Document:

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                                                                   EXHIBIT 10.20

                              EMPLOYMENT AGREEMENT

      This EMPLOYMENT AGREEMENT, dated as of December 1, 2000 (hereinafter
"Agreement"), by and between PSINet Inc. (hereinafter "the Company"), a New York
corporation with its principal place of business located at 44983 Knoll Square,
Ashburn, Virginia 20147 and Gary Hobbs (hereinafter "the Executive").

      WHEREAS, the Company has determined that it is in the best interests of
the Company to delegate certain management responsibilities of the Company to
the Executive;

      WHEREAS, the Executive is willing to provide his services as an
employee of the Company for the inducements and on the terms and conditions set
forth below in this Agreement; and

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

      1. EMPLOYMENT POSITION.

         (a) POSITION AND DUTIES. The Company hereby employs the Executive to
         serve as Vice President, PSINet Inc. and President, PSINet Asia Pacific
         and the Executive hereby accepts such retention in the capacity and
         subject to the terms and conditions hereinafter set forth. This
         position is a corporate officer position and, as an officer of the
         Company, the Executive must stand for election by the Company's Board
         of Directors (the "Board") each year of the Term (as defined in Section
         2 hereof). The Executive shall have such powers, duties, authority, and
         responsibilities as are (i) consistent with such position, (ii)
         assigned to such offices in the Company's By-laws, and (iii) reasonably
         assigned to the Executive by the President and Chief Operating Officer,
         PSINet International. The Executive accepts such employment and agrees
         to remain in the employ of the Company and provide management services
         to the Company, as determined by and under the direction of the
         President and Chief Operating Officer, PSINet International.

         (b) LOCATION OF EMPLOYMENT. The principal place of employment of the
         Executive shall be in the greater Washington, D.C. area. Executive
         shall be available to travel to the extent reasonably required to carry
         out the duties and responsibilities as Vice President, PSINet Inc. and
         President, PSINet Asia Pacific or as otherwise may be reasonably
         required by the business of the Company.

         (c) MANAGEMENT RESPONSIBILITIES. The Executive shall at all times
         perform his or her responsibilities and duties with appropriate care
         and consistent with his position as may be assigned by the President
         and Chief Operating Officer, PSINet International and shall at all
         times exercise reasonable judgment and discretion in the performance of
         such responsibilities and duties.

      2. TERM OF EMPLOYMENT. The initial term of the Executive's employment
under this Agreement shall commence as of the date of this Agreement and shall
terminate on the second

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anniversary hereof (the "Initial Term") subject to earlier termination as
provided in Section 6. Thereafter, this Agreement shall be automatically
extended each year for an additional one (1) year period (each, a "Renewal
Term"). The Initial Term together with any Renewal Term are referred to herein
collectively as the "Term."

      3. COMPENSATION.

         (a) BASE SALARY. The Company shall pay the Executive a base salary at a
         rate of $250,000.00 per year beginning on the date hereof. Beginning on
         January 1, 2001 and January 1 of each subsequent year thereafter, the
         Executive's base salary shall be increased at a minimum by an amount
         equal to five percent (5%) of the Executive's then current base salary.
         The Executive's base salary shall be subject to additional increases at
         the discretion of the President and Chief Operating Officer, PSINet
         International subject to the approval of the Compensation Committee of
         the Board (the "Compensation Committee"). The Executive's base salary
         shall be payable in such installments as the Company regularly pays its
         other salaried employees. All payments shall be subject to the
         deduction of payroll withholdings taxes and similar assessments as
         required by law or by further agreement with the Executive.

         (b) PERFORMANCE BONUS. The Company will pay the Executive a bonus
         subject to the successful completion of the objectives established for
         the Executive's performance for each calendar year during the Term. The
         performance criteria will be issued separately by the President and
         Chief Operating Officer, PSINet International with respect to each
         calendar year during the Term, and may be changed, with mutual
         fairness, from time to time as situations develop. The target bonus for
         the period ending December 31, 2000, will be a total of up to 50% of
         the Executive's base salary. Separate criteria will be established for
         the Executive's entitlement for the year starting January 1, 2001.
         Bonuses in subsequent years during the Term will be at least equal to
         the amount of the bonus during the previous calendar year.

         (c) STOCK OPTIONS. Effective upon the date of this Agreement, the
         Company shall grant the Executive options to purchase 100,000 shares of
         the Company's common stock (the "Options") pursuant to the Company's
         Executive Stock Incentive Plan (the "Plan"). Such Options shall be
         evidenced by an option agreement in such form and under the terms and
         conditions set forth in the Plan.

