Document:

Exhibit
10.1

 

[LOGO]

Science
Applications International Corporation

An Employee-Owned
Company

 

VIA FEDERAL EXPRESS

 

 

October 3, 2003

 

Mr. Kenneth C. Dahlberg

36
Alexander Street

Alexandria,
Virginia 22314

 

Dear Ken:

 

I am pleased to offer you
a position as Chief  Executive
Officer for Science Applications International Corporation.
(SAIC)(1), reporting directly to the SAIC Board of Directors.  If you accept this position you will also be
nominated to membership on the Board of Directors of Science Applications
International Corporation (SAIC).  Your
primary office location will be in San Diego. 
Your weekly base salary will be $19,230.77, which is equivalent to a
rate of $1,000,000.00
per year.  We would like you to start
work not later than Monday, November 3, 2003.

 

As the senior member of
the SAIC management team, you will be eligible to participate in our annual
incentive compensation plan, which has both a short-term and long-term
component.  Your target short-term
performance bonus for the SAIC fiscal year 2004 (FY04), which ends on January
31, 2004, will be $1,000,000.00, with the potential for up to
$1,500,000.00
for extraordinary performance. 
Short-term bonuses are payable in cash and fully vested SAIC stock. You
will also be eligible for a long-term performance bonus in the form of stock
granted on option, the details of which will be explained in a separate letter.
Your bonus for FY04 will be based on both corporate performance and achievement
of your FY04 objectives (as determined by the SAIC Board), and will be
pro-rated based on the number of months you are employed during FY04.

 

This offer of employment
also includes a cash sign-on bonus(2) of $660,000.00
to offset the forfeiture of your bonus for 2003 from your current
employer, plus significant sign-on incentives and the opportunity to acquire
stock in SAIC.  Specific information on
the stock features of your employment offer will be covered in a separate
letter.

 

SAIC will cover the cost of relocating you and your family from Virginia
to California, with relocation to occur at your earliest convenience.  You will be reimbursed for the actual costs
of relocating your household,
including the cost of temporary living expenses, moving household goods, home
travel to Virginia prior to relocation, real estate acquisition/disposal
expenses and loss protection benefits. 
SAIC will provide you with a one time “gross up” to your base salary to
cover your federal, state and local income and employment tax liability on the
relocation benefits provided by SAIC.(3)

 

If your employment is involuntarily terminated by
SAIC during the first three years of your employment for reasons other than
cause,(4) SAIC will continue your base salary, target short-term bonus and
benefits for the balance of that period. 
At the end of your salary and benefit continuation period, you will be
provided with at least two years of non-paid consulting status during which
time your unvested SAIC options and/or vesting stock will continue to
vest.  The severance benefits described
in this letter will be SAIC’s sole and exclusive obligation to you in the event
you are terminated for reasons other than cause.  In return for these separation benefits, you will be required to
sign a release and a non-compete/non-solicitation agreement.(5)

 

(1)           Subject to Board approval.

(2)           At your request, your cash sign-on
bonus will be paid to you in early January 2004.

(3)           You agree to repay any relocation payments from SAIC,
should you resign your employment within one year of your start date.

(4)           “Cause” shall be defined as (i) a
willful failure to substantially perform your duties, (ii) gross misconduct or,
(iii) conviction of a felony.

(5)           Should you become employed by SAIC it
is understood that you or the Company may terminate this employment relationship
at any time, with or without notice.

 

10260 Campus Point Drive, San Diego, CA 92121-1578
(858) 826-6000

 

 

As an employee of SAIC,
you will be eligible to receive the fringe benefit package described in the
enclosed documents and offer package CD-ROM. 
In addition, you will be provided with a country club membership, first
class seating for your SAIC business travel, up to $10,000.00 for financial
planning and/or tax preparation within the first two years of your employment
and disability insurance which will replace 70% of your base salary up to age
65.  Please review the CD-ROM, complete
the following forms and return them to SAIC not later than your first day of
work.(6)

 

Education Summary and
Pre-Employment Statement

Mutual Agreement to
Arbitrate Claims

Invention, Copyright and
Confidentially Agreement

Standards of Business
Ethics and Conduct Certification

Employment Eligibility
Certification (I-9) (w/required documents)

 

SAIC has a strong policy
against employee use of illegal drugs and substance abuse.  Your employment is also contingent upon your
successfully passing a medical laboratory screen for illegal drugs.  Details on this screening process will be
provided to you prior to your first day of work.

 

Our commitment to
technical leadership, quality, ethics and employee ownership, combined with our
extraordinary range of technologies, has made SAIC the largest employee-owned
R&D company in the world.  It is our
intention to foster an environment conducive to challenge and opportunity.  In turn, we believe that your capabilities
will significantly enhance our management team and contribute to the future
growth and success of the company.

