Exhibit 10.1

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

KEY EXECUTIVE STOCK DEFERRAL PLAN

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TABLE OF CONTENTS

 

          Page

ARTICLE I

   PURPOSE AND EFFECTIVE DATE    1

ARTICLE II

   DEFINITIONS    1

2.1  

   Account    1

2.2  

   Beneficiary    1

2.3  

   Board    1

2.4  

   Bonus Compensation Plan    1

2.5  

   Capital Restructuring Dividend    1

2.6  

   Code    1

2.7  

   Committee    2

2.8  

   Company    2

2.9  

   Company Stock    2

2.10

   Deferral    2

2.11

   Deferral Authority    2

2.12

   Deferrable Amount(s)    2

2.13

   Director    2

2.14

   Distribution Date    2

2.15

   Dividend Equivalent    2

2.16

   Employee    2

2.17

   Fair Market Value    2

2.18

   Ordinary Dividend    3

2.19

   Participant    3

2.20

   Plan    3

2.21

   Plan Year    3

2.22

   Retirement Date    3

2.23

   Separation From Service    3

2.24

   Share Unit    3

2.25

   Termination of Affiliation    3

2.26

   Trust    4

2.27

   Trustee    4

ARTICLE III

   PARTICIPATION    4

3.1  

   Designation by Deferral Authority    4

3.2  

   Deferral Elections    4

3.3  

   Amounts Subject to Deferral    5

3.4  

   Deferral Election Irrevocable    5

3.5  

   Deferrals May be Held in Trust    5

 

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TABLE OF CONTENTS

(continued)

 

          Page

ARTICLE IV

   TRUST FUND    6

4.1  

   Trust Fund Established    6

4.2  

   Company, Board, Deferral Authority, Committee and Trustee Not Responsible for
Adequacy of Trust Fund    6

4.3  

   Invasion of Trust by Creditors    6

4.4  

   Trust Expenses    6

ARTICLE V

   ACCOUNTS    6

5.1  

   Committee to Maintain Accounts    6

5.2  

   Additional Accounting Procedures    6

5.3  

   Limitation on Benefits    7

5.4  

   Vesting of Account Balances    7

ARTICLE VI

   RIGHTS IN ACQUIRED STOCK    7

6.1  

   Power to Vote Stock Rests With Trustee    7

6.2  

   Tender Offers    7

6.3  

   Dividends    7

ARTICLE VII

   DISTRIBUTIONS    8

7.1  

   Time of Commencement of Distribution    8

7.2  

   Form of Distribution    8

7.3  

   Methods of Distribution    8

7.4  

   Beneficiary Designation    10

7.5  

   Distribution to Guardian    10

7.6  

   Withholding of Taxes    10

7.7  

   Distribution of Dividend Equivalents    11

ARTICLE VIII

   ACCELERATION OF DISTRIBUTION    11

8.1  

   Change in Control    11

8.2  

   Hardship    12

ARTICLE IX

   SOURCE OF PAYMENT    12

9.1  

   No Direct Interest in Trust Assets    12

ARTICLE X

   PLAN TERMINATION AND AMENDMENT    13

10.1

   Termination and Amendments    13

ARTICLE XI

   PLAN ADMINISTRATION    13

11.1

   Committee    13

11.2

   Committee Powers    13

11.3

   Plan Expenses    14

 

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TABLE OF CONTENTS

(continued)

 

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11.4  

   Reliance Upon Documents and Opinions    15

11.5  

   Requirement of Proof    15

11.6  

   Reliance on Committee Memorandum    15

11.7  

   Limitation on Liability    15

11.8  

   Indemnification    15

ARTICLE XII

   MISCELLANEOUS PROVISIONS    16

12.1  

   Restrictions on Plan Interest    16

12.2  

   No Enlargement of Employee Rights    17

12.3  

   Rights of Repurchase and First Refusal for the Company    17

12.4  

   Mailing of Payments    17

12.5  

   Inability to Locate Participant or Beneficiary    17

12.6  

   Governing Law    17

12.7  

   Illegality of Particular Provision    18

12.8  

   Interpretation    18

12.9  

   Tax Effects    18

12.10

   Receipt or Release    18

12.11

   Records    18

12.12

   Arbitration    18

 

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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

KEY EXECUTIVE STOCK DEFERRAL PLAN

ARTICLE I

PURPOSE AND EFFECTIVE DATE

This Plan is an unfunded, deferred compensation arrangement established by
Science Applications International Corporation (“Company”) to provide selected
Employees and Directors with a method of supplementing their retirement income
by deferring a portion of their compensation and to make an indirect investment
in Company Stock through a “rabbi trust” vehicle. The Plan is effective as of
January 4, 1996, and is amended and restated effective January 1, 2005 to comply
with Section 409A of the Code.

ARTICLE II

DEFINITIONS

Whenever the following terms are used in the Plan they shall have the meaning
specified below, unless the context indicates clearly to the contrary.

2.1 Account. The Account maintained for bookkeeping purposes by the Committee
with respect to each Participant to evidence the Participant’s Deferrals of
Deferrable Amounts hereunder and to record the number of Share Units credited as
a result of such Deferrals.

2.2 Beneficiary. The person or persons properly designated by the Participant,
in accordance with Section 7.3, to receive the benefits provided herein upon
death of the Participant.

2.3 Board. The Board of Directors of Science Applications International
Corporation, or its ultimate parent corporation, if any.

2.4 Bonus Compensation Plan. The Company’s 1984 Bonus Compensation Plan and any
successor plan.

2.5 Capital Restructuring Dividend. The non-recurring cash dividend paid by the
Company in 2006 on shares of Company Stock in connection with the Company’s
capital restructuring and the initial public offering of Company Stock.