                  On each subsequent anniversary date of this Agreement during
         the Term, the Company shall grant the Executive options to purchase an
         additional 15,000 shares of the Company's common stock pursuant to the
         Plan or another option plan of the Company, such grant being subject to
         the terms of this Agreement and the Executive's continued employment at
         the time of the grant and evidenced by an option agreement in such form
         and under the terms and conditions set forth in the applicable plan.

         (d) VESTING OF STOCK OPTIONS. In the event of a Change in Control (as
         defined in Section 3(e) hereof), the Company shall immediately vest all
         of the unvested stock options the Executive has received prior to the
         date of the Change in Control.

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         (e) CHANGE IN CONTROL. As used in this Agreement, "Change in Control"
         shall mean: (i) the shareholders of the Company approve an agreement
         for the sale of all or substantially all of the assets of the Company;
         or (ii) the shareholders of the Company approve a merger or
         consolidation of the Company with any other corporation (and the
         Company implements it), other than (A) a merger or consolidation which
         would result in the voting securities of the Company outstanding
         immediately prior thereto continuing to represent more than eighty
         percent (80%) of the combined voting power of the voting securities of
         the Company, or such surviving entity, outstanding immediately after
         such merger or consolidation, or (B) a merger or consolidation effected
         to implement a recapitalization of the Company (or similar transaction)
         in which no "person" (as defined below) acquires more than thirty
         percent (30%) of the combined voting power of the Company's
         then-outstanding securities; or (iii) any "person," as such term is
         used in Sections 13(d) and 14(d) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act") (other than (1) the Company or
         (2) any corporation owned, directly or indirectly, by the Company or
         the shareholders of the Company in substantially the same proportions
         as their ownership of stock in the Company), is or becomes the
         "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
         directly or indirectly, of securities of the Company representing
         thirty percent (30%) or more of the combined voting power of the
         Company's then outstanding securities.

      4. FRINGE BENEFITS.

         (a) During the Term, the Executive shall be entitled to the maximum
         benefits that are generally provided to all executives of the Company
         under any life insurance, group insurance, medical, retirement, pension
         or other employee benefit or incentive plans or pursuant to other
         arrangements or understandings (excluding any equity, equity option or
         equity bonus plans), so long as any such plan, benefit, arrangement or
         understanding remains generally available to all other executive
         officers of the Company.

         (b) During the Term, the Executive shall be entitled to four (4) weeks
         paid vacation each year which can accumulate to a maximum of six (6)
         weeks.

      5. EXPENSE REIMBURSEMENT. In addition to the compensation and benefits
provided in Sections 3 and 4, the Company shall, upon receipt of appropriate
documentation, reimburse the Executive for his reasonable travel, lodging,
entertainment, and other ordinary and necessary business expenses incurred in
the course of his duties on behalf of the Company during the Term.

      6. TERMINATION. The Term is subject to early termination as provided
below:

         (a) TERMINATION BY REASON OF DISABILITY. If at any time during the
         Term, the Company determines in good faith that the Executive has been
         unable, as a result of physical or mental illness or incapacity, to
         perform his duties hereunder for a period of either (i) one hundred
         eighty (180) consecutive days during any twelve-month period or (ii)
         ninety (90) consecutive days during any twelve-month period if the
         Executive's physical or mental illness or incapacity would reasonably
         be expected to continue for another consecutive ninety (90) day period
         after such initial ninety (90) day period, the Term may be terminated
         by the Company upon thirty (30) days' written notice to the Executive.
         Should

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         termination occur pursuant to this Section 6(a), the Executive shall be
         entitled to receive disability benefits consistent with the Company's
         policy.

         (b) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S DEATH. In the
         event that the Executive's death occurs prior to the expiration of the
         Term, the Term shall terminate as of the date of the Executive's death.
         In the event of a termination under Section 6(b), all salary and
         benefits otherwise payable to the Executive under this Agreement shall
         cease immediately.

         (c) TERMINATION BY THE COMPANY FOR CAUSE. The Executive's employment
         may be terminated by the Company at any time for "Cause." In the event
         of a termination for Cause, all salary and benefits otherwise payable
         to the Executive shall cease immediately upon such termination. For
         purposes of this Agreement, the Company shall have Cause for
         termination of the Executive's employment under this Agreement by
         reason of (i) any breach by the Executive of his agreement not to
         compete or solicit pursuant to Section 7 hereof; (ii) any violation of
         Company policy which materially and adversely affects the business or
         reputation of the Company; (iii) any act or omission by the Executive
         constituting willful misconduct or gross negligence, (iv) the
         Executive's conviction of a felony (or a plea of guilty or NOLO
         CONTENDRE thereto); (v) the Executive's conviction of any other
         criminal action (or a plea of guilty or NOLO CONTENDRE thereto) that
         has or might reasonably be expected to have an adverse effect on the
         business or reputation of the Company or its subsidiaries; (vi) the
         Executive's commission of an act of fraud; (vii) a material breach by
         the Executive of any provision of this Agreement which breach and the
         effects thereof remain uncured for a period of thirty (30) days after
         written notice, specifically identifying the breach, is given to the
         Executive by the Company (however, it being expressly understood that
         the Company need not provide any notice and may terminate the Executive
         immediately where the Company in good faith believes that the
         Executive's material breach is not curable within thirty (30) days); or
         (viii) the Executive's voluntary resignation without having given the
         Company at least thirty (30) days prior written notice.

