -- -- -- 3,668 -- --

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

(1) The dollar values have been calculated by determining the difference between
the fair market value of the securities underlying the options as determined
in good faith by the Board of Directors at the applicable date and the
exercise price of the options. The options were granted on November 8, 1993,
July 20, 1994, October 4, 1994 and June 26, 1995 at exercise prices of
$0.34, $0.48, $0.82 and $1.36, respectively, which equaled the fair market
value of the Common Stock as determined by the Board of Directors on such
dates.

1993 STOCK OPTION PLAN

In 1993, the Company adopted the ViaSat, Inc. 1993 Stock Option Plan (the
"1993 Stock Option Plan") to enable key employees, consultants and non-employee
directors of the Company to acquire a proprietary interest in the Company, and
thus to create in such persons an increased interest in and a greater concern
for the welfare of the Company. The 1993 Stock Option Plan provided for
aggregate option grants of up to 733,500 shares. As of September 30, 1996,
options to purchase an aggregate of 375,509 shares of Common Stock at prices
ranging from $0.34 to $4.50 were outstanding under the 1993 Stock Option Plan.
No additional grants will be made under the 1993 Stock Option Plan after the
consummation of this offering.

1996 EQUITY PARTICIPATION PLAN

In connection with this offering, the Company has adopted the ViaSat, Inc.
1996 Equity Participation Plan (the "1996 Equity Participation Plan") designed
to update and replace the 1993 Stock Option Plan. The 1996 Equity Participation
Plan provides for the grant to executive officers, other key employees,
consultants and non-employee directors of the Company of a broad variety of
stock-based compensation alternatives such as nonqualified stock options,
incentive stock options, restricted stock and performance awards. Grants under
the 1996 Equity Participation Plan may provide participants with rights to
acquire shares of Common Stock.

The 1996 Equity Participation Plan will be administered by the Compensation
Committee, which is authorized to select from among the eligible participants
the individuals to whom options, restricted stock purchase rights and
performance awards are to be granted and to determine the number of shares to be
subject thereto and the terms and conditions thereof. The members of the
Compensation Committee who are not affiliated with the Company will select from
among the eligible participants the individuals to whom nonqualified stock
options are to be granted, except as set forth below, and will determine the
number of shares to be subject thereto and the terms and conditions thereof. The
Compensation Committee is also authorized to adopt, amend and rescind rules
relating to the administration of the 1996 Equity Participation Plan.

Nonqualified stock options will provide for the right to purchase Common
Stock at a specified price which may be less than fair market value on the date
of grant (but not less than par value), and usually will

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50

become exercisable in installments after the grant date. Nonqualified stock
options may be granted for any reasonable term.

Incentive stock options will be designed to comply with the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), and will be subject
to restrictions contained in the Code, including exercise prices equal to at
least 100% of fair market value of Common Stock on the grant date and a ten year
restriction on their term, but may be subsequently modified to disqualify them
from treatment as an incentive stock option.

Restricted stock may be sold to participants at various prices (but not
below par value) and made subject to such restrictions as may be determined by
the Compensation Committee. Restricted stock, typically, may be repurchased by
the Company at the original purchase price if the conditions or restrictions are
not met. In general, restricted stock may not be sold, or otherwise transferred
or hypothecated, until restrictions are removed or expire. Purchasers of
restricted stock, unlike recipients of options, will have voting rights and will
receive dividends prior to the time when the restrictions lapse.

Performance awards may be granted by the Compensation Committee on an
individual or group basis. Generally, these awards will be based upon specific
agreements and may be paid in cash or in Common Stock or in a combination of
cash and Common Stock. Performance awards may include "phantom" stock awards
that provide for payments based upon increases in the price of the Company's
Common Stock over a predetermined period. Performance awards also may include
bonuses which may be granted by the Compensation Committee on an individual or
group basis and which may be payable in cash or in Common Stock or in a
combination of cash and Common Stock.

Upon the closing of this offering, the Company estimates that it will issue
to recently-hired executive officers and other key employees of the Company
options to purchase approximately 15,000 shares of Common Stock pursuant to the
1996 Equity Participation Plan.

A maximum of 750,000 shares are reserved for issuance under the 1996 Equity
Participation Plan.

EMPLOYEE STOCK PURCHASE PLAN

In connection with this offering, the Company has adopted the ViaSat, Inc.
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") to assist
employees of the Company in acquiring a stock ownership interest in the Company
and to encourage them to remain in the employment of the Company. The Employee
Stock Purchase Plan is intended to qualify under Section 423 of the Code. A
maximum of 250,000 shares of Common Stock will be reserved for issuance under
the Employee Stock Purchase Plan. The Employee Stock Purchase Plan permits
eligible employees to purchase Common Stock at a discount through payroll
deductions during specified six-month offering periods. No employee may purchase
more than $25,000 worth of stock in any calendar year. The price of shares
purchased under the Employee Stock Purchase Plan will be equal to 85% of the
fair market value of the Common Stock on the first or last day of the offering
period, whichever is lower. The Employee Stock Purchase Plan will be
administered by the Compensation Committee.

401(K) PLAN

The Company adopted a tax-qualified employee savings and retirement plan
(the "401(k) Plan") effective January 1990 covering all employees who have been
employed by the Company for at least 90 days and who are at least 21 years of
age. Pursuant to the 401(k) Plan, employees may elect to reduce their current
compensation by not less than 1.0% nor more than 15.0% of eligible compensation
and have the amount of such reduction contributed to the 401(k) Plan. The 401(k)
Plan permits, but does not require, additional cash contributions to the 401(k)
Plan by the Company. The trustee under the 401(k) Plan invests the assets of the
401(k) Plan in designated investment options. The 401(k) Plan is intended to
qualify under Section 401 of the Code so that contributions to the 401(k) Plan,
and income earned on plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and so that contributions by the Company are
deductible by the Company when made for income tax purposes.

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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended March 31, 1996, each director of the Company,
including Mark D. Dankberg, Chairman, President and Chief Executive Officer of
the Company, participated in all discussions and decisions regarding salaries
and incentive compensation for all employees and consultants of the Company,
except that Mr. Dankberg was excluded from discussions regarding his own salary
and incentive compensation.

Mr. Johnson, individually, and Mr. Lay, through his position as a General
Partner of SCV, had an interest in the Company's sale of Series A Convertible
Preferred Stock and the related transactions described under "Certain
Transactions."

CERTAIN TRANSACTIONS

In June 1986, the Company sold 3,000,000 shares of Series A Convertible
Preferred Stock to SCV and certain of its affiliates, including Robert W.
Johnson, a director of the Company, at a price of $0.10 per share in a private
placement transaction. Each outstanding share of Series A Convertible Stock will
automatically convert into one share of Common Stock upon the closing of this
offering. For a description of the rights, preferences and privileges of the
Series A Convertible Preferred Stock, see Note 5 of Notes to Financial
Statements.

In connection with the sale of the Series A Convertible Preferred Stock in
June 1986, the Company entered into a Shareholders Agreement with SCV and
certain of its affiliates, including Robert W. Johnson, a director of the
Company, providing for the corporate governance of the Company. The Shareholders
Agreement will terminate upon the closing of this offering.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of October 25, 1996, and as adjusted to reflect
the sale of the shares offered by this Prospectus (i) by each of the Company's
directors and each of the Named Executive Officers, (ii) by all directors and
executive officers as a group, (iii) by each person who is known by the Company
to own beneficially more than 5% of the Common Stock, and (iv) by the Selling
Stockholders. Unless otherwise indicated, the address for all stockholders
listed in the table is c/o ViaSat, 2290 Cosmos Court, Carlsbad, California
92009.

SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING(1) NUMBER OF OFFERING(1)
----------------------- SHARES -----------------------
NAME AND ADDRESS NUMBER PERCENT(2) OFFERED NUMBER PERCENT(2)
- --------------------------------------- --------- ---------- --------- --------- ----------

Southern California Ventures(3)........ 1,995,120 33.92% 455,377 1,539,743 20.44%
406 Amapula Avenue, Suite 205
Torrance, California 90501
Mark D. Dankberg(4).................... 885,335 15.03 29,340 855,995 11.35
Steven R. Hart(5)...................... 661,434 11.24 25,673 635,761 8.44
Mark J. Miller(6)...................... 367,915 6.25 18,338 349,577 4.64
Maureen Miller......................... 293,519 4.99 7,335 286,184 3.80
3042 Spearman Lane
Spring Valley, California 91978
Thomas E. Carter(7).................... 183,925 3.09 9,536 174,389 2.30
Robert W. Johnson(8)................... 183,375 3.12 -- 183,375 2.43
Gregory D. Monahan(9).................. 175,600 2.98 -- 175,600 2.33
Jeffrey M. Nash(10).................... 165,038 2.81 -- 165,038 2.19
James P. Collins....................... 115,893 1.97 4,401 111,492 1.48
Andrew M. Paul(11)..................... 89,634 1.52 -- 89,634 1.19
B. Allen Lay(12)....................... -- -- -- -- --
All directors and executive officers as
a group (9 persons)(13).............. 2,712,256 46.12 82,887 2,629,369 34.91

- ---------------
(1) Assumes no exercise of the Underwriters' over-allotment option. Except as
indicated in the footnotes to this table, to the Company's knowledge, each
stockholder identified in the table possesses sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by such stockholder.

(2) Applicable percentage of ownership for each stockholder is based on
5,881,503 shares of Common Stock outstanding as of October 25, 1996
(including 2,365,538 shares of Common Stock to be issued upon conversion of
the Preferred Stock), together with applicable options for such
stockholder. Beneficial ownership is determined in accordance with the
rules of the Commission and includes voting and investment power with
respect to the shares. Shares of Common Stock subject to outstanding
options which are currently vested or which vest within 60 days are deemed
outstanding for computing the percentage ownership of the person holding
such options, but are not deemed outstanding for computing the percentage
ownership of any other person.

(3) B. Allen Lay, a director of the Company, is a General Partner of SCV and
may therefore be deemed to own beneficially shares owned by SCV. Mr. Lay
disclaims beneficial ownership of such shares.

(4) Includes options to purchase 5,135 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 24,205
shares of Common Stock not exercisable within such 60-day period.

(5) Includes options to purchase 1,284 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 6,051
shares of Common Stock not exercisable within such 60-day period.

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53

(6) Includes options to purchase 1,284 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 6,051
shares of Common Stock not exercisable within such 60-day period.

(7) Includes options to purchase 48,228 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 39,059
shares of Common Stock not exercisable within such 60-day period.

(8) Excludes options to purchase 3,668 shares of Common Stock not exercisable
within 60 days of October 25, 1996.

(9) Includes options to purchase 5,685 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 26,479
shares of Common Stock not exercisable within such 60-day period.

(10) Excludes options to purchase 3,668 shares of Common Stock not exercisable
within 60 days of October 25, 1996.

(11) Includes options to purchase 13,350 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 15,990
shares of Common Stock not exercisable within such 60-day period.

(12) Excludes options to purchase 3,668 shares of Common Stock not exercisable
within 60 days of October 25, 1996. Mr. Lay is a General Partner of SCV and
may therefore be deemed to have beneficial ownership of 1,995,120 shares of
Common Stock held by SCV. Mr. Lay disclaims beneficial ownership of such
shares. See footnote (3).

(13) Includes options to purchase 74,966 shares of Common Stock exercisable
within 60 days of October 25, 1996. Excludes options to purchase 128,839
shares of Common Stock not exercisable within such 60-day period.

BENEFITS OF OFFERING TO EXISTING STOCKHOLDERS

The following table sets forth certain information, based on an assumed
offering price of $11.00 per share, concerning benefits to be received by
existing stockholders of the Company from the sale of the Common Stock offered
hereby. See "Risk Factors -- Benefits of Offering to Existing Stockholders."

SHARES OWNED OPTIONS OWNED(1)
------------------------------- --------------------------- AGGREGATE AGGREGATE
AVERAGE SHARES COST OF VALUE OF
PURCHASE TOTAL UNDER AVERAGE TOTAL SHARES AND SHARES AND
NUMBER PRICE COST OPTION PRICE PRICE OPTIONS OPTIONS
--------- -------- -------- ------- ------- ------- ---------- -----------

Southern California Ventures....... 1,995,120 $ 0.14 $272,000 -- -- -- $272,000 $21,946,320
Mark D. Dankberg................... 880,200 0.01 12,000 5,135 $1.36 $ 7,000 19,000 9,738,685
Steven R. Hart..................... 660,150 0.01 9,000 1,284 1.36 1,750 10,750 7,275,774
Mark J. Miller..................... 366,631 0.01 4,998 1,284 1.36 1,750 6,748 4,047,065
Maureen Miller..................... 293,519 0.01 4,001 -- -- -- 4,001 3,228,709
Thomas E. Carter................... 135,697 0.17 22,500 48,228 0.78 37,525 60,025 2,023,175
Robert W. Johnson.................. 183,375 0.14 25,000 -- -- -- 25,000 2,017,125
Greg D. Monahan.................... 169,915 0.25 43,153 5,685 0.77 4,388 47,541 1,931,600
Jeffrey M. Nash.................... 165,038 0.14 22,500 -- -- -- 22,500 1,815,418
James P. Collins................... 115,893 0.16 18,300 -- -- -- 18,300 1,274,823
Andrew M. Paul..................... 76,284 0.54 41,000 13,350 0.94 12,600 53,600 985,974
B. Allen Lay....................... -- -- -- -- -- -- -- --
All directors and executive
officers
as a group (9 persons)........... 2,637,290 0.07 180,151 74,966 0.87 65,013 245,164 29,834,816

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

(1) Includes shares of Common Stock subject to outstanding options which are
currently vested or which vest within 60 days of October 25, 1996.

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54

DESCRIPTION OF CAPITAL STOCK

The following summary description of the capital stock of the Company does
not purport to be complete and is subject to the provisions of the Company's
Certificate of Incorporation and Bylaws, which are included as exhibits to the
Registration Statement of which this Prospectus forms a part and by the
provisions of applicable law.

Upon the closing of this offering, the authorized capital stock of the
Company will consist of 25,000,000 shares of Common Stock, par value $.0001 per
share, and 5,000,000 shares of Preferred Stock, par value $.0001 per share,
after giving effect to amendments to the Company's Certificate of Incorporation
that have been approved by the Company's Board of Directors and stockholders.

COMMON STOCK

As of October 25, 1996, there were 3,515,965 shares of Common Stock
outstanding held of record by 184 stockholders, and 3,225,000 shares of
Preferred Stock outstanding held of record by four stockholders. Upon the
closing of this offering, there will be 7,531,503 shares of Common Stock
outstanding, including 1,650,000 shares to be issued by the Company hereunder
and 2,365,538 shares to be issued upon conversion of the Preferred Stock.

Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders of the Company. The Common Stock does not
have cumulative voting rights, which means the holder or holders of more than
one-half of the shares voting for the election of directors can elect all of the
directors then being elected. Subject to the preferences that may be applicable
to any outstanding preferred stock, the holders of Common Stock are entitled to
a ratable distribution of any dividends that may be declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities, subject to the prior liquidation rights of any outstanding
preferred stock. The Common Stock has no preemptive, redemption or conversion
rights. The outstanding shares of Common Stock are, and the shares offered by
the Company in the offering, when issued and paid for, will be fully paid and
nonassessable. The rights, preferences and privileges of holders of Common Stock
are subject to, and may be adversely affected by, the rights of the holders of
shares of any preferred stock which the Company may designate and issue in the
future. See "Dividend Policy."

PREFERRED STOCK

Upon the closing of this offering, each outstanding share of Series A
Convertible Preferred Stock will be converted into 0.7335 of a share of Common
Stock, and the Series A Convertible Preferred Stock will be automatically
retired. Thereafter, the Board of Directors will be authorized, without further
stockholder approval, to issue up to 5,000,000 shares of Preferred Stock in one
or more series and to fix the rights, preferences, privileges and restrictions
granted or imposed upon any unissued shares of Preferred Stock and to fix the
number of shares constituting any series and the designations of such series.

The issuance of Preferred Stock may have the effect of delaying or
preventing a change in control of the Company. The issuance of Preferred Stock
could decrease the amount of earnings and assets available for distribution to
the holders of Common Stock or could adversely affect the rights and powers,
including voting rights, of the holders of the Common Stock. In certain
circumstances, such issuance could have the effect of decreasing the market
price of the Common Stock. As of the closing of the offering, no shares of
Preferred Stock will be outstanding, and the Company currently has no plans to
issue any shares of Preferred Stock.

BUSINESS COMBINATIONS; CERTAIN CHARTER AND BYLAW PROVISIONS

Section 203 of the Delaware General Corporation Law (the "DGCL") prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
upon closing of such transaction the interested stockholder owned 85% of the
voting stock of the corporation

52
55

outstanding at the time the transaction commenced, or unless the business
combination is, or the transaction in which such person became an interested
stockholder was, approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the stockholder. An "interested stockholder" is a person who,
together with affiliates and associates, owns (or, in the case of affiliates and
associates of the issuer, did own within the last three years) 15% or more of
the corporation's voting stock.

The Company's Amended and Restated Certificate of Incorporation and Bylaws
contain provisions prohibiting stockholder action by written consent by the
stockholders; limiting the right to call stockholder meetings to the Chairman of
the Board, the President, the Secretary or the Board of Directors; and
prohibiting the stockholders from removing directors from office except for
cause and reserving to the directors the exclusive right to change the number of
directors or to fill vacancies on the Board. The Company's Amended and Restated
Certificate of Incorporation also provides for the Board of Directors to be
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the Board of Directors will be elected each
year.

The purpose and intended effect of the above described provisions in the
Company's Amended and Restated Certificate of Incorporation and Bylaws are to
enhance the continuity and stability of the Company's management by making it
more difficult for stockholders to remove or change the incumbent members of the
Board of Directors. Such provisions, coupled with the ownership by existing
stockholders of approximately 70.8% of the Common Stock following this offering,
could also render the Company more difficult to be acquired pursuant to an
unfriendly acquisition by an outsider by making it more difficult for such
person to obtain control of the Company and replace current management without
the approval of the Board of Directors.

The Company has included in its Amended and Restated Certificate of
Incorporation and Bylaws provisions to (i) eliminate the personal liability of
its directors for monetary damages resulting from breaches of their fiduciary
duty to the extent permitted by the DGCL and (ii) indemnify its directors and
officers to the fullest extent permitted by Section 145 of the DGCL, including
circumstances in which indemnification is otherwise discretionary. The Company
believes that these provisions are necessary to attract and retain qualified
persons as directors and officers. The Company also intends to enter into
indemnification agreements with certain officers and directors upon consummation
of the offering.

LISTING

The Common Stock has been approved for quotation and trading on The Nasdaq
National Market, subject to official notice of issuance, under the symbol
"VSAT."

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is Harris Trust
Company of California.

53
56

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, the Company will have outstanding
7,531,503 shares of Common Stock. Of these shares, the 2,200,000 shares sold in
the offering (plus any shares issued upon exercise of the Underwriters'
over-allotment option) will be freely tradeable without restriction under the
Securities Act, unless purchased by "affiliates" of the Company as that term is
defined in Rule 144 under the Securities Act.

In general, under Rule 144 as currently in effect, a stockholder (or
stockholders whose shares are aggregated) who has beneficially owned shares
constituting "restricted securities" (generally defined as securities acquired
from the Company or an affiliate of the Company in a non-public transaction) for
at least two years, is entitled to sell within any three-month period a number
of shares that does not exceed the greater of one percent of the outstanding
Common Stock or the average weekly trading volume in the Common Stock during the
four calendar weeks preceding the date on which notice of such sale is filed
pursuant to Rule 144. Sales under Rule 144 are also subject to certain
provisions regarding the manner of sale, notice requirements and the
availability of current public information about the Company. A stockholder (or
stockholders whose shares are aggregated) who is not an affiliate of the Company
for at least 90 days prior to a proposed transaction and who has beneficially
owned "restricted securities" for at least three years is entitled to sell such
shares under Rule 144 without regard to the limitations described above.
Currently 2,812,817 shares of Common Stock are qualified for sale under this
rule. The Commission has proposed to amend Rule 144 to reduce the two and three
year holding periods specified above to one and two years, respectively.