2.6 Code. The Internal Revenue Code of 1986, as amended.

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2.7 Committee. The committee composed of such members as shall be appointed from
time to time by the Board to administer the Plan.

2.8 Company. Science Applications International Corporation (or its ultimate
parent corporation, if any). In addition, unless the context indicates
otherwise, as used in this Plan the term Company shall also mean and include any
direct or indirect subsidiary of the Company which has been approved by the
Deferral Authority for participation in this Plan by its Employees.

2.9 Company Stock. The Class A Common Stock of Science Applications
International Corporation, or any other security (including preferred stock) of
the Company or the Company’s ultimate parent corporation, if any, designated as
Company Stock by the Committee.

2.10 Deferral. The amount of Deferrable Amounts a Participant has deferred in
accordance with Section 3.2 or which is designated as a Deferral under this Plan
in connection with an Employee’s offer letter for employment with the Company.
Deferrals shall be denominated as Share Units.

2.11 Deferral Authority. The individual or group of individuals appointed by the
Board to determine which Employees are eligible to make Deferrals and to
participate in the Plan.

2.12 Deferrable Amount(s). The bonus, if any, payable to an Employee or
Director, in accordance with Company procedures under the Bonus Compensation
Plan, Directors’ fees or other payments as determined by the Committee. In no
way does the adoption or operation of this Plan obligate the Company to pay any
bonus or continue any compensation program.

2.13 Director. A member of the Board, other than a Director Emeritus, or a
member of the Board of Directors of any subsidiary or affiliate thereof which
has been approved by the Deferral Authority for participation in this Plan by
its Employees or Directors.

2.14 Distribution Date. The date when distributions begin under the Plan, as
specified in Section 7.1.

2.15 Dividend Equivalent. The amount of the Capital Restructuring Dividend paid
by the Company on that number of shares of Company Stock which is equal to the
number of Share Units then credited to a Participant’s Account.

2.16 Employee. A management or highly compensated employee of the Company.

2.17 Fair Market Value.

(1) If the Company Stock is being valued in connection with a transaction (such
as the crediting of amounts to an Account or a distribution) for which the
Committee determines there is a corresponding transaction by the Trust, the net
price per share of Company Stock purchased or the net proceeds per share of
Company Stock sold in the transaction by the Trust, in each case including all
expenses of such transaction by the Trust.

 

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(2) If paragraph (1) does not apply, (a) the closing price of the Company Stock
on the New York Stock Exchange on the date for which the fair market value is
determined, or, if there is no trading of the Company Stock on such date, then
the closing price of the Company Stock on the New York Stock Exchange on the
next preceding date on which there was trading in such shares; or (b) if the
Company Stock is not listed, admitted or quoted, the Committee may designate
such other source of data as it deems appropriate for determining such value for
purposes of this Plan.

2.18 Ordinary Dividend. All cash dividends or other cash distributions, other
than the Capital Restructuring Dividend, paid by the Company on shares of
Company Stock.

2.19 Participant. An Employee or Director designated by the Deferral Authority
for participation in the Plan who timely files an election to participate and
makes or receives Deferrals hereunder.

2.20 Plan. The Science Applications International Corporation Key Executive
Stock Deferral Plan, as set forth herein and as amended from time to time.

2.21 Plan Year. January 1 through December 31.

2.22 Retirement Date. The date of an Employee’s termination of employment from
the Company or a Director’s ceasing to be an active Director as determined by
the Committee, on or after attaining age 59-1/2. Effective January 1, 2005, a
Retirement Date shall not occur unless the Employee or Director has had a
Separation From Service.

2.23 Separation From Service. The death, retirement or termination of the
Employee’s employment with the Company, or in the case of a Director, ceasing to
perform services for the Company as a member of the Board. This definition of
Separation From Service shall be interpreted and construed in a manner intended
to comply with Code Section 409A and the published authorities thereunder.

2.24 Share Unit. The interest of a Participant in a share of Company Stock held
in the Participant’s Account. A full Share Unit shall be equivalent to a full
share of Company Stock, and a partial Share Unit shall be equivalent to the
corresponding fraction of a share of Company Stock.

2.25 Termination of Affiliation. Any termination of employment with the Company
by an Employee, as determined by the Committee, whether by reason of death,
disability, voluntary resignation, layoff, discharge or otherwise, prior to
attaining age 59-1/2 and, in the case of a Director, ceasing to be an active
Director prior to attaining age 59-1/2. The Committee shall have the discretion
to establish rules and make determinations as to what constitutes a Termination
of Affiliation including, without limitation, change of status (e.g., part-time,
consulting Employee, etc.) or leave of absence. Notwithstanding the foregoing,
effective January 1, 2005, a Termination of Affiliation shall not occur unless
the Employee or Director has had a Separation From Service.

 

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2.26 Trust. The Science Applications International Corporation Key Executive
Stock Deferral Trust established by the Company to hold assets used by the
Company to provide for benefits to Participants and Beneficiaries under the
Plan.

2.27 Trustee. Wachovia Bank or such successor trustee as shall be appointed
pursuant to the Trust instrument.

ARTICLE III

PARTICIPATION

3.1 Designation by Deferral Authority. The Deferral Authority in its sole
discretion shall designate those Employees or Directors who are to be eligible
to participate in the Plan with respect to Deferrals for a particular Plan Year
or with respect to a particular Deferrable Amount or Amounts. Designating an
individual as eligible to participate in the Plan for a particular Plan Year or
with respect to a particular Deferrable Amount shall not require the Deferral
Authority to designate such individual for any subsequent Plan Year or with
respect to any subsequent Deferrable Amounts. The designation of eligibility by
the Deferral Authority may be made in such manner as determined by the Deferral
Authority, including, without limitation, establishment of criteria such as
compensation level or level or authority.