         (d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may terminate
         the employment of the Executive under this Agreement at any time
         without cause with thirty (30) days' prior written notice. Should the
         Executive be terminated pursuant to this Section 6(d), he shall be
         entitled to Termination Payments as provided for in Section 6(f).

         (e) EXECUTIVE'S RIGHT TO TERMINATION. The Executive may terminate his
         employment at any time, provided that the Executive shall have given
         the Company at least thirty (30) days prior written notice of such
         termination. In the event of termination by the Executive, the
         Executive's salary and benefits shall continue during the notice period
         specified by the Executive and shall cease thereafter.

         (f) TERMINATION PAYMENTS. A. If the Executive's employment is
         terminated by the Company without Cause pursuant to Section 6(d)
         (hereinafter the "Termination Event"), the Company shall provide the
         Executive the following

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         (collectively, the "Termination Payments"), to be paid or given within
         thirty (30) days of the Date of Termination:

                  (i)      a lump sum representing (1) the Executive's monthly
                           base salary as derived from the Executive's annual
                           salary and giving effect to all annual increases
                           thereto as provided in Section 3(a) herein, times the
                           greater of (y) the number of months remaining in the
                           current Term or (z) twelve (12) months; and (2) all
                           other accrued and unpaid amounts due to the Executive
                           as of the Date of Termination (including, without
                           limitation, accrued vacation pay and reimbursement of
                           business expenses);

                  (ii)     a lump sum representing all annual bonus amounts, as
                           provided for in Section 3(b) hereof, calculated on
                           the assumption that all performance criteria
                           objectives would have been exceeded, such that the
                           Executive would receive the maximum bonus established
                           by the President and Chief Operating Officer, PSINet
                           International to which the Executive would have been
                           entitled had he remained employed by the Company for
                           the longer of (y) the remainder of the current Term
                           or (z) twelve (12) months after the Date of
                           Termination.

                  B. If the Termination Event occurs within twelve months after
         a Change in Control, the Executive is entitled to the Termination
         Payments as stated in Section 6(f)(A)(i) and (ii) above as well as the
         following:

                  (iii)    continuation of all life insurance and health
                           benefits, disability insurance and benefits and
                           reimbursement theretofore being provided to the
                           Executive and/or his family, or such other more
                           favorable benefits applicable to any senior executive
                           officer of the Company, to which the Executive would
                           have been entitled had he remained employed by the
                           Company for the longer of (y) the remainder of the
                           current Term or (z) twelve (12) months after the Date
                           of Termination;

                  (iv)     Company contributions, to the extent permitted by
                           applicable law, to a SEP-IRA, Keogh or other
                           retirement mechanism reasonably selected by the
                           Executive sufficient to provide the same level of
                           retirement benefits the Executive would have received
                           if he had remained employed by the Company for the
                           longer of (y) the remainder of the current Term or
                           (z) twelve (12) months after the Date of Termination,
                           provided, however, that the Company shall make up the
                           difference in cash payments directly to the Executive
                           to the extent that applicable law would not permit it
                           to make such contributions.

                  C. In consideration of the Termination Payments provided in
         this Section 6(f)(A) and (B), the Executive agrees to execute a
         termination of employment agreement under which the Executive agrees to
         fully release all claims against the Company.

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         (g) NOTICE OF TERMINATION. Any termination of the Executive's
         employment during the Term by the Company or by the Executive shall be
         communicated by Notice of Termination to the other party hereto given
         in accordance with Section 16 of this Agreement. For purposes of this
         Agreement, a "Notice of Termination" means a written notice which (i)
         indicates the specific termination provision in this Agreement relied
         upon, (ii) to the extent applicable, sets forth in reasonable detail
         the facts and circumstances claimed to provide a basis for termination
         of the Executive's employment under the provision so indicated, and
         (iii) if applicable, specifies a termination date. The failure by the
         Executive or the Company to set forth in the Notice of Termination any
         fact or circumstance which contributes to a showing of Good Reason or
         Cause shall not waive any right of the Executive or the Company
         hereunder or preclude the Executive or the Company, as applicable, from
         asserting such fact or circumstance in enforcing the Executive's or the
         Company's rights hereunder.