Holders of 4,491,822 shares, including all officers and directors of the
Company, have entered into contractual "lock-up" agreements generally providing
that they will not directly or indirectly offer, sell, contract to sell or grant
any option to purchase or otherwise transfer or dispose of shares of Common
Stock or other equity securities of the Company or any securities exercisable
for or convertible into Common Stock or other equity securities of the Company
owned by them for a period of 180 days after the closing of the offering without
the prior written consent of representatives of the Underwriters.

The Company has entered into a Stock Restriction Agreement with each of its
stockholders for the purpose of limiting the sale, succession or other transfer
of the Common Stock during the lifetime or upon the death of each stockholder.
The Stock Restriction Agreement provides that the Company's stockholders will
not transfer their shares of Common Stock during their lifetime or upon their
death, except in limited instances, without first offering such shares for sale
to the Company. In addition, the Stock Restriction Agreement requires each
stockholder to approve an offer to purchase all of the outstanding Common Stock
if such offer is accepted by stockholders owning at least two-thirds of the
outstanding shares. The Stock Restriction Agreement with respect to each
stockholder will terminate upon the closing of this offering, regardless of
whether any of such stockholder's shares are included in this offering.

The Company intends to file a registration statement under the Securities
Act after the offering covering the sale of 1,369,348 shares of Common Stock
reserved for issuance under the 1993 Stock Option Plan, the 1996 Equity
Participation Plan and the Employee Stock Purchase Plan. See "Management -- 1993
Stock Option Plan," "-- 1996 Equity Participation Plan" and "-- Employee Stock
Purchase Plan." Such registration statement will automatically become effective
upon filing. Accordingly, shares registered under such registration statement
will, subject to Rule 144 volume and other limitations applicable to affiliates
of the Company, be available for sale in the public market, except to the extent
that such shares are subject to vesting restrictions.

Prior to the offering, there has been no public market for the Common Stock
and no predictions can be made as to the effect, if any, that sales of shares of
Common Stock will have on the market price of the Common Stock prevailing from
time to time. Nevertheless, sales of significant numbers of shares of the Common
Stock in the public market could adversely affect the market price of the Common
Stock and could impair the Company's future ability to raise capital through an
offering of its equity securities.

54
57

UNDERWRITING

Under the terms and subject to the conditions of the Underwriting
Agreement, the Underwriters named below, for whom Oppenheimer & Co., Inc.,
Needham & Company, Inc. and Unterberg Harris are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Company and
Selling Stockholders, and the Company and Selling Stockholders have agreed to
sell to each Underwriter, the aggregate number of shares of Common Stock set
forth opposite their respective names in the table below. The Underwriting
Agreement provides that the obligations of the Underwriters to pay for and
accept delivery of the shares of Common Stock are subject to certain conditions
precedent, and that the Underwriters are committed to purchase and pay for all
shares if any shares are purchased.

NAME NUMBER OF SHARES
--------------------------------------------------------------------- ----------------

Oppenheimer & Co., Inc...............................................
Needham & Company, Inc...............................................
Unterberg Harris.....................................................
---------
Total...................................................... 2,200,000
=========

The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus, and to certain dealers
(who may include the Underwriters) at such price less a concession not in excess
of $ per share, of which $ may be reallowed to other dealers.
After the offering to the public, the offering price and other selling terms may
be changed by the Representatives. No such reduction shall change the amount of
the proceeds to be received by the Company and the Selling Stockholders as set
forth on the cover page of this Prospectus.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to 330,000
shares of Common Stock at the same price per share set forth on the cover page
of this Prospectus solely to cover over-allotments, if any. To the extent that
the Underwriters exercise such option, each of the Underwriters will be
committed, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares of Common Stock to
be purchased by such Underwriter, as shown in the above table, bears to the
total shown.

In connection with the offering, certain Underwriters and selling group
members (if any) or their respective affiliates may engage in passive market
making transactions in the Common Stock on The Nasdaq National Market in
accordance with Rule 10b-6A under the Exchange Act during the two business day
period before commencement of offers or sales of the Common Stock. The passive
market making transactions must comply with applicable volume and price limits
and be identified as such. In general, a passive market maker may display its
bid at a price not in excess of the highest independent bid for such security;
if all independent bids are lowered below the passive market maker's bid,
however, such bid must then be lowered when certain purchase limits are
exceeded.

The Underwriting Agreement contains covenants of indemnity and contribution
between the Company and the Underwriters and the Selling Stockholders against
certain civil liabilities that may be incurred in connection with this offering,
including liabilities under the Securities Act.

Pursuant to the terms of lock-up agreements, all officers, directors,
Selling Stockholders and holders of 1.0% or more of the Common Stock have agreed
with the Representatives not to sell, otherwise dispose of, contract to sell,
grant any option to sell, transfer or otherwise dispose of, directly or
indirectly, shares of Common Stock or other equity securities of the Company or
securities exchangeable for or convertible into shares of Common Stock or other
equity securities of the Company for a period of 180 days after the date of this
Prospectus, without the prior written consent of the Representatives. The
Company has agreed not to sell, contract to sell, grant any option to sell,
transfer or otherwise dispose of, directly or indirectly, shares of

55
58

Common Stock or other equity securities of the Company for a period of 180 days
after the date of this Prospectus, without the prior written consent of the
Representatives, except that the Company may issue securities pursuant to the
1993 Stock Option Plan, the 1996 Equity Participation Plan and the Employee
Stock Purchase Plan and upon the exercise of outstanding stock options or
purchase rights under such plans. See "Shares Eligible for Future Sale."

The Underwriters will not make sales to accounts over which they exercise
discretionary authority (i) in excess of five percent of the number of shares of
Common Stock offered hereby, and (ii) unless they obtain specific written
consent of the customer.

Prior to the offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock has been
determined by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors considered in determining the initial public
offering price were prevailing market and economic conditions, revenues and
earnings of the Company, estimates of the business potential and prospects of
the Company, the present state of the Company's business operations, the
Company's management and other factors deemed relevant.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Latham & Watkins, San Diego, California. Certain legal matters in
connection with the offering will be passed upon for the Underwriters by Kaye,
Scholer, Fierman, Hays & Handler, LLP, Los Angeles, California.

EXPERTS

The financial statements of the Company as of March 31, 1995 and 1996, and
for each of the three years in the period ended March 31, 1996 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

56
59

GLOSSARY OF SELECTED TERMS

DAMA....................... Demand Assigned Multiple Access. A protocol for
assigning a communication channel to a user only
upon request.

DOD........................ Department of Defense.

Downlink................... A radio transmission from a satellite back down
toward the earth.

EMUT....................... Enhanced Manpack UHF Terminal. A small, portable
satellite terminal for DOD that operates in the
UHF frequency band.

FDMA....................... Frequency Division Multiple Access. A protocol that
assigns each communication channel to a different
transmission frequency.

GHz........................ Giga Hertz. One billion cycles per second. A
measure of frequency or bandwidth.

LEO........................ Low Earth Orbit.

Local Loop Services........ Local telephony service.

MHz........................ Mega Hertz. One million cycles per second. A
measure of frequency or bandwidth.

MIL-STD.................... Military standard.

NCS........................ Network Control System. The satellite terminal and
computer that manages channel assignments in a
DAMA network.

Network.................... A collection of user terminals linked together by a
satellite.

PSTN....................... Public Switched Telephone Network.

RF......................... Radio Frequency.

SCPC....................... Single Channel Per Carrier. A signalling technique
that transmits one voice or data circuit per
radio channel.

SHF........................ Super High Frequency radio transmissions.

TDM........................ Time Division Multiplexing. A protocol for
combining several different circuits into a
single, continuous transmission.

TDMA....................... Time Division Multiple Access. A protocol for time
sharing a single communication channel among a
number of different users.

Transponder................ A receiving and transmitting device on board a
satellite that relays an uplink transmission from
a satellite terminal back down to earth.

UHF........................ Ultra High Frequency radio transmissions.

Uplink..................... A radio transmission from a satellite terminal that
is sent up to a satellite.

VSAT....................... Very Small Aperture Terminal. A satellite terminal
with a very small antenna. A VSAT antenna is
typically considered to be less than 3.7 meters
in diameter.

Wireless Local Loop........ Wireless switched local telephony service.

57
60

INDEX TO FINANCIAL STATEMENTS

PAGES
-----

VIASAT, INC.
Report of Independent Accountants..................................................... F-2
Balance Sheet......................................................................... F-3
Statement of Income................................................................... F-4
Statement of Stockholders' Equity..................................................... F-5
Statement of Cash Flows............................................................... F-6
Notes to Financial Statements......................................................... F-7

F-1
61

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of ViaSat, Inc.

In our opinion, the accompanying balance sheet and the related statements of
income, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of ViaSat, Inc. at March 31, 1996 and
1995, and the results of its operations and its cash flows for each of the three
years in the period ended March 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

San Diego, California
June 11, 1996, except as to the
Recapitalization discussed in Note 1,
which is as of November 4, 1996

F-2
62

VIASAT, INC.

BALANCE SHEET

MARCH 31, SEPTEMBER PRO FORMA
--------------------------- 30, STOCKHOLDERS'
1995 1996 1996 EQUITY
----------- ------------ ------------ -------------
(UNAUDITED) (UNAUDITED)
(NOTE 1)

ASSETS
Current assets:
Cash and cash equivalents............ $ 2,731,000 $ 2,297,000 $ 1,186,000
Accounts receivable.................. 4,300,000 6,171,000 6,620,000
Inventory............................ 204,000 1,223,000 3,678,000
Deferred income taxes................ 134,000 484,000 637,000
Other current assets................. 64,000 170,000 422,000
---------- ----------- -----------
Total current assets.............. 7,433,000 10,345,000 12,543,000
Property and equipment, net............ 1,896,000 2,789,000 3,430,000
Other assets........................... 48,000 128,000 439,000
---------- ----------- -----------
Total assets................. $ 9,377,000 $ 13,262,000 $ 16,412,000
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................... $ 1,480,000 $ 2,774,000 $ 3,952,000
Accrued liabilities.................. 2,669,000 2,157,000 2,615,000
Current portion of notes payable..... 476,000 763,000 1,007,000
---------- ----------- -----------
Total current liabilities......... 4,625,000 5,694,000 7,574,000
---------- ----------- -----------
Notes payable.......................... 1,220,000 1,747,000 1,512,000
Other liabilities...................... 119,000 604,000 849,000
---------- ----------- -----------
Total long-term liabilities....... 1,339,000 2,351,000 2,361,000
---------- ----------- -----------
Commitments (Note 9)
Stockholders' equity:
Series A, convertible preferred stock,
$.01 par value; 3,225,000 shares
authorized, issued and outstanding
actual, no shares outstanding pro
forma (unaudited).................... 32,000 32,000 32,000 --
Common stock, $.01 par value, 7,335,000
shares authorized; 3,207,339,
3,342,101 and 3,509,804 issued and
outstanding actual, respectively;
5,875,342 shares issued and
outstanding pro forma (unaudited).... 44,000 46,000 48,000 80,000
Paid in capital........................ 568,000 737,000 1,224,000 1,224,000
Stockholders' notes receivable......... -- -- (311,000) (311,000)
Retained earnings...................... 2,769,000 4,402,000 5,484,000 5,484,000
---------- ----------- ----------- ----------
Total stockholders' equity........ 3,413,000 5,217,000 6,477,000 $ 6,477,000
==========
---------- ----------- -----------
Total liabilities and
stockholders'
equity.......................... $ 9,377,000 $ 13,262,000 $ 16,412,000
========== =========== ===========

See accompanying notes to financial statements.

F-3
63

VIASAT, INC.

STATEMENT OF INCOME

YEAR ENDED MARCH 31, SIX MONTHS ENDED
--------------------------------------- -------------------------
1994 1995 1996 SEPT. 30,
----------- ----------- ----------- 1996
-----------
SEPT. 30, (UNAUDITED)
1995
-----------
(UNAUDITED)

Revenues........................ $11,579,000 $22,341,000 $29,017,000 $14,156,000 $21,582,000
Cost of revenues................ 9,033,000 16,855,000 20,983,000 10,110,000 15,333,000
----------- ----------- ----------- ---------- ----------
Gross profit.................. 2,546,000 5,486,000 8,034,000 4,046,000 6,249,000
Operating expenses:
Selling, general and
administrative............. 1,554,000 2,416,000 3,400,000 1,762,000 2,313,000
Independent research and
development................ 134,000 788,000 2,820,000 1,186,000 2,218,000
----------- ----------- ----------- ---------- ----------
Income from operations.......... 858,000 2,282,000 1,814,000 1,098,000 1,718,000
Other income (expense):
Interest income................. 2,000 27,000 29,000 18,000 69,000
Interest expense................ (47,000) (114,000) (260,000) (104,000) (125,000)
----------- ----------- ----------- ---------- ----------
Income before income taxes...... 813,000 2,195,000 1,583,000 1,012,000 1,662,000
Provision (benefit) for income
taxes......................... 328,000 888,000 (50,000) (32,000) 580,000
----------- ----------- ----------- ---------- ----------
Net income...................... $ 485,000 $ 1,307,000 $ 1,633,000 $ 1,044,000 $ 1,082,000
=========== =========== =========== ========== ==========
Pro forma net income per share
(unaudited)................... $ 0.28 $ 0.18
=========== ==========
Shares used in computing pro
forma
net income per share
(unaudited)................... 5,875,729 6,120,635
=========== ==========

See accompanying notes to financial statements.

F-4
64

VIASAT, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

PREFERRED STOCK COMMON STOCK
-------------------- -------------------- STOCKHOLDERS'
NUMBER OF NUMBER OF PAID IN NOTES RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL RECEIVABLE EARNINGS
--------- ------- --------- ------- ---------- ------------- ----------

Balance at March 31,
1993.................. 3,225,000 $32,000 2,949,697 $40,000 $ 416,000 $ 977,000
Issuance of common
stock............... 17,311 6,000
Net income............ 485,000
--------- ------- --------- ------- -------- --------- ----------
Balance at March 31,
1994.................. 3,225,000 32,000 2,967,008 40,000 422,000 1,462,000
Issuance of common
stock............... 240,331 4,000 146,000
Net income............ 1,307,000
--------- ------- --------- ------- -------- --------- ----------
Balance at March 31,
1995.................. 3,225,000 32,000 3,207,339 44,000 568,000 2,769,000
Issuance of common
stock............... 134,762 2,000 169,000
Net income............ 1,633,000
--------- ------- --------- ------- -------- --------- ----------
Balance at March 31,
1996.................. 3,225,000 32,000 3,342,101 46,000 737,000 4,402,000
Issuance of common
stock (unaudited)... 167,703 2,000 487,000
Shares subscribed..... $(311,000)
Net income
(unaudited)......... 1,082,000
--------- ------- --------- ------- -------- --------- ----------
Balance at September 30,
1996 (unaudited)...... 3,225,000 $32,000 3,509,804 $48,000 $1,224,000 $(311,000) $5,484,000
========= ======= ========= ======= ======== ========= ==========

See accompanying notes to financial statements.

F-5
65

VIASAT, INC.

STATEMENT OF CASH FLOWS

YEAR ENDED MARCH 31, SIX MONTHS ENDED
---------------------------------------- ------------------------------
1994 1995 1996 SEPTEMBER 30, SEPTEMBER 30,
----------- ---------- ----------- 1995 1996
------------- -------------
(UNAUDITED) (UNAUDITED)

Cash flows from operating activities:
Net income........................... $ 485,000 $1,307,000 $ 1,633,000 $ 1,044,000 $ 1,082,000
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation....................... 316,000 542,000 982,000 424,000 619,000
Loss on disposal of fixed assets... 83,000
Deferred income taxes.............. (66,000) (13,000) (350,000) (175,000) (153,000)
Increase (decrease) in cash resulting
from changes in:
Accounts receivable................ (2,256,000) (265,000) (1,871,000) (2,217,000) (449,000)
Inventory.......................... (15,000) (189,000) (1,019,000) (480,000) (2,455,000)
Other assets....................... (53,000) (43,000) (186,000) (62,000) (564,000)
Accounts payable................... 670,000 530,000 1,294,000 183,000 1,178,000
Accrued liabilities................ 1,019,000 1,331,000 (512,000) (919,000) 458,000
Other liabilities.................. -- 119,000 485,000 (5,000) 245,000
----------- ---------- ----------- ----------- ----------
Net cash provided by (used in)
operating activities.......... 183,000 3,319,000 456,000 (2,207,000) (39,000)
----------- ---------- ----------- ----------- ----------
Cash flows from investing activities:
Purchases of property and
equipment.......................... (511,000) (1,701,000) (1,875,000) (1,035,000) (1,260,000)
----------- ---------- ----------- ----------- ----------
Cash flows from financing activities:
Proceeds from short-term bank
borrowings......................... 170,000 -- 1,400,000
Repayment of short-term bank
borrowings......................... (150,000) (350,000) (1,400,000)
Proceeds from issuance of notes
payable............................ 289,000 1,650,000 2,778,000 734,000 326,000
Repayment of notes payable........... (53,000) (346,000) (1,964,000) (254,000) (316,000)
Proceeds from issuance of common
stock.............................. 6,000 150,000 171,000 81,000 178,000
----------- ---------- ----------- ----------- ----------
Net cash provided by financing
activities....................... 262,000 1,104,000 985,000 561,000 188,000
----------- ---------- ----------- ----------- ----------
Net (decrease) increase in cash and
cash equivalents..................... (66,000) 2,722,000 (434,000) (2,681,000) (1,111,000)
Cash and cash equivalents at beginning
of period............................ 75,000 9,000 2,731,000 2,731,000 2,297,000
----------- ---------- ----------- ----------- ----------
Cash and cash equivalents at end of
period............................... $ 9,000 $2,731,000 $ 2,297,000 $ 50,000 $ 1,186,000
=========== ========== =========== =========== ==========
Supplemental information:
Cash paid for interest............... $ 48,000 $ 116,000 $ 260,000 $ 104,000 $ 125,000
=========== ========== =========== =========== ==========
Cash paid for income taxes........... $ 121,000 $ 642,000 $ 468,000 $ 303,000 $ 1,086,000
=========== ========== =========== =========== ==========

See accompanying notes to financial statements.

F-6
66

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

ViaSat, Inc. (the "Company") designs, produces and markets advanced digital
satellite telecommunications and wireless signal processing equipment.

Management Estimates and Assumptions

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Cash Equivalents

Cash equivalents consist of highly liquid investments with original
maturities of 90 days or less.

Revenue Recognition

The majority of the Company's revenues are derived from services performed
for the United States Government and its prime contractors under a variety of
contracts including cost-plus-fixed fee, fixed-price, and time and materials
type contracts. Such sales amounted to $28,305,000, $21,226,000 and $11,143,000
for the years ended March 31, 1996, 1995 and 1994, respectively. Included in
these revenues are sales to a significant customer under various subcontracts
totaling $5,269,000 and $4,166,000 during the years ended March 31, 1996 and
1995, respectively. Sales to this customer were not significant during the year
ended March 31, 1994. Generally, revenues are recognized as services are
performed using the percentage of completion method, measured primarily by costs
incurred to date compared with total estimated costs at completion or based on
the number of units delivered. The Company provides for anticipated losses on
contracts by a charge to income during the period in which they are first
identified.

Contract costs, including indirect costs, are subject to audit and
negotiations with Government representatives. These audits have been completed
and agreed upon through fiscal year 1994. Contract revenues and accounts
receivable are stated at amounts which are expected to be realized upon final
settlement.