3.2 Deferral Elections.

(a) An eligible Employee or Director shall not become a Participant in the Plan
unless and until he or she has executed and delivered to the Committee a
Deferral election, including any forms or agreements as may be prescribed by the
Committee, and the Committee shall have accepted such Deferral election and/or
additional forms or agreements. Participation in the Plan and any elections made
by a Participant, including Deferral elections and elections as to form of
distribution under Article VII, is conditioned on the Participant executing an
agreement with the Company, in a manner prescribed by the Committee, relating to
the Company’s right of repurchase of Company Stock (to the extent applicable)
and such other matters as the Committee shall prescribe. To initially
participate in the Plan, the Employee or Director must submit his or her
Deferral election, including any forms or agreements prescribed by the
Committee, during the applicable Deferral election period established by the
Committee. Effective for Deferrals on or after January 1, 2005, the last day of
the Deferral election period for any Deferrable Amount other than
“performance-based compensation” (as defined below) shall be no later than the
last day of the calendar year prior to the first calendar year during which the
Employee or Director performs services for which such Deferral Amount is earned.
Beginning with the Deferral election made in the 2003 Plan Year for Deferrable
Amounts received during calendar year 2004, the Participant’s election shall be
carried forward automatically to future Plan Years for which the Participant is
eligible to participate unless, during the applicable Deferral election period
for such future Plan Years, the Participant elects to modify or cancel the prior
election under procedures established by the Committee. In addition to amounts
deferred pursuant to a Deferral election, additional Deferrals may be credited
to a Participant’s Account pursuant to the terms of an offer letter with an
Employee made at the time of commencement of

 

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employment with the Company, as determined and approved by the Deferral
Authority in its sole discretion. Furthermore, the Committee may, to the extent
consistent with satisfying Code Section 409A, permit an Employee or Director to
make a Deferral Election within 30 days of the date such Employee or Director
first becomes eligible to participate in the Plan, as indicated by the effective
date of his status change in the Plan’s records. Such a Deferral election shall
be with respect to compensation earned for services performed after the
election.

(b) If a Deferrable Amount constitutes “performance-based compensation,” then
the Committee may, but need not, delay the last day of the Deferral election
period. The last day of the Deferral election period with respect to any
Deferrable Amount which is considered to be performance-based compensation shall
be no later than six months before the end of the service period over which such
Deferrable Amount is earned. For this purpose, “performance-based compensation”
means compensation where the amount of or entitlement to the compensation is
contingent on the satisfaction of pre-established written performance criteria
relating to a performance period of at least twelve consecutive months, provided
that performance-based compensation does not include any amount that will be
paid regardless of performance, or based upon a level of performance that is
substantially certain to be met at the time the criteria is established.
Performance-based compensation must also meet any other applicable requirements
established under authority issued pursuant to Code Section 409A.

3.3 Amounts Subject to Deferral. The total Deferrals elected for a particular
Plan Year may be in an amount up to a specified percentage of Deferrable
Amounts, such maximum percentage to be up to one hundred percent (100%) as
determined by the Deferral Authority.

3.4 Deferral Election Irrevocable. Any Deferral election by a Participant for a
particular Plan Year shall be irrevocable for that Plan Year following the end
of such Plan Year’s Deferral election period.

3.5 Deferrals May be Held in Trust.

(a) With respect to Deferrals before January 1, 2005, within a reasonable period
of time following the date on which a Deferrable Amount would have been paid to
a Participant but for the Deferral hereunder, the Company shall contribute, to
the Trust, Company Stock or money in an amount sufficient to purchase shares of
Company Stock equal in value (based, prior to any public offering of Company
Stock, on the then prevailing Formula Price as determined under the Company’s
Certificate of Incorporation) to the Deferral. The Trustee shall apply such
contribution toward the purchase of Company Stock in accordance with the
directions of the Committee and the terms of the Trust and the Participant shall
be credited with the applicable number of Share Units.

(b) Effective January 1, 2005, contributions to the Trust with respect to
Deferrals shall be made only if the Company, in its sole discretion, determines
to make such contributions. Regardless of whether the Company makes
contributions to the Trust with respect to Deferrals, the Participant shall be
credited with a number of Share Units equal to the Deferral. If it becomes
necessary to determine the value of a full or partial Share Unit prior to any
public offering of Company Stock, such value shall be based on the then
prevailing Formula Price (as determined under the Company’s Certificate of
Incorporation) as of the date the Deferrable

 

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Amount would have been paid to the Participant but for the Deferral hereunder.
Following any public offering of Company Stock, such value shall be determined
according to the Fair Market Value of the Company Stock as of the date the
Deferrable Amount would have been paid to the Participant but for the Deferral
hereunder.

ARTICLE IV

TRUST FUND

4.1 Trust Fund Established. The Company has established the Trust pursuant to a
trust agreement under which the Trustee will hold and administer in trust all
assets deposited with the Trustee in accordance with the terms of this Plan. The
Board shall have the authority to select and remove the Trustee to act under the
Trust agreement, and to enter into new or amended trust agreements as it deems
advisable.

4.2 Company, Board, Deferral Authority, Committee and Trustee Not Responsible
for Adequacy of Trust Fund. Neither the Company, Board, Deferral Authority,
Committee nor Trustee shall be liable or responsible for the adequacy of the
funds held in the Trust to meet and discharge any or all payments and
liabilities hereunder. All Plan benefits will be paid from the Trust assets or
by the Company to the extent not paid from Trust assets, and neither the Board,
Deferral Authority, Committee nor Trustee shall have any duty or liability to
pay such benefits or furnish the Trust with any funds, securities or other
assets.