         (h) DATE OF TERMINATION. For purposes of this Agreement, "Date of
         Termination" means (i) if the Executive's employment is terminated by
         reason of death, the date of death; or (ii) if the Executive's
         employment is terminated under any other circumstances, the date of
         receipt of the Notice of Termination by the party being so notified or
         any later date specified therein. For purposes of this Agreement, the
         Executive will be deemed to be employed through the end of the calendar
         day on the Date of Termination.

         (i) TAX PROVISIONS. In the event that any payments under this Agreement
         or any other compensation, benefit or other amount from the Company for
         the benefit of the Executive are subject to the tax imposed by Section
         4999 of the Internal Revenue Code of 1986, as amended (the "Code")
         (including any applicable interest and penalties, the "Excise Tax"), no
         such payment ("Parachute Payment") shall be reduced (except for
         required tax withholdings) and the Company shall pay to the Executive
         by the earlier of the date such Excise Tax is withheld from payments
         made to the Executive or the date such Excise Tax becomes due and
         payable by the Executive, an additional amount (the "Gross-Up Payment")
         such that the net amount retained by the Executive (after deduction of
         any Excise Tax on the Parachute Payments, taxes based upon the Tax Rate
         (as defined below) upon the payment provided for by this Section 6(i)
         and Excise Tax upon the payment provided for by this Section 6(i)),
         shall be equal to the amount the Executive would have received if no
         Excise Tax had been imposed. A Tax counsel chosen by the Company's
         independent auditors, provided such person is reasonably acceptable to
         the Executive ("Tax Counsel"), shall determine in good faith whether
         any of the Parachute Payments are subject to the Excise Tax and the
         amount of any Excise Tax, and Tax Counsel shall promptly notify the
         Executive of its determination. The Company and the Executive shall
         file all tax returns and reports regarding such Parachute Payments in a
         manner consistent with the Company's reasonable good faith
         determination. For purposes of determining the amount of the Gross-Up
         Payment, the Executive shall be deemed to pay taxes at the Tax Rate
         applicable at the time of the Gross-Up Payment. In the event that the
         Excise Tax is subsequently determined to be less than the amount taken
         into account hereunder at the time a Parachute Payment is made, the
         Executive shall repay to the Company promptly following the date that
         the amount of such reduction in Excise Tax is finally determined the

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         portion of the Gross-Up Payment attributable to such reduction (without
         interest). In the event that the Excise Tax is determined to exceed the
         amount taken into account hereunder at the time a Parachute Payment is
         made (including by reason of any payment the existence or amount of
         which cannot be determined at the time of the Gross-Up Payment), the
         Company shall pay the Executive an additional amount with respect to
         the Gross-Up Payment in respect of such excess (plus any interest or
         penalties payable in respect of such excess) at the time that the
         amount of such excess is finally determined. The Company shall
         reimburse the Executive for all reasonable fees, expenses, and costs
         related to determining the reasonableness of any Company position in
         connection with this paragraph and preparation of any tax return or
         other filing that is affected by any matter addressed in this
         paragraph, and any audit, litigation or other proceeding that is
         affected by any matter addressed in this Section 6(i) and an amount
         equal to the tax on such amounts at the Executive's Tax Rate. For the
         purposes of the foregoing, "Tax Rate" means the Executive's effective
         tax rate based upon the combined federal and state and local income,
         earnings, Medicare and any other tax rates applicable to the Executive,
         all at the highest marginal rate of taxation in the country and state
         of the Executive's residence on the date of determination, net of the
         reduction in federal income taxes which could be obtained by deduction
         of such state and local taxes.

      7. COVENANTS OF EXECUTIVE

         (a) COVENANT NOT TO COMPETE. In consideration of the Executive's
         employment pursuant to this Agreement and for other good and valuable
         consideration, the receipt and adequacy of which is hereby
         acknowledged, the Executive agrees that, so long as the Executive is
         employed by the Company under this Agreement and for a period of twelve
         (12) months following the termination of such employment (but only if
         the Company has elected to enforce the restriction), the Executive
         shall not, without the prior written consent of the Company, either for
         the Executive or for any other person, firm or corporation, own,
         manage, operate, control, be employed by, participate in or be
         associated in any manner with the ownership, management, operation or
         control of any business providing Internet-related, E-commerce,
         web-hosting, network or communication services competitive with the
         Company as of the Date of Termination or within six (6) months
         thereafter. The foregoing shall in no event restrict the Executive
         from: (i) writing or teaching, whether on behalf of for-profit, or
         not-for-profit institution(s); (ii) investing (without participating in
         management or operation) in the securities of any private or publicly
         traded corporation or entity; or (iii) after termination of employment,
         becoming employed by a hardware, software or other vendor to the
         Company, provided that such vendor does not offer Internet-related,
         E-commerce, or web-hosting network or communication services that are
         competitive with the services offered by the Company as of the Date of
         Termination or within six (6) months thereafter.