Unbilled Accounts Receivable

Unbilled receivables consist of costs and fees earned and billable on
contract completion or other specified events. The majority of unbilled
receivables is expected to be collected within one year. The amount of contract
retention included in unbilled accounts receivable as of March 31, 1996 and 1995
is $45,000 and $22,000, respectively, and is expected to be collected beyond one
year.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash equivalents and trade
accounts receivable which are generally not collateralized. The Company limits
its exposure to credit loss by placing its cash equivalents with high credit
quality financial institutions. Concentrations of credit risk with respect to
receivables are limited because the Company's primary customers are various
agencies of the United States Government and its prime contractors.

F-7
67

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Inventories

Inventories are valued at the lower of cost or market, cost being
determined by the first-in, first-out method.

Software Costs

Software product development costs incurred from the time technological
feasibility is reached until the product is available for general release to
customers are capitalized and reported at the lower of cost or net realizable
value. Through March 31, 1996, no significant amounts were expended subsequent
to reaching technological feasibility.

Property and Equipment

Equipment, computers, and furniture and fixtures are recorded at cost, and
depreciated over estimated useful lives of 3 to 7 years under the straight-line
method. Additions to property and equipment together with major renewals and
betterments are capitalized. Maintenance, repairs and minor renewals and
betterments are charged to expense. When assets are sold or otherwise disposed
of, the cost and related accumulated depreciation or amortization are removed
from the accounts and any resulting gain or loss is recognized.

Long-lived Assets

The Company assesses potential impairments to its long-lived assets when
there is evidence that events or changes in circumstances have made recovery of
the asset's carrying value unlikely. An impairment loss would be recognized when
the sum of the expected future net cash flows is less than the carrying amount
of the asset. No such impairment losses have been identified by the Company.

Warranty Reserves

The Company provides limited warranties on certain of its products for
periods of up to three years. The Company recognizes warranty reserves based
upon an estimate of total warranty costs, with amounts expected to be incurred
within twelve months classified as a current liability.

Income Taxes

Income taxes are provided utilizing the liability method. The liability
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and tax bases of assets and liabilities. Additionally, under the
liability method, changes in tax rates and laws will be reflected in income in
the period such changes are enacted.

Fair Value of Financial Instruments

At March 31, 1996, the carrying amounts of the Company's financial
instruments, including cash equivalents, trade receivables and accounts payable,
approximated their fair values due to their short term maturities. At March 31,
1996, the estimated fair value of the Company's long-term debt approximated its
carrying value.

New Accounting Pronouncement

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). The
Company does not intend to adopt the measurement provisions of SFAS 123 with
regard to employee-based stock compensation, and will adopt the disclosure
provisions during the fiscal year ending March 31, 1997.

F-8
68

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Pro forma net income per share

Pro forma net income per share is computed based on the weighted average
number of common shares and common stock equivalents, using the treasury stock
method, outstanding during the respective periods after giving retroactive
effect to the conversion, which will occur upon the closing of the Company's
initial public offering, of all outstanding shares of preferred stock into
2,365,538 shares of common stock. Pursuant to Securities and Exchange Commission
Staff Accounting Bulletin No. 83, all issuances of common stock and all stock
options granted within one year prior to the Company's planned initial public
offering have been included as outstanding for all periods using the treasury
stock method. Historical earnings per share are not presented because such
amounts are not deemed meaningful due to the significant change in the Company's
capital structure that will occur in connection with the planned initial public
offering.

Recapitalization

In November 1996, the Company filed an Amended and Restated Certificate of
Incorporation to effect a .7335 for 1 reverse stock split of all outstanding
shares of common stock and stock options. All shares and per share data in the
accompanying financial statements have been adjusted retroactively to give
effect to the reverse stock split. The Amended and Restated Certificate of
Incorporation increases the authorized stock of the Company such that the
Company is authorized to issue 5,000,000 shares of $0.0001 par value preferred
stock, and 25,000,000 shares of $0.0001 par value common stock. Concurrently,
the conversion ratio of the Company's preferred stock was changed to .7335 for
1.

Interim results (unaudited)

The accompanying balance sheet at September 30, 1996 and the related
statements of income and of cash flows for the six months ended September 30,
1995 and 1996, and the statement of stockholders' equity for the six months
ended September 30, 1996 are unaudited. In the opinion of management, these
statements have been prepared on the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments, necessary for the fair statement of results of the interim periods.
The data disclosed in these notes to the financial statements at such dates and
for such periods are also unaudited.

Pro forma stockholders' equity (unaudited)

The unaudited pro forma information presented in the accompanying balance
sheet as of September 30, 1996 reflects the conversion of all outstanding
preferred stock into 2,365,538 shares of common stock, which will occur upon
completion of the Company's planned initial public offering.

F-9
69

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. COMPOSITION OF CERTAIN BALANCE SHEET CAPTIONS

MARCH 31, SEPTEMBER 30,
------------------------- -------------
1995 1996 1996
---------- ---------- -------------
(UNAUDITED)

Accounts receivable:
Billed...................................... $2,890,000 $5,653,000 $ 5,062,000
Unbilled.................................... 1,410,000 518,000 1,558,000
---------- ---------- ----------
$4,300,000 $6,171,000 $ 6,620,000
========== ========== ==========
Inventory:
Raw materials............................... $ 67,000 $ 753,000 $ 532,000
Work in process............................. 137,000 402,000 3,043,000
Finished goods.............................. 68,000 103,000
---------- ---------- ----------
$ 204,000 $1,223,000 $ 3,678,000
========== ========== ==========
Property and equipment:
Machinery and equipment..................... $1,288,000 $2,313,000 $ 3,097,000
Computer equipment.......................... 1,564,000 2,213,000 2,540,000
Furniture and fixtures...................... 179,000 380,000 529,000
---------- ---------- ----------
3,031,000 4,906,000 6,166,000
Less accumulated depreciation............... (1,135,000) (2,117,000) (2,736,000)
---------- ---------- ----------
$1,896,000 $2,789,000 $ 3,430,000
========== ========== ==========
Accrued liabilities:
Accrued vacation............................ $ 406,000 $ 591,000 $ 632,000
Accrued 401(k) matching contribution........ 275,000 444,000 284,000
Current portion of warranty reserve......... 67,000 413,000 651,000
Accrued bonus............................... 488,000 347,000 357,000
Collections in excess of revenues........... 773,000 237,000 498,000
Income taxes payable........................ 601,000 40,000 50,000
Other....................................... 59,000 85,000 143,000
---------- ---------- ----------
$2,669,000 $2,157,000 $ 2,615,000
========== ========== ==========

3. SHORT-TERM BANK BORROWINGS

The Company has a $4,000,000 line of credit with a bank which allows it to
borrow the greater of $1,000,000 or 80% of eligible accounts receivable plus 50%
of the Company's eligible inventory at the bank's prime rate (8.25% at March 31,
1996). There were no borrowings outstanding as of March 31, 1996 and 1995. The
Company is required to pay a fee equal to 0.25% of the unused portion of the
line of credit on an annual basis. The credit agreement includes covenants
which, among other things, require the Company to maintain stated net worth
amounts plus specific liquidity and long-term solvency ratios as well as a
minimum net income level. The line of credit expires on September 15, 1997.
Amounts borrowed are secured by substantially all of the Company's assets.

F-10
70

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTES PAYABLE

Notes payable are as follows:

MARCH 31,
----------------------- SEPTEMBER 30,
1995 1996 1996
---------- ---------- -------------
(UNAUDITED)

Bank installment loans, with various expiration
dates through September 1999, total monthly
payments of $81,000 with interest rates ranging
between 8% and 12%, collateralized by
equipment....................................... $1,092,000 $1,989,000 $ 2,088,000
Finance company installment loans, with various
expiration dates through April 1999, total
monthly payments of $20,000 with interest rates
ranging between 10.23% and 11.81%,
collateralized by equipment..................... 604,000 521,000 431,000
---------- ---------- ----------
1,696,000 2,510,000 2,519,000
Less current portion.............................. (476,000) (763,000) (1,007,000)
---------- ---------- ----------
$1,220,000 $1,747,000 $ 1,512,000
========== ========== ==========

Principal maturities of notes payable as of March 31, 1996 are summarized
as follows:

YEAR ENDING MARCH 31,
- ---------------------

1997.......................................................... $ 763,000
1998.......................................................... 932,000
1999.......................................................... 623,000
2000.......................................................... 192,000
----------
$2,510,000
==========

5. CONVERTIBLE PREFERRED STOCK

At March 31, 1996, the Company had 3,225,000 shares of its convertible $.01
par value Series A preferred stock (preferred stock) outstanding with a
liquidation preference of $.10 per share. Each share of preferred stock is
convertible at the option of the holder into one share of common stock subject
to adjustment for stock splits and certain other transactions (Note 1). Holders
of the preferred stock have votes per share equivalent to the number of shares
of common stock to which the preferred stock may be converted.

Each share of preferred stock shall automatically convert at its then
effective conversion price (i) upon the closing of any public offering of the
Company's common stock at an offering price of not less than $.50 per share and
having an aggregate offering price of at least $3,000,000, or (ii) immediately
prior to the closing of a merger, consolidation or combination of the Company
with any other corporation, or (iii) immediately prior to a sale of
substantially all of the Company's assets in which the Company receives at least
$3,000,000 in cash or negotiable securities.

Each share of preferred stock is entitled to receive dividends on a
cumulative basis at the annual rate of $.009 per share, when and as declared by
the Board of Directors. Such dividends have preference over any distribution to
holders of common stock. Undeclared cumulative dividends amounted to $260,000 at
March 31, 1996.

F-11
71

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMON STOCK AND OPTIONS

In July 1993, the Company adopted the 1993 Stock Option Plan (the Plan)
which authorizes 733,500 shares to be granted no later than July 2003. The Plan
provides for the grant of both incentive stock options and non-qualified stock
options which are subject to a three year vesting period. The option prices
represent the estimated fair market value of the Company's common stock as
determined by the Company's Board of Directors.

Transactions under the stock option plan are summarized as follows:

NUMBER OPTION PRICE
OF SHARES PER SHARE
--------- ------------

Outstanding at March 31, 1994
(all granted in fiscal 1994)................................... 54,829 $ .34
Options granted................................................ 61,137 $ .48
Options granted................................................ 74,450 $ .82
-------
Outstanding at March 31, 1995.................................. 190,416 $.34 - $ .82
Options granted................................................ 128,033 $1.36
Options canceled............................................... (147) $ .82
Options exercised.............................................. (8,215) $.34 - $ .82
-------
Outstanding at March 31, 1996.................................. 310,087 $.34 - $1.36
Options granted (unaudited).................................... 120,661 $4.09 - $4.50
Options canceled (unaudited)................................... (183) $1.36
Options exercised (unaudited).................................. (55,056) $.34 - $1.36
-------
Outstanding at September 30, 1996 (unaudited).................. 375,509 $.34 - $4.50
=======

At March 31, 1996, options to purchase 77,570 shares of the Company's
Common Stock were currently exercisable at $.34 to $.82 per share.

The Company also granted certain officers and employees the opportunity to
purchase at fair market value 254,855, 124,805, and 118,607 shares of the
Company's common stock in fiscal 1995, 1996 and for the six months ended
September 30, 1996, respectively.

F-12
72

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

The provision (benefit) for income taxes includes the following:

YEAR ENDED MARCH 31, SIX MONTHS
------------------------------------ ENDED
1994 1995 1996 SEPTEMBER 30,
--------- -------- --------- 1996
-------------
(UNAUDITED)

Current tax provision
Federal.......................... $ 361,000 $708,000 $ 344,000 $ 857,000
State............................ 109,000 193,000 9,000 188,000
--------- -------- --------- ---------
470,000 901,000 353,000 1,045,000
--------- -------- --------- ---------
Deferred tax provision:
Federal.......................... (109,000) (10,000) (310,000) (370,000)
State............................ (33,000) (3,000) (93,000) (95,000)
--------- -------- --------- ---------
(142,000) (13,000) (403,000) (465,000)
--------- -------- --------- ---------
Total provision (benefit) for
income taxes................ $ 328,000 $888,000 $ (50,000) $ 580,000
========= ======== ========= =========

Significant components of the Company's deferred tax assets and liabilities
are as follows:

MARCH 31,
--------------------- SEPTEMBER 30,
1995 1996 1996
-------- -------- -------------
(UNAUDITED)

Deferred tax assets:
Warranty reserve............................... $ 36,000 $219,000 $ 438,000
Accrued vacation............................... 129,000 190,000 203,000
Other.......................................... 60,000 142,000 384,000
-------- -------- --------
Total deferred tax assets................... 225,000 551,000 1,025,000
Deferred tax liabilities:
Depreciation................................... (91,000) (14,000) (23,000)
-------- -------- --------
Net deferred tax assets.......................... $134,000 $537,000 $ 1,002,000
======== ======== ========

A reconciliation of the provision for income taxes to the amount computed
by applying the statutory federal income tax rate to income before income taxes
is as follows:

YEAR ENDED MARCH 31, SIX MONTHS
----------------------------------- ENDED
1994 1995 1996 SEPTEMBER 30,
-------- -------- --------- 1996
-------------
(UNAUDITED)

Tax expense at statutory rate....... $276,000 $746,000 $ 538,000 $ 565,000
State tax provision (benefit), net
of federal benefit................ 87,000 153,000 (60,000) 62,000
Research tax credit................. -- (18,000) (480,000) (50,000)
Other............................... (35,000) 7,000 (48,000) 3,000
-------- -------- --------- --------
$328,000 $888,000 $ (50,000) $ 580,000
======== ======== ========= ========

The Company's income tax benefit for the fiscal year ended March 31, 1996
was primarily attributable to the utilization of research and development
credits generated in the period and the impact of a favorable

F-13
73

VIASAT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

United States Federal judicial decision which clarified the tax law related to
the utilization of research and development credits generated from the Company's
funded research and development.

8. EMPLOYEE BENEFITS

The Company has a voluntary deferred compensation plan under Section 401(k)
of the Internal Revenue Code. The Company may make discretionary contributions
to the plan which vest equally over six years. Employees who have completed 90
days of service and are at least 21 years of age are eligible to participate in
the plan. Participants are entitled, upon termination or retirement, to their
vested portion of the plan assets which are held by an independent trustee.
Discretionary contributions accrued by the Company during fiscal years 1996,
1995 and 1994 amounted to $444,000, $275,000 and $45,000, respectively. The cost
of administering the plan is not significant.

9. COMMITMENTS

The Company leases office facilities under noncancelable operating leases
with terms ranging from one to five years which expire between March 7, 1997 and
August 11, 1999. Certain of the Company's facilities leases contain option
provisions which allow for extension of the lease terms. Rent expense was
$608,000, $493,000 and $387,000 in fiscal years 1996, 1995 and 1994,
respectively.

Future minimum lease payments are as follows:

YEAR ENDING MARCH 31,
-----------------------------------------------------------------

1997...................................................... $ 655,000
1998...................................................... 650,000
1999...................................................... 335,000
2000...................................................... 135,000
----------
$1,775,000
==========

Additionally, the Company enters into long term purchase commitments with
certain of its vendors to purchase materials used to manufacture products
delivered under long term contracts. At March 31, 1996, the Company had
commitments to purchase $2,689,000 and $11,000 of materials in fiscal 1997 and
1998, respectively. Purchases under these contracts totaled $692,000 during the
year ended March 31, 1996.

10. SUBSEQUENT EVENTS (UNAUDITED)

In July 1996, the Company granted certain officers and employees the
opportunity to purchase 118,607 shares of the Company's Common Stock at $4.09
per share.

F-14
74

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
------------------------

TABLE OF CONTENTS

PAGE
----

Available Information...................... 3
Prospectus Summary......................... 4
Risk Factors............................... 7
Capitalization............................. 16
Use of Proceeds............................ 16
Dividend Policy............................ 16
Dilution................................... 17
Selected Financial Data.................... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 19
Business................................... 26
Management................................. 44
Certain Transactions....................... 49
Principal and Selling Stockholders......... 50
Description of Capital Stock............... 52
Shares Eligible for Future Sale............ 54
Underwriting............................... 55
Legal Matters.............................. 56
Experts.................................... 56
Glossary of Selected Terms................. 57
Index to Financial Statements.............. F-1

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

UNTIL , 1996 (25 DAYS AFTER THE DATE
OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
2,200,000 SHARES

LOGO

COMMON STOCK
-------------------

PROSPECTUS
-------------------
OPPENHEIMER & CO., INC.

NEEDHAM & COMPANY, INC.
UNTERBERG HARRIS
, 1996
- ------------------------------------------------------------
- ------------------------------------------------------------
75

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is an itemized statement of expenses incurred in connection
with this Registration Statement. All such expenses will be paid by the Company.

Securities and Exchange Commission registration fee....................... $ 10,469
NASD filing fee........................................................... 3,536
NASDAQ NMS listing fee.................................................... 17,500
Legal fees and expenses................................................... 250,000
Accounting fees and expenses.............................................. 150,000
Printing and engraving expenses........................................... 125,000
Blue Sky fees and expenses................................................ 25,000
Transfer agent and registrar fees......................................... 15,000
Miscellaneous............................................................. 53,495
--------
Total........................................................... $ 650,000
========

All of the above items are estimates, except the Securities and Exchange
Commission registration fee and the NASD filing fee.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The information contained in the Prospectus under the caption "Description
of Capital Stock -- Business Combinations, Certain Charter and Bylaw Provisions"
is incorporated by reference herein.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

(a) Securities sold.

The following table sets forth the date of sale, title and amount of shares
of Common Stock sold by the Company within the past three years which were not
registered under the Securities Act:

DATE OF SALE TITLE NO. OF SHARES OFFERING PRICE
- ------------ ------------- ------------- --------------

03/01/94 Common Stock 140,355 $ 67,370
10/04/94 Common Stock 111,639 91,544
06/26/95 Common Stock 117,378 159,634
07/01/96 Common Stock 112,941 461,929
------- --------
482,313 $780,477
======= ========

In addition, the Company has granted stock options under the 1993 Stock
Option Plan since such plan's inception. For a description of these options to
employees and directors of the Company, see "Management -- 1993 Stock Option
Plan."

(b) Underwriters and other purchasers.

Underwriters were not retained in connection with the sale of any of the
Company's currently outstanding securities. All sales were made in private sales
to employees or directors of the Company.

The Common Stock was sold by the Company for cash in the amounts set forth
in Item 15(a) above.

II-1
76

(d) Exemption from registration claimed.

