Exhibit 10.3

LEIDOS, INC.
MANAGEMENT STOCK COMPENSATION PLAN

Amended and Restated Effective as of September 27, 2013

        
-1-

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

 

TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS    1
1.1    Account    1
1.2    Award    1
1.3    Awarding Authority    1
1.4    Beneficiary    1
1.5    Board    1
1.6    Capital Restructuring Dividend    1
1.7    Code    1
1.8    Committee    1
1.9    Company    1
1.10    Company Stock    2
1.11    Dividend Account    2
1.12    Employee    2
1.13    Fair Market Value    2
1.14    Ordinary Dividend    2
1.15    Ordinary Dividend Equivalent Amount    2
1.16    Participant    2
1.17    Plan    2
1.18    Separation From Service    2
1.19    Share Unit    3
1.20    Termination of Affiliation    3
1.21    Trust    3
1.22    Trustee    3
ARTICLE II PARTICIPATION AND AWARDS    3
2.1    Designation by Awarding Authority    3
2.2    Awarding Authority to Make Awards    3
2.3    Awards May be Held in Trust    3

        
-i-

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

 

2.4    Vesting and Forfeiture    4
ARTICLE III TRUST FUND    4
3.1    Trust Fund Established    4
3.2
Company, Committee, Board, Award Authority and Trustee

Not Responsible for Adequacy of Trust Fund     4
3.3    Invasion of Trust by Creditors    4
3.4    Trust Expenses    4
ARTICLE IV ACCOUNTS    5
4.1    Committee to Maintain Accounts    5
4.2    Accounting Procedures    5
4.3    Ordinary Dividend Equivalents    5
ARTICLE V RIGHTS IN ACQUIRED STOCK    5
5.1    Power to Vote Stock Rests With Trustee    5
5.2    Tender Offers    5
5.3    Dividends    5
ARTICLE VI DISTRIBUTION OF ACCOUNTS    6
6.1    Time of Distribution    6
6.2    Form of Distribution    7
6.3    Beneficiary Designation    8
6.4    Distribution to Guardian    8
6.5    Withholding of Taxes    8
6.6    Distribution of Dividend Equivalents    9
ARTICLE VII ACCELERATION OF DISTRIBUTION AND/OR VESTING    9
7.1    Change in Control    9
7.2    Hardship    10
ARTICLE VIII PLAN TERMINATION AND AMENDMENT    10
8.1    Termination and Amendments    10
ARTICLE IX PLAN ADMINISTRATION    10
9.1    Committee    10
9.2    Committee Powers    11

        
-ii-

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

 

9.3    Plan Expenses    12
9.4    Reliance Upon Documents and Opinions    12
9.5    Requirement of Proof    12
9.6    Limitation on Liability    12
9.7    Indemnification    12
ARTICLE X MISCELLANEOUS PROVISIONS    13
10.1    Restrictions on Plan Interest    13
10.2    No Enlargement of Employee Rights    14
10.3    Rights of Repurchase and First Refusal for the Company    14
10.4    Mailing of Payments    14
10.5    Inability to Locate Participant or Beneficiary    14
10.6    Governing Law    15
10.7    Illegality of Particular Provision    15
10.8    Interpretation    15
10.9    Tax Effects    15
10.10    Receipt or Release    15
10.11    Records    15
10.12    Arbitration    15
10.13    Recoupment of Awards    15

        
-iii-

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

 