 

This employment offer is
effective through October 6, 2003. 
Please indicate your acceptance of this offer by signing this letter in
the space provided below and faxing it to me at (858) 826-2407 prior to the
expiration date.  You should also mail
the letter with your signature, to me in the enclosed envelope.

 

We look forward to a
mutually rewarding association.  Should
you have any questions, please call me at

(858) 826-2405.

 

Sincerely,

 

Science Applications
International Corporation

 

 

	
  /s/ B.L. Theule

  	
   

  
	
  B.L. Theule

  
	
  Senior Vice President

  
	
  Human Resources

  

 

 

I accept the terms and
conditions of this employment offer.

 

 

	
  /s/ Kenneth C. Dahlberg

  	
   

  	
  10/11/03

  	
   

  
	
  Kenneth C. Dahlberg

  	
  Date

  

 

(6)           Your employment is contingent upon
these documents being completed, signed and returned to SAIC.

 

2Exhibit
10.2

 

[LOGO]

Science
Applications International Corporation

An Employee-Owned
Company

 

VIA FEDERAL
EXPRESS

 

 

October
3, 2003

 

Mr. Kenneth C. Dahlberg

36
Alexander Street

Alexandria,
Virginia 22314

 

Dear Mr. Dahlberg:

 

Should
you accept the offer of employment with SAIC, a recommendation will be
submitted to the Bonus Compensation Committee of the Board of Directors
requesting that you be awarded 104,919 shares of SAIC’s vesting Class A Common Stock. (1) This award recognizes the forfeiture of
the restricted stock and unvested option shares granted to you by your current
employer.  The award of vesting
stock would be on the terms set forth in the sample Stock Restriction
Agreement.  If the recommendation is
approved, the appropriate number of shares will be credited to your account and
a Stock Restriction Agreement for the shares will be forwarded as soon as
practicable after your date of hire. 
This Agreement will need to be signed and returned within 120 days from
the award date or the award of vesting shares will be forfeited. The value of
your award may vary depending upon the Formula Price of the stock in effect
when the stock is issued.  Currently,
the Formula Price is $30.50 per share and is scheduled to be
re-evaluated on October 10, 2003.  The calculation
of the Formula Price is described in the Prospectus, which will be provided to
you during your new employee orientation. Except for applicable state and
Federal taxes, this stock will be awarded at no cost to you.

 

A
recommendation will also be submitted to the Stock Option Committee of the
Board of Directors requesting that you be granted a vesting option to
purchase up to 225,000 shares of SAIC’s Class A Common Stock. (2)  The
exercise price of such option will be the Formula Price in effect on the
October 2003 quarterly trade date.  If
the recommendation is approved, an option agreement will be forwarded to you.

 

You
will be eligible to participate in the long-term incentive compensation plan
referred to in your employment offer letter. 
Your annual long-term bonus for SAIC fiscal year 2005 (FY05)
ending in January 2005 will be awarded in the form of a vesting option to
purchase shares.  The number of option
shares granted at target for FY05 will be equal to $5,300,000 divided by the
Formula Price in effect when the option is granted.

 

In
addition, a recommendation will be submitted to the Operating Committee of the
Board of Directors requesting that you be given the opportunity to subscribe to purchase up
to 20,000 shares of SAIC’s Class A Common Stock in the Limited
Market and, contingent upon such purchase, to receive a vesting option for up
to 60,000
shares of SAIC’s Class A Common Stock (three options for every share you purchase).  If the recommendation is approved, a formal
offer will be forwarded to you along with information on how to acquire the
shares approximately three weeks prior to the trade date.  This opportunity to subscribe to purchase
the SAIC Class A Common Stock as described above would be limited to the first
four trade dates following your start date. 
The acquisition price of the stock and the exercise price of the option
will be the Formula Price in effect when you purchase the stock.

 

(1)           This award may be deferred in the
SAIC Key Executive Non-Qualified Deferred Compensation Plan.  In order
to defer your stock and/or vesting stock you must complete the enclosed
deferral forms and return them to Bernie Theule before your first day of work.

 

(2)           The
option will be granted pursuant to the 1999 Stock Incentive Plan, which will be
provided to you when you start work.

 

10260 Campus Point Drive, San Diego, CA 92121-1578
(858) 826-6000

 

 

SAIC
Class A Common Stock is subject to certain restrictions described Article
Fourth of SAIC’s Certificate of Incorporation, which will be provided at the
new hire orientation.  Any offer will be
based on the Prospectus. If you have any questions regarding the acquisition of
SAIC’s securities, please contact SAIC’s Stock Programs Department at (800) 785-7764
in San Diego, California.

 

Very
truly yours,

 

SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION

 

 

	
  /s/
  Nancy Walker

  	
   

  
	
  Nancy
  Walker

  
	
  Paralegal

  

 

 

BT

 

2

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