         (b) NONSOLICITATION. In consideration of the Executive's employment
         pursuant to this Agreement and for other good and valuable
         consideration, the receipt and adequacy of which is hereby
         acknowledged, the Executive agrees that, so long as the Executive is
         employed by the Company under this Agreement and for a period of
         eighteen (18) months following the termination of such

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         employment, the Executive agrees not to hire, solicit, nor attempt to
         solicit for himself or any third party, the services of any employee or
         subcontractor of the Company or any of the Company's subsidiaries or
         affiliates without the Company's prior written consent; provided,
         however, that the Executive is not prevented from employing such person
         who contacts the Executive on his or her own initiative and without any
         direct or indirect solicitation by the Executive.

         (c) BREACH/THREATENED BREACH. The Executive may request permission from
         the Company's Board of Director's to engage in activities which would
         otherwise be prohibited by Section 7(a) or (b). The Company shall
         respond to such request within thirty (30) days after receipt. The
         Company shall notify the Executive in writing if it becomes aware of
         any breach or threatened breach of any of the provisions in Section
         7(a) or (b), and the Executive shall have thirty (30) days after
         receipt of such notice in which to cure or prevent the breach, to the
         extent that the Executive is able to do so. The Executive and the
         Company acknowledge that any breach or threatened breach by the
         Executive of any of the provisions in Section 7(a) or (b) above cannot
         be remedied by the recovery of damages, and agree that in the event of
         any such breach or threatened breach which is not cured with such
         30-day period, the Company may pursue injunctive relief for any such
         breach or threatened breach. If a court of competent jurisdiction
         determines that the Executive breached any of such provisions, the
         Executive shall not be entitled to any Termination Payments from and
         after date of the breach. In such event, the Executive shall promptly
         repay any Termination Payments previously made plus interest thereon
         from the date of such payment(s) at 12% per annum. If, however, the
         Company has suspended making such Termination Payments and a court of
         competent jurisdiction finally determines that the Executive did not
         breach such provision or determines such provision to be unenforceable
         as applied to the Executive's conduct, the Executive shall be entitled
         to receive any suspended Termination Payment, plus interest thereon
         from the date when due at 12% per annum. The Company may elect (once)
         to continue paying the Termination Payments before a final decision has
         been made by the court.

         (d) OWNERSHIP OF WORK PRODUCT. All copyrights, patents, trade secrets,
         or other intellectual property rights associated with any ideas,
         concepts, techniques, inventions, processes, or works of authorship
         developed or created by the Executive during the course of performing
         the Company's work (collectively the "Work Product") shall belong
         exclusively to the Company and shall, to the extent possible, be
         considered a work made for hire for the Company within the meaning of
         Title 17 of the United States Code. The Executive automatically
         assigns, and shall assign at the time of creation of the Work Product,
         without any requirement of further consideration, any right, title, or
         interest the Executive may have in such Work Product, including any
         copyrights or other intellectual property rights pertaining thereto.
         Upon request of the Company, the Executive shall take such further
         actions, including execution and delivery of instruments of conveyance,
         as may be appropriate to give full and proper effect to such
         assignment.

         (e) EQUITABLE RELIEF. The Executive acknowledges and agrees that the
         covenants and obligations of Executive contained in Section 7 hereof
         relate to special, unique and extraordinary matters and are reasonable
         and necessary to

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         protect the legitimate interests of the Company and that a breach of
         any of the terms of such covenants and obligations will cause the
         Company irreparable harm and injury for which adequate remedies at law
         are not available. The Executive therefore agrees that the Company need
         not prove actual damages in order to obtain injunctive relief, a
         restraining order, an order of specific performance or any other
         equitable relief (together, "Equitable Relief") with respect to any of
         Executive's obligations under Section 7. The Executive hereby waives
         any claim or defense therein that the Company has an adequate remedy at
         law or that money damages would provide an adequate remedy. It shall,
         however, be the option of the Company whether or not to seek Equitable
         Relief.

      8. REPRESENTATION AND WARRANTIES.

         (a) THE COMPANY. The Company hereby represents and warrants to the
         Executive as follows:

                  (i)      the Company is duly organized, validly existing and
                           in good standing under the laws of the State of New
                           York;

                  (ii)     this Agreement has been duly authorized, executed and
                           delivered by the Company and will constitute the
                           legal, valid and binding obligation of the Company,
                           enforceable against the Company in accordance with
                           its terms, subject to applicable bankruptcy,
                           insolvency, moratorium or other similar laws
                           affecting the rights of creditors generally and to
                           general principles of equity whether considered in a
                           suit at law or in equity; and

                  (iii)    the execution and delivery of this Agreement by the
                           Company, the performance by the Company of its
                           obligations hereunder and the consummation by the
                           Company of the transactions contemplated hereby will
                           not violate any agreement to which the Company is a
                           party.

