Document:

Jeffrey Baker Employment Agreement

EXHIBIT 10-q

EMPLOYMENT AGREEMENT

This is an Employment Agreement (Agreement) between ANALYSTS INTERNATIONAL CORPORATION, a Minnesota corporation, (hereinafter "Analysts") with headquarters offices located at 3601 W. 76th Street, Minneapolis, Minnesota 55435 and JEFFREY P. BAKER, (hereinafter "Executive") of 1 Spyglass Court, Frisco, Texas 75034.

SECTION 1

DEFINITIONS

1.    Definitions.

The following capitalized terms used in this Agreement shall be defined as follows:

Agreement shall mean this Agreement between Analysts and Executive.

Base Salary shall mean the annual base salary payable to Executive pursuant to Section 3.1 hereof, and "bi-weekly Base Salary" shall mean the Base Salary divided by twenty-six (26).

Board shall mean the Board of Directors of Analysts.

Cause shall mean termination of the Executive’s employment with Analysts by the Board because of (1) failure to perform his duties in good faith and as required in Section 2.2 hereof after receiving three notices of specific and material failures in this regard; (2) gross misconduct, dishonesty or disloyalty which results in material harm to Analysts; (3) willful and material breach of this Agreement by Executive (other than Executive’s failure to perform his duties hereunder resulting from incapacity due to physical or mental illness); or (4) conviction or entry of a plea of guilty or nolo contendere to any felony or to any misdemeanor involving fraud, misrepresentation, theft or moral turpitude. No act, or failure to act, by Executive shall be considered "willful" unless committed without good faith and without a reasonable belief that the act or omission was in Analysts’s best interest.

Change in Control shall have the definition of a "Change in Control" as defined in Analysts’ Change in Control Agreement (attached hereto as Exhibit A and hereinafter referred to as "Change in Control Agreement") with its senior executives. 

Change in Control Payments shall mean any payment (including any benefit or transfer of property) in the nature of compensation to or for the benefit of Executive under any arrangement which is partially or entirely contingent on a Change of Control, or is deemed to be contingent on a Change in Control for purposes of Section 280G of the Code. As used in this definition, the term "arrangement" includes any agreement between Executive and Analysts and 

	  
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any and all of Analysts’ salary, bonus, incentive, compensation or benefit plans, programs or arrangements, and shall include this Agreement.

Code shall mean the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes a reference to such provision as it may be amended from time to time and to any successor provision..

Company shall mean Analysts International Corporation, a Minnesota corporation, any subsidiaries thereof, and any successors or assigns, including any Successor as defined herein.

Company Product means any product, product line or service (including any component thereof or research to develop information useful in connection with a product or service) that is being designed, developed, manufactured, marketed or sold by Analysts at the time of the termination of Executive’s employment with Analysts or with respect to which Analysts has acquired, conceived of or developed, prior to termination of Executive’s employment, Confidential Information which it intends to use in the design, development, manufacture, marketing or sale of a product or service.

Competitive Product means any product, product line or service (including any component thereof or research to develop information useful in connection with a product or service) that is being designed, developed, manufactured, marketed or sold by anyone other than Analysts and is of the same general type, performs similar functions, or is used for the same purposes as a Company Product.

Confidential Information means any information or compilation of information that Executive learns or develops during the course of his employment with Analysts that derives independent economic value from not being generally known, or readily ascertainable by proper means, by other persons who can obtain economic value from its disclosure or use. "Confidential Information" includes, but is not limited to, trade secrets, inventions, discoveries, and may relate to such matters as financial information; information concerning capitalization of the Company; pricing procedures, techniques and other pricing information; technical and business plans; identity of potential clients and their IT consulting requirements; the IT consulting needs of current clients; research and development, manufacturing, bidding or other business processes; management systems and techniques; vendor relationships and processes; and sales and marketing plans and information.

Good Reason except for purposes of a Change in Control, in which case Good Reason shall have the meaning set forth in the Change in Control Agreement, shall mean, (1) a substantial reduction in the nature or status of Executive’s responsibilities hereunder, including if Executive should no longer serves as the President of Analysts (unless Executive is appointed CEO of Analysts); (2) a reduction by the Company in the Executive’s Base Salary, except in the case where the Company reduces the base salaries of its senior executives generally provided that such reduction shall not exceed the average percentage reduction of all senior executives of this Agreement; (3) the failure to comply with Section 3.3 of this Agreement; and (4) intentional failure by Analysts to allow Executive to participate to the full extent in all plans, programs or benefits in accordance with this Agreement. Notwithstanding the foregoing, "Good Reason" 

	  
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shall be deemed to occur only if such event enumerated in (1), (2), (3) or (4) above has not been corrected by Analysts within two weeks of receipt of notice from Executive of the occurrence of such event, which notice shall specifically describe such event.

Inventions means any inventions, discoveries, improvements, ideas or works of authorship (whether patentable or not and including those which may be subject to copyright protection) generated, conceived, authored or reduced to practice by Executive alone or in conjunction with others, during or after working hours, while an employee of Analysts, and that:

	 	(i)	are derived in whole or in part from, or use, incorporate or represent any improvement to any Invention or trade secret of Analysts; or

	 	(ii)	result from any work Executive performs for Analysts; or

	 	(iii)	use any of Analysts’ equipment, supplies, facilities or trade secret information; or

	 	(iv)	otherwise relate to Analysts’ products or Analysts’ present or reasonably foreseeable future research or development.

For purposes of this Agreement, the term "Inventions" shall not preclude Executive’s involvement in Financial Market Solutions, LLC, e-Learning and Education Solutions, LLC, bpmx., LLC or Mullets, LLC (hereinafter "the LLCs"), and Executive may make de minimus use of Analysts equipment, supplies or facilities for his involvement with the LLCs. In all other respects, Executive shall refrain from the activities set forth in subsections (i)-(iv) of the definition of "Inventions." With respect to his involvement with the LLCs, Executive shall remain bound by the terms of Section 2.2.

Term shall mean the term of Executive’s employment under Section 2.3 below.

Person shall mean an individual, partnership, corporation, estate or trust or other entity.

Successor shall be any entity acquiring substantially all of the assets of Analysts or a corporation into which Analysts is merged or with which it is consolidated.

SECTION 2

EMPLOYMENT AND TERMS OF AGREEMENT

2.1    Employment. Analysts hereby agrees to continue to employ Executive, and Executive hereby agrees to continue his employment as President of Analysts, subject to the terms and conditions of this Agreement. Executive shall report directly to the Company’s Chief Executive Officer ("CEO"). 

	  
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2.2    Duties.

a.    During the term of his employment pursuant to this Agreement, Executive shall serve Analysts faithfully and to the best of his ability and shall devote substantially all his business and professional time, energy, and diligence to the performance of the duties of such office and he shall perform such service and duties in connection with the business and affairs of Analysts: (i) as are customarily incident to such office; and (ii) as may reasonably be assigned or delegated to him by the CEO. 

b.    Executive may engage in appropriate civic, charitable or religious activities and devote a reasonable amount of time to private investments or with the consent of Analysts’ Board of Directors, which shall not be withheld unreasonably, serve on up to two (2) boards of directors of other entities, in each case, as long as such activities and service do not interfere or conflict with Executive’s duties and responsibilities to Analysts and its affiliates.

c.    Executive agrees to be subject to Analysts’ control, rules, regulations, policies, codes of conduct and programs and to comply with the federal and state laws and regulations applicable to Analysts, including but not limited to federal securities laws and regulations, and NASDAQ market rules. 

2.3    Term of Employment.

a.    The term of this Agreement shall be effective as of June 18, 2004 and shall extend until terminated as expressly provided herein.

b.    Unless extended by mutual consent or as provided in Section 2.3(c) below, this Agreement shall terminate on June 17, 2007 (the "Initial Term").

c.    On and after the Initial Term, this Agreement shall be deemed extended from year to year ("Extension Year") unless, no later than ninety (90) days prior to the end of the Initial Term or applicable Extension Year (as the case may be), Analysts or the Executive shall have notified the other party in writing that it or he does not elect to extend the Initial Term or applicable Extension Year (as the case may be) past its then expiration date.