4.3 Invasion of Trust by Creditors. If assets of the Trust should be reduced due
to action of the Company’s creditors, as provided in the Trust document, the
Committee shall reduce each Account for which the Trust held assets on a pro
rata basis to reflect such reduction in Trust assets, and the Company shall have
no obligation to replace such lost assets.

4.4 Trust Expenses. Expenses of the Trust which are not paid by the Company
shall be applied to reduce each Account for which the Trust holds assets on a
pro rata basis.

ARTICLE V

ACCOUNTS

5.1 Committee to Maintain Accounts. The Committee shall open and maintain a
separate Account for each Participant to record the Deferrals made by the
Participant and the number of Share Units credited as a result of the Deferrals.

5.2 Additional Accounting Procedures. The Committee shall establish and may
amend from time to time additional accounting procedures for the purpose of
making allocations, distributions, valuations and adjustments to Accounts, and
to allocate Trust earnings expenses and losses to such accounts. A Participant
or Beneficiary shall have no contractual or other right to have a particular
accounting procedure or convention apply, or continue to apply, and the
Committee shall be free to alter any such procedure or convention without notice
or obligation to any Participant or Beneficiary.

 

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5.3 Limitation on Benefits. Benefits payable to a Participant or Beneficiary
under the Plan shall be limited to the vested Account balance credited to such
Participant or Beneficiary.

5.4 Vesting of Account Balances. A Participant’s Account balance shall be one
hundred percent (100%) vested except with respect to the portion of the Account
balance attributable to vesting bonuses awarded under the Bonus Compensation
Plan. Such portion of a Participant’s Account balance shall become vested (and
the nonvested portion forfeited) at the time or times the bonus would have
become vested (and the nonvested portion forfeited) under the Bonus Compensation
Plan without regard to deferral under this Plan. The Share Units represented by
such forfeited portion shall be returned to the Company or reallocated in
accordance with the Committee’s directions and the terms of the Trust.

ARTICLE VI

RIGHTS IN ACQUIRED STOCK

6.1 Power to Vote Stock Rests With Trustee. The power to vote any stock held by
the Trustee shall rest solely with the Trustee, who shall vote such stock in the
same proportion that the other shareholders vote their shares of stock of the
Company. For purposes of this Section 6.1, in determining how other shareholders
voted, the Trustee shall take into account the votes of shareholders with
respect to all classes of voting stock, including but not limited to Class A and
Class B Common Stock.

6.2 Tender Offers. In the case of a tender offer for the Company Stock, the
Trustee shall tender the shares of Company Stock held by the Trust only if more
than fifty percent (50%) of the shares of Company Stock held outside the Trust
are tendered by the shareholders.

6.3 Dividends. All Ordinary Dividends on Company Stock held in Trust shall be
held by the Trustee and reinvested as directed by the Committee. The Committee
shall allocate such Ordinary Dividends among the Accounts pro rata to the shares
allocated to each Account. The Capital Restructuring Dividend on Company Stock
held in Trust shall be immediately disbursed by the Trustee to the Company for
immediate distribution by the Company to Participants in accordance with
Section 7.7. No person (including, but not limited to, the Trustee, the Company,
the Committee or the Board) shall have the authority or ability to delay the
immediate transfer of the Capital Restructuring Dividend from the Trustee to the
Company pursuant to this Section 6.3.

 

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ARTICLE VII

DISTRIBUTIONS

7.1 Time of Commencement of Distribution. Subject to the acceleration provisions
of Article VIII, the balance credited to a Participant’s Account shall be
distributed, or commence to be distributed, to the Participant on the first to
occur of the following events:

(a) the Participant’s Retirement Date; or

(b) the date of the Participant’s Termination of Affiliation with the Company.

7.2 Form of Distribution. Each distribution shall be made in the form of Company
Stock, except that fractional Share Units shall, as determined according to
procedures established by the Committee, be distributed in kind as fractional
shares or applied towards satisfying tax withholding obligations with respect to
Participants’ distributions. A Participant shall have no right to request a cash
distribution.

7.3 Methods of Distribution.

(a) Lump Sum on Death. If a Participant dies having an Account balance
(regardless of whether distributions have begun under the Plan), the remaining
balance in the Participant’s Account shall be paid in the form of a lump sum to
the Beneficiary or Beneficiaries designated in accordance with Section 7.4, or
as otherwise provided in Sections 7.4 and 7.5, within a reasonable period
following the date when the Committee receives notice of the Participant’s
death.

(b) Election for Retirement Distributions. Subject to the acceleration
provisions in Article VIII, distributions made on account of a Participant’s
Retirement Date shall be made to the Participant in accordance with a valid
election made by the Participant under this subsection (b). The Participant may
elect in a manner prescribed by the Committee to have his or her Account paid in
one of the following forms:

(1) A lump sum payment of the entire Account Balance; or

(2) A series of annual payments over a five or ten year period. Each installment
shall include one-fifth or one-tenth, as applicable, of the number of shares of
Company Stock distributable to the Participant. Effective for new Participants
making Deferral elections for the 2004 and subsequent Plan Years, a series of
annual payments over a fifteen year period shall be an available option for
Retirement distributions. Each installment shall include one-fifteenth of the
number of shares of Company Stock distributable to the Participant.

In the event Participant elects a lump sum payment as described in
Section 7.3(b)(1) and Participant has an Account balance attributable to vesting
bonuses under the Bonus Compensation Plan that will continue vesting after such
lump sum payment, additional distributions shall be made within a reasonable
period of time following each date Share Units

 

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vest. In the event Participant elects a series of annual payments as described
in Section 7.3(b)(2) and Participant has an Account balance attributable to
vesting bonuses under the Bonus Compensation Plan that will continue vesting
after any annual distribution of Participant’s Account balance occurs, any Share
Units that vest after a distribution will be added to the Account balance and
distributed ratably over the remaining series of annual payments.