         (b) EXECUTIVE. The Executive hereby represents and warrants to the
         Company as follows:

                  (i)      this Agreement has been duly executed and delivered
                           by the Executive and will constitute the legal, valid
                           and binding obligation of the Executive, enforceable
                           against the Executive in accordance with its terms,
                           subject to applicable bankruptcy, insolvency,
                           moratorium or other similar laws affecting the rights
                           of creditors generally and to general principles of
                           equity whether considered in a suit at law or in
                           equity;

                  (ii)     the execution and delivery of this Agreement by
                           Executive, the performance by the Executive of his
                           obligations hereunder and the consummation by the
                           Executive of the transactions contemplated hereby
                           will not violate any agreement to which he is a
                           party; and

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                  (iii)    the Executive has made such investigations of the
                           business and properties of the Company as he deems
                           necessary or appropriate before entering into this
                           Agreement.

      9. TRANSFERABILITY.

         (a) This Agreement is personal to the Executive and without the prior
         written consent of the Company shall not be assignable by the Executive
         otherwise than by will or the laws of descent and distribution. This
         Agreement shall inure to the benefit of and be enforceable by the
         Executive's legal representatives.

         (b) This Agreement shall inure to the benefit of and be binding upon
         the Company, its successors and assigns.

         (c) The Company shall require any successor (whether direct or
         indirect, by purchase, merger, consolidation, share exchange or
         otherwise) to all or substantially all of the business and/or assets of
         the Company to expressly assume in writing and agree to perform this
         Agreement in the same manner and to the same extent that the Company
         would be required to perform it if no such succession had taken place.
         As used in this Agreement, "Company" shall mean the Company as defined
         herein and any successor to its businesses and/or assets as aforesaid
         that assumes and agrees to perform this Agreement by operation of law,
         or otherwise. A failure of the Company to cause a successor to assume
         this Agreement in any such transaction shall be a breach of this
         Agreement by the Company.

      10. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
plan, program, policy or practice provided by the Company and for which the
Executive may qualify (except with respect to any benefit to which the Executive
has waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the date of this Agreement with the Company.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any benefit, plan, policy, practice or program of, or any
contract or agreement entered into with, the Company shall be payable in
accordance with such benefit, plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

      11. FULL SETTLEMENT; MITIGATION. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts (including amounts for damages for breach) payable to the
Executive under any of the provisions of this Agreement, and such amounts shall
not be reduced whether or not the Executive obtains other employment. In
addition, in the event of a Change in Control only, the Company's obligation to
make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others.

      12. NO WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.

                                       10

<PAGE>

      13. ARBITRATION. With the exception of disputes arising under Section 7
hereof, any dispute arising under this Agreement shall be settled by arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator may be rendered in any court
having jurisdiction thereof. Arbitration hereunder shall be by a single
arbitrator appointed by agreement of the parties. The parties shall agree that
any arbitration award shall be final and binding on the parties. Except as
stated otherwise in Paragraph 14 of this Agreement, each party shall bear its
own costs and attorneys' fees associated with the arbitration.

      14. COSTS TO THE EXECUTIVE AFTER CHANGE IN CONTROL. Notwithstanding
anything in this Agreement to the contrary, if, following a Change in Control,
any successor in interest to the Company unsuccessfully contests and/or
challenges any of the Executive's rights under this Agreement, then the
successor in interest to the Company shall pay the Executive's reasonable
attorney's fees and costs incurred in such contest or challenge.

      15. SEVERABILITY. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding, or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding, and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding, or unenforceable in its entirety or partially or as to any party,
for any reason, and if such provision cannot be changed consistent with the
intent of the parties hereto to make it fully legal, valid, binding, and
enforceable, then such provision will be stricken from this Agreement, and the
remaining provisions of this Agreement will not in any way be affected or
impaired, but will remain in full force and effect.

      16. ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains and its terms
constitute the entire agreement of the parties and supersedes all prior
agreements regarding the subject matter herein. This Agreement supersedes and
replaces any prior or contemporaneous agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written. No amendment or
modification of any provision of this Agreement shall be effective unless in
writing and signed by the party against whom enforcement of such amendment or
modification is sought.

      17. NOTICES. All notices required to be given or which may be given
under this Agreement shall be in writing delivered in accordance with one or
more of the following and shall be deemed received upon the earlier of (i) when
it is personally delivered to the party, (ii) three (3) days after having been
mailed by certified mail, postage prepaid, return receipt requested, (iii) two
(2) days after having been sent via overnight delivery by a recognized overnight
delivery service, or (iv) one (1) day after having been sent via facsimile
transmission, in each case addressed to the party intended to be notified at the
address of such party as set forth in the records of the Company or such other
address as such party may designate in writing to the other.