 

SECTION 3

COMPENSATION, BENEFITS AND OTHER ENTITLEMENTS

3.1    Base Salary. As compensation for his services to Analysts and as compensation for his confidentiality and non-competition agreements provided in Sections 6 and 8 of this Agreement, Executive shall be paid a bi-weekly salary of $14,615.38. The Base Salary may be increased or reduced; provided, however, that any reduction shall be permitted only if the Company reduces the base salary of its senior executives generally and such reduction shall not exceed the average percentage reduction for all senior executives. The Base Salary shall be inclusive of all applicable income, Social Security, and other taxes and charges that are required by law to be withheld by Analysts or that Executive requests Analysts to withhold. 

	  
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3.2    Bonus. In addition to the Base Salary payable to Executive pursuant to Section 3.1 above, Executive will be eligible to participate in Analysts annual executive incentive plan. The criteria for payout of Executive’s bonus for a particular year shall, subject to the preceding sentence, be determined solely within the discretion of the Board or the Compensation Committee of Analysts and shall be communicated to Executive each year in the form of a separate incentive plan covering all executives. The bonus earned by Executive, if any, will be paid to Executive in accordance with the terms and conditions of the incentive plan.

3.3    Long-Term Incentives. In addition to the Base Salary and incentive bonus, if any, payable to Executive pursuant to Sections 3.1 and 3.2, Executive will be eligible to receive equity-based awards. Except for those restricted stock awards and stock option grants made in accordance with Sections 3.3.a, 3.3.b and 3.3.c, the Compensation Committee in its sole discretion will determine whether to grant to Executive any equity based awards in a particular year and the size of such awards.

a.    Restricted stock award. With the effective date of this Agreement, Executive shall be granted 200,000 shares of restricted common stock of Analysts on the effective date of this Agreement. The shares will vest in four annual increments of twenty-five percent (25%) beginning one year from the date hereof so long as Executive continues to be employed by Analysts on the vesting dates. 

b.    Non-incentive stock options. 

(i)    Option grant and vesting. Analysts will, effective the date of this Agreement, grant to Executive non-incentive stock options covering 300,000 shares of common stock of Analysts with a ten-year term. Such award will vest seven years from the date of grant, if at the vesting date Executive remains employed by Analysts, and shall have an exercise price of $3.00 per share. If, prior to the effective date of this Agreement, the price of Analysts’ stock closes above $3.00 at the end of the regular NASDAQ trading, the price of such options shall be the average price in the preceding thirty (30) days at the close of regular NASDAQ trading sessions, as reported by The Wall Street Journal or a comparable reporting service.

(ii)    Acceleration of vesting. The vesting of the non-incentive options granted in conjunction with this Agreement will be accelerated if the average closing price of Analysts’ stock, as reflected by NASDAQ, equals or exceeds the prices set forth in the table below (hereinafter "Acceleration Price") and any additional terms set forth below in Sections 3.3.b.(ii)(a) and 3.3.b.(ii)(b) are met.

	
Share Price (Acceleration Price)
	
Number of Options to Vest

	
$5.00
	
60,000

	
$8.00
	
60,000

	
$10.00
	
60,000

	
$12.00
	
60,000

	
$15.00
	
60,000

	  
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(a) Acceleration Price. The accelerated vesting provisions of this Section 3.3.b shall not apply until the Acceleration Price has been met and is maintained as an average price for ninety (90) days. Notwithstanding the foregoing, no acceleration of vesting shall occur due to any increase in stock price within: i) thirty (30) days prior to internal or public knowledge of a possible merger or acquisition involving Analysts; or ii) ninety (90) days after public disclosure of completion or termination of such merger or acquisition unless the ratio of the price of Analysts stock to Net Earnings (hereinafter "P/E ratio") is less than 30. For purposes of this Agreement, "Net Earnings" shall mean net earnings for the trailing twelve months as measured by generally accepted accounting principles, (hereinafter "GAAP") and as publicly reported in Analysts’ filings with the SEC for the most recently completed quarter, except in the case where Analysts has any highly unusual one-time charges and the parties agree in writing that Net Earnings shall exclude specific one-time charges.

(b) Accelerated vesting at or above $10.00 per share. In no event shall acceleration of vesting occur at or above $10.00 per share unless the P/E ratio of Analysts stock is fifty (50) or less. 

(iii)    Other terms and conditions of non-incentive stock options. Executive shall sign an option agreement containing the terms for options outlined herein and such other terms and conditions required by Analysts as determined in the sole discretion of the Board or Compensation Committee of the Board of Analysts.

c.    Incentive stock options.

(i)    Option grant and vesting. Analysts intends to grant Executive incentive stock options for 100,000 shares after each of the first two years of the Initial Term of this Agreement. Options granted shall be issued from the Company’s incentive stock option plan or plans, which currently call for options with a ten-year term. Each option grant shall vest seven years from the date of grant, if at the vesting date Executive remains employed by Analysts and shall have an exercise price equal to the price of such stock at the close of the regular NASDAQ trading session on the date of the grant, as reported by The Wall Street Journal or a comparable reporting service, or, if no sale of such stock shall have occurred on such date, on the next preceding day on which a sale of stock occurred. 

(ii)    Acceleration of vesting. Vesting of any incentive options granted pursuant to Section 3.3.c(i) of this Agreement will be accelerated in increments of 20,000 if the average closing price of Analysts’ stock, as reflected by NASDAQ, equals or exceeds associated acceleration trigger prices to be determined at the time of each grant (hereinafter ("Incentive Option Acceleration Price") and any additional terms set forth below in Sections 3.3.c(ii)(a) and 3.3.c(ii)(b) are met. 

(a) Incentive Option Acceleration Price. The accelerated vesting provisions of this Section 3.3c shall not apply until an Incentive Option Acceleration Price has been met and is maintained as an average price for ninety (90) days.

	  
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(b) Limits on Acceleration of Vesting. Notwithstanding the foregoing, no acceleration of vesting shall occur due to any increase in stock price within: i) thirty (30) days prior to internal or public knowledge of a possible merger or acquisition involving Analysts; or ii) ninety (90) days after public disclosure of completion or termination of such merger or acquisition unless the P/E ratio of Analysts stock (as defined in Section 3.3.b(ii)(a)) is less than 30. 

(iii)    Other terms and conditions of incentive stock options. Executive shall sign an option agreement containing the terms for options outlined herein and such other terms and conditions required by Analysts’ incentive stock option plans, as interpreted and determined in the sole discretion of the Board or Compensation Committee of the Board of Analysts.

3.4    Benefits. Executive shall be eligible to participate in or receive benefits under all senior executive and employee benefit plans, health plans, or arrangements, if any, made available from time to time by Analysts to its senior executive employees as set forth in an employee manual or otherwise, including but not limited to deferred compensation, 401(k) plan, disability, life and other insurance plans and programs, all hospitalization and health and welfare plans and programs, and stock option, restricted share, incentive or other bonus plans. Analysts retains the right to amend, modify or terminate any of its benefits or benefit plans during the term of Executive’s employment. 

3.5    Miscellaneous Benefits. Analysts shall provide Executive the following additional benefits:

a.    Reimbursement of all ordinary and necessary expenses incurred by Executive for Analysts’ business. 

b.    Paid vacation at the discretion of Executive and with the concurrence of the CEO.

 

c.    Moving expenses, including realtor commissions paid by him, up to $100,000. Moving expenses will not include any loss on the sale of Executive’s Texas home or temporary living expenses in Minnesota. Analysts shall pay airfare related to periodic trips by Executive to Texas until completion of his relocation to Minnesota.

d.    Participation in Analysts’ Special Executive Retirement Plan (hereinafter "SERP"), a copy of which is attached hereto and incorporated herein by reference. In order to participate in the SERP, Executive shall sign a Deferred Compensation Agreement. 

e.    Monthly automobile allowance substantially similar to the current CEO.

SECTION 4

TERMINATION OF EMPLOYMENT

4.1    Termination. Notwithstanding any other provision of this Agreement to the contrary or appearing to be to the contrary, Executive’s employment shall terminate as follows:

	  
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a.    By mutual written agreement of the parties.

b.    Upon Executive’s death.