Effective January 1, 2005, a Participant’s election of the form of distribution
shall be made at the time the Participant first makes a Deferral election. Such
election of form of distribution shall be applicable to all subsequent Deferral
elections by the Participant.

(c) Change of Distribution Election. Except as set forth in this Section 7.3(c),
a Participant’s election of form of distribution shall be irrevocable. Each of
the forms of distribution set forth in Section 7.3(b) shall be considered a
single payment for purposes of Code Section 409A. Accordingly, Participants
shall be allowed to make a new form of distribution election, provided that the
following requirements are satisfied:

(1) the election does not take effect until at least twelve months after the
date the election is made, and the election must be made at least twelve months
prior to the date the first payment would be made to the Participant absent the
election;

(2) the commencement date of the first payment to the Participant shall be five
years following the date the payment would have commenced absent the change in
the Participant’s election; and

(3) no Participant may make more than one new form of distribution election.

Any attempt to change a distribution election that does not satisfy these
requirements shall be void.

(d) Other Distributions. Distributions other than those specified in (a) or
(b) above shall be made as a lump sum within a reasonable period of time
following a Participant’s Termination of Affiliation.

(e) Default Distribution. If the Participant fails to make a valid election as
described in subsection (b), the Participant’s Account shall be distributed in
full as a lump sum payment within a reasonable period of time following the
Distribution Date. If Participant has an Account balance attributable to vesting
bonuses under the Bonus Compensation Plan that will continue vesting after such
lump sum payment is made, additional distributions shall be made within a
reasonable period of time following each date Share Units vest.

(f) Notwithstanding the foregoing, if any stock of the Company is publicly
traded on an established securities market, the distribution to any Participant
who is a “specified employee” under Code Section 409A(a)(1)(B)(i) shall not be
made (or commence to be made in the case of installment payments) before the
earlier of (i) the date which is six months after such Participant’s Separation
From Service or (ii) the date of the Participant’s death. For any twelve

 

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month period commencing April 1 and ending March 31, a Employee is a “specified
employee” if the Employee was a “key employee” at any time during the calendar
year ending before such April 1. A key employee is defined in Code
Section 416(i) without regard to Code Section 416(i)(5).

7.4 Beneficiary Designation.

(a) Upon forms provided by the Committee, each Participant shall designate in
writing the Beneficiary or Beneficiaries whom such Participant desires to
receive the benefits of this Plan, if any, payable in the event of such
Participant’s death. A Participant may from time to time change his or her
designated Beneficiary or Beneficiaries without the consent of such Beneficiary
or Beneficiaries by filing a new designation in writing with the Committee. The
Committee may rely upon the designation of Beneficiary or Beneficiaries last
filed by the Participant in accordance with the terms of this Plan.

(b) If the designated Beneficiary does not survive the Participant, or if there
is no valid Beneficiary designation, amounts payable under the Plan shall be
paid to the Participant’s spouse, or if there is no surviving spouse, then to
the duly appointed and currently acting personal representative of the
Participant’s estate. If there is no personal representative of the
Participant’s estate duly appointed and acting in that capacity within sixty
(60) days after the Participant’s death, then all payments due under the Plan
shall be payable to the person or persons who can verify by affidavit or court
order to the satisfaction of the Committee that they are legally entitled to
receive the benefits specified hereunder pursuant to the laws of intestate
succession or other legal provision in effect at the Participant’s death in the
jurisdiction having authority over disposition of the Participant’s estate.

7.5 Distribution to Guardian. If the Committee shall find that any person to
whom any payment is payable under this Plan is unable to care for his or her
affairs because of illness or accident, or is a minor, a payment due (unless a
prior claim therefore shall have been made by a duly appointed guardian or other
legal representative) may be paid to the spouse, a child, a parent, or a brother
or sister, or to any custodian, conservator or other fiduciary responsible for
the management and control of such person’s financial affairs in such manner and
proportions as the Committee may determine. Any such payment shall, to the
extent thereof, discharge of the liabilities of the Company to the Participant
or Beneficiary under this Plan.

7.6 Withholding of Taxes. To the extent any distribution is subject to
withholding taxes, the Committee shall require, as a condition to the payment of
such distribution, that the taxes be withheld from such distribution by the
Trustee, in which case the withheld amounts shall be delivered to the Company
which shall pay over the withheld taxes as required by law; provided, however,
that the Committee may, but need not, allow the Participant to make payment to
the Company in the form of a check for such withholding taxes.

 

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7.7 Distribution of Dividend Equivalents.

(a) Notwithstanding anything to the contrary in this Article VII, effective
January 1, 2006, Dividend Equivalents with respect to the Capital Restructuring
Dividend shall be distributed as set forth in this Section 7.7.

(b) Dividend Equivalents with respect to the Capital Restructuring Dividend
shall be distributed by the Company to Participants as soon as administratively
feasible upon the Company’s receipt of the Capital Restructuring Dividend from
the Trustee in accordance with Section 6.3. No one (including, but not limited
to, the Trustee, the Company, the Board, the Committee or any Participant) shall
have the authority or the ability to delay the immediate distribution of
Dividend Equivalents or alter the amount of Dividend Equivalents distributed
with respect to the Capital Restructuring Dividend. The distribution of Dividend
Equivalents with respect to the Capital Restructuring Dividend to be made to a
Participant in accordance with this Section 7.7(b) shall equal the product of
(i) the Participant’s Share Units as of the record date for the Capital
Restructuring Dividend, times (ii) the per share Capital Restructuring Dividend.
Immediate payment of the Dividend Equivalent upon the payment of the Capital
Restructuring Dividend by the Company is intended to satisfy the requirement of
Code Section 409A that payment be made as of a specified time or pursuant to a
fixed schedule.