      18. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Virginia without giving effect to the conflicts of law
principles thereof.

                                       11

<PAGE>

      19. SURVIVAL. All provisions which may reasonably be interpreted or
construed to survive the expiration or termination of this Agreement shall
survive the expiration or termination of this Agreement.

      20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
be one and the same instrument.

      21. EXECUTION. This Agreement shall be deemed effective upon the
execution by the Company and the Executive.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as the date first written above.

Executive:

/s/ GARY HOBBS
-------------------------
Gary Hobbs

PSINet Inc. ("Company"):

By: /s/ WILLIAM L. SCHRADER
    --------------------------------
Title: Chairman and Chief Executive Officer

                                    12<PAGE>

                                                                   Exhibit 10(b)

                 SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
                             STOCK COMPENSATION PLAN

                         Effective as of January 1, 1997

                                 (Amended 4/04/01)

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
         PURPOSE .........................................................................................1

ARTICLE I    DEFINITIONS .................................................................................1

         1.1      Account ................................................................................1
         1.2      Award ..................................................................................1
         1.3      Awarding Authority .....................................................................1
         1.4      Beneficiary ............................................................................1
         1.5      Board ..................................................................................1
         1.6      Committee ..............................................................................1
         1.7      Company.................................................................................1
         1.8      Company Stock ..........................................................................2
         1.9      Distribution ...........................................................................2
         1.10     Employee ...............................................................................2
         1.11     Participant ............................................................................2
         1.12     Plan ...................................................................................2
         1.13     Share Unit .............................................................................2
         1.14     Trust ..................................................................................2
         1.15     Trustee ................................................................................2

ARTICLE II   PARTICIPATION AND AWARDS ....................................................................2

         2.1      Designation by Awarding Authority ......................................................2
         2.2      Awarding Authority to Make Awards ......................................................2
         2.3      Awards to be Held in Trust .............................................................3
         2.4      Vesting and Forfeiture .................................................................3

ARTICLE III  TRUST FUND...................................................................................3

         3.1      Trust Fund Established..................................................................3
         3.2      Company, Committee and Trustee
                   Not Responsible for Adequacy of Fund ..................................................4

ARTICLE IV   ACCOUNTING PROCEDURES .......................................................................4

         4.1      Committee to Maintain Accounts .........................................................4
         4.2      Accounting Procedures ..................................................................4
         4.3      Invasion of Trust by Creditors .........................................................4
         4.4      Trust Expenses..........................................................................4

</TABLE>

                                      - i -
<PAGE>

<TABLE>

<S>                                                                                                    <C>
ARTICLE V    RIGHTS IN ACQUIRED STOCK ....................................................................4

         5.1      Power to Vote Stock Rests with Trustee .................................................4
         5.2      Tender Offers ..........................................................................5
         5.3      Dividends ..............................................................................5

ARTICLE VI   DISTRIBUTION OF ACCOUNTS ....................................................................5

         6.1      Time of Distribution ...................................................................5
         6.2      Form of Distribution ...................................................................5
         6.3      Beneficiary Designation ................................................................5
         6.4      Distribution to Guardian ...............................................................6
         6.5      Withholding of Taxes....................................................................6

ARTICLE VII  ACCELERATION OF DISTRIBUTION AND VESTING ....................................................7

         7.1      Termination of Employment or Death .....................................................7
         7.2      Change in Control ......................................................................7
         7.3      Hardship ...............................................................................7

ARTICLE VIII  PLAN TERMINATION AND AMENDMENT .............................................................7

         8.1      Termination and Amendment ..............................................................7

ARTICLE IX    PLAN ADMINISTRATION ........................................................................8

         9.1      Committee ..............................................................................8
         9.2      Committee Powers .......................................................................8
         9.3      Plan Expenses ..........................................................................9
         9.4      Reliance Upon Documents and Opinions ..................................................10
         9.5      Requirement of Proof ..................................................................10
         9.6      Limitation on Liability ...............................................................10
         9.7      Indemnification .......................................................................10

ARTICLE X    MISCELLANEOUS PROVISIONS ...................................................................11

         10.1     Restrictions on Plan Interest .........................................................11
         10.2     No Enlargement of Employee Rights .....................................................12
         10.3     Rights of Repurchase and
                   First Refusal for the Company.........................................................12
         10.4     Mailing of Payments ...................................................................12
         10.5     Inability to Locate Participant or Beneficiary ........................................13
         10.6     Governing Law .........................................................................13
         10.7     Records ...............................................................................13
         10.8     Illegality of Particular Provision ....................................................13
         10.9     Receipt or Release ....................................................................13
         10.10    Arbitration .......................................................................... 13

</TABLE>

                                     - ii -
<PAGE>

                 SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
                             STOCK COMPENSATION PLAN

                                     PURPOSE

         This Plan is an unfunded compensation arrangement established effective
on April 3, 1996 by Science Applications International Corporation ("SAIC") to
make deferred awards of company stock to selected employees.