 

c.    Analysts shall have the right to terminate Executive’s employment upon Executive’s inability to perform the essential functions of his position due to physical or mental disability as determined in the good faith judgment of the Board of Directors, provided such inability continues for a period of ninety (90) consecutive days, one hundred twenty (120) non-consecutive days in any twelve (12) month period, or longer period if required by applicable law.

d.    Subject to Sections 4.1.c and 4.1.f, upon ninety (90) days written notice to Executive by Analysts.

e.    Analysts shall have the right to terminate Executive’s employment immediately for "Cause" as defined in Section 1 above.

f.    Executive shall have the right to terminate his employment immediately for "Good Reason" as defined in Section 1 above.

g.    Executive shall have the right to terminate his employment immediately if not appointed CEO of Analysts after the current CEO retires or resigns.

h.    Executive’s right to resign after a Change in Control, if any, shall be governed by the Change in Control Agreement.    

4.2    Effect of Termination of or Resignation from Employment. With the exception of the provisions of Section 4.3, the following terms and conditions will apply in the event that Analysts terminates the employment of Executive or Executive resigns from his employment with Analysts.

a.    Termination for Cause not Due to Performance or Due to Resignation by Executive Without Good Reason. If Analysts terminates Executive’s employment for Cause other than Cause related to Executive’s performance, or if Executive resigns from his employment without Good Reason, then Executive shall be entitled only to receive "Accrued Benefits." For purposes of this Agreement, "Accrued Benefits" shall mean any accrued and unpaid Base Salary through the termination date and any other benefits under any plan or program in accordance with the terms of such plan or program (including any vesting requirements). 

b.    Termination for Cause Due to Performance or Without Cause or Resignation by Executive With Good Reason. In the event that Analysts terminates Executive’s employment for Cause related to Executive’s performance or without Cause or Executive resigns from his employment with Good Reason, except in the case where Executive resigns under the circumstances set forth in Section 4.3: i) Executive shall be entitled to Accrued Benefits as defined in 4.2a above; ii) the right to exercise stock options vested as of the date of termination for a period of ninety (90) days; and iii) with respect to outstanding restricted stock awards

	  
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granted in conjunction with this Agreement, all restrictions shall lapse immediately and such awards shall be fully vested.

c.    Termination Within 90 Days of Change in Control Transaction. If Analysts terminates Executive’s employment without Cause within the ninety (90) day period prior to a closing on a transaction resulting in a Change in Control, Executive shall, on the closing of such transaction, be entitled to receive a lump sum distribution in an amount equal to one-third (1/3) the amount he would have received under the Change in Control Agreement. The terms of this Section 4.2.c shall apply only if since commencement of Executive’s employment a trend of continuous improvement in a combination of two of three factors: i) revenue; ii) net profit; or iii) stock price has occurred.

 

d.    Effective Date of Termination. The date of termination of Executive’s employment by Analysts under the circumstances described in this Section 4.2 shall be effective immediately upon receipt by Executive of written notice of termination, unless otherwise indicated in such notice. The date of resignation by Executive under the circumstances described in this Section 4.2 shall be ninety (90) days after receipt by Analysts of written notice of resignation. 

4.3    Effect of Resignation of Executive If Executive is not Appointed CEO Upon Resignation or Retirement of Current CEO.

a.    Restricted Stock Awards. Notwithstanding other termination provisions of this Section 4, in the event that Executive resigns if he is not appointed CEO upon the resignation or retirement of the current CEO, with respect to outstanding restricted stock awards, all restrictions shall lapse immediately and such awards shall fully vest one year after the effective date of Executive’s employment termination if Executive has, in the sole determination of Analysts, complied with the non-competition provisions set forth in Section 8 of this Agreement and his Deferred Compensation Agreement.

b.    Vested Stock Options. All fully vested stock options shall be exercisable for ninety (90) days after the effective date of Executive’s resignation.

Section 5

INVENTIONS

5.    Assignment of Inventions. Executive agrees to promptly disclose to Analysts in writing all Inventions; and all such Inventions shall be the exclusive property of Analysts and are hereby assigned by Executive to Analysts. Further, Employee will, at Analysts’ expense, give Analysts all assistance it reasonably requires to perfect, protect, and use its rights to Inventions. In particular, but without limitation, Executive will sign all documents, do all things, and supply all information that Analysts may deem necessary or desirable to:

	  
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(i)    transfer or record the transfer of his entire right, title and interest in Inventions; and

	 	(ii)	enable Analysts to obtain patent, copyright or trademark protection for Inventions anywhere in the world.

The obligations of this Section 5 shall continue beyond the termination of employment with respect to Inventions conceived or made by Executive during the period of his employment and shall be binding upon assigns, executors, administrators and other legal representatives. For purposes of this Agreement, any Invention relating to the business of Analysts on which Executive files a patent application within six (6) months after termination of employment with Analysts shall be presumed to cover Inventions conceived by Executive during the term of his employment, subject to proof to the contrary by good faith, written and duly corroborated records establishing that such Invention was conceived and made following termination of employment.

NOTICE: Pursuant to Minnesota Statutes § 181.78, Executive is hereby notified that this Section 6 does not apply to any invention for which no equipment, supplies, facility, or trade secret information of Analysts was used and which was developed entirely on Executive’s own time, and (1) which does not relate (a) directly to the business of Analysts or (b) to Analysts’ actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for Analysts.

SECTION 6

CONFIDENTIAL INFORMATION

6.    Confidential Information. Executive agrees not to directly or indirectly use or disclose Confidential Information for the benefit of anyone other than Analysts, either during or after employment, for as long as the information retains the characteristics of Confidential Information described in Section 1 above.

SECTION 7

DOCUMENTS AND PROPERTY

7.    Return of Documents and Property. All documents and tangible items provided to Executive by Analysts, or possessed by or created by Executive for use in connection with his employment, are the property of Analysts and shall be promptly returned to Analysts on termination of employment together with all copies, recordings, abstracts, notes or reproductions of any kind made from or about the documents and tangible items or the information they contain.

	  
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SECTION 8

NON-COMPETITION

8.    Non-competition. In consideration of Executive’s rights under this Agreement, Executive agrees that, from and after the Effective Date and continuing until the two-year anniversary of termination or cessation of Executive’s employment with Analysts, Executive will not, alone or in any capacity with another legal entity:

	 	(i)	directly or indirectly, own any interest in, control, be employed by or associated in a material manner with, or render services to (including but not limited to services in research), any person or entity (or subsidiary, subdivision, division, or joint venture of such entity) in connection with the design, development, manufacture, marketing, or sale of a Competitive Product that is sold or intended for distribution or sale in any geographic area in which Analysts actively markets, or in which, to the Executive’s knowledge acquired through his employment with Analysts, Analysts intends to actively market, a Company Product of the same general type or function;

	 	(ii)	directly or indirectly, solicit any of Analysts’ then current employees for the purpose of hiring them or inducing them to leave their employment with Analysts;

	 	(iii)	directly or indirectly, solicit, attempt to solicit, interfere, or attempt to interfere with Analysts’ relationship with its then current customers or potential customers (of which Executive has knowledge acquired through his employment with Analysts), on behalf of himself or any other person or entity engaged in the design, development, manufacture, marketing, or sale of a Competitive Product; or

	 	(iv)	directly or indirectly design, develop, manufacture, market, or sell any Competitive Product that is sold or intended for distribution or sale in any geographic area in which Analysts actively markets, or in which, to the Executive’s knowledge acquired through his employment with Analysts, Analysts intends to actively market, a Company Product of the same general type or function.

Notwithstanding the foregoing in no event shall ownership of less than four percent (4%) of the outstanding publicly-traded equity or debt securities of any issuer or less than four percent (4%) of the outstanding interests in a private equity fund, mutual fund or other pooled investment account, in each case, in which the Executive does not actively participate in the management thereof, be prohibited by this Section 8.

Notwithstanding the foregoing, Executive’s involvement with the LLCs, either during his employment or thereafter, shall not be a violation of this Section 8. Executive agrees,

	  
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however, that, during his employment and the two-year period thereafter, he shall comply with Sections 8.(ii) and 8.(iii) at all times, including his involvement with the LLCs.

Executive acknowledges and agrees that the re-strictions set forth in this Section 8 are reasonable and appropriate in duration, scope and geographical area and accepts them as a condition of employment with Analysts. 

SECTION 9

BREACH OF NON-COMPETITION PROVISIONS

9.    Breach of Non-competition Provisions of this Agreement. In addition to any other relief or remedies afforded by law or in equity, if Executive breaches Section 8 of this Agreement, Executive agrees that Analysts shall be entitled, as a matter of right, to injunctive relief in any court of competent jurisdiction. Executive recognizes and hereby admits that irreparable damage will result to Analysts if he violates or threatens to violate the terms of Section 8 of this Agreement. This Section 9 shall not preclude the granting of any other appropriate relief including, without limitation, money damages against Executive for breach of Section 8 of this Agreement.