(c) Distributions of Dividend Equivalents with respect to the Capital
Restructuring Dividend shall be made in cash without interest and shall be made
from the Capital Restructuring Dividend paid to the Trust and transferred to the
Company pursuant to Section 6.3.

ARTICLE VIII

ACCELERATION OF DISTRIBUTION

8.1 Change in Control. All Accounts shall be immediately distributed to the
Participants to whom such Accounts belong, upon the occurrence of a Change in
Control (as hereinafter defined) of the Company. A Change in Control shall be
deemed to occur upon any “person” (as defined in Section 3(a)(9) of the United
States Securities Exchange Act of 1934 (the “34 Act”)), other than the Company,
any subsidiary or any employee benefit plan or trust maintained by the Company
or subsidiary becoming the beneficial owner (as defined in Rule 13d-3 under the
34 Act), directly or indirectly, of more than 25% of the Company Stock
outstanding at such time, without the prior approval of the Board. For purposes
of the foregoing, a subsidiary is any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, other than
the last corporation in such chain, owns at least fifty percent (50%) of the
total voting power in one of the other corporations in such chain. Effective
January 1, 2005, 35% shall be substituted for 25% in the above definition of
Change in Control, in accordance with Code Section 409A.

 

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8.2 Hardship.

(a) Prior to January 1, 2005, notwithstanding the provisions of Section 7.1 and
7.3 hereof, a Participant shall be entitled to request a hardship distribution
of all or any portion of his or her Account. A Participant or legal
representative of the Participant must make a written request for a hardship
distribution, stating the reasons such withdrawal is necessary because of a
financial hardship. The Committee, in its sole discretion, shall determine
whether or not to grant the hardship distribution of such Participant’s Account
and, in so doing, may rely on the Participant’s statements, and a hardship
distribution may be approved without further investigation unless the Committee
has reason to believe such statements are false.

(b) Effective January 1, 2005, a withdrawal under this Section 8.2 shall be
permitted only if the Participant incurs an “unforeseeable emergency,” as
defined below. Any such distribution shall be limited to the amount for which
distribution is reasonably necessary to satisfy the emergency need (which may
include amounts necessary to pay any Federal, State or local income taxes or
penalties reasonably anticipated to result from the distribution). For purposes
of this Section 8.2(b), an “unforeseeable emergency” is a severe financial
hardship of the Participant resulting from (i) an illness or accident of the
Participant, the Participant’s spouse or dependent, (ii) the loss of the
Participant’s property due to casualty (including the need to rebuild a home
following damage to a home to the extent not otherwise covered by insurance, or
(iii) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The determination of
whether an Participant has an unforeseeable emergency shall be made in
accordance with the authorities published pursuant to Code Section 409A.

ARTICLE IX

SOURCE OF PAYMENT

9.1 No Direct Interest in Trust Assets. All distributions hereunder shall be
paid solely from the Trust or from the assets of the Company, as determined by
the Company. The Company shall pay any distributions not paid by the Trust. No
special or separate funds shall be established and no other segregation of
assets shall be made to assure the payment of benefits hereunder. A Participant
shall have no right, title, or interest whatever in or to any investments which
the Company may make through the Trust to meet its obligations hereunder.
Nothing contained in this Plan, and no action taken pursuant to its provisions,
shall create or be construed to create any kind of a fiduciary relationship
between the Company and a Participant or any other person.

 

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ARTICLE X

PLAN TERMINATION AND AMENDMENT

10.1 Termination and Amendments. The Plan shall continue until all amounts
credited to the Participants’ Accounts have been distributed in accordance with
the terms of the Plan. Notwithstanding the foregoing sentence, the Company
retains the right to amend or terminate the Plan for any reason, including but
not limited to adverse changes in tax laws or the bankruptcy, receivership or
dissolution of the Company. In the event of a Plan termination, benefits will be
paid out when due under the terms of the Plan. To the extent feasible, the
Committee shall use its best efforts to avoid adversely affecting the rights of
any existing Participants in the Plan, but prior to a Change in Control, the
Committee shall be under no specific duty or obligation in this regard.
Following a Change in Control no amendment or termination of the Plan shall
adversely affect any benefits earned by Participants prior to the amendment or
termination.

ARTICLE XI

PLAN ADMINISTRATION

11.1 Committee. The Plan shall be administered by the Committee. Subject to the
provisions of the Plan and the authority granted to the Deferral Authority, the
Committee shall have exclusive power to determine the manner and time of
Deferrals and payment of benefits to the extent herein provided and to exercise
any other discretionary powers granted to the Committee pursuant to the Plan.
The decisions or determinations by the Committee shall be final and binding upon
all parties, including shareholders, Participants, Beneficiaries and other
Employees. The Committee shall have the authority to interpret the Plan, to make
factual findings and determinations, to adopt and revise rules and regulations
relating to the Plan and to make any other determinations which it believes
necessary or advisable for the administration of the Plan. The Committee’s
discretion shall be as broad and unfettered as permitted by law. Notwithstanding
the foregoing, after a Change in Control, any findings, adoption or revision of
rules or regulations, interpretations, decisions or determinations made by the
Committee (including under Section 11.2) shall not be given any deference by a
court or arbitrator, and if challenged by a Participant or Beneficiary, shall be
reviewed on a de novo basis.