The Company relied upon an exemption from registration under Section 4(2)
of the Securities Act in connection with each of these transactions. All sales
were made through private placements to employees or directors of the Company.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------

1.1 Form of Underwriting Agreement.(1)
3.1 Amended and Restated Certificate of Incorporation.(1)
3.2 Bylaws.(1)
4.1 Form of Common Stock Certificate.(1)
5.1 Opinion of Latham & Watkins.(2)
10.1 Preferred Stock Purchase Agreement, dated as of June 11, 1986, by and among the
Company, Southern California Ventures, Robert W. Johnson and Thomas A. Tisch.(1)
10.2 Shareholders' Agreement, dated June 11, 1986, by and among Southern California
Ventures, Robert W. Johnson, Thomas A. Tisch, the Company, Mark D. Dankberg, Steven
R. Hart and Mark J. Miller.(1)
10.3 Form of Stock Restriction Agreement by and between the Company and each stockholder
of the Company.(1)
10.4 Form of Invention and Confidential Disclosure Agreement by and between the Company
and each employee of the Company.(1)
10.5 ViaSat, Inc. 1993 Stock Option Plan (the "1993 Stock Option Plan").(1)
10.6 Form of Incentive Stock Option Agreement under the 1993 Stock Option Plan.(1)
10.7 Form of Nonqualified Stock Option Agreement under the 1993 Stock Option Plan.(1)
10.8 The 1996 Equity Participation Plan of ViaSat, Inc. (the "1996 Equity Participation
Plan").(2)
10.9 Form of Incentive Stock Option Agreement under the 1996 Equity Participation
Plan.(2)
10.10 Form of Nonqualified Stock Option Agreement under the 1996 Equity Participation
Plan.(2)
10.11 The ViaSat, Inc. Employee Stock Purchase Plan.(2)
10.12 ViaSat, Inc. 401(k) Profit Sharing Plan.(1)
10.13 Loan Agreement, dated as of September 15, 1995, by and between the Company and Union
Bank.(1)
10.14 Business Loan Agreement, dated as of April 5, 1994, as amended, by and between the
Company and Scripps Bank.(1)
10.15 Equipment Financing Agreement, dated April 28, 1994, by and between the Company and
Heritage Leasing Capital.(1)
10.16 Equipment Financing Agreement, dated May 13, 1994, by and between the Company and
Heritage Leasing Capital.(1)
10.17 Equipment Financing Agreement, dated September 19, 1994, by and between the Company
and Heritage Leasing Capital.(1)
10.18 Equipment Financing Agreement, dated December 6, 1994, by and between the Company
and Heritage Leasing Capital.(1)
10.19 Sublease, dated as of August 20, 1993, by and between Whittaker Corporation and the
Company (2290 Cosmos Court, Carlsbad, California).(1)

II-2
77

EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------

10.20 Lease Agreement, dated December 8, 1994, by and between The Campus, LLC and the
Company (The Campus, Carlsbad, California).(1)
10.21 Lease, dated March 21, 1995, by and between Nagog Development Co. and the Company
(125 Nagog Park, Acton, Massachusetts).(1)
10.22 Lease, dated March 8, 1996, by and between Harry and Wendy Brandon and the Company
(1900 S. Harbor City Blvd., Melbourne, Florida).(1)
10.23 Basic Ordering Agreement, dated November 8, 1994, as amended, by and between the
Company and AT&T acting through its Tridom division.(1)
10.24 Supply & Services Contract, dated June 2, 1996, by and between HCL Comnet Systems
and Services Limited and the Company.(1)
10.25 Basic Ordering Agreement Subcontract, dated March 4, 1994, by and between Magnavox
Electronic Systems Company and the Company.(1)
10.26 Award/Contract, effective March 29, 1996, as amended, issued by Electronic Systems
Center/MCK Air Force Materiel Command, USAF to the Company.(1)
10.27 Award/Contract, effective October 2, 1995, issued by Electronic Systems Center/MCK
Air Force Materiel Command, USAF to the Company.(1)
10.28 Award/Contract, effective September 29, 1993, as amended, issued by Information
Technology Acquisition Center to the Company.(1)
10.29 Turnkey Agreement, dated August 9, 1996, by and between Hutchison Corporate Access
(HK) Limited and the Company.(1)
10.30 Award/Contract, effective July 30, 1991, issued by Electronic Systems Division Air
Force Systems Command, USAF to the Company.(1)
10.31 Award/Contract, effective September 27, 1993, as amended, issued by Contracting
Officer Naval Research Laboratory to the Company.(1)
10.32 Award Contract, effective September 21, 1994, as amended, issued by Technical
Contract Management Office to the Company.(1)
10.33 Fixed Price Contract, dated as of October 18, 1995, by and between the Company and
Spectragraphics.(1)
10.34 Commitment Letter, dated October 28, 1996, issued by Union Bank to the Company.(1)
11.1 Statement re computation of per share earnings.(1)
21.1 Subsidiaries.(1)
23.1 Consent of Price Waterhouse LLP.(2)
23.2 Consent of Latham & Watkins (contained in Exhibit 5.1).(2)
24.1 Power of Attorney.(1)
27.1 Financial Data Schedule.(1)

- ---------------
(1) Filed previously.

(2) Filed herewith.

(b) Financial Statement Schedules.

All required information is set forth in the financial statements included
in the Prospectus constituting part of this Registration Statement.

II-3
78

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
79

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Carlsbad, State of California, on November 20, 1996.

ViaSat, Inc.

By: /s/ MARK D. DANKBERG
------------------------------------
Mark D. Dankberg
Chairman, President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------

/s/ MARK D. DANKBERG Chairman of the Board, November 20, 1996
- ------------------------------------------ President and Chief
Mark D. Dankberg Executive Officer (Principal
Executive Officer)

/s/ GREGORY D. MONAHAN* Vice President, Chief November 20, 1996
- ------------------------------------------ Financial Officer and
Gregory D. Monahan General Counsel (Principal
Financial Officer and
Principal Accounting
Officer)

/s/ ROBERT W. JOHNSON* Director November 20, 1996
- ------------------------------------------
Robert W. Johnson

/s/ JEFFREY M. NASH* Director November 20, 1996
- ------------------------------------------
Jeffrey M. Nash

/s/ B. ALLEN LAY* Director November 20, 1996
- ------------------------------------------
B. Allen Lay

*By: /s/ MARK D. DANKBERG
--------------------------------------
Mark D. Dankberg
Attorney-in-Fact

II-5
80

EXHIBIT INDEX

The following exhibits are filed as part of this Form S-1 Registration
Statement.

EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------------------------------

10.22 Lease, dated March 8, 1996, by and between Harry and Wendy Brandon and the Company
(1900 S. Harbor City Blvd., Melbourne, Florida).(1)
10.23 Basic Ordering Agreement, dated November 8, 1994, as amended, by and between the
Company and AT&T acting through its Tridom division.(1)
10.24 Supply & Services Contract, dated June 2, 1996, by and between HCL Comnet Systems
and Services Limited and the Company.(1)
10.25 Basic Ordering Agreement Subcontract, dated March 4, 1994, by and between Magnavox
Electronic Systems Company and the Company.(1)
10.26 Award/Contract, effective March 29, 1996, as amended, issued by Electronic Systems
Center/MCK Air Force Materiel Command, USAF to the Company.(1)
10.27 Award/Contract, effective October 2, 1995, issued by Electronic Systems Center/MCK
Air Force Materiel Command, USAF to the Company.(1)
10.28 Award/Contract, effective September 29, 1993, as amended, issued by Information
Technology Acquisition Center to the Company.(1)
10.29 Turnkey Agreement, dated August 9, 1996, by and between Hutchison Corporate Access
(HK) Limited and the Company.(1)
10.30 Award/Contract, effective July 30, 1991, issued by Electronic Systems Division Air
Force Systems Command, USAF to the Company.(1)
10.31 Award/Contract, effective September 27, 1993, as amended, issued by Contracting
Officer Naval Research Laboratory to the Company.(1)
10.32 Award Contract, effective September 21, 1994, as amended, issued by Technical
Contract Management Office to the Company.(1)
10.33 Fixed Price Contract, dated as of October 18, 1995, by and between the Company and
Spectragraphics.(1)
10.34 Commitment Letter, dated October 28, 1996, issued by Union Bank to the Company.(1)
11.1 Statement re computation of per share earnings.(1)
21.1 Subsidiaries.(1)
23.1 Consent of Price Waterhouse LLP.(2)
23.2 Consent of Latham & Watkins (contained in Exhibit 5.1).(2)
24.1 Power of Attorney.(1)
27.1 Financial Data Schedule.(1)

- ---------------
(1) Filed previously.

(2) Filed herewith.

   1
                         [LATHAM & WATKINS LETTERHEAD]

                                                                     EXHIBIT 5.1
                               November 20, 1996








ViaSat, Inc.
2290 Cosmos Court
Carlsbad, California  92009

        Re:      Registration Statement on Form S-1, File No. 333-13183;
                 2,530,000 Shares of Common Stock, Par Value $.0001 Per Share

Ladies and Gentlemen:

                  In connection with the registration by ViaSat, Inc., a
Delaware corporation (the "Company"), of 2,530,000 shares of common stock of the
Company, par value $.0001 per share (the "Shares"), under the Securities Act of
1933, as amended (the "Act"), on a Registration Statement on Form S-1 filed with
the Securities and Exchange Commission (the "Commission") on October 1, 1996
(File No. 333-13183), as amended by Amendment No. 1 filed with the Commission on
November 5, 1996 and Amendment No. 2 filed with the Commission on November 20,
1996 (collectively, the "Registration Statement"), you have requested our
opinion with respect to the matters set forth below.

                  In our capacity as your counsel in connection with such
registration, we are familiar with the proceedings taken and proposed to be
taken by the Company in connection with the authorization, issuance and sale of
the Shares, and for the purposes of this opinion, have assumed such proceedings
will be timely completed in the manner presently proposed. In addition, we have
made such legal and factual examinations and inquiries, including an examination
of originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion.

                  In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity to authentic original documents of all documents submitted to us
as copies.
   2
ViaSat, Inc.
November 20, 1996
Page 2


                  We are opining herein as to the effect on the subject
transaction only of the General Corporation Law of the State of Delaware, and we
express no opinion with respect to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction or any other laws, or as to any
matters of municipal law or the laws of any other local agencies within the
state.

                  Subject to the foregoing, it is our opinion that the Shares
have been duly authorized, and, upon issuance, delivery and payment therefor in
the manner contemplated by the Registration Statement, will be validly issued,
fully paid and nonassessable.

                  We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."

                                                        Very truly yours,



                                                        LATHAM & WATKINS

   1
                                                                    EXHIBIT 10.8

                       THE 1996 EQUITY PARTICIPATION PLAN
                                       OF
                                  VIASAT, INC.


                  ViaSat, Inc., a Delaware corporation, has adopted The 1996
Equity Participation Plan of ViaSat, Inc. (the "Plan"), effective October 24,
1996, for the benefit of its eligible employees, consultants and directors. The
Plan consists of two plans, one for the benefit of key Employees (as such term
is defined below) and consultants and one for the benefit of Independent
Directors (as such term is defined below).

                  The purposes of this Plan are as follows:

                  (1) To provide an additional incentive for directors, key
Employees and consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of Company
stock and/or rights which recognize such growth, development and financial
success.

                  (2) To enable the Company to obtain and retain the services of
directors, key Employees and consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.

                                    ARTICLE I

                                   DEFINITIONS

                  1.1 General. Wherever the following terms are used in this
Plan they shall have the meanings specified below, unless the context clearly
indicates otherwise.

                  1.2         Award Limit.  "Award Limit" shall mean Five 
Hundred Thousand (500,000) shares of Common Stock.

                  1.3         Board.  "Board" shall mean the Board of Directors
of the Company.

                  1.4         Change in Control.  "Change in Control" shall
mean a change in ownership or control of the Company effected through either of
the following transactions:

                  (a) any person or related group of persons (other than the
         Company or a person that directly or indirectly controls, is controlled
         by, or is under common control with, the Company) directly or
         indirectly acquires beneficial ownership (within the meaning of Rule
         13d-3 under the Exchange Act) of securities possessing more than fifty
         percent (50%) of the total combined voting power of the Company's
         outstanding securities pursuant to a tender or exchange offer made
         directly to the Company's stockholders which the Board does not
         recommend such stockholders to accept; or

                  (b) there is a change in the composition of the Board over a
         period of thirty-six (36) consecutive months (or less) such that a
         majority of the Board members (rounded up to the nearest whole number)
         ceases, by reason of one or more proxy contests for the election of
         Board members, to be comprised of individuals who either (i) have been
         Board members continuously
   2
         since the beginning of such period or (ii) have been elected or
         nominated for election as Board members during such period by at least
         a majority of the Board members described in clause (i) who were still
         in office at the time such election or nomination was approved by the
         Board.

                  1.5         Code.  "Code" shall mean the Internal Revenue 
Code of 1986, as amended.

                  1.6         Committee.  "Committee" shall mean the 
Compensation Committee of the Board, or another committee of the Board, 
appointed as provided in Section 9.1.

                  1.7 Common Stock. "Common Stock" shall mean the common stock
of the Company, par value $0.0001 per share, and any equity security of the
Company issued or authorized to be issued in the future, but excluding any
preferred stock and any warrants, options or other rights to purchase Common
Stock. Debt securities of the Company convertible into Common Stock shall be
deemed equity securities of the Company.

                  1.8         Company.  "Company" shall mean ViaSat, Inc., a 
Delaware corporation.

                  1.9         Corporate Transaction.  "Corporate Transaction" 
shall mean any of the following stockholder-approved transactions to which the 
Company is a party:

                  (a) a merger or consolidation in which the Company is not the
         surviving entity, except for a transaction the principal purpose of
         which is to change the State in which the Company is incorporated, form
         a holding company or effect a similar reorganization as to form
         whereupon this Plan and all Options are assumed by the successor
         entity;

                  (b) the sale, transfer, exchange or other disposition of all
         or substantially all of the assets of the Company, in complete
         liquidation or dissolution of the Company in a transaction not covered
         by the exceptions to clause (a), above; or

                  (c) any reverse merger in which the Company is the surviving
         entity but in which securities possessing more than fifty percent (50%)
         of the total combined voting power of the Company's outstanding
         securities are transferred or issued to a person or persons different
         from those who held such securities immediately prior to such merger.

                  1.10        Deferred Stock.  "Deferred Stock" shall mean 
Common Stock awarded under Article VII of this Plan.

                  1.11        Director.  "Director" shall mean a member of the 
Board.

                  1.12        Dividend Equivalent.  "Dividend Equivalent" shall
mean a right to receive the equivalent value (in cash or Common Stock) of 
dividends paid on Common Stock, awarded under Article VII of this Plan.

                  1.13        Employee.  "Employee" shall mean any officer or 
other employee (as defined in accordance with Section 3401(c) of the Code) of 
the Company, or of any corporation which is a Subsidiary.

                  1.14        Exchange Act.  "Exchange Act" shall mean the 
Securities Exchange Act of 1934, as amended.


                                        2
   3
                  1.15 Fair Market Value. "Fair Market Value" of a share of
Common Stock as of a given date shall be (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in the
case of Options granted to Independent Directors) acting in good faith.

                  1.16 Grantee. "Grantee" shall mean an Employee or consultant
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

                  1.17 Incentive Stock Option. "Incentive Stock Option" shall
mean an option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.

                  1.18 Independent Director. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.

                  1.19 Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Committee.

                  1.20 Option. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
consultants shall be Non-Qualified Stock Options.

                  1.21 Optionee. "Optionee" shall mean an Employee, consultant
or Independent Director granted an Option under this Plan.

                  1.22 Performance Award. "Performance Award" shall mean a cash
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.

                  1.23 Plan. "Plan" shall mean The 1996 Equity Participation
Plan of ViaSat, Inc.

                  1.24 QDRO. "QDRO" shall mean a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

                  1.25 Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VI of this Plan.

                  1.26 Restricted Stockholder. "Restricted Stockholder" shall
mean an Employee or consultant granted an award of Restricted Stock under
Article VI of this Plan.


                                        3
   4
                  1.27 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.

                  1.28 Stock Appreciation Right. "Stock Appreciation Right"
shall mean a stock appreciation right granted under Article VIII of this Plan.

                  1.29 Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of shares of Common Stock, or (ii) an option or other right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made in lieu of all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee or consultant in cash, awarded under Article VII of this Plan.

                  1.30 Subsidiary. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

                  1.31 Termination of Consultancy. "Termination of Consultancy"
shall mean the time when the engagement of an Optionee, Grantee or Restricted
Stockholder as a consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including, but not by way of limitation, by
resignation, discharge, death or retirement; but excluding terminations where
there is a simultaneous commencement of employment with the Company or any
Subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Consultancy.
Notwithstanding any other provision of this Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.

                  1.32 Termination of Directorship. "Termination of
Directorship" shall mean the time when an Optionee who is an Independent
Director ceases to be a Director for any reason, including, but not by way of
limitation, a termination by resignation, failure to be elected, death or
retirement. The Board, in its sole and absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Directorship with
respect to Independent Directors.

                  1.33 Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between an Optionee,
Grantee or Restricted Stockholder and the Company or any Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death, disability or
retirement; but excluding (i) terminations where there is a simultaneous
reemployment or continuing employment of an Optionee, Grantee or Restricted
Stockholder by the Company or any Subsidiary, (ii) at the discretion of the
Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former employee.
The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for good cause, and all questions of whether
particular leaves of absence constitute Terminations of Employment; provided,
however, that,


                                        4
   5
unless otherwise determined by the Committee in its discretion, a leave of
absence, change in status from an employee to an independent contractor or other
change in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status
or other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section . Notwithstanding any other provision of this Plan, the Company or any
Subsidiary has an absolute and unrestricted right to terminate an Employee's
employment at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in writing.

                                   ARTICLE II

                             SHARES SUBJECT TO PLAN

                  2.1         Shares Subject to Plan.

                  (a) The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $0.0001 per share. The
aggregate number of such shares which may be issued upon exercise of such
options or rights or upon any such awards under the Plan shall not exceed Seven
Hundred Fifty Thousand (750,000). The shares of Common Stock issuable upon
exercise of such options or rights or upon any such awards may be either
previously authorized but unissued shares or treasury shares.

                  (b) The maximum number of shares which may be subject to
Options or Stock Appreciation Rights granted under the Plan to any individual in
any fiscal year shall not exceed the Award Limit. To the extent required by
Section 162(m) of the Code, shares subject to Options which are canceled
continue to be counted against the Award Limit and if, after grant of an Option,
the price of shares subject to such Option is reduced, the transaction is
treated as a cancellation of the Option and a grant of a new Option and both the
Option deemed to be canceled and the Option deemed to be granted are counted
against the Award Limit. Furthermore, to the extent required by Section 162(m)
of the Code, if, after grant of a Stock Appreciation Right, the base amount on
which stock appreciation is calculated is reduced to reflect a reduction in the
Fair Market Value of the Company's Common Stock, the transaction is treated as a
cancellation of the Stock Appreciation Right and a grant of a new Stock
Appreciation Right and both the Stock Appreciation Right deemed to be canceled
and the Stock Appreciation Right deemed to be granted are counted against the
Award Limit.

                  2.2 Add-back of Options and Other Rights. If any Option, or
other right to acquire shares of Common Stock under any other award under this
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by this Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1. Furthermore, any shares subject to Options or other awards which
are adjusted pursuant to Section 10.3 and become exercisable with respect to
shares of stock of another corporation shall be considered cancelled and may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Shares of Common Stock which are delivered by the Optionee or
Grantee or withheld by the Company upon the exercise of any Option or other
award under this Plan, in payment of the exercise price thereof, may again be
optioned, granted or awarded hereunder, subject to the limitations of Section 
2.1. If any share of Restricted Stock is forfeited by the Grantee or repurchased
by the Company pursuant to Section 6.6 hereof, such share may again be


                                        5
   6
optioned, granted or awarded hereunder, subject to the limitations of Section 
2.1. Notwithstanding the provisions of this Section 2.2, no shares of Common
Stock may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

                                   ARTICLE III

                               GRANTING OF OPTIONS

                  3.1 Eligibility. Any Employee or consultant selected by the
Committee pursuant to Section 3.4(a)(i) shall be eligible to be granted an
Option. Each Independent Director of the Company shall be eligible to be granted
Options at the times and in the manner set forth in Section 3.4(d).

                  3.2 Disqualification for Stock Ownership. No person may be
granted an Incentive Stock Option under this Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary or parent corporation (within the
meaning of Section 422 of the Code) unless such Incentive Stock Option conforms
to the applicable provisions of Section 422 of the Code.

                  3.3 Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted to any person who is not an Employee.