SECTION 10

OTHER OBLIGATIONS

10.    Effect of Other Obligations. It is intended that the obligation of the parties to perform the terms of this Agreement is unconditional and does not depend on the performance or non-performance of any terms, duties or obligations not specifically recited in this Agreement.

SECTION 11

BINDING AGREEMENT AND SURVIVAL

11.    Binding Agreement; Survival. 

a.    Binding Agreement. This Agreement shall be binding upon, and inure to the benefit of Analysts, its successors and assigns, but without the prior written consent of Executive, this Agreement may not be assigned other than in connection with a merger or sale of substantially all the assets of Analysts or similar transaction. The rights of the Executive hereunder to payments and benefits shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

b.    Survival. The rights and obligations set forth in Sections 4, 5, 6, 7, 8 and 12 shall survive the termination or expiration of this Agreement.

	  
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SECTION 12

SEVERABILITY

12.    Severability. If the final determination of a court of competent jurisdiction declares, after the expiration of the time within which judicial review (if permitted) of such determination may be perfected, that any term of provision hereof is invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the invalid or unenforceable term or provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

SECTION 13

AMENDMENT AND WAIVER

13.    Amendment; Waiver. This Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

SECTION 14

GOVERNING LAW

14.    Governing Law. All matters affecting this Agreement, including the validity thereof, are to be governed by, interpreted and construed in accordance with the laws of the State of Minnesota without regard to the conflict of laws principles thereof.

SECTION 15

NOTICES

15.    Notices. Any notice hereunder by either party to the other shall be given in writing by personal delivery or certified mail, return receipt requested. If addressed to Executive, the notice shall be delivered or mailed to Executive at the address most recently communicated in writing by Executive to Analysts, or if addressed to Analysts, the notice shall be delivered or mailed to Analysts at its executive offices to the attention of the Board of Directors of Analysts. A notice shall be deemed given, if by personal delivery, on the date of such delivery or, if by certified mail, on the date shown on the applicable return receipt.

	  
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SECTION 16

PREVIOUS AGREEMENTS

16.    Supersedes Previous Agreements. This Agreement supersedes all prior or contemporaneous negotiations, commitments, agreements and writings with respect to the subject matter hereof, all such other negotiations, commitments, agreements and writings will have no further force or effect, and the parties to any such other negotiation, commitment, agreement or writing will have no further rights or obligations thereunder.

SECTION 17

HEADINGS AND CONSTRUCTION

17.    Headings; Construction. The headings of Sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. This Agreement shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Agreement to be drafted.

SECTION 18

BENEFIT

18.    Benefit. Subject to Section 11, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

IN WITNESS WHEREOF, Analysts has caused this Agreement to be signed by its Chief Executive Officer pursuant to the authority of its Board, and Executive has executed this Agreement.

 

ANALYSTS INTERNATIONAL CORPORATION

	
By:
	 
	 	
Michael J. LaVelle

	 	
Chief Executive Officer

	 	 
	 	 
	
By:
	 
	 	
Jeffrey P. Baker

	 	
Executive

	 
	 	14exhibit10_15

COMPUTER SCIENCES CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AND SUMMARY PLAN DESCRIPTION

ARTICLE I

Purpose

          The purpose of this Supplemental Executive Retirement Plan ("Supplemental Plan") is to provide retirement benefits to designated officers and key executives of Computer Sciences Corporation (the "Company") in addition to retirement benefits that may be payable under the Computer Sciences Corporation Employee Pension Plan, and in addition to any other retirement plan (other than the social security system to the extent provided herein) under which benefits may be payable with respect to such person. This document is also intended to constitute the Summary Plan Description for the Supplemental Plan.

          It is intended that this Supplemental Plan be a plan "for a select group of management or highly compensated employees" as set forth in Section 201(2) of the Employee Retirement Income Security Act of 1974.

          Subject to Article X hereof, benefits under this Supplemental Plan shall be payable solely from the general assets of the Company and no Participant or other person shall be entitled to look to any source for payment of such benefits other than the general assets of the Company.

ARTICLE ll

Effective Date/Restatement Date

          The Supplemental Plan was effective as of September 1, 1985. It is hereby amended and restated effective August 9, 2004.

ARTICLE lll

Participants

          No person shall be a Participant in this Supplemental Plan unless (a) such individual is specifically designated as such in a written instrument executed by the Chief Executive Officer of the Company (the "Chief Executive Officer"), and (b) such individual has consented to be governed by the terms of this Supplemental Plan by execution of a written instrument in form satisfactory to the Company.

          A person shall cease to be a Participant in this Supplemental Plan in the event of (a) a Plan amendment having such effect, or (b) the occurrence of an event described in this Supplemental Plan which terminates such participation, or (c) prior to a Change in Control (as hereinafter defined), the Chief Executive Officer notifies such person, in writing, of the discontinuance of such person's participation pursuant to Article XVIII of this Supplemental Plan. In determining whether any person shall commence or cease to be a Participant herein, the Chief Executive Officer, acting in such capacity, shall have complete and unfettered discretion.

ARTICLE IV

Retirement Benefits

          The amount of retirement benefit payable to each Participant upon Separation from Service (as defined in paragraph (d) below) shall be as determined in this Article IV, except as otherwise provided in Articles XIX, XX and XXI.

          (a)  A Participant who is entitled to receive a benefit under the Computer Sciences Corporation Employee Pension Plan ("Pension Plan"), shall be entitled to receive an Excess Benefit under this Supplemental Plan. The Excess Benefit hereunder vests at the time that the Participant becomes vested under the Pension Plan. The Excess Benefit is an additional monthly amount calculated as follows: the additional monthly amount which the Participant would otherwise be entitled to receive as a single life annuity under the Pension Plan at the date of commencing payment of the Excess Benefit, if the limitations imposed by Sections 401(a)(17) and 415 of the Internal Revenue Code, as amended, were not applied, less any benefits that the Participant is entitled to receive as a single life annuity at that date under Appendix M of the Pension Plan, and provided further, that in making such calculation:
(i)all deferrals of salary under the Company's Deferred Compensation Plan shall be disregarded, as if no deferrals had been made;

(ii)compensation for periods of time prior to date of first participation in this Supplemental Plan shall be disregarded and not taken into account; and

(iii)compensation from all affiliates of the Company shall be taken into account, as if such affiliates were participating employers in the Pension Plan. 

          In addition to the benefit described in this paragraph (a), a benefit as described in paragraph (b) following may be payable to the Participant. The Participant shall automatically commence receiving Participant's Excess Benefit on the date on which the Participant commences to receive benefits under the Pension Plan.

          (b)  A Participant who has a Separation from Service (as hereinafter defined) on or after attaining age sixty-two (62) shall receive an amount determined under this paragraph (b). A Participant who has a Separation from Service prior to attaining age sixty-two (62) shall only receive an amount determined under this paragraph (b) if he or she is entitled to an early separation benefit pursuant to Article V(b), a pre-retirement death benefit pursuant to Article VII(b)(ii) or a disability benefit pursuant to Article VIII. Amounts payable pursuant to this paragraph (b) shall be paid monthly in the form of a life annuity. Payments shall commence on the first day of the calendar month that is on or immediately after a Participant's Separation 

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from Service date. The monthly amount payable shall be equal to (i) one-twelfth (1/12) of fifty percent (50%) of the Participant's Average Base Salary Rate (as defined in paragraph (d) below), minus (ii) the amount determined under paragraph (c) below. The resulting amount will be proportionately reduced pursuant to paragraph (e) below if the Participant has a Separation from Service prior to attaining age sixty-two (62) and/or with fewer than twelve (12) years of Continuous Service.

          (c)  The amount determined under this paragraph (c) shall generally be equal to the primary social security benefit paid or payable to the Participant at the time benefits commence under this Supplemental Plan, whether or not the Participant is denied social security benefits because of other income or voluntarily forgoes social security income. However, where a Participant commences to receive benefits under this Supplemental Plan prior to attaining the minimum age (the "Minimum Social Security Age") at which he will be entitled to commence receiving social security benefits (currently age sixty-two (62)), his benefits under this Plan shall be reduced by the amount of social security benefits it is estimated he would be entitled to receive monthly. The estimated social security benefit will be calculated based on the Participant's compensation through his Separation from Service date as though he were the Minimum Social Security Age on such date, and in accordance with social security rules in effect at the time of his Separation from Service.