11.2 Committee Powers. The Committee shall have all powers necessary to
supervise the administration of the Plan and control its operations. In addition
to any powers and authority conferred on the Committee elsewhere in the Plan or
by law, the Committee shall have, by way of illustration and not by way of
limitation, the following powers and authority;

(a) To designate agents to carry out responsibilities relating to the Plan;

(b) To employ such legal, actuarial, medical, accounting, clerical and other
assistance as it may deem appropriate in carrying out the provisions of this
Plan;

 

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(c) To administer, interpret, construe and apply this Plan and to decide all
questions which may arise or which may be raised under this Plan by any
Employee, Participant, Beneficiary or other person whatsoever, including but not
limited to all questions relating to eligibility to participate in the Plan, and
the amount of benefits to which any Participant may be entitled;

(d) To establish rules and procedures from time to time for the conduct of its
business and for the administration and effectuation of its responsibilities
under the Plan;

(e) To establish claims procedures, and to make forms available for filing of
such claims, and to provide the name of the person or persons with whom such
claims should be filed. The Committee shall establish procedures for action upon
claims initially made and the communication of a decision to the claimant
promptly and, in any event, not later than sixty (60) days after the date of the
claim; the claim may be deemed by the claimant to have been denied for purposes
of further review described below in the event a decision is not furnished to
the claimant within such sixty (60) day period. Every claim for benefits which
is denied shall be denied by written notice setting forth in a manner calculated
to be understood by the claimant (1) the specific reason or reasons for the
denial, (2) specific reference to any provisions of this Plan on which denial is
based, (3) description of any additional material or information necessary for
the claimant to perfect his claim with an explanation of why such material or
information is necessary, and (4) an explanation of the procedure for further
reviewing the denial of the claim under the Plan. The Committee shall establish
a procedure for review of claim denials, such review to be undertaken by the
Committee. The review given after denial of any claim shall be a full and fair
review with the claimant or his duly authorized representative having one
hundred eighty (180) days after receipt of denial of his claim to request such
review, having the right to review all pertinent documents and the right to
submit issues and comments in writing. The Committee shall establish a procedure
for issuance of a decision by the Committee not later than sixty (60) days after
receipt of a request for review from a claimant unless special circumstances,
such as the need to hold a hearing, require a longer period of time, in which
case a decision shall be rendered as soon as possible but not later than one
hundred twenty (120) days after receipt of the claimant’s request for review.
The decision on review shall be in writing and shall include specific reasons
for the decision written in a manner calculated to be understood by the claimant
with specific reference to any provisions of this Plan on which the decision is
based; and

(f) To perform or cause to be performed such further acts as it may deem to be
necessary, appropriate, or convenient in the efficient administration of the
Plan.

Prior to a Change in Control, any action taken in good faith by the Committee in
the exercise of authority conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their beneficiaries, and all discretionary
powers conferred upon the Committee shall be absolute. Following a Change in
Control, the actions of the Committee and its exercise of discretionary powers
shall be reviewed on a de novo basis if challenged by a Participant or
Beneficiary.

11.3 Plan Expenses. Members of the Committee shall serve as such without
compensation from the Plan, but may receive compensation from the Company for so
serving.

 

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All Plan administration expenses shall be borne by the Company or the Trust as
determined by the Committee in its sole discretion.

11.4 Reliance Upon Documents and Opinions. The members of the Committee, the
Deferral Authority, the Board, and the Company shall be entitled to rely upon
any tables, valuations, computations, estimates, certificates, opinions and
reports furnished by any consultant, or firm or corporation which employs one or
more consultants or advisors. The Committee may, but is not required to, rely
upon all records of the Company with respect to any matter or thing whatsoever,
and may likewise treat such records as conclusive with respect to all Employees,
Participants, Beneficiaries and any other persons whomsoever, except as
otherwise provided by law.

11.5 Requirement of Proof. The Committee, the Deferral Authority, the Board, or
the Company may require satisfactory proof of any matter under this Plan from or
with respect to any Employee, director, consultant, Participant or Beneficiary,
and no such person shall acquire any rights or be entitled to receive any
benefits under this Plan until such proof shall be furnished as so required.

11.6 Reliance on Committee Memorandum. Any person dealing with the Committee may
rely on and shall be fully protected in relying on a certificate or memorandum
in writing signed by any Committee member so authorized, or by a quorum of the
members of the Committee, as constituted as of the date of such certificate or
memorandum, as evidence of any action taken or resolution adopted by the
Committee.

11.7 Limitation on Liability. No employee or director of the Company shall be
subject to any liability by reason of or arising from his or her participation
in the establishment or administration or operation of the Plan unless he or she
acts fraudulently or in bad faith.

11.8 Indemnification.

(a) To the extent permitted by law, the Company shall indemnify each member of
the Deferral Authority, the Committee, and any other employee or director of the
Company who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed proceeding, whether civil, criminal,
administrative, or investigative, by reason of his or her conduct in the
performance in connection with the establishment or administration of the Plan
or any amendment or termination of the Plan.

(b) This indemnification shall apply against expenses including, without
limitation, attorneys fees and any expenses of establishing a right to
indemnification hereunder, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with such proceeding, except in
relation to matters as to which he or she has acted fraudulently or in bad faith
in the performance of such duties.

(c) The termination of any proceeding by judgment, order, settlement,
conviction, upon a plea of nolo contendere or its equivalent shall not, in and
of itself, create a presumption that the person acted fraudulently or in bad
faith in the performance of his or her duties.

 

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(d) Expenses incurred in defending any such proceeding may be advanced by the
Company prior to the final disposition of such proceeding, upon receipt of an
undertaking by or on behalf of the recipient to repay such amount, unless it
shall be determined ultimately that the recipient is entitled to be indemnified
as authorized in this Section 11.8.

(e) The right of indemnification set forth in this Section 11.8 shall be in
addition to any other right to which any Committee member or other person may be
entitled as a matter of law, by corporate bylaws or otherwise.