LEIDOS, INC.
MANAGEMENT STOCK COMPENSATION PLAN
PURPOSE
This Plan is an unfunded compensation arrangement established effective as of
April 3, 1996 by Leidos, Inc. (previously known as Science Applications
International Corporation) to make deferred awards of company stock to selected
management and highly compensated Employees. This Plan was amended and restated
effective January 1, 2005 to comply with Code Section 409A and amended and
restated effective September 27, 2013.
ARTICLE I
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.
1.1    Account. The bookkeeping account established for a Participant pursuant
to Article IV to record the number of Share Units awarded to the Participant, to
record the Participant’s Ordinary Dividend Equivalent Amounts, to record the
number of Share Units credited as a result of such Ordinary Dividend Equivalent
Amounts, and to record the vesting of the amounts credited to the Account.
1.2    Award. The award of Share Units to an Employee pursuant to the Plan.
1.3    Awarding Authority. The individual or group of individuals appointed by
the Board to make Awards pursuant to the Plan.
1.4    Beneficiary. The person or persons properly designated by the
Participant, in accordance with Section 6.3, to receive the benefits provided
herein upon death of the Participant.
1.5    Board. The Board of Directors of Leidos, Inc., or its ultimate parent
corporation, if any.
1.6    Capital Restructuring Dividend. The non-recurring cash dividend paid by
the Company in 2006 or 2007 on shares of Company Stock in connection with the
Company’s capital restructuring and the initial public offering of Company Stock
1.7    Code. The Internal Revenue Code of 1986, as amended.

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

2

1.8    Committee. The committee appointed by the Board to administer the Plan.
Members of the Committee shall be eligible to receive Awards under the Plan at
the discretion of the Awarding Authority.
1.9    Company. Leidos, Inc. (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 Awarding Authority for participation in
this Plan by its Employees.
1.10    Company Stock. The Class A Common Stock of Leidos, Inc., 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.
1.11    Dividend Account. The portion of a Participant’s Account maintained by
the Committee to record the Participant’s Ordinary Dividend Equivalent Amounts.
1.12    Employee. A management or highly compensated employee of the Company, as
determined by the Committee.
1.13    Fair Market Value.
(1)    If the Company Stock is being valued in connection with a transaction
(such as the crediting of Share Units 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.
(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.
1.14    Ordinary Dividend. All cash dividends or other cash distributions, other
than the Capital Restructuring Dividend, paid by the Company on shares of
Company Stock.
1.15    Ordinary Dividend Equivalent Amount. The amount of Ordinary Dividends
credited by the Company to a Participant’s Account. Such amount to be equal to
the per

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

3

share Ordinary Dividend paid by the Company on its Company Stock multiplied by
the number of Share Units credited to the Participant’s Account as of the
related dividend payment record date.
1.16    Participant. An Employee designated by the Awarding Authority to receive
an Award under the Plan.
1.17    Plan. The Leidos, Inc. Management Stock Compensation Plan as set forth
herein and as amended from time to time.
1.18    Separation From Service. The death, retirement or termination of the
Employee’s employment with the Company. 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.
1.19    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.
1.20    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.
Furthermore, if an Employee is employed by a direct or indirect subsidiary of
the Company, such an Employee will have a Termination of Affiliation upon the
divestiture of such subsidiary. 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. A Termination of Affiliation may
occur regardless of whether an Employee has had a Separation From Service.
1.21    Trust. The Leidos, Inc. Stock Compensation Plan Trust established by the
Company to hold assets awarded to Participants under the Plan.
1.22    Trustee. Wachovia Bank or such successor trustee as shall be appointed
pursuant to the Trust.
ARTICLE II
PARTICIPATION AND AWARDS
2.1    Designation by Awarding Authority. The Awarding Authority in its sole
discretion shall designate those Employees who are to receive Awards under the
Plan. The