          (d)  The term "Base Salary Rate" means the annual salary rate of a Participant from the Company and all Affiliates exclusive of overtime, bonus, incentive or any other type of special compensation. The term "Average Base Salary Rate" means the average of the highest three (3) of the last five (5) Base Salary Rates of a Participant which are the Base Salary Rates in effect on his Separation from Service date and on the same day and month for each of the four (4) years (or the period of Continuous Service if fewer than four (4) years) immediately preceding the Separation from Service date. If the period of Continuous Service as of a Participant's Separation from Service date is (i) less than two years but more than one year, "Average Base Salary Rate" means the average of the Base Salary Rate on his Separation from Service date and on the same day and month of the immediately preceding year, or (ii) less than one year, "Average Base Salary Rate" means the Base Salary Rate on his Separation from Service date.

          Unless otherwise determined in writing with respect to a Participant by the Chief Executive Officer, the term "Continuous Service" means the period of service without interruption of a person commencing as of the date of hire of such person by the Company or an Affiliate and ending on the date of separation from service for any reason from the Company and all Affiliates ("Separation from Service"). The term "Affiliate" means a corporation or other entity of which fifty-one percent (51%) or more of the capital stock or capital or profits interest (in the case of a noncorporate entity) is directly or indirectly owned by the Company. A medical leave of absence not exceeding twelve (12) months authorized by a Company written policy or any other leave of absence authorized by a Company written policy or approved in writing by the Chief Executive Officer shall not be deemed an interruption in Continuous Service or a Separation from Service.

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          In the event the Company acquires a corporation or other entity ("Acquisition"), and any employee of Acquisition, by written determination of the Chief Executive Officer of the Company, becomes a Participant in the Supplemental Plan, such Participant's period of Continuous Service shall commence no sooner than the date Acquisition becomes an Affiliate of the Company unless the Company's Chief Executive Officer otherwise determines and so confirms in writing.

          (e)  If a Participant has a Separation from Service prior to attaining age sixty-two (62) and/or with fewer than twelve (12) years of Continuous Service, then the benefit determined under paragraph (b) of this Article IV (after subtracting the amount determined under paragraph (c) of this Article IV) shall be proportionately reduced by five percent (5%) for each year under age sixty-two (62), and then further reduced by 1/12 for each year under twelve (12) years of Continuous Service, pro-rated, in each case, on a completed-months basis.

           By way of example, assume that a Participant entitled to receive a benefit determined under paragraph (b) has a Separation from Service at age sixty-one (61) and four (4) completed months, with ten (10) years and one (1) completed month of Continuous Service and an Average Base Salary Rate of $300,000. Assume further that the monthly amount calculated under paragraph (c) is $1,500. The monthly benefit determined under paragraph (b) would be equal to $11,000 (one-twelfth (1/12) of fifty percent (50%) of $300,000, or $12,500, minus $1,500), reduced by 3.33% (1/12 of 5% for each of the eight months under age sixty-two (62)) to $10,634, and further reduced by 15.97% (1/12 of 1/12 for each of the twenty-three (23) months under twelve (12) years of Continuous Service) to $8,936.

          Unless expressly determined to the contrary in writing by the Chief Executive Officer, no period of service completed by a person after attainment of age sixty-five (65) and no adjustment to any person's Base Salary Rate which occurs after attainment of age sixty-five (65) shall be taken into account in computing benefits hereunder.

ARTICLE V

Eligibility for Benefits

	Except as otherwise provided in paragraph (a) of Article IV, and in paragraph (b) of this Article V, and in Articles VII, VIII, IX and X:

	Participants shall become eligible to commence receiving retirement benefits under this Supplemental Plan after Separation from Service on or after attaining age sixty-two (62) and such benefits shall be calculated in accordance with the provisions of Article IV; 

	no Participant in this Supplemental Plan shall have any vested interest in or right to receive a benefit hereunder until attainment of the age of sixty-two (62); and 

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	unless otherwise determined in writing by the Chief Executive Officer, any interruption in the Continuous Service of a Participant herein prior to the attainment of age sixty-two (62) shall terminate the participation in this Supplemental Plan of such Participant, and no benefit shall be payable to or with respect to such Participant.

          (b)A Participant whose Separation from Service occurs on or after attaining age fifty-five (55), but prior to attaining age sixty-two (62), will be entitled to a special early separation benefit, payable monthly as calculated in accordance with the provisions of Article IV(b), if such benefit is approved by the Chief Executive Officer in his or her sole and unfettered discretion. Under special circumstances, the Board of Directors of the Company may approve a special early separation benefit for a Participant whose Separation from Service occurs prior to attaining age fifty-five (55).

ARTICLE Vl

Form of Benefit Payments

          (a)Except as provided in Articles Vll and XIX, benefits payable based on the calculations in Article IV of this Supplemental Plan shall be paid monthly for the life-time of the Participant (unless an optional form is selected under paragraphs (b) or (c) of this Article Vl). Upon the death of the Participant, benefits shall continue to be paid to the Participant's spouse for the lifetime of such spouse at the rate of fifty percent (50%) of Participant's benefit (and to be calculated without regard to the offset in Section IV(a) regarding Appendix M of the Pension Plan), provided certain conditions are met. The conditions of such Spousal Benefit are (1) that the spouse shall be married to the Participant as of the date of the Participant's Separation from Service and (2) the spouse shall be no more than five years younger than the Participant. In the event the spouse is more than five years younger than the Participant, the Participant may elect to receive benefit payments in the form of a joint and survivor option as described in paragraph (c) following.

          (b)Any Participant, who before September 1, 1993 has commenced to receive benefits and has not made a written election to receive an annuity pursuant to paragraph (a) preceding or paragraph (c) following, shall be entitled to one hundred twenty (120) monthly benefit payments in the amount specified in paragraph (b) of Article IV preceding and a life annuity of the Excess Benefit as defined in paragraph (a) of Article IV preceding. If a Participant, who before September 1, 1993, has commenced to receive benefits and has not made a written election to receive an annuity pursuant to paragraph (a) preceding or paragraph (c) following, dies after Separation from Service and before receiving one hundred and twenty (120) monthly benefit payments, the remainder of the one hundred and twenty (120) monthly benefit payments shall be made to the Participant's designated beneficiary or, if no such beneficiary is then living or no such beneficiary can be located, to the Participant's estate. In the event a Participant has made a written election, prior to September 1, 1993, to receive an annuity pursuant to paragraph (a) preceding or paragraph (c) following, no benefit shall be payable under this paragraph (b), except that any Excess Benefit under the Pension Plan, as provided in paragraph (a) of Article IV, shall be payable at the rate of fifty percent (50%) thereof to the Participant's spouse.

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          (c)In the event that the Participant's spouse is more than five years younger than Participant, at any time prior to the later of September 1, 1993 or the commencement of benefits under this Supplemental Plan, a Participant may, in lieu of receiving benefits in the form described in paragraph (a) of this Article Vl, elect to receive benefit payments under this Supplemental Plan in the form of a joint and survivor option providing monthly benefits for the lifetime of the Participant with a stipulated percentage of such amount continued after the Participant's death to the spouse to whom the Participant is married as of the date of the Participant's Separation from Service, for the lifetime of such spouse. The amount of monthly payments available under this option shall be determined by reference to factors such as the Participant's life expectancy, the life expectancy of the Participant's spouse, prior benefits received under the Supplemental Plan, and the percentage of the Participant's monthly benefit which is continued after the Participant's death to the Participant's spouse, so that the value of the joint and survivor option is the actuarial equivalent of the benefits otherwise payable under paragraph (a) (or paragraph (b) if the Participant has elected coverage under paragraph (b) preceding) of this Article Vl inclusive of the Participant and the spousal fifty percent (50%) survivor benefits, which shall be calculated assuming the Participant's spouse was exactly five years younger than Participant. In determining the monthly amount payable under the joint and survivor option with respect to any Participant, the Company may rely upon such information as it, in its sole discretion, deems reliable, including but not limited to, the opinion of an enrolled actuary or annuity purchase rates quoted by an insurance company licensed to conduct an insurance business in the State of California. The election of a joint and survivor option is irrevocable after benefit payments have commenced, and the monthly amount payable during the lifetime of the Participant shall in no event be adjusted by reason of the death of the Participant's spouse prior to the death of the Participant, or by reason of the dissolution of the marriage between the Participant and such spouse, or for any other reason.