                  3.4         Granting of Options

                  (a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:

                                  (i) Determine which Employees are key
         Employees and select from among the key Employees or consultants
         (including Employees or consultants who have previously received
         Options or other awards under this Plan) such of them as in its opinion
         should be granted Options;

                                  (ii) Subject to the Award Limit, determine the
         number of shares to be subject to such Options granted to the selected
         key Employees or consultants;

                                  (iii) Subject to Section 3.3, determine
         whether such Options are to be Incentive Stock Options or Non-Qualified
         Stock Options and whether such Options are to qualify as
         performance-based compensation as described in Section 162(m)(4)(C) of
         the Code; and

                                  (iv) Determine the terms and conditions of
         such Options, consistent with this Plan; provided, however, that the
         terms and conditions of Options intended to qualify as
         performance-based compensation as described in Section 162(m)(4)(C) of
         the Code shall include, but not be limited to, such terms and
         conditions as may be necessary to meet the applicable provisions of
         Section 162(m) of the Code.

                  (b) Upon the selection of a key Employee or consultant to be
granted an Option, the Committee shall instruct the Secretary of the Company to
issue the Option and may impose such conditions on the grant of the Option as it
deems appropriate. Without limiting the generality of the


                                        6
   7
preceding sentence, the Committee may, in its discretion and on such terms as it
deems appropriate, require as a condition on the grant of an Option to an
Employee or consultant that the Employee or consultant surrender for
cancellation some or all of the unexercised Options, awards of Restricted Stock
or Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments or other rights which have been previously granted
to him under this Plan or otherwise. An Option, the grant of which is
conditioned upon such surrender, may have an option price lower (or higher) than
the exercise price of such surrendered Option or other award, may cover the same
(or a lesser or greater) number of shares as such surrendered Option or other
award, may contain such other terms as the Committee deems appropriate, and
shall be exercisable in accordance with its terms, without regard to the number
of shares, price, exercise period or any other term or condition of such
surrendered Option or other award.

                  (c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.

                  (d) During the term of the Plan, each person who is an
Independent Director as of the date of the consummation of the initial public
offering of Common Stock automatically shall be granted (i) an Option to
purchase Seven Thousand Five Hundred (7,500) shares of Common Stock (subject to
adjustment as provided in Section 10.3) on the date of such initial public
offering and (ii) an Option to purchase Four Thousand (4,000) shares of Common
Stock (subject to adjustment as provided in Section 10.3) on the date of each
annual meeting of stockholders after such initial public offering at which
directors are elected to the Board. During the term of the Plan, a person who is
initially elected to the Board after the consummation of the initial public
offering of Common Stock and who is an Independent Director at the time of such
initial election automatically shall be granted (i) an Option to purchase Seven
Thousand Five Hundred (7,500) shares of Common Stock (subject to adjustment as
provided in Section 10.3) on the date of such initial election and (ii) an
Option to purchase Four Thousand (4,000) shares of Common Stock (subject to
adjustment as provided in Section 10.3) on the date of each annual meeting of
stockholders after such initial election at which directors are elected to the
Board. Members of the Board who are employees of the Company who subsequently
retire from the Company and remain on the Board will not receive an initial
Option grant pursuant to clause (i) of the preceding sentence, but to the extent
that they are otherwise eligible, will receive, after retirement from employment
with the Company, Options as described in clause (ii) of the preceding sentence.
All of the foregoing Option grants authorized by this Section 3.4(d) are subject
to stockholder approval of the Plan.

                                   ARTICLE IV

                                TERMS OF OPTIONS

                  4.1 Option Agreement. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock Option Agreements evidencing Incentive Stock
Options shall


                                        7
   8
contain such terms and conditions as may be necessary to meet the applicable
provisions of Section 422 of the Code.

                  4.2 Option Price. The price per share of the shares subject to
each Option shall be set by the Committee; provided, however, that such price
shall be no less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law, and (i) in the case of Incentive Stock
Options and Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, such price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted; (ii) in the case of Incentive Stock Options granted to an individual
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code) such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted; and (iii) in the case
of Options granted to Independent Directors, such price shall equal 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted;
provided, however, that the price of each share subject to each Option granted
to Independent Directors on the date of the initial public offering of Common
Stock shall equal the initial public offering price (net of underwriting
discounts and commissions) per share of Common Stock.

                  4.3 Option Term. The term of an Option shall be set by the
Committee in its discretion; provided, however, that, (i) in the case of Options
granted to Independent Directors, the term shall be ten (10) years from the date
the Option is granted, without variation or acceleration hereunder, but subject
to Section 5.6, and (ii) in the case of Incentive Stock Options, the term shall
not be more than ten (10) years from the date the Incentive Stock Option is
granted, or five (5) years from such date if the Incentive Stock Option is
granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation thereof (within the
meaning of Section 422 of the Code). Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable to
Incentive Stock Options, the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment or Termination of
Consultancy of the Optionee, or amend any other term or condition of such Option
relating to such a termination.

                  4.4        Option Vesting

                  (a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that, unless the
Committee otherwise provides in the terms of the Option or otherwise, no Option
shall be exercisable by any Optionee who is then subject to Section 16 of the
Exchange Act within the period ending six months and one day after the date the
Option is granted; and provided, further, that Options granted to Independent
Directors shall become exercisable in cumulative annual installments of 33 1/3%
on each of the first, second and third anniversaries of the date of Option
grant, without variation or acceleration hereunder except as provided in
Section  10.3(b). At any time after grant of an Option, the Committee may, in
its sole and absolute discretion and subject to whatever terms and conditions
it selects, accelerate the period during which an Option (except an Option
granted to an Independent Director) vests.
        
                  (b) No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee in the case of Options granted to


                                        8
   9
Employees or consultants either in the Stock Option Agreement or by action of
the Committee following the grant of the Option.

                  (c) To the extent that the aggregate Fair Market Value of
stock with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company and any
Subsidiary) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding sentence shall be applied by taking Options into account in the
order in which they were granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.

                  4.5 Consideration. In consideration of the granting of an
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company or any Subsidiary for a period of at
least one year (or such shorter period as may be fixed in the Stock Option
Agreement or by action of the Committee following grant of the Option) after the
Option is granted (or, in the case of an Independent Director, until the next
annual meeting of stockholders of the Company). Nothing in this Plan or in any
Stock Option Agreement hereunder shall confer upon any Optionee any right to
continue in the employ of, or as a consultant for, the Company or any
Subsidiary, or as a director of the Company, or shall interfere with or restrict
in any way the rights of the Company and any Subsidiary, which are hereby
expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without good cause.

                                    ARTICLE V

                               EXERCISE OF OPTIONS

                  5.1 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.

                  5.2 Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:

                  (a) A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of Options granted to
Independent Directors) stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;

                  (b) Such representations and documents as the Committee (or
the Board, in the case of Options granted to Independent Directors), in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;



                                        9
   10
                  (c) In the event that the Option shall be exercised pursuant
to Section 10.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and

                  (d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Independent Directors), may in its discretion (i) allow a delay in payment up to
thirty (30) days from the date the Option, or portion thereof, is exercised;
(ii) allow payment, in whole or in part, through the delivery of shares of
Common Stock owned by the Optionee, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (v)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Committee or the Board; (vi) allow payment, in whole
or in part, through the delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; or (vii) allow payment through any
combination of the consideration provided in the foregoing subparagraphs (ii),
(iii), (iv), (v) and (vi). In the case of a promissory note, the Committee (or
the Board, in the case of Options granted to Independent Directors) may also
prescribe the form of such note and the security to be given for such note. The
Option may not be exercised, however, by delivery of a promissory note or by a
loan from the Company when or where such loan or other extension of credit is
prohibited by law.

                  5.3 Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:

                  (a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

                  (b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee or Board shall, in its absolute discretion,
deem necessary or advisable;

                  (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee (or Board, in the case
of Options granted to Independent Directors) shall, in its absolute discretion,
determine to be necessary or advisable;

                  (d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons of
administrative convenience; and

                  (e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.


                                       10
   11
                  5.4 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.

                  5.5 Ownership and Transfer Restrictions. The Committee (or
Board, in the case of Options granted to Independent Directors), in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The Committee may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.

                  5.6 Limitations on Exercise of Options Granted to Independent
Directors. No Option granted to an Independent Director may be exercised to any
extent by anyone after the first to occur of the following events:

                  (a) The expiration of twelve (12) months from the date of the
Optionee's death;

                  (b) the expiration of twelve (12) months from the date of the
Optionee's Termination of Directorship by reason of his permanent and total
disability (within the meaning of Section 22(e)(3) of the Code);

                  (c) the expiration of three (3) months from the date of the
Optionee's Termination of Directorship for any reason other than such Optionee's
death or his permanent and total disability, unless the Optionee dies within
said three-month period; or

                  (d) The expiration of ten (10) years from the date the Option
was granted.

                                   ARTICLE VI

                            AWARD OF RESTRICTED STOCK

                  6.1        Award of Restricted Stock

                  (a) The Committee may from time to time, in its absolute
discretion:

                         (i) Select from among the key Employees or consultants
         (including Employees or consultants who have previously received other
         awards under this Plan) such of them as in its opinion should be
         awarded Restricted Stock; and

                         (ii) Determine the purchase price, if any, and other
         terms and conditions applicable to such Restricted Stock, consistent
         with this Plan.

                  (b) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of


                                       11
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the Common Stock to be purchased, unless otherwise permitted by applicable state
law. In all cases, legal consideration shall be required for each issuance of
Restricted Stock.

                  (c) Upon the selection of a key Employee or consultant to be
awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.

                  6.2 Restricted Stock Agreement. Restricted Stock shall be
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee or consultant and an authorized officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with this Plan.

                  6.3 Consideration. As consideration for the issuance of
Restricted Stock, in addition to payment of any purchase price, the Restricted
Stockholder shall agree, in the written Restricted Stock Agreement, to remain in
the employ of, or to consult for, the Company or any Subsidiary for a period of
at least one year after the Restricted Stock is issued (or such shorter period
as may be fixed in the Restricted Stock Agreement or by action of the Committee
following grant of the Restricted Stock). Nothing in this Plan or in any
Restricted Stock Agreement hereunder shall confer on any Restricted Stockholder
any right to continue in the employ of, or as a consultant for, the Company or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Restricted Stockholder at any time for any reason whatsoever, with or
without good cause.

                  6.4 Rights as Stockholders. Upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 6.7, the Restricted
Stockholder shall have, unless otherwise provided by the Committee, all the
rights of a stockholder with respect to said shares, subject to the restrictions
in his Restricted Stock Agreement, including the right to receive all dividends
and other distributions paid or made with respect to the shares; provided,
however, that in the discretion of the Committee, any extraordinary 
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 6.5.

                  6.5 Restriction. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company, Company performance and individual performance;
provided, however, that, unless the Committee otherwise provides in the terms of
the Restricted Stock Agreement or otherwise, no share of Restricted Stock
granted to a person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six months and one day have
elapsed from the date on which the Restricted Stock was issued, and provided,
further, that by action taken after the Restricted Stock is issued, the
Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted Stock Agreement. Restricted Stock may not be sold or encumbered until
all restrictions are terminated or expire. Unless provided otherwise by the
Committee, if no consideration was paid by the Restricted Stockholder upon
issuance, a Restricted Stockholder's rights in unvested Restricted Stock shall
lapse upon Termination of Employment or, if applicable, upon Termination of
Consultancy with the Company.



                                       12
   13
                  6.6 Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Restricted Stock Agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or, if applicable, upon a
Termination of Consultancy between the Restricted Stockholder and the Company,
at a cash price per share equal to the price paid by the Restricted Stockholder
for such Restricted Stock; provided, however, that provision may be made that no
such right of repurchase shall exist in the event of a Termination of Employment
or Termination of Consultancy without cause, or following a change in control of
the Company or because of the Restricted Stockholder's retirement, death or
disability, or otherwise.

                  6.7 Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.

                  6.8 Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.

                                   ARTICLE VII

                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

                  7.1 Performance Awards. Any key Employee or consultant
selected by the Committee may be granted one or more Performance Awards. The
value of such Performance Awards may be linked to the market value, book value,
net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee, or may be based upon the appreciation in the market value, book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular key
Employee or consultant.

                  7.2 Dividend Equivalents. Any key Employee or consultant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Common Stock, to be credited as of dividend payment dates,
during the period between the date an Option, Stock Appreciation Right, Deferred
Stock or Performance Award is granted, and the date such Option, Stock
Appreciation Right, Deferred Stock or Performance Award is exercised, vests or
expires, as determined by the Committee. Such Dividend Equivalents shall be
converted to cash or additional shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the Committee.
With respect to Dividend Equivalents granted with respect to Options intended to
be qualified performance-based compensation for purposes of Section 162(m) of
the Code, such Dividend Equivalents shall be payable regardless of whether such
Option is exercised.

                  7.3 Stock Payments. Any key Employee or consultant selected by
the Committee may receive Stock Payments in the manner determined from time to
time by the Committee. The number


                                       13
   14
of shares shall be determined by the Committee and may be based upon the Fair
Market Value, book value, net profits or other measure of the value of Common
Stock or other specific performance criteria determined appropriate by the
Committee, determined on the date such Stock Payment is made or on any date
thereafter.

                  7.4 Deferred Stock. Any key Employee or consultant selected by
the Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee. Common Stock underlying a Deferred Stock award will not be
issued until the Deferred Stock award has vested, pursuant to a vesting schedule
or performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying the award has been issued.

                  7.5 Performance Award Agreement, Dividend Equivalent
Agreement, Deferred Stock Agreement, Stock Payment Agreement. Each Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall
be evidenced by a written agreement, which shall be executed by the Grantee and
an authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

                  7.6 Term. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.

                  7.7 Exercise Upon Termination of Employment. A Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
exercisable or payable only while the Grantee is an Employee or consultant;
provided that the Committee may determine that the Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment may be exercised or
paid subsequent to Termination of Employment or Termination of Consultancy
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.

                  7.8 Payment on Exercise. Payment of the amount determined
under Section 7.1 or 7.2 above shall be in cash, in Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.3.

                  7.9 Consideration. In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary for a period of at
least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted (or such shorter period as may be
fixed in such agreement or by action of the Committee following such grant).
Nothing in this Plan or in any agreement hereunder shall confer on any Grantee
any right to continue in the employ of, or as a consultant for, the Company or
any Subsidiary or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Grantee at any time for any reason whatsoever, with or without good cause.


                                       14
   15
                                  ARTICLE VIII

                            STOCK APPRECIATION RIGHTS

                  8.1 Grant of Stock Appreciation Rights. A Stock Appreciation
Right may be granted to any key Employee or consultant selected by the
Committee. A Stock Appreciation Right may be granted (i) in connection and
simultaneously with the grant of an Option, (ii) with respect to a previously
granted Option, or (iii) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with this Plan as
the Committee shall impose and shall be evidenced by a written Stock
Appreciation Right Agreement, which shall be executed by the Grantee and an
authorized officer of the Company. The Committee, in its discretion, may
determine whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and Stock
Appreciation Right Agreements evidencing Stock Appreciation Rights intended to
so qualify shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code. Without limiting the
generality of the foregoing, the Committee may, in its discretion and on such
terms as it deems appropriate, require as a condition of the grant of a Stock
Appreciation Right to an Employee or consultant that the Employee or consultant
surrender for cancellation some or all of the unexercised Options, awards of
Restricted Stock or Deferred Stock, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments, or other rights which have been
previously granted to him under this Plan or otherwise. A Stock Appreciation
Right, the grant of which is conditioned upon such surrender, may have an
exercise price lower (or higher) than the exercise price of the surrendered
Option or other award, may cover the same (or a lesser or greater) number of
shares as such surrendered Option or other award, may contain such other terms
as the Committee deems appropriate, and shall be exercisable in accordance with
its terms, without regard to the number of shares, price, exercise period or any
other term or condition of such surrendered Option or other award.

                  8.2        Coupled Stock Appreciation Rights

                  (a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.

                  (b) A CSAR may be granted to the Grantee for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.

                  (c) A CSAR shall entitle the Grantee (or other person entitled
to exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.

                  8.3        Independent Stock Appreciation Rights

                  (a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that unless the Committee otherwise provides in
the terms


                                       15
   16
of the ISAR or otherwise, no ISAR granted to a person subject to Section 16 of
the Exchange Act shall be exercisable until at least six months have elapsed
from (but excluding) the date on which the Option was granted. The exercise
price per share of Common Stock subject to each ISAR shall be set by the
Committee. An ISAR is exercisable only while the Grantee is an Employee or
consultant; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment or Termination of Consultancy
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.

                  (b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.

                  8.4        Payment and Limitations on Exercise

                  (a) Payment of the amount determined under Section 8.2(c) and
8.3(b) above shall be in cash, in Common Stock (based on its Fair Market Value
as of the date the Stock Appreciation Right is exercised) or a combination of
both, as determined by the Committee. To the extent such payment is effected in
Common Stock it shall be made subject to satisfaction of all provisions of
Section 5.3 above pertaining to Options.

                  (b) Grantees of Stock Appreciation Rights may be required to
comply with any timing or other restrictions with respect to the settlement or
exercise of a Stock Appreciation Right, including a window-period limitation, as
may be imposed in the discretion of the Board or Committee.

                  8.5 Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary for a period of at least one year after the Stock Appreciation
Right is granted (or such shorter period as may be fixed in the Stock
Appreciation Right Agreement or by action of the Committee following grant of
the Restricted Stock). Nothing in this Plan or in any Stock Appreciation Right
Agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Grantee at any
time for any reason whatsoever, with or without good cause.

                                   ARTICLE IX

                                 ADMINISTRATION

                  9.1 Compensation Committee. Prior to the Company's initial
registration of Common Stock under Section 12 of the Exchange Act, the
Compensation Committee shall consist of the entire Board. Following such
registration, the Compensation Committee (or another committee or a subcommittee
of the Board assuming the functions of the Committee under this Plan) shall
consist solely of two or more Independent Directors appointed by and holding
office at the pleasure of the Board, each of whom is both a "non-employee
director" as defined by Rule 16b-3 and an "outside director" for purposes of
Section 162(m) of the Code. Appointment of Committee members shall be effective
upon


                                       16
   17
acceptance of appointment.  Committee members may resign at any time by 
delivering written notice to the Board.  Vacancies in the Committee may be 
filled by the Board.

                  9.2 Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this Plan
and the agreements pursuant to which Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments are granted or awarded, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any such grant or award
under this Plan need not be the same with respect to each Optionee, Grantee or
Restricted Stockholder. Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of the Code. In its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee under this Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.

                  9.3 Majority Rule; Unanimous Written Consent. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.

                  9.4 Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Optionees, Grantees, Restricted Stockholders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to this Plan, Options, awards of Restricted Stock or Deferred Stock,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, and all members of the Committee and the Board shall be fully
protected by the Company in respect of any such action, determination or
interpretation.

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

                  10.1 Not Transferable. Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution or pursuant to a QDRO, unless and until such rights or awards
have been exercised, or the shares underlying such rights or awards have been
issued, and all restrictions applicable to such shares have lapsed. No Option,
Restricted Stock award, Deferred Stock award, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or interest or right
therein shall be liable for the debts, contracts or engagements of the Optionee,
Grantee or Restricted Stockholder or


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his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

                  During the lifetime of the Optionee or Grantee, only he may
exercise an Option or other right or award (or any portion thereof) granted to
him under the Plan, unless it has been disposed of pursuant to a QDRO. After the
death of the Optionee or Grantee, any exercisable portion of an Option or other
right or award may, prior to the time when such portion becomes unexercisable
under the Plan or the applicable Stock Option Agreement or other agreement, be
exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's or Grantee's will or under the then applicable
laws of descent and distribution.

                  10.2 Amendment, Suspension or Termination of this Plan. Except
as otherwise provided in this Section 10.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. However, without approval of the
Company's stockholders given within twelve months before or after the action by
the Board or the Committee, no action of the Board or the Committee may, except
as provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit, and no action of the Board or the Committee may be taken that would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent of the holder of Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, alter or impair any rights or obligations under any Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments theretofore granted
or awarded, unless the award itself otherwise expressly so provides. No Options,
Restricted Stock, Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments may be granted or awarded during any
period of suspension or after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the first to occur of
the following events:

                  (a) The expiration of ten years from the date the Plan is
adopted by the Board; or

                  (b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.4.