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

4

Awarding Authority's designation of an Employee for a particular Award shall not
require the Awarding Authority to make any further Awards to such Employee.
2.2    Awarding Authority to Make Awards. The Awarding Authority shall make
Awards under the Plan by determining a number of Share Units to be credited to
those Employees whom the Awarding Authority has selected for participation in
the Plan and by establishing an Account in favor of such Employees in accordance
with Article IV to hold such Share Units. A separate Account shall be
established for each Award. Each Account shall be subject to a vesting schedule
specified by the Awarding Authority. The amount, timing and vesting of each
Award shall be decided in the Awarding Authority's sole discretion, and the
Awarding Authority may apply different terms to Awards made to different
Employees as well as to different Awards made to the same Employee.
2.3    Awards May be Held in Trust.
(a)    With respect to Awards granted before January 1, 2005, within a
reasonable period of time following the date of the Award, the Company shall
contribute to the Trust Company Stock or an amount of money sufficient to
purchase shares of Company Stock corresponding to the number of Share Units made
in such Award. 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. To the extent any such Award is made to an Employee of an
affiliate of the Company, the Company may charge the cost of the corresponding
Trust contribution to such affiliate as agreed between the Company and the
affiliate.
(b)    Effective January 1, 2005, contributions to the Trust with respect to
Awards 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 Awards, the Participant shall be credited with a
number of Share Units subject to the Award.
2.4    Vesting and Forfeiture. Each Account shall be subject to a vesting
schedule, not to exceed seven (7) years, established by the Awarding Authority.
Vesting shall cease upon the Participant’s Termination of Affiliation for any
reason other than the death of the Participant. In the event of death of a
Participant, all of the Participant’s Account(s) shall become immediately
vested. The unvested portion of a Participant’s Accounts upon a Termination of
Affiliation shall be immediately forfeited by the Participant, and any shares of
Company Stock represented by such unvested portion shall be returned to the
Company or reallocated in accordance with the Committee’s directions and the
terms of the Trust. Notwithstanding anything to the contrary in the provisions
of this Plan regarding distribution

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

5

of Accounts, the provisions of this Section 2.4 shall govern vesting and
forfeitures of Accounts. Accordingly, a Participant may have a Termination of
Affiliation under this Section 2.4 (resulting in a forfeiture of the unvested
portion of the Participant’s Accounts) prior to the Participant’s Separation
From Service.
ARTICLE III
TRUST FUND
3.1    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.
3.2    Company, Committee, Board, Award Authority and Trustee Not Responsible
for Adequacy of Trust Fund. Neither the Company, Board, Award Authority,
Committee nor Trustee shall be liable or responsible for the adequacy of 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, Award
Authority, Committee nor the Trustee shall have any duty or liability to pay
such benefits or furnish the Trust with any funds, securities or other assets.
3.3    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.
3.4    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 IV
ACCOUNTS
4.1    Committee to Maintain Accounts. The Committee shall open and maintain a
separate Account with respect to each Award made under the Plan for purposes of
keeping a record of the number of Share Units credited as a result of the Award.
4.2    Accounting Procedures. The Committee shall establish and may amend from
time to time accounting procedures for the purpose of making allocations,
distributions, valuations and adjustments to Accounts provided for in this
Article IV. A Participant or

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

6

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
obligation to any Participant or Beneficiary.
4.3    Ordinary Dividend Equivalents. As of any date that the Company pays an
Ordinary Dividend, each Participant’s Dividend Account shall be credited with an
Ordinary Dividend Equivalent Amount. Such Ordinary Dividend Equivalent Amount
shall be credited to each Participant’s Account in the form of a number of Share
Units (including partial Share Units) determined by dividing the Participant’s
Ordinary Dividend Equivalent Amount (expressed in dollars) by the Fair Market
Value of a share of Company Stock as of the crediting date. Amounts credited to
a Participant’s Dividend Account shall vest (or be forfeited) in accordance with
the provisions of Section 2.4.
ARTICLE V
RIGHTS IN ACQUIRED STOCK
5.1    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 5.1, 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.
5.2    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.
5.3    Dividends. All Ordinary Dividends on Company Stock held in Trust shall be
held by the Trustee and reinvested as directed by the Committee. The 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 6.6. 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
5.3.