ARTICLE Vll

Pre-Retirement Death Benefits

          In the event of the death of a Participant hereunder during a period of Continuous Service and participation in this Supplemental Plan and after attainment of age 55 (or if death occurs before age 55, then following approval of the Board of Directors of the Company in special circumstances), the beneficiary or the spouse of the Participant shall be entitled to benefits as provided below in paragraphs (a) and (b) :

          (a)Participant's spouse shall be entitled to a fifty percent (50%) or the actuarial equivalent spousal benefit (as determined pursuant to Article Vl, paragraphs (a) or (c), as applicable), attributable to Participant's Excess Benefit under Article IV (a) above calculated as of the Participant's date of death (and to be calculated without regard to the offset in Article IV(a) regarding Appendix M of the Pension Plan), and with such spousal benefit to be reduced in an amount equal to any Qualified Pre-Retirement Survivor Annuity benefit under the Pension Plan relating to benefits on Appendix M thereof. This spousal benefit shall be automatically payable commencing on the same date on which spousal benefits commence under the Pension Plan.

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          (b)At the written election of the Participant, either a benefit under paragraph (i) below or a benefit under paragraph (ii) below shall be paid by the Company. Such election shall be signed by the Participant and notarized and, if the Participant is married at the time of election, the election must also be signed by the Participant's spouse and notarized. The latest election on file in the Company's records shall be controlling. If no election has been made by the Participant, a benefit under paragraph (ii) below shall be paid by the Company.
(i)A lump sum death benefit shall be payable by the Company to the Participant's designated beneficiary or, if no such beneficiary is then living or no such beneficiary can be located, to the Participant's estate. The amount of such death benefit shall be two (2) times the Participant's Base Salary Rate in effect on the date of the Participant's death. On the written request of a beneficiary but subject to the approval in writing of the Chief Executive Officer, the amount payable under this paragraph (b)(i) may be paid to a beneficiary in monthly or other installments over a period not exceeding one hundred and twenty (120) months. 

(ii)Participant's spouse shall receive a spousal fifty percent (50%) or the actuarial equivalent spousal benefit (as determined pursuant to Article Vl, paragraphs (a) or (c), as applicable), attributable to Participant's benefit under Article IV(b) above calculated as of the Participant's date of death. In the event a Participant is not married at the time of Participant's death and the Participant has elected the fifty percent (50%) spousal benefit, a lump sum death benefit shall be payable in accordance with paragraph (b)(i) preceding. 

          No benefits shall be payable under this Article Vll if the Participant's death occurs as a result of an act of suicide within twenty-five (25) months after commencement of participation in this Supplemental Plan.

ARTICLE Vlll

Disability Benefits

          A disability benefit is payable under this Supplemental Plan, as follows:

          (a)If a Participant has a Separation from Service by reason of Permanent Disability (as hereinafter defined) prior to attaining age sixty-two (62) and on or after attaining age fifty-five (55) (or, in special circumstances, if such Separation from Service occurs prior to attaining age fifty-five (55) and has been approved for this benefit by the Board of Directors of the Company), then: 

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	the Participant shall become eligible to commence receiving his or her Excess Benefit under paragraph (a) of Article IV, as calculated thereunder as of the Separation from Service date (this benefit shall be automatically payable commencing on the same date on which benefits commence under the Pension Plan); and 

	the Participant shall become eligible to commence receiving a benefit under paragraph (b) of Article IV, as calculated thereunder as of the Separation from Service date.

          (b) "Permanent Disability" shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, unless a different definition applies for a Participant in an employment agreement approved by the Compensation Committee of the Board of Directors, in which case that different definition shall also apply to this Supplemental Plan. The Participant shall not be deemed to have a Permanent Disability until proof of the existence thereof shall have been furnished to the Board of Directors of the Company in such form and manner, and at such times, as the Board of Directors may require. Any determination by the Board of Directors of the Company that the Participant does or does not have a Permanent Disability shall be final and binding upon the Company and the Participant.

ARTICLE IX

Right to Amend, Modify, Suspend or Terminate Plan

          By action of the Company's Board of Directors, the Company may amend, modify, suspend or terminate this Supplemental Plan without further liability to any employee or former employee or any other person. Notwithstanding the preceding sentence:

          (a)this Supplemental Plan may not be amended, modified, suspended or terminated as to a Participant whose Separation from Service has occurred and who is entitled to receive or has commenced to receive benefits under this Supplemental Plan, without the express written consent of such Participant or, if deceased, such Participant's designated beneficiary or, if no beneficiary is then living or if no beneficiary can be located, such Participant's legal representative; and

          (b)following a Change in Control (as defined in Article X), this Supplemental Plan may not be amended, modified, suspended or terminated as to any Participant who was a Participant prior to such Change in Control, without the express written consent of such Participant.

          (c) this Supplemental Plan may not be amended, modified, suspended or terminated as to a Participant with respect to benefits already accrued under paragraph (a) of Article IV, without the express written consent of such Participant, but may be amended, modified, suspended or terminated as to a Participant with respect to benefits not yet accrued under paragraph (a) of Article IV without such consent.

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ARTICLE X

Change in Control

          The term "Change in Control" means, after the effective date of this Supplemental Plan, (a) the acquisition by any person, entity or group (as defined in Section 13(d)3 of the Securities Exchange Act of 1934, as amended) as beneficial owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the then outstanding securities of the Company, (b) a change during any period of two (2) consecutive years of a majority of the Board of Directors as constituted as of the beginning of such period, unless the election of each director who was not a director at the beginning of such period was approved by vote of at least two-thirds of the directors then in office who were directors at the beginning of such period, (c) a sale of substantially all of the property and assets of the Company, (d) a merger, consolidation, reorganization or other business combination to which the Company is a party and the consummation of which results in the outstanding voting securities of the Company being exchanged for or converted into cash, property and/or securities not issued by the Company, (e) a merger, consolidation, reorganization or other business combination to which the Company is a party and the consummation of which does not result in the outstanding voting securities of the Company being exchanged for or converted into cash, property and/or securities not issued by the Company, provided that the outstanding voting securities of the Company immediately prior to such business combination (or, if applicable, the securities of the Company into which such voting securities are converted as a result of such business combination) represent less than 50% of the voting power of the Company immediately following such business combination, or (f) any other event constituting a change in control of the Company for purposes of Schedule 14A of Regulation 14A under the Securities Exchange Act of 1934.

          In the event a Participant who was a Participant as of the date of a Change in Control either (a) has an involuntary Separation from Service for any reason (which, for purposes of this Article X, shall include a voluntary Separation from Service for Good Reason, as hereinafter defined) within thirty-six full calendar months following such Change in Control, or (b) has a voluntary Separation from Service for any reason other than Good Reason (including the death of the Participant) more than twelve (12) full calendar months after, but within thirty-six (36) full calendar months following, such Change in Control, such Participant shall be entitled to receive immediately upon such Separation from Service, without regard to approval by the Chief Executive Officer or any other person(s) (1) benefits attributable to paragraph (a) of Article IV hereunder in accordance with Articles IV, Vl, VII and VlIl, as applicable, with such benefits to commence when benefits under the Pension Plan commence, and (2) benefits attributable to paragraph (b) of Article IV hereunder in accordance with Articles IV, Vl, VII and VlIl, as applicable, with such benefits to commence at the time set forth in paragraph (b) of Article IV. Such benefits under paragraph (b) of Article IV shall be calculated as if, on the date of such Separation from Service, the Participant (i) had completed a number of years of Continuous Service equal to the greater of twelve (12) or the actual number of years of his or her Continuous Service, and (ii) had attained an age equal to the greater of sixty-two (62) or his or her actual age.