                  10.3 Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.

                  (a) Subject to Section 10.3(d), in the event that the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company (including,
but not limited to, a Corporate Transaction), or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion (or in the
case of Options granted to Independent Directors, the


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Board's sole discretion), affects the Common Stock such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to an Option, Restricted Stock award, Performance
Award, Stock Appreciation Right, Dividend Equivalent, Deferred Stock award or
Stock Payment, then the Committee (or the Board, in the case of Options granted
to Independent Directors) shall, in such manner as it may deem equitable, adjust
any or all of

                             (i) the number and kind of shares of Common Stock
         (or other securities or property) with respect to which Options,
         Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
         Stock Payments may be granted under the Plan, or which may be granted
         as Restricted Stock or Deferred Stock (including, but not limited to,
         adjustments of the limitations in Section 2.1 on the maximum number and
         kind of shares which may be issued and adjustments of the Award Limit),

                             (ii) the number and kind of shares of Common Stock
         (or other securities or property) subject to outstanding Options,
         Performance Awards, Stock Appreciation Rights, Dividend Equivalents, or
         Stock Payments, and in the number and kind of shares of outstanding
         Restricted Stock or Deferred Stock, and

                             (iii) the grant or exercise price with respect to
         any Option, Performance Award, Stock Appreciation Right, Dividend
         Equivalent or Stock Payment.

                  (b) Subject to Sections 10.3(b)(vii) and 10.3(d), in the event
of any Corporate Transaction or other transaction or event described in Section 
10.3(a) or any unusual or nonrecurring transactions or events affecting the
Company, any affiliate of the Company, or the financial statements of the
Company or any affiliate, or of changes in applicable laws, regulations, or
accounting principles, the Committee (or the Board, in the case of Options
granted to Independent Directors) in its discretion is hereby authorized to take
any one or more of the following actions whenever the Committee (or the Board,
in the case of Options granted to Independent Directors) determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any option, right or other award under this Plan, to facilitate
such transactions or events or to give effect to such changes in laws,
regulations or principles:

                             (i) In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors) may
         provide, either by the terms of the agreement or by action taken prior
         to the occurrence of such transaction or event and either automatically
         or upon the optionee's request, for either the purchase of any such
         Option, Performance Award, Stock Appreciation Right, Dividend
         Equivalent, or Stock Payment, or any Restricted Stock or Deferred Stock
         for an amount of cash equal to the amount that could have been attained
         upon the exercise of such option, right or award or realization of the
         optionee's rights had such option, right or award been currently
         exercisable or payable or fully vested or the replacement of such
         option, right or award with other rights or property selected by the
         Committee (or the Board, in the case of Options granted to Independent
         Directors) in its sole discretion;

                             (ii) In its sole and absolute discretion, the
         Committee (or the Board, in the case of Options granted to Independent
         Directors) may provide, either by the terms of such Option, Performance
         Award, Stock Appreciation Right, Dividend Equivalent, or Stock Payment,


                                       19
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         or Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event that it cannot be exercised
         after such event;

                             (iii) In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors) may
         provide, either by the terms of such Option, Performance Award, Stock
         Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event, that for a specified period of
         time prior to such transaction or event, such option, right or award
         shall be exercisable as to all shares covered thereby, notwithstanding
         anything to the contrary in (i) Section 4.4 or (ii) the provisions of
         such Option, Performance Award, Stock Appreciation Right, Dividend
         Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock;

                             (iv) In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors) may
         provide, either by the terms of such Option, Performance Award, Stock
         Appreciation Right, Dividend Equivalent, or Stock Payment, or
         Restricted Stock or Deferred Stock or by action taken prior to the
         occurrence of such transaction or event, that upon such event, such
         option, right or award be assumed by the successor or survivor
         corporation, or a parent or subsidiary thereof, or shall be substituted
         for by similar options, rights or awards covering the stock of the
         successor or survivor corporation, or a parent or subsidiary thereof,
         with appropriate adjustments as to the number and kind of shares and
         prices;

                             (v) In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee (or
         the Board, in the case of Options granted to Independent Directors) may
         make adjustments in the number and type of shares of Common Stock (or
         other securities or property) subject to outstanding Options,
         Performance Awards, Stock Appreciation Rights, Dividend Equivalents, or
         Stock Payments, and in the number and kind of outstanding Restricted
         Stock or Deferred Stock and/or in the terms and conditions of
         (including the grant or exercise price), and the criteria included in,
         outstanding options, rights and awards and options, rights and awards
         which may be granted in the future;

                             (vi) In its sole and absolute discretion, and on
         such terms and conditions as it deems appropriate, the Committee may
         provide either by the terms of a Restricted Stock award or Deferred
         Stock award or by action taken prior to the occurrence of such event
         that, for a specified period of time prior to such event, the
         restrictions imposed under a Restricted Stock Agreement or a Deferred
         Stock Agreement upon some or all shares of Restricted Stock or Deferred
         Stock may be terminated, and, in the case of Restricted Stock, some or
         all shares of such Restricted Stock may cease to be subject to
         repurchase under Section 6.6 or forfeiture under Section 6.5 after such
         event; and

                             (vii) None of the foregoing discretionary actions
         taken under this Section 10.3(b) shall be permitted with respect to
         Options granted under Section 3.4(d) to Independent Directors to the
         extent that such discretion would be inconsistent with the applicable
         exemptive conditions of Rule 16b-3. In the event of a Change in Control
         or a Corporate Transaction, to the extent that the Board does not have
         the ability under Rule 16b-3 to take or to refrain from taking the
         discretionary actions set forth in Section 10.3(b)(iii) above, each
         Option granted to an Independent Director shall be exercisable as to
         all shares covered thereby upon such Change in Control or during the
         five days immediately preceding the consummation of such Corporate


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         Transaction and subject to such consummation, notwithstanding anything
         to the contrary in Section 4.4 or the vesting schedule of such Options.
         In the event of a Corporate Transaction, to the extent that the Board
         does not have the ability under Rule 16b-3 to take or to refrain from
         taking the discretionary actions set forth in Section 10.3(b)(ii)
         above, no Option granted to an Independent Director may be exercised
         following such Corporate Transaction unless such Option is, in
         connection with such Corporate Transaction, either assumed by the
         successor or survivor corporation (or parent or subsidiary thereof) or
         replaced with a comparable right with respect to shares of the capital
         stock of the successor or survivor corporation (or parent or subsidiary
         thereof).

                  (c) Subject to Section 10.3(d) and 10.8, the Committee (or the
Board, in the case of Options granted to Independent Directors) may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.

                  (d) With respect to Incentive Stock Options and Options and
Stock Appreciation Rights intended to qualify as performance-based compensation
under Section 162(m), no adjustment or action described in this Section 10.3 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to violate Section 422(b)(1) of the
Code or would cause such option or stock appreciation right to fail to so
qualify under Section 162(m), as the case may be, or any successor provisions
thereto. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that the option or other award is not to comply with such
exemptive conditions. The number of shares of Common Stock subject to any
option, right or award shall always be rounded to the next whole number.

                  10.4 Approval of Plan by Stockholders. This Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan. Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted and Restricted Stock or Deferred Stock may be awarded
prior to such stockholder approval, provided that such Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments shall
not be exercisable and such Restricted Stock or Deferred Stock shall not vest
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments previously granted and all Restricted
Stock or Deferred Stock previously awarded under this Plan shall thereupon be
canceled and become null and void.

                  10.5 Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee,
Grantee or Restricted Stockholder of any sums required by federal, state or
local tax law to be withheld with respect to the issuance, vesting or exercise
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. The Committee (or the
Board, in the case of Options granted to Independent Directors) may in its
discretion and in satisfaction of the foregoing requirement allow such Optionee,
Grantee or Restricted Stockholder to elect to have the Company withhold shares
of Common Stock otherwise issuable under such Option or other award (or allow
the return of shares of Common Stock) having a Fair Market Value equal to the
sums required to be withheld.


                                       21
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                  10.6 Loans. The Committee may, in its discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of an
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted under this Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee.

                  10.7 Forfeiture Provisions. Pursuant to its general authority
to determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options or other
awards made under the Plan, or to require the recipient to agree by separate
written instrument, that (i) any proceeds, gains or other economic benefit
actually or constructively received by the recipient upon any receipt or
exercise of the award, or upon the receipt or resale of any Common Stock
underlying such award, must be paid to the Company, and (ii) the award shall
terminate and any unexercised portion of such award (whether or not vested)
shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable).

                  10.8 Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, this Plan, and any Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to any individual who is then subject to Section 16 of the
Exchange Act, shall 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 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan, Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents, Stock Payments, Restricted Stock and Deferred Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other provision
of this Plan, any Option or Stock Appreciation Right intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to such requirements.

                  10.9 Effect of Plan Upon Options and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary or (ii) to grant or assume options or other rights
otherwise than under this Plan in connection with any proper corporate purpose
including but not by way of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
limited liability company, firm or association.

                  10.10 Compliance with Laws. This Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights,


                                       22
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Dividend Equivalents or Stock Payments under this Plan and the issuance and
delivery of shares of Common Stock and the payment of money under this Plan or
under Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments granted or Restricted Stock or Deferred Stock
awarded hereunder are subject to compliance with all applicable federal and
state laws, rules and regulations (including but not limited to state and
federal securities law and federal margin requirements) and to such approvals by
any listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the Company, provide
such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

                  10.11 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this Plan.

                  10.12 Governing Law. This Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of California without regard to conflicts of laws thereof.



                                       23

   1
                                                                    EXHIBIT 10.9

                        INCENTIVE STOCK OPTION AGREEMENT


                  THIS AGREEMENT, dated ____________, 19__, is made by and
between ViaSat, Inc., a Delaware corporation hereinafter referred to as
"Company," and ____________________, an employee of the Company or a Subsidiary
of the Company, hereinafter referred to as "Employee":

                  WHEREAS, the Company wishes to afford the Employee the
opportunity to purchase shares of its $0.0001 par value Common Stock; and

                  WHEREAS, the Company wishes to carry out the Plan (the terms
of which are hereby incorporated by reference and made a part of this
Agreement); and

                  WHEREAS, the Committee, appointed to administer the Plan, has
determined that it would be to the advantage and best interest of the Company
and its stockholders to grant the Incentive Stock Option provided for herein to
the Employee as an inducement to enter into or remain in the service of the
Company or its Subsidiaries and as an incentive for increased efforts during
such service, and has advised the Company thereof and instructed the undersigned
officers to issue said Option;

                  NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary. The masculine pronoun shall include the feminine and neuter, and
the singular the plural, where the context so indicates. All capitalized terms
used herein without definition shall have the meanings ascribed to such terms in
the Plan.

Section 1.1 - Board

                  "Board" shall mean the Board of Directors of the Company.

Section 1.2 - Code

                  "Code" shall mean the Internal Revenue Code of 1986, as 
amended.

Section 1.3 - Committee

                  "Committee" shall mean the Compensation Committee of the
Board, or another committee of the Board, appointed as provided in Section 9.1
of the Plan.


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Section 1.4 - Company

                  "Company" shall mean ViaSat, Inc., a Delaware corporation.

Section 1.5 - Director

                  "Director" shall mean a member of the Board.

Section 1.6 - Exchange Act

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

Section 1.7 - Officer

                  "Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the future.

Section 1.8 - Option

                  "Option" shall mean the incentive stock option to purchase
Common Stock of the Company granted under this Agreement.

Section 1.9 - Plan

                  "Plan" shall mean The 1996 Equity Participation Plan of 
ViaSat, Inc.

Section 1.10 - Rule 16b-3

                  "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.

Section 1.11 - Secretary

                  "Secretary" shall mean the Secretary of the Company.

Section 1.12 - Securities Act

                  "Securities Act" shall mean the Securities Act of 1933, as 
amended.

Section 1.13 - Subsidiary

                  "Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.


                                        2
   3
Section 1.14 - Termination of Employment

                  "Termination of Employment" shall mean the time when the
employee-employer relationship between the Employee and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of the Employee by the
Company or any Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship, 
and (iii) at the discretion of the Committee, terminations which are followed by
the simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Committee, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, unless otherwise determined by the
Committee in its discretion, a leave of absence, change in status from an
employee to an independent contractor or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that, such leave of absence, change in status or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section . Notwithstanding
any other provision of this Agreement or of the Plan, the Company or any
Subsidiary has an absolute and unrestricted right to terminate the Employee's
employment at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in writing.

                                   ARTICLE II

                                 GRANT OF OPTION

Section 2.1 - Grant of Option

                  In consideration of the Employee's agreement to remain in the
employ of the Company or its Subsidiaries and for other good and valuable
consideration, on the date hereof the Company irrevocably grants to the Employee
the option to purchase any part or all of an aggregate of ________ shares of its
$0.0001 par value Common Stock upon the terms and conditions set forth in this
Agreement.

Section 2.2 - Purchase Price

                  The purchase price of the shares of stock covered by the
Option shall be $_____ per share without commission or other charge.

Section 2.3 - Consideration to Company

                  In consideration of the granting of this Option by the
Company, the Employee agrees to render faithful and efficient services to the
Company or a Subsidiary, with such duties and responsibilities as the Company
shall from time to time prescribe, for a period of at least one (1) year from
the date this Option is granted. Nothing in this Agreement or in the Plan shall
confer upon the

                                        3
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Employee any right to continue in the employ of the Company or any Subsidiary,
or as a director of the Company, or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Employee at any time for any reason whatsoever, with
or without cause.

Section 2.4 - Adjustments in Option

                  The Committee shall make adjustments with respect to the
Option in accordance with the provisions of Section 10.3 of the Plan; provided,
however, that each such adjustment shall be made in such manner as not to
constitute a "modification" within the meaning of Section 424(h)(3) of the Code,
unless the Optionee consents to an adjustment which would constitute such a
"modification."

                                                    ARTICLE III

                            PERIOD OF EXERCISABILITY

Section 3.1 - Commencement of Exercisability

                  (a) Subject to Sections 3.5 and 5.6, the Option shall become
exercisable in [three (3) cumulative installments as follows:

                           (i) The first installment shall consist of one-third
         (1/3rd) of the shares covered by the Option and shall become
         exercisable on the first anniversary of the date the Option is granted.

                      (ii) The second installment shall consist of one-third
         (1/3rd) of the shares covered by the Option and shall become
         exercisable on the second anniversary of the date the Option is
         granted.

                     (iii) The third installment shall consist of one-third
         (1/3rd) of the shares covered by the Option and shall become
         exercisable on the third anniversary of the date the Option is
         granted.] [or other installment schedule.]

                  (b) No portion of the Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.

Section 3.2 - Duration of Exercisability

                  The installments provided for in Section 3.1 are cumulative.
Each such installment which becomes exercisable pursuant to Section 3.1 shall
remain exercisable until it becomes unexercisable under Section 3.3.


                                        4
   5
Section 3.3 - Expiration of Option

                  The Option may not be exercised to any extent by anyone after
the first to occur of the following events:

                  (a)  The expiration of five (5) years from the date the Option
was granted; or

                  (b) If the Employee owned (within the meaning of Section 
424(d) of the Code), at the time the Option was granted, more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Subsidiary or parent corporation thereof (within the meaning of Section 
422 of the Code), the expiration of five (5) years from the date the Option was
granted; or

                  (c) The time of the Employee's Termination of Employment
unless such Termination of Employment results from his death, his retirement,
his disability (within the meaning of Section 22(e)(3) of the Code) or his being
discharged not for good cause; or

                  (d) The expiration of three (3) months from the date of the
Employee's Termination of Employment by reason of his retirement or his being
discharged not for good cause, unless the Employee dies within said three-month
period; or

                  (e) The expiration of one (1) year from the date of the
Employee's Termination of Employment by reason of his disability (within the
meaning of Section 22(e)(3) of the Code); or

                  (f)  The expiration of one (1) year from the date of the 
Employee's death; or

                  (g) The effective date of either the merger or consolidation
of the Company with or into another corporation, or the acquisition by another
corporation or person of all or substantially all of the Company's assets or
eighty percent (80%) or more of the Company's then outstanding voting stock, or
the liquidation or dissolution of the Company, unless the Committee waives this
provision in connection with such transaction. At least ten (10) days prior to
the effective date of such merger, consolidation, acquisition, liquidation or
dissolution, the Committee shall give the Employee notice of such event if the
Option has then neither been fully exercised nor become unexercisable under this
Section 3.3.

Section 3.4 - Acceleration of Exercisability

                  In the event of the merger or consolidation of the Company
with or into another corporation, or the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, the Committee may, in its absolute discretion and
upon such terms and conditions as it deems appropriate, provide by resolution,
adopted prior to such event and incorporated in the notice referred to in
Section 3.3(g), that at some time prior to the effective date of such event this
Option shall be exercisable as to all the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under Section 3.1(a);
provided, however, that this acceleration of exercisability shall not take place
if:


                                        5
   6
                  (a)  This Option becomes unexercisable under Section 3.3 prior
to said effective date; or

                  (b) In connection with such an event, provision is made for an
assumption of this Option or a substitution therefor of a new option by an
employer corporation, or a parent or subsidiary of such corporation, so that
such assumption or substitution complies with the provisions of Section 424(a)
of the Code; and

provided, further, that nothing in this Section 3.4 shall make this Option
exercisable if it is otherwise unexercisable by reason of Section 3.5 or Section
5.6.

                  The Committee may make such determinations and adopt such
rules and conditions as it, in its absolute discretion, deems appropriate in
connection with such acceleration of exercisability, including, but not by way
of limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction, and determinations regarding whether provisions for
assumption or substitution have been made as defined in subsection (b) above.

Section 3.5 - Limitation on Exercisability

                  Notwithstanding any other provision of this Agreement, the
aggregate Fair Market Value (determined at the time the Option is granted) of
the shares of the Company's stock with respect to which "incentive stock
options" (within the meaning of Section 422 of the Code) are exercisable for the
first time by the Employee during any calendar year (under the Plan and all
other incentive stock option plans of the Company, any Subsidiary and any parent
corporation thereof (within the meaning of Section 422 of the Code)) shall not
exceed $100,000.

                                   ARTICLE IV

                               EXERCISE OF OPTION

Section 4.1 - Person Eligible to Exercise

                  During the lifetime of the Employee, only he may exercise the
Option or any portion thereof. After the death of the Employee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by his personal representative or
by any person empowered to do so under the deceased Employee's will or under the
then applicable laws of descent and distribution.

Section 4.2 - 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 when the Option or portion thereof becomes unexercisable under
Section 3.3; provided, however, that each partial exercise shall be for not less
than ___________ (__) shares (or the minimum installment set forth in Section 
3.1, if a smaller number of shares) and shall be for whole shares only.