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

7

ARTICLE VI
DISTRIBUTION OF ACCOUNTS
6.1    Time of Distribution. Subject to the acceleration provisions of Article
VII, a Participant's Account shall be distributed as follows:
(a)    With respect to Awards granted prior to January 1, 2005, if the
Participant filed an election in a manner prescribed by the Committee before the
expiration of the applicable election deadline, the vested portion of the
Participant's Account shall be distributed or commence to be distributed within
a reasonable period of time following the date (i) it becomes vested, or (ii)
the Participant has a Separation From Service with the Company, as elected by
the Participant; provided, however, that such payments shall be made no later
than the last day of the calendar year in which the applicable payment date
occurs or, if later, the fifteenth day of the third calendar month following the
applicable payment date. The applicable election deadline was ninety (90) days
following the date of the Award. If the Participant failed to make the election
described in this subsection (a), the Participant's Account with respect to
Awards made before January 1, 2005 shall be distributed or commence to be
distributed within a reasonable period of time following the seventh anniversary
of the date of the Award contained in such Account (but no later than the last
day of the calendar year in which the seventh anniversary occurs or, if later,
the fifteenth day of the third calendar month following the seventh
anniversary); provided, however, that if the Participant has a Separation From
Service prior to such payment date, then the vested portion of the Participant’s
Account shall be distributed or commence to be distributed within a reasonable
period of time following the Separation From Service (but no later than the last
day of the calendar year in which the Separation From Service occurs or, if
later, the fifteenth day of the third calendar month following such Separation
From Service). The election under this subsection (a) shall be irrevocable. In
addition to executing an election, the Participant may also be required to
execute an agreement with the Company, on a form prescribed by the Committee,
relating to the Company's right of repurchase of Company Stock, if any, and such
other matters as the Committee shall prescribe.
(b)    With respect to Awards granted on or after January 1, 2005, the vested
portion of the Participant's Account shall be distributed or commence to be
distributed within a reasonable period of time following the date the
Participant has a Separation From Service; provided, however, that such payments
shall be made no later than the last day of the calendar year in which the
Separation From Service occurs or, if later, the fifteenth day of the third
calendar month following the date of the Separation From Service. For Awards
made on or after January 1, 2005, a Participant may in a manner prescribed by
the Committee elect between the forms of distribution specified in Section 6.2
for distributions made if the Participant’s Separation From Service occurs on or
after age 59 ½. Such election must be

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

8

made before the expiration of the applicable election deadline with respect to
the Award. The applicable election deadline for an Award that is entirely
unvested for thirteen (13) or more months from the date of the grant of the
Award shall be thirty (30) days following such grant date. The applicable
election deadline for any other Award shall be the last day of the calendar year
preceding the calendar year in which the Award is granted. In addition to
executing an election, the Participant may also be required to execute an
agreement with the Company, on a form prescribed by the Committee, relating to
the Company's right of repurchase of Company Stock, if any, and such other
matters as the Committee shall prescribe.
(c)    Notwithstanding the foregoing, if any stock of the Company is publicly
traded on an established securities market at the time of a Participant’s
Separation From Service, any distribution on account of the Separation From
Service of a Participant who is a “specified employee” under Code Section
409A(a)(1)(B)(i) shall not be made before the earlier of (i) the date which is
six (6) months after such Participant’s Separation From Service or (ii) the date
of the Participant’s death. For any twelve (12) month period commencing April 1
and ending March 31, an 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).
6.2    Form of Distribution.
(a)    Except as set forth in this Section 6.2, each distribution shall be made
in a lump sum.
(b)    For awards made on or after January 1, 2005, a Participant shall elect,
for distributions made if the Participant’s Separation From Service occurs on or
after age 59½, to receive payment in lump sum or in installments over a 5-year
period. If elected, installment payments shall be spread in approximately equal
numbers of shares of Company Stock over the payout period. Except as set forth
in Sections 6.2(c) and 6.2(d), a Participant’s election of form of distribution
shall be irrevocable. If the Participant does not timely make an election, the
payment shall be a lump sum.
(c)    Both of the forms of distribution set forth in Section 6.2(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 with
respect to Awards described in Section 6.2(b), provided that the following
requirements are satisfied.
(i)    The election does not take effect until at least twelve (12) months after
the date the election is made, and the election must be made at least