9

          For purposes of this Supplemental Plan, a Participant's voluntary Separation from Service shall be deemed to be for "Good Reason" if it occurs within six months of any of the following without the Participant's express written consent:

          (a)a substantial change in the nature, or diminution in the status, of the Participant's duties or position from those in effect immediately prior to the Change in Control;

          (b)a reduction by the Company in the Participant's annual base salary as in effect on the date of a Change in Control or as in effect thereafter if such compensation has been increased and such increase was approved prior to the Change in Control;

          (c)a reduction by the Company in the overall value of benefits provided to the Participant, as in effect on the date of a Change in Control or as in effect thereafter if such benefits have been increased and such increase was approved prior to the Change in Control (as used herein, "benefits" shall include all profit sharing, retirement, pension, health, medical, dental, disability, insurance, automobile, and similar benefits);

          (d)a failure to continue in effect any stock option or other equity-based or non-equity based incentive compensation plan in effect immediately prior to the Change in Control, or a reduction in the Participant's participation in any such plan, unless the Participant is afforded the opportunity to participate in an alternative incentive compensation plan of reasonably equivalent value;

          (e)a failure to provide the Participant the same number of paid vacation days per year available to him prior to the Change in Control, or any material reduction or the elimination of any material benefit or perquisite enjoyed by the Participant immediately prior to the Change in Control;

          (f)relocation of the Participant's principal place of employment to any place more than 35 miles from the Participant's previous principal place of employment;

          (g)any material breach by the Company of any stock option or restricted stock agreement; or

          (h)conduct by the Company, against the Participant's volition, that would cause the Participant to commit fraudulent acts or would expose the Participant to criminal liability;

provided that for purposes of clauses (b) through (e) above, "Good Reason" shall not exist (A) if the aggregate value of all salary, benefits, incentive compensation arrangements, perquisites and other compensation is reasonably equivalent to the aggregate value of salary, benefits, incentive compensation arrangements, perquisites and other compensation as in effect immediately prior to the Change in Control, 

10

or as in effect thereafter if the aggregate value of such items has been increased and such increase was approved prior to the Change in Control, or (B) if the reduction in aggregate value is due to reduced performance by the Company, the business unit of the Company for which the Participant is responsible, or the Participant, in each case applying standards reasonably equivalent to those utilized by the Company prior to the Change in Control.

          Not later than the occurrence of a Change in Control, the Company shall cause to be transferred to a grantor trust described in Section 671 of the Internal Revenue Code, assets equal in value to all accrued obligations under this Supplemental Plan as of one day following a Change in Control, in respect of both active employees of the Company and retirees as of that date. Such trust by its terms shall, among other things, be irrevocable. The value of liabilities and assets transferred to the trust shall be determined by one or more nationally recognized firms qualified to provide actuarial services as described in Section 4 of the Computer Sciences Corporation Severance Plan for Senior Management and Key Employees. The establishment and funding of such trust shall not affect the obligation of the Company to provide supplemental pension payments under the terms of this Supplemental Plan to the extent such benefits are not paid from the trust.

ARTICLE Xl

No Assignment

          Benefits under this Supplemental Plan may not be assigned or alienated and shall not be subject to the claims of any creditor.

ARTICLE Xll

Administration

          This Supplemental Plan shall be administered by the Chief Executive Officer or by such other person or persons to whom the Chief Executive Officer may delegate functions hereunder. With respect to all matters pertaining to this Supplemental Plan, the determination of the Chief Executive Officer or his designated delegate shall be conclusive and binding. The Chief Executive Officer shall be eligible to participate in this Supplemental Plan in the same manner as any other employee; provided, however, that the designation of the Chief Executive Officer as a Participant and any other action provided herein with respect to the Chief Executive Officer's participation shall be taken by the Compensation Committee of the Board of Directors of the Company.

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ARTICLE Xlll

Release

          In connection with any benefit or benefit payment under this Supplemental Plan, or the designation of any beneficiary or any election or other action taken or to be taken under the Supplemental Plan by any Participant or any other person, the Company, acting through its Chief Executive Officer or his delegate, may require such consents or releases as are reasonable under the circumstances, and further may require any such designation, election or other action to be in writing and in form reasonably satisfactory to the Chief Executive Officer or his delegate.

ARTICLE XIV

No Waiver

          The failure of the Company, the Chief Executive Officer or any other person acting on behalf thereof to demand a Participant or other person claiming rights with respect to a Participant to perform any act which such person is or may be required to perform hereunder shall not constitute a waiver of such requirement or a waiver of the right to require such act. The exercise of or failure to exercise any discretion reserved to the Company, its Chief Executive Officer or his delegate, to grant or deny any benefit to any Participant or other person under this Supplemental Plan shall in no way require the Company, its Chief Executive Officer or his delegate to similarly exercise or fail to exercise such discretion with respect to any other Participant.

ARTICLE XV

No Contract

          This Supplemental Plan is strictly a voluntary undertaking on the part of the Company and, except with respect to the obligations of the Company upon and following a Change in Control, which shall be absolute and unconditional, shall not be deemed to constitute a contract or part of a contract between the Company (or an Affiliate) and any employee or other person, nor shall it be deemed to give any employee the right to be retained for any specified period of time in the employ of the Company (or an Affiliate) or to interfere with the right of the Company (or an Affiliate) to discharge or retire any employee at any time, nor shall this Supplemental Plan interfere with the right of the Company (or an Affiliate) to establish the terms and conditions of employment of any employee.

ARTICLE XVI

Indemnification

          The Company shall defend, indemnify and hold harmless the Officers and Directors of the Company acting in their capacity as such (and not as Participants herein) from any and all claims, expenses and liabilities arising out of their actions or failure to act hereunder, excluding fraud or willful misconduct.

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ARTICLE XVII

Claim Review Procedure

          Benefits will be provided to each Participant or beneficiary as specified in this Supplemental Plan. 

 
(a)  If such person (a "Claimant") believes that the Claimant has not been provided with benefits due under this Supplemental Plan, then the Claimant has the right to make a written claim for benefits under the Plan. If such a written claim is made, and the Administrator wholly or partially denies the claim, the Administrator shall provide the Claimant with written notice of such denial, setting forth, in a manner calculated to be understood by the Claimant:

                  (i)   the specific reason or reasons for such denial;
(ii)specific reference to pertinent Plan provisions on which the denial is based;

(iii)a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and

(iv) an explanation of the Plan's claims review procedure and time limits applicable to those procedures, including a statement of the Claimant's right to bring a civil action under ERISA Section 502(a) if the claim is denied on appeal.

          (b)  The written notice of any claim denial pursuant to paragraph (a) of this Article XVII shall be given not later than thirty (30) days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim, in which event:
(i)  written notice of the extension shall be given by the Administrator to the Claimant prior to thirty (30) days after receipt of the claim;

(ii)the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day period for giving notice of a claim denial; and 

(iii)the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Administrator expects to render the benefit determination.

          (c)  The decision of the Administrator shall be final unless the Claimant, within sixty (60) days after receipt of notice of the claims denial from the Administrator, submits a written request to the Board of Directors of the Company, or its delegate, for an appeal of the denial. During that sixty (60) day period, the Claimant shall be provided, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits. The Claimant shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits as part of the Claimant's appeal. The Claimant may act in these matters individually, or through his or her authorized representative.
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          (d)  After receiving the written appeal, if the Board of Directors of the Company, or its delegate, shall issue a written decision notifying the Claimant of its decision on review, not later than thirty (30) days after receipt of the written appeal, unless the Board of Directors of the Company or its delegate determines that special circumstances require an extension of time for reviewing the appeal, in which event:
(i)written notice of the extension shall be given by the Board of Directors of the Company or its delegate prior to thirty (30) days after receipt of the written appeal; 

(ii)the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day review period; 

(iii)  the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Board of Directors of the Company or its delegate expects to render the appeal decision.

          The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is received by the Board of Directors of the Company or its delegate, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing of the appeal. If the period of time for reviewing the appeal is extended as permitted above, due to a claimant's failure to submit information necessary to decide the claim on appeal, then the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

          (e)In conducting the review on appeal, the Board of Directors of the Company or its delegate shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Board of Directors of the Company or its delegate upholds the denial, the written notice of decision from the Board of Directors of the Company or its delegate shall set forth, in a manner calculated to be understood by the Claimant:
(i)  the specific reason or reasons for the denial

(ii)specific reference to pertinent Plan provisions on which the denial is based;

(iii)a statement that the Claimant is entitled to be receive, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits.

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(iv)  A statement of the Claimant's right to bring a civil action under ERISA 502(a).

          (f)If the Plan or any of its representatives fail to follow any of the above claims procedures, the Claimant shall be deemed to have duly exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under ERISA Section 502(a), including but not limited to the filing of an action for immediate declaratory relief regarding benefits due under the Plan.