ARTICLE XII

MISCELLANEOUS PROVISIONS

12.1 Restrictions on Plan Interest.

(a) A Participant’s interest in this Plan shall be limited to his or her Account
and he or she shall have no other interest in any assets of the Company nor any
right as against the Company, Deferral Authority or Committee for payment of
benefits under this Plan.

(b) None of the benefits, payments, proceeds, claims or rights hereunder of any
Participant or Beneficiary shall be subject to any claim of any creditor of such
Participant or Beneficiary and in particular the same shall not be subject to
attachment, garnishment, or other legal process by any creditor of such
Participant or Beneficiary.

(c) A Participant or Beneficiary shall not have any right to alienate,
anticipate, commute, pledge, encumber, or assign any of the benefits or payments
or proceeds which he or she may expect to receive, contingently or otherwise,
under the Plan.

(d) A Participant’s and Beneficiary’s interest in this Plan and his or her
Account in the Trust are subject to the claims of the Company’s creditors as
provided in the Trust. Each Participant and Beneficiary shall, however, be
considered a general creditor of the Company with respect to his or her Account,
so that if the Company should become insolvent, the Participant or Beneficiary
will have a claim against the Company and Trust assets equal to that of the
Company’s other general creditors (regardless of whether assets are removed from
the Trust by a trustee in bankruptcy).

(e) Whenever a provision of this Plan restricts or limits a Participant or a
Participant’s Account, benefit or distribution, such limitation shall also apply
to a Beneficiary unless otherwise specified.

 

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12.2 No Enlargement of Employee Rights.

(a) This Plan is strictly a voluntary undertaking on the part of the Company and
shall not be deemed to constitute a contract between the Company and any
Employee or Director, or be consideration for, or an inducement to, or a
condition of, the employment of any Employee or affiliation of any Director.

(b) The employment of any Employee is not for any specified term and may be
terminated by any Employee or by the Company at any time, for any reason, with
or without cause. Nothing contained in the Plan shall be deemed to give any
Employee the right to be retained in the employ of the Company, to constitute
any promise or commitment by the Company regarding future positions, future work
assignments, future compensation or any other term or condition of employment or
to interfere with the right of the Company to discharge or retire any Employee
at any time.

(c) No person shall have any right to any benefits under this Plan, except to
the extent expressly provided herein.

12.3 Rights of Repurchase and First Refusal for the Company. Any Company Stock
distributed from the Plan may be subject to a right of repurchase and right of
first refusal by the Company, as well as any conditions, limitations or
restrictions contained in an agreement specified in Section 3.2. The terms and
conditions of the right of repurchase and right of first refusal to the extent
applicable, shall be in addition to those applied to Company Stock by the
Restated Certificate of Incorporation of Science Applications International
Corporation, as amended.

12.4 Mailing of Payments. All payments under the Plan shall be delivered in
person or mailed to the last address of the Participant (or, in the case of the
death of the Participant to that of any other person entitled to such payments
under the terms of the Plan). Each Participant shall be responsible for
furnishing the Committee with his or her correct current address and the correct
current name and address of his or her Beneficiary.

12.5 Inability to Locate Participant or Beneficiary. In the event that the
Committee is unable to locate a Participant or Beneficiary to whom benefits are
payable hereunder after mailing a notice to the Participant’s or Beneficiary’s
last known address, and such inability lasts for a period of three (3) years,
then any remaining benefits payable hereunder shall be forfeited to the Company
and no Participant or Beneficiary shall have any right to further benefits from
the Plan, even if subsequently located.

12.6 Governing Law. All legal questions pertaining to the Plan shall be
determined in accordance with the laws of California, excluding its rules
governing conflicts of laws. Without limiting Section 12.9, it is intended that
this Plan be administered and interpreted in a manner consistent with the
applicable requirements of Code Section 409A, and further that the Plan be
interpreted in a manner that satisfies the applicable requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, so that elective
deferrals will be entitled to the

 

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benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange
Act and will not be subjected to avoidable liability thereunder.

12.7 Illegality of Particular Provision. If any particular provision of this
Plan shall be found to be illegal or unenforceable, such provision shall not
affect the other provisions thereof, but the Plan shall be construed in all
respect as if such invalid provision were omitted.

12.8 Interpretation. Section headings are for convenient reference only and
shall not be deemed to be part of the substance of this instrument or in any way
to enlarge or limit the contents of any article or section.

12.9 Tax Effects. The Company makes no representations or warranties as to the
tax consequences to a Participant or to a Participant’s Beneficiary from
Deferrals hereunder or the subsequent receipt of any benefits as a result
thereof. Each Participant must rely solely on his or her own tax advisor with
respect to the tax consequences arising from the Deferrals or the receipt of
benefits hereunder, or from any other related transaction.

12.10 Receipt or Release. Any payment to any Participant or Beneficiary in
accordance with the provisions of this Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee and the Company, and the
Committee may require such Participant or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release to such effect.

12.11 Records. The records of the Company with respect to the Plan shall be
conclusive on all Participants, Beneficiaries, and all other persons whomsoever.

12.12 Arbitration. Any person disputing a decision of the Committee shall submit
such dispute to binding arbitration pursuant to the rules of the American
Arbitration Association, to be held in San Diego County. In any arbitration with
respect to a decision or action of the Committee taken before a Change in
Control, the losing party in such arbitration proceedings shall bear the costs
of arbitration, and each party shall bear its own attorneys’ fees. In any
arbitration with respect to a decision or action of the Committee taken after a
Change in Control, the Company shall bear the costs of arbitration (other than
attorneys’ fees), and the arbitrator may make an award of attorneys’ fees; any
such award shall be made according to the then-prevailing standards for judicial
awards of attorneys’ fees applicable to civil actions brought under the Employee
Retirement Income Security Act of 1974, as amended.

 

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