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

9

twelve (12) months prior to the date the first payment would be made to the
Participant absent the election.
(ii)    The commencement date of the first payment to the Participant shall be
five (5) years following the date the payment would have commenced absent the
change in the Participant’s election; and
(iii)    No Participant may make more than one (1) new form of distribution
election.
Any attempt to change a payout election that does not satisfy these requirements
shall be void.
(d)    Pursuant to authority issued by the Internal Revenue Service under Code
Section 409A, the following transition rule shall apply with respect to Awards
(whenever granted) other than Awards that (absent an election) would be payable
in whole or in part in 2006:
(i)    Each Participant who had not had a Separation From Service as of December
31, 2006 shall be permitted to elect, for distributions made if the
Participant’s Separation From Service occurs on or after age 59 ½, to receive
payment in lump sum or over a 5-year period.
(ii)    The elections under this Section 6.2(d) shall be made pursuant to rules
prescribed by the Committee, but shall in no event be made after December 31,
2006.
(e)    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.
6.3    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.

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

10

(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 statutory provision in effect at the Participant's death in
the state in which the Participant resided.
6.4    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 therefor 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 be a complete
discharge of the liabilities of the Company and the Trust to the Participant or
Beneficiary under this Plan.
6.5    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. With
respect to amounts paid from the Trust, the Trustee shall deliver the withheld
amounts to the Company which shall pay over the withheld taxes as required by
law. 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, and the Committee
may provide in its discretion for other methods of withholding acceptable to the
Company.
6.6    Distribution of Dividend Equivalents.
(a)    Notwithstanding anything to the contrary in this Article VI, effective
January 1, 2006, Dividend Equivalents with respect to the Capital Restructuring
Dividend shall be distributed as set forth in this Section 6.6.
(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 5.3. No one (including, but not limited
to, the Trustee, the

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

11

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 6.6(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 5.3.
ARTICLE VII
ACCELERATION OF DISTRIBUTION AND/OR VESTING
7.1    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 if any “person” (as such term is 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, during any 12-month period ending on the date of the
most recent acquisition by such person, becomes the beneficial owner (as defined
in Rule 13d-3 under the 34 Act), directly or indirectly of the Company’s stock
representing thirty-five percent (35%) or more of the voting power of the
Company’s then-outstanding stock; provided, however, that a transaction shall
not constitute a Change in Control unless it is a “change in the ownership or
effective control” of the Company, or a change “in the ownership of a
substantial portion of the assets” of the Company within the meaning of Code
Section 409A. 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.
7.2    Hardship.

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

12

(a)    Prior to January 1, 2005, notwithstanding the provisions of Section 6.1
hereof, a Participant shall be entitled to request a hardship distribution of
all or any portion of the vested portion of his or her Account(s). A 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(s) 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 7.2 shall be
permitted only if the Participant incurs an “unforeseeable emergency,” as
defined below. Any such distribution shall be limited to the amount of 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 7.2(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 a Participant has an unforeseeable emergency shall be made in accordance
with the authorities published pursuant to Code Section 409A.
ARTICLE VIII
PLAN TERMINATION AND AMENDMENT
8.1    Termination and Amendments. The Plan shall continue until all amounts
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 accounting
rules or 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.