ARTICLE XVIII

Termination of Benefits and Participation

          Prior, but only prior to a Change in Control, the retirement benefits payable to any Participant under this Supplemental Plan, and the participation of such Participant in this Supplemental Plan, may be terminated with respect to benefits under paragraph (b) of Article IV (but not with respect to benefits under paragraph (a) of Article IV) if in the judgment of the Chief Executive Officer, upon the advice of counsel, such Participant, directly or indirectly:

          (a)breaches any obligation to the Company under any agreement relating to assignment of inventions, disclosure of information or data, or similar matters; or

          (b)competes with the Company, or renders competitive services (as a director, officer, employee, consultant or otherwise) to, or owns more than a 5% interest in, any person or entity that competes with the Company; or

          (c)solicits, diverts or takes away any person who is an employee of the Company or advises or induces any employee to terminate his or her employment with the Company; or

          (d)solicits, diverts or takes away any person or entity that is a customer of the Company, or advises or induces any customer or potential customer not to do business with the Company; or

          (e)   discloses to any person or entity other than the Company, or makes any use of, any information relating to the technology, know-how, products, business or data of the Company or its subsidiaries, suppliers, licensors or customers, including but not limited to the names, addresses and special requirements of the customers of the Company.

Article XIX

Lump-Sum Acceleration

          (a)This Article XIX applies to benefits payable under paragraph (a) of Article IV and under paragraph (b) of Article IV. 

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          (b)At any time within three (3) years after the occurrence of a Change in Control, a Participant or the Participant's Surviving Spouse may elect to receive a lump sum payment, in an amount determined below, sixty (60) days after giving written notice of the Participant's desire or the Participant's Surviving Spouse's desire to receive such lump sum benefit, to the person designated to administer this Supplemental Plan under Article XII. The date which is sixty (60) days after the notice is given shall be the "Commencement Date." The lump sum payment shall be determined in accordance with paragraphs (c) and (d) of this Article XIX, and then shall be reduced by a penalty equal to ten percent (10%) of such payment which shall be irrevocably forfeited.

          (c)The lump sum payment shall equal the lump sum value of the Participant's (or the Participant's Surviving Spouse's, if applicable) remaining Benefit as of the Commencement Date. The lump sum value shall be computed by using the present value basis as is required under Section 417(e) of the Internal Revenue Code, as amended, at the Commencement Date for determining lump sums under qualified plans. 

          (d)In calculating the lump sum payment, the Cost of Living Adjustment called for under Article XXI shall be taken into account as follows: The Company shall determine the average of the 3 most recent adjustments under Article XXI (or the 3 most recent adjustments that would have occurred had Article XXI been in effect for all relevant periods). That average so-determined shall be deemed to apply for purposes of all future years for purposes of making the lump sum calculation.

Article XX

Hardship Withdrawal

          (a)   This Article XX applies to benefits payable under paragraph (a) of Article IV and under paragraph (b) of Article IV, and is applicable only to Participants who have commenced receiving retirement benefits under this Supplemental Plan.

          (b)"Hardship" of a Participant shall mean an unforeseeable emergency which constitutes a severe financial hardship resulting from any one or more of the following:
(i)sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Section 152(a)of the Internal Revenue Code, as amended) of the Participant;

(ii)loss of the Participant's property due to casualty; or

(iii)any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant's control.

          (c)Whether a Participant has incurred a Hardship shall be determined by the person designated to administer this Supplemental Plan under Article XII, in his discretion on the basis of all relevant facts and circumstances and in accordance with nondiscriminatory and objective standards, uniformly interpreted and consistently applied.

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          (d)A Participant may make a withdrawal from the Participant's account, in the form of a lump sum, on account of the Participant's Hardship, only to the extent that the Hardship is not otherwise relievable:
(i)through reimbursement or compensation by insurance or otherwise, or

(ii) by liquidation of the Participant's assets (to the extent that such liquidation does not itself cause a Hardship).

          (e)The amount of the lump sum hardship withdrawal shall not exceed the current lump sum value of the remaining benefits otherwise due, as determined immediately prior to the hardship distribution, and as determined by using the methodology described in paragraphs (c) and (d) of Article XIX, without regard to the penalty provision of paragraph (a) of Article XIX.

          (f)If a hardship lump sum distribution is made to a Participant, the amount of future benefits under this Supplemental Plan shall be reduced, as follows: 
(i)  First, the current lump sum value of the benefits otherwise due shall be determined immediately prior to the hardship distribution by using the methodology described in paragraphs (c) and (d) of Article XIX, without regard to the penalty provision of paragraph (a) of Article XIX.

(ii)  Second, the amount of the lump sum hardship distribution to be made shall be subtracted from the amount so determined. The resulting net amount is called the "Resulting Net Value." 

(iii)  Third, all future benefit payments shall be adjusted downward, to an amount that has a lump sum present value equal to the Resulting Net Value. Such lump sum present value shall be calculated using the methodology described in paragraphs (c) and (d) of Article XIX, without regard to the penalty provision of paragraph (a) of Article XIX.

          (g)Participants may request a Hardship withdrawal from either benefits otherwise payable under paragraph (a) of Article IV or under paragraph (b) of Article IV, or from benefits payable under both paragraphs (a) and (b).

          (h)The provisions of this Article XX shall be equally applicable to Participant's Surviving Spouse.

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Article XXI

Cost of Living Adjustment

          (a)This Article XXI applies to benefits payable on or after August 13, 2001 under paragraph (b) of Article IV, but does not apply to benefits payable under paragraph (a) of Article IV.

          (b)On the first day of each fiscal year of the Company, following commencement of payment of benefits to the Participant (or that Participant's Surviving Spouse, as applicable) hereunder, the benefits payable to that Participant (or that Participant's Surviving Spouse) shall be subject to an upward adjustment, as follows:
(i)  Benefits payable shall be increased by an amount equal to the lesser of (A) the greater of zero or the most recently published annual percent change in the Consumer Price Index (as defined below), as computed to the nearest one-tenth of one percent (0.1) for the twelve consecutive reference months of March of the prior calendar year through and including February of the current calendar year ; or (B) five percent (5%).

(ii)  Such adjustments, if any, shall be calculated for each year, irrespective of any other year's adjustment. For example, if the CPI change in four successive years is 3%, 6%, 7% and 3%, the Company would implement corresponding increases equal to 3%, 5%, 5% and 3%.

          (c)   The "Consumer Price Index" is "The Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100" as published by the Bureau of Labor Statistics.

          (d)  In the event that the Bureau of Labor Statistics reissues CPI data to correct an error in previously published CPI data, any affected benefits will be recalculated by the Company.

Article XXII

Certain Further Payments By the Company

          (a)This Article XXII applies to benefits payable under paragraph (a) of Article IV and under paragraph (b) of Article IV.

          (b)  The Company shall be obligated to make certain further payments to Participants as set forth in this Article XXII. 

          (c)  In the event that any amount or benefit payable to the Participant by the Company on or after August 13, 2001 pursuant to this Supplemental Plan (collectively, the "Taxable Benefits") is subject on or after August 13, 2001 to the tax imposed under Section 3121 of the Internal Revenue Code, as amended (the "FICA Tax"), or any similar tax that may hereafter be imposed, the Company shall pay to the Participant at the time specified in paragraph (d) below, the Tax Reimbursement Payment (as defined below). The "Tax Reimbursement Payment" is defined as an amount, which when reduced by any FICA Tax 

18

paid by the Participant on the Taxable Benefits (but without reduction for any Federal, state or local income taxes on such Taxable Benefits), shall be equal to the amount of any Federal, state or local income taxes payable because of the inclusion of the Tax Reimbursement Payment in the Participant's adjusted gross income, by applying the highest applicable marginal rate of Federal, state and local income taxation, respectively, for the calendar year in which the Tax Reimbursement Payment is to be made.

 

          (d)   For purposes of determining the amount of the Tax Reimbursement Payment, the Participant shall be deemed:
(i)to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made; and

(ii)     to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Participant's adjusted gross income.) 

          (e)   The Tax Reimbursement Payment attributable to a Taxable Benefit shall be paid to the Participant not more than thirty (30) days following the incurrence of the FICA Tax. If the amount of such Tax Reimbursement Payment cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Participant an amount estimated in good faith by the Company to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment as soon as the amount thereof can be determined.

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