                                        6
   7
Section 4.3 - Manner of Exercise

                  The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:

                  (a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Employee or other person then
entitled to exercise the Option or such portion; and

                  (b)      (i)  Full cash payment to the Secretary of the 
         Company for the shares with respect to which such Option or portion is 
         exercised; or

                           (ii) With the consent of the Committee, (A) shares of
         the Company's Common Stock owned by the Employee, duly endorsed for
         transfer to the Company, with a Fair Market Value on the date of
         delivery equal to the aggregate exercise price of the Option or
         exercised portion thereof, or (B) shares of the Company's Common Stock
         issuable to the Employee upon exercise of the Option, with a Fair
         Market Value on the date of delivery equal to the aggregate exercise
         price of the Option or exercised portion thereof; or

                           (iii) With the consent of the Committee, a full
         recourse promissory note bearing interest (at no less than such rate as
         shall then preclude the imputation of interest under the Code or
         successor provision) and payable upon such terms as may be prescribed
         by the Committee. The Committee may also prescribe the form of such
         note and the security to be given for such note. The Option may not be
         exercised, however, by delivery of a promissory note or by a loan from
         the Company when or where such loan or other extension of credit is
         prohibited by law; or

                           (iv)  With the consent of the Committee, property of 
         any kind which constitutes good and valuable consideration; or

                           (v) With the consent of the Committee, a notice that
         the Employee has placed a market sell order with a broker with respect
         to shares of the Company's Common Stock then issuable upon exercise of
         the Option, and that the broker has been directed to pay a sufficient
         portion of the net proceeds of the sale to the Company in satisfaction
         of the Option exercise price; or

                           (iv) With the consent of the Committee, any
         combination of the consideration provided in the foregoing
         subparagraphs (i), (ii), (iii), (iv) and (v); and

                  (c) A bona fide written representation and agreement, in a
form satisfactory to the Committee, signed by the Employee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting

                                        7
   8
to the Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above. The Committee
may, in its absolute discretion, take whatever additional actions it deems
appropriate to insure the observance and performance of such representation and
agreement and to effect compliance with the Securities Act and any other federal
or state securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares;

                  (d) Full payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; with the consent of the
Committee, (i) shares of the Company's Common Stock owned by the Employee, duly
endorsed for transfer, with a Fair Market Value equal to the sums required to be
withheld, or (ii) shares of the Company's Common Stock issuable to the Employee
upon exercise of the Option with a Fair Market Value equal to the sums required
to be withheld, may be used to make all or part of such payment; and

                  (e) In the event the Option or portion shall be exercised
pursuant to Section 4.1 by any person or persons other than the Employee,
appropriate proof of the right of such person or persons to exercise the Option.

Section 4.4 - Conditions to Issuance of Stock Certificates

                  The shares of stock deliverable upon the exercise of the
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. Such
shares shall be fully paid and nonassessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:

                  (a)  The admission of such shares to listing on all stock 
exchanges on which such class of stock is then listed; and

                  (b) The completion of any registration or other qualification
of such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

                  (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and


                                        8
   9
                  (d) The receipt by the Company of full payment for such
shares, including payment of all amounts which, under federal, state or local
tax law, the Company (or other employer corporation) is required to withhold
upon exercise of the Option; and

                  (e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

Section 4.5 - Rights as Stockholder

                  The holder of the Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such shares shall have been issued by the Company to
such holder.

                                    ARTICLE V

                                OTHER PROVISIONS

Section 5.1 - Administration

                  The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret, amend
or revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Option. Any
such interpretations and rules with respect to incentive stock options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan and this Agreement except with
respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.

Section 5.2 - Option Not Transferable

                  Neither the Option nor any interest or right therein or part
thereof shall be sold, pledged, assigned, or transferred in any manner other
than by will or the laws of descent and distribution, unless and until such
Option has been exercised, or the shares underlying such Option have been
issued, and all restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein or part thereof shall be liable for the
debts, contracts or engagements of the Employee or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.


                                        9
   10
Section 5.3 - Shares to Be Reserved

                  The Company shall at all times during the term of the Option
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.

Section 5.4 - Notices

                  Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Employee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section 
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Employee shall, if
the Employee is then deceased, be given to the Employee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.

Section 5.5 - Titles

                  Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

Section 5.6 - Stockholder Approval

                  The Plan will be submitted for approval by the Company's
stockholders within twelve (12) months after the date the Plan was initially
adopted by the Board. This Option may not be exercised to any extent by anyone
prior to the time when the Plan is approved by the stockholders, and if such
approval has not been obtained by the end of said twelve-month period, this
Option shall thereupon be cancelled and become null and void.

Section 5.7 - Notification of Disposition

                  The Employee shall give prompt notice to the Company of any
disposition or other transfer of any shares of stock acquired under this
Agreement if such disposition or transfer is made (a) within two (2) years from
the date of granting the Option with respect to such shares or (b) within one
(1) year after the transfer of such shares to him. Such notice shall specify the
date of such disposition or other transfer and the amount realized, in cash,
other property, assumption of indebtedness or other consideration, by the
Employee in such disposition or other transfer.


                                       10
   11
Section 5.8 - Construction

                  This Agreement shall be administered, interpreted and enforced
under the internal laws of the State of California without regard to conflicts
of laws thereof.

Section 5.9 - Conformity to Securities Laws

                  The Employee acknowledges that the Plan is intended to conform
to the extent necessary with all provisions of the Securities Act and the
Exchange Act and any and all regulations and rules promulgated by the Securities
and Exchange Commission thereunder, including without limitation Rule 16b-3.
Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the Option is granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.


                                       11
   12
                  IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.


                                             ______________________________


                                             By ___________________________
                                                        President


                                             By ___________________________
                                                        Secretary


_____________________________
         Employee

_____________________________

_____________________________
         Address

Employee's Taxpayer
Identification Number:

_____________________________


                                       12

   1
                                                                   EXHIBIT 10.10

                      NON-QUALIFIED STOCK OPTION AGREEMENT


                  THIS AGREEMENT, dated ____________, 19__, is made by and
between ViaSat, Inc., a Delaware corporation hereinafter referred to as
"Company," and _________________________, an employee of the Company or a
Subsidiary of the Company, hereinafter referred to as "Optionee":

                  WHEREAS, the Company wishes to afford the Optionee the
opportunity to purchase shares of its $0.0001 par value Common Stock; and

                  WHEREAS, the Company wishes to carry out the Plan (the terms
of which are hereby incorporated by reference and made a part of this
Agreement); and

                  WHEREAS, the Committee, appointed to administer the Plan, has
determined that it would be to the advantage and best interest of the Company
and its stockholders to grant the Non-Qualified Option provided for herein to
the Optionee as an inducement to enter into or remain in the service of the
Company or its Subsidiaries and as an incentive for increased efforts during
such service, and has advised the Company thereof and instructed the undersigned
officers to issue said Option;

                  NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary. The masculine pronoun shall include the feminine and neuter, and
the singular the plural, where the context so indicates. All capitalized terms
used herein without definition shall have the meanings ascribed to such terms in
the Plan.

Section 1.1 - Board

                  "Board" shall mean the Board of Directors of the Company.

Section 1.2 - Code

                  "Code" shall mean the Internal Revenue Code of 1986, as 
amended.

Section 1.3 - Committee

                  "Committee" shall mean the Compensation Committee of the
Board, or another committee of the Board, appointed as provided in Section 9.1
of the Plan.

                                        1
   2
Section 1.4 - Company

                  "Company" shall mean ViaSat, Inc., a Delaware corporation.

Section 1.5 - Director

                  "Director" shall mean a member of the Board.

Section 1.6 - Exchange Act

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

Section 1.7 - Officer

                  "Officer" shall mean an officer of the Company, as defined in
Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the future.

Section 1.8 - Option

                  "Option" shall mean the non-qualified option to purchase
Common Stock of the Company granted under this Agreement.

Section 1.9 - Plan

                  "Plan" shall mean The 1996 Equity Participation Plan of 
ViaSat, Inc.

Section 1.10 - Rule 16b-3

                  "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.

Section 1.11 - Secretary

                  "Secretary" shall mean the Secretary of the Company.

Section 1.12 - Securities Act

                  "Securities Act" shall mean the Securities Act of 1933, as 
amended.

Section 1.13 - Subsidiary

                  "Subsidiary" shall mean any corporation in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.


                                        2
   3
Section 1.14 - Termination of Employment

                  "Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of the Optionee by the
Company or any Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee- employer relationship,
and (iii) at the discretion of the Committee, terminations which are followed by
the simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Committee, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment. Notwithstanding any other provision of this Agreement or of the
Plan, the Company or any Subsidiary has an absolute and unrestricted right to
terminate the Optionee's employment at any time for any reason whatsoever, with
or without cause, except to the extent expressly provided otherwise in writing.

                                   ARTICLE II

                                 GRANT OF OPTION

Section 2.1 - Grant of Option

                  In consideration of the Optionee's agreement to remain in the
employ of the Company or its Subsidiaries and for other good and valuable
consideration, on the date hereof the Company irrevocably grants to the Optionee
the option to purchase any part or all of an aggregate of ________ shares of its
$0.0001 par value Common Stock upon the terms and conditions set forth in this
Agreement.

Section 2.2 - Purchase Price

                  The purchase price of the shares of stock covered by the
Option shall be $_____ per share without commission or other charge.

Section 2.3 - Consideration to Company

                  In consideration of the granting of this Option by the
Company, the Optionee agrees to render faithful and efficient services to the
Company or a Subsidiary, with such duties and responsibilities as the Company
shall from time to time prescribe, for a period of at least one (1) year from
the date this Option is granted. Nothing in this Agreement or in the Plan shall
confer upon the Optionee any right to continue in the employ of the Company or
any Subsidiary, or as a director of the Company, or shall interfere with or
restrict in any way the rights of the Company and its Subsidiaries, which are
hereby expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without cause.


                                        3
   4
Section 2.4 - Adjustments in Option

                  The Committee shall make adjustments with respect to the
Option in accordance with the provisions of Section 10.3 of the Plan.

                                   ARTICLE III

                            PERIOD OF EXERCISABILITY

Section 3.1 - Commencement of Exercisability

                  (a) Subject to Section 5.6, the Option shall become
exercisable in [three (3) cumulative installments as follows:

                           (i) The first installment shall consist of one-third
         (1/3rd) of the shares covered by the Option and shall become
         exercisable on the first anniversary of the date the Option is granted.

                      (ii) The second installment shall consist of one-third
         (1/3rd) of the shares covered by the Option and shall become
         exercisable on the second anniversary of the date the Option is
         granted.

                     (iii) The third installment shall consist of one-third
         (1/3rd) of the shares covered by the Option and shall become
         exercisable on the third anniversary of the date the Option is
         granted.] [or other installment schedule.]

                  (b) No portion of the Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.

Section 3.2 - Duration of Exercisability

                  The installments provided for in Section 3.1 are cumulative.
Each such installment which becomes exercisable pursuant to Section 3.1 shall
remain exercisable until it becomes unexercisable under Section 3.3.

Section 3.3 - Expiration of Option

                  The Option may not be exercised to any extent by anyone after
the first to occur of the following events:

                  (a)      The expiration of five (5) years from the date the 
Option was granted; or

                  (b) The time of the Optionee's Termination of Employment
unless such Termination of Employment results from his death, his retirement,
his disability or his being discharged not for good cause; or


                                        4
   5
                  (c) The expiration of three (3) months from the date of the
Optionee's Termination of Employment by reason of his retirement or his being
discharged not for good cause, unless the Optionee dies within said three-month
period; or

                  (d)      The expiration of one (1) year from the date of the 
Optionee's Termination of Employment by reason of his disability; or

                  (e)      The expiration of one (1) year from the date of the 
Optionee's death; or

                  (f) The effective date of either the merger or consolidation
of the Company with or into another corporation, or the acquisition by another
corporation or person of all or substantially all of the Company's assets or
eighty percent (80%) or more of the Company's then outstanding voting stock, or
the liquidation or dissolution of the Company, unless the Committee waives this
provision in connection with such transaction. At least ten (10) days prior to
the effective date of such merger, consolidation, acquisition, liquidation or
dissolution, the Committee shall give the Optionee notice of such event if the
Option has then neither been fully exercised nor become unexercisable under this
Section 3.3.

Section 3.4 - Acceleration of Exercisability

                  In the event of the merger or consolidation of the Company
with or into another corporation, or the acquisition by another corporation or
person of all or substantially all of the Company's assets or eighty percent
(80%) or more of the Company's then outstanding voting stock, or the liquidation
or dissolution of the Company, the Committee may, in its absolute discretion and
upon such terms and conditions as it deems appropriate, provide by resolution,
adopted prior to such event and incorporated in the notice referred to in
Section 3.3(f), that at some time prior to the effective date of such event this
Option shall be exercisable as to all the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under Section 3.1(a);
provided, however, that this acceleration of exercisability shall not take place
if:

                  (a)      This Option becomes unexercisable under Section 3.3 
prior to said effective
date; or

                  (b) In connection with such an event, provision is made for an
assumption of this Option or a substitution therefor of a new option by an
employer corporation or a parent or subsidiary of such corporation; and

provided, further, that nothing in this Section 3.4 shall make this Option
exercisable if it is otherwise unexercisable by reason of Section 5.6.

                  The Committee may make such determinations and adopt such
rules and conditions as it, in its absolute discretion, deems appropriate in
connection with such acceleration of exercisability, including, but not by way
of limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction.


                                        5
   6
                                   ARTICLE IV

                               EXERCISE OF OPTION

Section 4.1 - Person Eligible to Exercise

                  During the lifetime of the Optionee, only he may exercise the
Option or any portion thereof. After the death of the Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by his personal representative or
by any person empowered to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.

Section 4.2 - 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 when the Option or portion thereof becomes unexercisable under
Section 3.3; provided, however, that each partial exercise shall be for not less
than ____________ (__) shares (or the minimum installment set forth in Section 
3.1, if a smaller number of shares) and shall be for whole shares only.

Section 4.3 - Manner of Exercise

                  The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:

                  (a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion; and

                  (b)      (i)  Full cash payment to the Secretary of the 
         Company for the shares with respect to which such Option or portion is
         exercised; or

                           (ii) With the consent of the Committee, (A) shares of
         the Company's Common Stock owned by the Optionee, duly endorsed for
         transfer to the Company, with a Fair Market Value on the date of
         delivery equal to the aggregate exercise price of the Option or
         exercised portion thereof, or (B) shares of the Company's Common Stock
         issuable to the Optionee upon exercise of the Option, with a Fair
         Market Value on the date of delivery equal to the aggregate exercise
         price of the Option or exercised portion thereof; or

                           (iii) With the consent of the Committee, a full
         recourse promissory note bearing interest (at no less than such rate as
         shall then preclude the imputation of interest under the Code or
         successor provision) and payable upon such terms as may be prescribed
         by the Committee. The Committee may also prescribe the form of such
         note and the security to be given for such note. The Option may not be
         exercised, however, by delivery of a promissory note or by a loan from
         the Company when or where such loan or other extension of credit is
         prohibited by law; or

                                        6
   7
                           (iv)  With the consent of the Committee, property of
         any kind which constitutes good and valuable consideration; or

                           (v) With the consent of the Committee, a notice that
         the Optionee has placed a market sell order with a broker with respect
         to shares of the Company's Common Stock then issuable upon exercise of
         the Option, and that the broker has been directed to pay a sufficient
         portion of the net proceeds of the sale to the Company in satisfaction
         of the Option exercise price; or

                           (iv) With the consent of the Committee, any
         combination of the consideration provided in the foregoing
         subparagraphs (i), (ii), (iii), (iv) and (v); and

                  (c) A bona fide written representation and agreement, in a
form satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company if
any sale or distribution of the shares by such person is contrary to the
representation and agreement referred to above. The Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise
does not violate the Securities Act, and may issue stop-transfer orders covering
such shares. Share certificates evidencing stock issued on exercise of this
Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares; and

                  (d) Full payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; with the consent of the
Committee, (i) shares of the Company's Common Stock owned by the Optionee, duly
endorsed for transfer, with a Fair Market Value equal to the sums required to be
withheld, or (ii) shares of the Company's Common Stock issuable to the Optionee
upon exercise of the Option with a Fair Market Value equal to the sums required
to be withheld, may be used to make all or part of such payment; and

                  (e) In the event the Option or portion shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option.


                                        7
   8
Section 4.4 - Conditions to Issuance of Stock Certificates

                   The shares of stock deliverable upon the exercise of the
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. Such
shares shall be fully paid and nonassessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:

                  (a)  The admission of such shares to listing on all stock 
exchanges on which such class of stock is then listed; and

                  (b) The completion of any registration or other qualification
of such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

                  (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

                  (d) The receipt by the Company of full payment for such
shares, including payment of all amounts which, under federal, state or local
tax law, the Company (or other employer corporation) is required to withhold
upon exercise of the Option; and

                  (e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

Section 4.5 - Rights as Stockholder

                  The holder of the Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of any part of the Option unless and until
certificates representing such shares shall have been issued by the Company to
such holder.

                                    ARTICLE V

                                OTHER PROVISIONS

Section 5.1 - Administration

                  The Committee shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret, amend
or revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Optionee, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the

                                        8
   9
Plan or the Option. In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement except with respect to matters which under Rule
16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of the
Committee.

Section 5.2 - Option Not Transferable

                   Neither the Option nor any interest or right therein or part
thereof shall be sold, pledged, assigned, or transferred in any manner other
than by will or the laws of descent and distribution, unless and until such
Option has been exercised, or the shares underlying such Option have been
issued, and all restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein or part thereof shall be liable for the
debts, contracts or engagements of the Optionee or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

Section 5.3 - Shares to Be Reserved

                  The Company shall at all times during the term of the Option
reserve and keep available such number of shares of stock as will be sufficient
to satisfy the requirements of this Agreement.

Section 5.4 - Notices

                  Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section 
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.

Section 5.5 - Titles

                  Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

Section 5.6 - Stockholder Approval

                  The Plan will be submitted for approval by the Company's
stockholders within twelve (12) months after the date the Plan was initially
adopted by the Board. This Option may not be

                                        9
   10
exercised to any extent by anyone prior to the time when the Plan is approved by
the stockholders, and if such approval has not been obtained by the end of said
twelve-month period, this Option shall thereupon be cancelled and become null
and void.

Section 5.7 - Construction

                  This Agreement shall be administered, interpreted and enforced
under the internal laws of the State of California without regard to conflicts
of laws thereof.

Section 5.8 - Conformity to Securities Laws

                  The Optionee acknowledges that the Plan is intended to conform
to the extent necessary with all provisions of the Securities Act and the
Exchange Act and any and all regulations and rules promulgated by the Securities
and Exchange Commission thereunder, including without limitation Rule 16b-3.
Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the Option is granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.


                                       10
   11
                  IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.


                                       ViaSat, Inc.


                                       By______________________________________
                                                       President


                                       By______________________________________
                                                       Secretary



_________________________________
         Optionee



_________________________________
         Address

Optionee's Taxpayer
Identification Number:


_________________________________

                                       11

   1
                                                                   EXHIBIT 10.11

                                THE VIASAT, INC.
                          EMPLOYEE STOCK PURCHASE PLAN


         ViaSat, Inc., a corporation organized under the laws of the State of
Delaware (the "Company"), hereby adopts The ViaSat, Inc. Employee Stock Purchase
Plan (the "Plan"). The purposes of the Plan are as follows:

         (1) To assist employees of the Company and its Subsidiary Corporations
(as defined below) in acquiring a stock ownership interest in the Company
pursuant to a plan which is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423(b) of the Internal Revenue Code of 1986,
as amended.

         (2) To help employees provide for their future security and to
encourage them to remain in the employment of the Company and its Subsidiary
Corporations.

1.       DEFINITIONS

         Whenever any of the following terms is used in the Plan with the first
letter or letters capitalized, it shall have the following meaning unless the
context clearly indicates to the contrary (such definitions to be equally
applicable to both the singular and the plural forms of the terms defined):

         (a)   "Authorization" has the meaning assigned to that term in Section 
3(b) hereof.

         (b)   "Board of Directors" or "Board" means the Board of Directors of 
the Company.

         (c)   "Code" means the Internal Revenue Code of 1986, as amended.

         (d) "Committee" means the committee appointed to administer the Plan
pursuant to Section 12 hereof.

         (e)   "Company" means ViaSat, Inc., a Delaware corporation.

         (f) "Date of Exercise" means, with respect to any Option, the last day
of the Offering Period for which the Option was granted.

         (g) "Date of Grant" means, with respect to any Option, the date upon
which the Option is granted, as set forth in Section 3(a) hereof.