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

13

ARTICLE IX
PLAN ADMINISTRATION
9.1    Committee. The Plan shall be administered by the Committee. Subject to
the provisions of the Plan and the authority granted hereunder to the Awarding
Authority, the Committee shall have exclusive power to determine the manner and
time of Awards 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 in these matters 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 9.2)
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.
9.2    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;
(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 whomsoever, including but not
limited to all questions relating to eligibility to participate in the Plan,
determination of Awards 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;

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

14

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

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

15

serving. All Plan administration expenses shall be borne by the Company or the
Trust as determined by the Committee in its sole discretion.
9.4    Reliance Upon Documents and Opinions. The members of the Committee, the
Awarding 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.
9.5    Requirement of Proof. The Committee, the Awarding Authority, the Board,
or the Company may require satisfactory proof of any matter under this Plan from
or with respect to any Employee, 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.
9.6    Limitation on Liability. No Employee or director of the Company and no
other person 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.
9.7    Indemnification.
(a)    To the extent permitted by law, the Company shall indemnify each member
of the Awarding Authority, of 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

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

16

a presumption that the person acted fraudulently or in bad faith in the
performance of his or her duties.
(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 9.7.
(e)    The right of indemnification set forth in this Section 9.7 shall be in
addition to any other right to which any Awarding Authority member, Committee
member or other person may be entitled as a matter of law, by corporate bylaws
or otherwise.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1    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, Awarding 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 the assets of
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).

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

17

(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.
10.2    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 to be consideration for, or an inducement to, or a condition of,
the employment of any Employee.
(b)    An Employee's employment with the Company is not for any specified term
and may be terminated by such Employee or by the Company at any time for any
reason, with or without cause. Nothing in this Plan or in any agreement pursuant
to this Plan shall confer upon any Employee or Participant any right to continue
in the employ of or affiliation with the Company nor 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 affiliation.
(c)    No person shall have any right to any benefits under this Plan, except to
the extent expressly provided herein.
(d)    The Plan is not intended to nor shall it be deemed to be a Plan providing
retirement income or resulting in the deferral of income by Employees for
periods extending to the termination of covered employment or beyond.
10.3    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 any applicable agreement. 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 Leidos, Inc., as amended.
10.4    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.
10.5    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

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

18

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.
10.6    Governing Law. All legal questions pertaining to the Plan shall be
determined in accordance with the laws of the State of Delaware, excluding its
rules governing conflict of laws. Without limiting Section 10.9, 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 satisfied the applicable requirements of Rule 16b-3
promulgated under the Exchange Act, so that Awards will be entitled to the
benefits of Rule 16b-3 or other exemptive rules under Exchange Act and will not
be subject to avoidable liability thereunder.
10.7    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.
10.8    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.
10.9    Tax Effects. The Company makes no representations or warranties as to
the tax consequences to a Participant or to a Participant’s Beneficiary from the
grant of Awards 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 grant of Awards or the receipt
of benefits hereunder, or from any other related transaction.
10.10    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 Awarding Authority, 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.
10.11    Records. The records of the Company with respect to the Plan shall be
conclusive on all Participants, Beneficiaries, and all other persons whomsoever.
10.12    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 Fairfax County, Commonwealth of Virginia.
In any arbitration

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

19

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.
10.13    Recoupment of Awards. Notwithstanding any other provision herein
including, but not limited to, Sections 2.2, 7.1, 8.1 and 10.1(b), and
notwithstanding any other provisions in any Award agreement with respect to this
Plan, Awards granted or paid under this Plan shall be subject to recoupment by
the Company pursuant to the Company's recoupment policy originally adopted on
June 18, 2009 by the Human Resources and Compensation Committee of the Board, as
such policy may subsequently be amended (the “Recoupment Policy”). Although
consent to the Recoupment Policy by a Participant is not a prerequisite to the
effectiveness of the Recoupment Policy with respect to the Participant,
acceptance of an Award under this Plan shall be deemed to constitute consent by
the Participant to the terms and conditions of the Recoupment Policy with
respect to such Award and any and all prior Awards granted to the Participant
under this Plan. For purposes of clarity, to the extent provided by the
Recoupment Policy, a Participant may be required to return certain payments made
to the Participant with respect to an Award, and payments that otherwise would
have been made to the Participant with respect to an Award may be reduced or
entirely eliminated. Such actions may be taken pursuant to the Recoupment Policy
without regard to whether such payments and the Participant's Awards were
otherwise vested.