         (h)   "Eligible Compensation" means the employee's base pay.

         (i) "Eligible Employee" means an employee of the Company or any
Subsidiary Corporation (1) who does not, immediately after the option is
granted, own stock possessing five percent or more of the total combined voting
power or value of all classes of stock of the Company, a Parent Corporation or a
Subsidiary Corporation; (2) who has been employed by the Company or any
Subsidiary Corporation for not less than six months; (3) whose customary
employment is for more than 20 hours per week; and (4) whose customary
employment is for more than five months in any calendar year. For purposes of
   2
paragraph (i), the rules of Section 424(d) of the Code with regard to the
attribution of stock ownership shall apply in determining the stock ownership of
an individual, and stock which an employee may purchase under outstanding
options shall be treated as stock owned by the employee. During a leave of
absence meeting the requirements of Treasury Regulation 1.421-7(h)(2), an
individual shall be treated as an employee of the Company or Subsidiary
Corporation employing such individual immediately prior to such leave. "Eligible
Employee" shall not include any director of the Company or any Subsidiary
Corporation who does not render services to the Company in the status of an
employee within the meaning of Section 3401(c) of the Code.

         (j) "IPO Date" means the date on which the Company's Stock is
initially offered to the public.

         (k) "Offering Period" shall mean the six-month periods commencing
January 1 and July 1 of each Plan Year as specified in Section 3(a) hereof or
such other dates which are six months apart as determined by the Committee,
except that the initial Offering Period shall commence on the IPO Date and
end on (i) June 30 of the same year, in the event that the IPO Date occurs
between January 1 and March 31 of a particular year; (ii) December 31 of the
same year, in the event that the IPO Date occurs between April 1 and
September 30 of a particular year; or (iii) June 30 of the following year, in
the event that the IPO Date occurs between October 1 and December 31 of a
particular year. Options shall be granted on the Date of Grant and exercised on
the Date of Exercise as provided in Sections 3(a) and 4(a) hereof.

         (l) "Option" means an option granted under the Plan to an Eligible
Employee to purchase shares of the Company's Stock.

         (m) "Option Period" means, with respect to any Option, the period
beginning upon the Date of Grant and ending upon the Date of Exercise.

         (n)   "Option Price" has the meaning set forth in Section 4(b) hereof.

         (o) "Parent Corporation" means any corporation, other than the Company,
in an unbroken chain of corporations ending with the Company if, at the time of
the granting of the Option, each of the corporations other than the Company owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.

         (p) "Participant" means an Eligible Employee who has complied with the
provisions of Section 3(b) hereof.

         (q) "Payday" means the regular and recurring established day for
payment of cash compensation to employees of the Company or any Subsidiary
Corporation.

         (r)   "Plan" means The ViaSat, Inc. Employee Stock Purchase Plan.

         (s)   "Plan Year" means the calendar year.

         (t)   "Stock" means the shares of the Company's Common Stock, $0.0001 
par value.

         (u) "Subsidiary Corporation" means any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in an unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.



                                        2
   3
2.  STOCK SUBJECT TO THE PLAN

         Subject to the provisions of Section 9 hereof (relating to adjustments
upon changes in the Stock) and Section 11 hereof (relating to amendments of the
Plan), the Stock which may be sold pursuant to Options granted under the Plan
shall not exceed in the aggregate 250,000 shares, and may be unissued shares or
treasury shares or shares bought on the market for purposes of the Plan.

3.  GRANT OF OPTIONS

         (a) General Statement. The Company shall offer Options under the Plan
to all Eligible Employees in successive Offering Periods until the earlier of
(i) the date when the number of shares of Stock available under the Plan have
been sold or (ii) the date when the Plan is terminated. Dates of Grant shall
include January 1 and July 1 of each Plan Year and/or such other date or dates
as the Committee may from time to time determine, except that the Date of Grant
with respect to any Options granted in the initial Offering Period shall be the
IPO Date. Each Option shall expire on the Date of Exercise immediately after
the automatic exercise of the Option pursuant to Section 4(a) hereof. The number
of shares of Stock subject to each Option shall equal the payroll deductions
authorized by each Participant in accordance with subsection (b) hereof for the
Option Period, divided by the Option Price, except as provided in Section 4(a);
provided, however, that the maximum number of shares subject to any Option shall
not exceed 100,000.

         (b) Election to Participate; Payroll Deduction Authorization. Except as
provided in subsection (d) hereof, an Eligible Employee shall participate in the
Plan only by means of payroll deduction. Each Eligible Employee who elects to
participate in the Plan shall deliver to the Company during the calendar month
preceding a Date of Grant no later than five (5) working days before such Date
of Grant (or, in the case of the initial Offering Period, on the Date of Grant),
a completed and executed written payroll deduction authorization in a form
prepared by the Company (the "Authorization"). An Eligible Employee's
Authorization shall give notice of such Eligible Employee's election to
participate in the Plan for the next following Offering Period and subsequent
Offering Periods and shall designate a stated whole dollar amount of Eligible
Compensation to be withheld on each Payday. The amount withheld shall not be
less than $10.00 each Payday and the stated amount shall not exceed 5% of
Eligible Compensation. The cash compensation payable to a Participant for an
Offering Period shall be reduced each Payday through a payroll deduction in an
amount equal to the stated withdrawal amount specified in the Authorization
payable on such Payday, and such amount shall be credited to the Participant's
account under the Plan. Any Authorization shall remain in effect until the
Eligible Employee amends the same pursuant to this subsection, withdraws
pursuant to Section 5 or ceases to be an Eligible Employee pursuant to Section 
6.

         (c) $25,000 Limitation. No Eligible Employee shall be granted an Option
under the Plan which permits his or her rights to purchase stock under the Plan
and under all other employee stock purchase plans of the Company, any Parent
Corporation or any Subsidiary Corporation subject to Section 423 to accrue at a
rate which exceeds $25,000 of fair market value of such stock (determined at the
time the Option is granted) for each calendar year in which the Option is
outstanding at any time. For purpose of the limitation imposed by this
subsection, the right to purchase stock under an Option accrues when the Option
(or any portion thereof) first becomes exercisable during the calendar year, the
right to purchase stock under an Option accrues at the rate provided in the
Option, but in no case may such rate exceed $25,000 of the fair market value of
such stock (determined at the time such Option is granted) for any one calendar
year, and a right to purchase stock which has accrued under an Option may not be
carried over to any other Option.


                                        3
   4
         (d) Leaves of Absence. During a leave of absence meeting the
requirements of Treasury Regulation Section 1.421-7(h)(2), a Participant may
continue to participate in the Plan by making cash payments to the Company on
each Payday equal to the amount of the Participant's payroll deductions under
the Plan for the Payday immediately preceding the first day of such
Participant's leave of absence.

4.  EXERCISE OF OPTIONS; OPTION PRICE

         (a) General Statement. Each Participant automatically and without any
act on such Participant's part shall be deemed to have exercised such
Participant's Option on the Date of Exercise to the extent that the balance then
in the Participant's account under the Plan is sufficient to purchase at the
Option Price whole shares of the Stock subject to the Option. The Company will
pay to the Participant any cash in lieu of fractional shares of Stock remaining
after the purchase of whole shares of Stock upon exercise of an Option without
any interest thereon. Certificates representing fractional shares will not be
issued.

         (b) Option Price Defined. The option price per share of Stock (the
"Option Price") to be paid by a Participant upon the exercise of the
Participant's Option shall be equal to 85% of the lesser of the fair market
value of a share of Stock on the Date of Exercise or the fair market value of a
share of Stock on the Date of Grant. The fair market value of a share of Stock
as of a given date shall be: (i) the closing price of a share of Stock on the
principal exchange on which the Stock is then trading, if any, on such date, or,
if shares were not traded on such date, then on the next preceding trading day
during which a sale occurred; (ii) if the Stock is not traded on an exchange but
is quoted on Nasdaq or a successor quotation system, (1) the last sales price
(if the Stock is then listed as a National Market Issue under the NASD National
Market System) or (2) the mean between the closing representative bid and asked
prices (in all other cases) for a share of the Stock on such date, or, if shares
were not traded on such date, then on the next preceding trading day during
which a sale occurred, as reported by Nasdaq or such successor quotation system;
(iii) if the Stock is not publicly traded on an exchange and not quoted on
Nasdaq or a successor quotation system, the mean between the closing bid and
asked prices for a share of Stock on such date, or, if shares were not traded on
such date, then on the next preceding trading day during which a sale occurred,
as determined in good faith by the Committee; or (iv) if the Stock is not
publicly traded, the fair market value of a share of Stock established by the
Committee acting in good faith; provided, however, that the fair market value of
a share of Stock on the IPO Date shall be the price at which the Stock is
initially offered to the public on such date.

         (c) Delivery of Share Certificate. As soon as practicable after the
exercise of any Option, the Company will deliver to the Participant or his or
her nominee the whole shares of Stock purchased by the Participant from funds
credited to the Participant's account under the Plan. Any fractional shares of
Stock or cash in lieu of fractional shares of Stock remaining after the purchase
of whole shares of Stock upon exercise of an Option will be credited to such
Participant's account and carried forward and, in the case of cash in lieu of
fractional shares, applied toward the purchase of whole shares of Stock pursuant
to the Option, if any, granted to such Participant for the next following
Offering Period. Certificates representing fractional shares will not be issued.
In the event the Company is required to obtain authority from any commission or
agency to issue any such certificate, the Company shall seek to obtain such
authority. The inability of the Company to obtain authority from any such
commission or agency which the Committee in its absolute discretion deems
necessary for the lawful issuance of any such certificate shall relieve the
Company from liability to any Participant except to pay to the Participant the
amount of the balance in the Participant's account in cash in one lump sum
without any interest thereon.

         (d) Pro Rata Allocations. If the total number of shares of Stock for
which Options are to be exercised on any date exceeds the number of shares
remaining unsold under the Plan (after deduction of


                                        4
   5
all shares for which Options have theretofore been exercised), the Committee
shall make a pro rata allocation of the available remaining shares in as nearly
a uniform manner as shall be practicable and any balance of payroll deductions
credited to the accounts of Participants which have not been applied to the
purchase of shares of Stock shall be paid to such Participants in cash in one
lump sum within sixty (60) days after the Date of Exercise, without any interest
thereon.

5.  WITHDRAWAL FROM THE PLAN

         (a) General Statement. Any Participant may withdraw from participation
under the Plan at any time except that no Participant may withdraw during the
last ten (10) days of any Offering Period. A Participant who wishes to withdraw
from the Plan must deliver to the Company a notice of withdrawal in a form
prepared by the Company (the "Withdrawal Election") not later than ten (10) days
prior to the Date of Exercise during any Offering Period. Upon receipt of a
Participant's Withdrawal Election, the Company shall pay to the Participant the
amount of the balance in the Participant's account under the Plan in cash in one
lump sum within sixty (60) days, without any interest thereon. Upon receipt of a
Participant's Withdrawal Election by the Company, the Participant shall cease to
participate in the Plan and the Participant's Option shall terminate.

         (b) Eligibility Following Withdrawal. A Participant who withdraws from
the Plan and who is still an Eligible Employee shall be eligible to participate
again in the Plan as of any subsequent Date of Grant by delivering to the
Company an Authorization pursuant to Section 3(b) hereof.

6.  TERMINATION OF EMPLOYMENT

         (a) Termination of Employment Other than by Death. If the employment of
a Participant terminates other than by death, the Participant's participation in
the Plan automatically and without any act on the Participant's part shall
terminate as of the date of the termination of the Participant's employment. As
soon as practicable after such a termination of employment, the Company will pay
to the Participant the amount of the balance in the Participant's account under
the Plan without any interest thereon. Upon a Participant's termination of
employment covered by this Section 6(a), the Participant's Authorization,
interest in the Plan and Option under the Plan shall terminate.

         (b) Termination By Death. If the employment of a participant is
terminated by the Participant's death, the executor of the Participant's will or
the administrator of the Participant's estate by written notice to the Company
may request payment of the balance in the Participant's account under the Plan,
in which event the Company shall make such payment without any interest thereon
as soon as practicable after receiving such notice; upon receipt of such notice
the Participant's Authorization, interest in the Plan and Option under the Plan
shall terminate. If the Company does not receive such notice prior to the next
Date of Exercise, the Participant's Option shall be deemed to have been
exercised on such Date of Exercise.

7.  RESTRICTION UPON ASSIGNMENT

         An Option granted under the Plan shall not be transferable other than
by will or the laws of descent and distribution, and is exercisable during the
Participant's lifetime only by the Participant. Except as provided in Section 
6(c) hereof, an Option may not be exercised to any extent except by the
Participant. The Company shall not recognize and shall be under no duty to
recognize any assignment or alienation of the Participant's interest in the
Plan, the Participant's Option or any rights under the Participant's Option.


                                        5
   6
8.  NO RIGHTS OF STOCKHOLDERS UNTIL SHARES ISSUED

         With respect to shares of Stock subject to an Option, a Participant
shall not be deemed to be a stockholder of the Company, and the Participant
shall not have any of the rights or privileges of a stockholder, until such
shares have been issued to the Participant or his or her nominee following
exercise of the Participant's Option. No adjustments shall be made for dividends
(ordinary or extraordinary, whether in cash securities, or other property) or
distribution or other rights for which the record date occurs prior to the date
of such issuance, except as otherwise expressly provided herein.

9.  CHANGES IN THE STOCK; ADJUSTMENTS OF AN OPTION

         Whenever any change is made in the Stock or to Options outstanding
under the Plan, by reason of a stock split, stock dividend, recapitalization or
other subdivision, combination, or reclassification of shares, appropriate
action shall be taken by the Committee to adjust accordingly the number of
shares of Stock subject to the Plan and the number and the Option Price of
shares of Stock subject to the Options outstanding under the Plan to preserve,
but not increase, the rights of Participants hereunder.

10.  USE OF FUNDS; NO INTEREST PAID

         All funds received or held by the Company under the Plan shall be
included in the general funds of the Company free of any trust or other
restriction and may be used for any corporate purpose. No interest will be paid
to any Participant or credited to any Participant's account under the Plan with
respect to such funds.

11.  AMENDMENT OF THE PLAN

         The Board of Directors may amend, suspend, or terminate the Plan at any
time and from time to time, provided that approval by a vote of the holders of
more than 50% of the outstanding shares of the Company's capital stock entitled
to vote shall be required to amend the Plan (i) to change the number of shares
of Stock reserved for sale pursuant to Options under the Plan, (ii) to decrease
the Option Price below a price computed in the manner stated in Section 4(b)
hereof, (iii) to alter the requirements for eligibility to participate in the
Plan or (iv) in any manner that would cause the Plan to no longer be an
"employee stock purchase plan" within the meaning of Section 423(b) of the Code.

12.  ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS

         (a) Appointment of Committee. The Plan shall be administered by the
Committee, which shall be composed of not less than two members of the Board of
Directors, none of whom shall be eligible to serve on the Committee unless such
member is then a "disinterested person" within the meaning of paragraph (d)(3)
of Rule 16b-3 which has been adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, if and as such rule is
then in effect. Each member of the Committee shall serve for a term commencing
on a date specified by the Board of Directors and continuing until the member
dies or resigns or is removed from office by the Board of Directors. The
Committee at its option may utilize the services of an agent to assist in the
administration of the Plan including establishing and maintaining an individual
securities account under the Plan for each Participant.

         (b) Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in accordance with
the provisions of the Plan. The Committee shall


                                        6
   7
have the power to interpret the Plan and the terms of the Options and to adopt
such rules for the administration, interpretation, and application of the Plan
as are consistent therewith and to interpret, amend or revoke any such rules. In
its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan.

         (c) Majority Rule. The Committee shall act by a majority of its members
in office. The Committee may act either by vote at a meeting or by a memorandum
or other written instrument signed by a majority of the Committee.

         (d) Compensation; Professional Assistance; Good Faith Actions. All
expenses and liabilities incurred by members of the Committee in connection with
the administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, the Company and all other interested persons. No member
of the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination, or interpretation.

13.  NO RIGHTS AS AN EMPLOYEE

         Nothing in the Plan shall be construed to give any person (including
any Eligible Employee or Participant) the right to remain in the employ of the
Company, a Parent Corporation or a Subsidiary Corporation or to affect the right
of the Company, any Parent Corporation or any Subsidiary Corporation to
terminate the employment of any person (including any Eligible Employee or
Participant) at any time, with or without cause.

14.  MERGER, ACQUISITION OR LIQUIDATION OF THE COMPANY

         In the event of the merger or consolidation of the Company into another
corporation, the acquisition by another corporation of all or substantially all
of the Company's assets or 50% or more of the Company's then outstanding voting
stock, the liquidation or dissolution of the Company or any other reorganization
of the Company, the Date of Exercise with respect to outstanding Options shall
be the business day immediately preceding the effective date of such merger,
consolidation, acquisition, liquidation, dissolution, or reorganization unless
the Committee shall, in its sole discretion, provide for the assumption or
substitution of such Options in a manner complying with Section 424(a) of the
Code.

15.  TERM; APPROVAL BY STOCKHOLDERS

         No Option may be granted during any period of suspension of the Plan or
after termination of the Plan. The Plan shall be submitted for the approval of
the Company's stockholders within 12 months after the date of the Board of
Directors' adoption of the Plan. Options may be granted prior to such
stockholder approval; provided, however, that such Options shall not be
exercisable prior to the time when the Plan is approved by the stockholders; and
provided, further, that if such approval has not been obtained by the end of
said 12-month period, all Options previously granted under the Plan shall
thereupon expire.



                                        7
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16.  EFFECT UPON OTHER PLANS

         The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary Corporation. Nothing in this Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation (a)
to establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) to grant or
assume options otherwise than under this Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.

17.  CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES.

         The Company shall not be required to issue or deliver any certificate
or certificates for shares of Stock purchased upon the exercise of Options prior
to fulfillment of all the following conditions:

         (a) The admission of such shares to listing on all stock exchanges, if
any, on which the Stock is then listed; and

         (b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

         (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

         (d) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law upon exercise of the Option; and

         (e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons of
administrative convenience.

18.  NOTIFICATION OF DISPOSITION

         Each Participant shall give prompt notice to the Company of any
disposition or other transfer of any shares of Stock purchased upon exercise of
an Option if such disposition or transfer is made (a) within two (2) years from
the Date of Grant of the Option or (b) within one (1) year after the transfer of
such shares to such Participant upon exercise of such Option. Such notice shall
specify the date of such disposition or other transfer and the amount realized,
in cash, other property, assumption of indebtedness or other consideration, by
the Participant in such disposition or other transfer.

19.  NOTICES

         Any notice to be given under the terms of the Plan to the Company shall
be addressed to the Company in care of its Secretary and any notice to be given
to any Eligible Employee or Participant shall be addressed to such Employee at
such Employee's last address as reflected in the Company's records. By a notice
given pursuant to this Section , either party may designate a different address
for notices to be given to it, him or her. Any notice which is required to be
given to an Eligible Employee or a


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Participant shall, if the Eligible Employee or Participant is then deceased, be
given to the Eligible Employee's or Participant's personal representative if
such representative has previously informed the Company of his or her status and
address by written notice under this Section. Any notice shall have been deemed
duly given if personally delivered or if enclosed in a properly sealed envelope
or wrapper addressed as aforesaid at the time it is deposited (with postage 
prepaid) in a post office or branch post office regularly maintained by the 
United States Postal Service.

20.  HEADINGS

         Headings are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.



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                                                                   EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated June 11, 1996, except as
to the Recapitalization discussed in Note 1, which is as of November 4, 1996, 
relating to the financial statements of ViaSat, Inc., which appears in such 
Prospectus. We also consent to the reference to us under the heading "Experts" 
in such Prospectus.

PRICE WATERHOUSE LLP

San Diego, California
November 14, 1996