                                    ARTICLE I

                                   DEFINITIONS

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

         1.1      ACCOUNT. The bookkeeping account established for an Employee
pursuant to Article IV to record the number of Share Units awarded to the
Employee and the vesting thereof.

         1.2      AWARD. The award of Share Units in the Trust to an Employee
pursuant to the Plan.

         1.3      AWARDING AUTHORITY. The individual or group of individuals
appointed by the Board to make Awards pursuant to the Plan.

         1.4      BENEFICIARY. The person or persons properly designated by the
Participant, in accordance with Section 6.3, to receive the benefits provided
herein upon death of the Participant.

         1.5      BOARD. The Board of Directors of Science Applications
International Corporation.

         1.6      COMMITTEE. The committee appointed by the Board to administer
the Plan. Members of the Committee shall be eligible to receive Awards under the
Plan at the discretion of the Awarding Authority.

         1.7      COMPANY. Science Applications International Corporation, a
Delaware corporation, and any subsidiary thereof, the participation in this Plan
of the Employees of which is approved by the Awarding Authority.

                                     - 1 -
<PAGE>

         1.8      COMPANY STOCK. The Class A Common Stock of Science
Applications International Corporation.

         1.9      DISTRIBUTION. Payment of the vested balance in a Participant's
Account from the Trust to the Participant or the Participant's Beneficiary.

         1.10     EMPLOYEE.  A salaried employee of the Company.

         1.11     PARTICIPANT. An Employee designated by the Committee to
receive an Award under the Plan.

         1.12     PLAN. The Science Applications International Corporation Stock
Compensation Plan as set forth herein and as amended from time to time by the
Board.

         1.13     SHARE UNIT. The interest of a Participant in a share of
Company Stock held in the Participant's Account in the Trust.

         1.14     TRUST. The Science Applications International Corporation
Stock Compensation Plan Trust established by the Company to hold all assets
awarded to Participants under the Plan.

         1.15     TRUSTEE. State Street Bank or such successor trustee as shall
be appointed pursuant to the Trust.

                                   ARTICLE II

                            PARTICIPATION AND AWARDS

         2.1      DESIGNATION BY AWARDING AUTHORITY. The Awarding Authority in
its sole discretion shall designate those Employees who are to receive Awards
under the Plan. The Awarding Authority's designation of an Employee for a
particular Award shall not require the Awarding Authority to make any further
Awards to such Employee.

         2.2      AWARDING AUTHORITY TO MAKE AWARDS. The Awarding Authority
shall make Awards under the Plan by determining a number of Share Units to be
credited to those Employees whom the Awarding Authority has selected for
participation in the Plan corresponding to a specified number of shares of
Company Stock allocated in the Trust to such Employees, and by establishing an
Account in favor of such Employees in accordance with Article IV to hold such
Share Units. A separate Account shall be established for each Award. Each
Account shall be subject to a vesting schedule specified by the Awarding
Authority. The

                                     - 2 -
<PAGE>

amount, timing and vesting of each Award shall be decided in the Awarding
Authority's sole discretion, and the Awarding Authority may apply different
terms to Awards made to different Employees as well as to different Awards made
to the same Employee.

         2.3      AWARDS TO BE HELD IN TRUST. Within a reasonable period of time
following the date of an Award, SAIC shall contribute to the Trust Company Stock
or an amount of money sufficient to purchase shares of Company Stock
corresponding to the Share Units made in such Award. The Trustee shall apply
such contribution toward the purchase of Company Stock in accordance with the
directions of the Committee and the terms of the Trust. To the extent any such
Award is made to an Employee of an affiliate of SAIC, SAIC may charge the cost
of the corresponding Trust contribution to such affiliate as agreed between SAIC
and the affiliate.

         2.4      VESTING AND FORFEITURE. Each Account shall be subject to a
vesting schedule, not to exceed seven (7) years, established by the Awarding
Authority. Vesting shall cease upon termination of the Participant's employment
with the Company for any reason other than the death of the Participant. For
purposes of the Plan, an Employee's leave of absence exceeding thirty (30) days
other than (i) a leave of absence caused by the Employee's disability, as
defined under the terms of any of the Company's short-term or long-term
disability plans, (ii) a qualified military leave as determined by the
Committee, or (iii) a family or medical leave covered by federal or state
family/medical leave acts, shall be considered a termination of employment
effective on the thirtieth day of such leave of absence. An Employee's change in
status to that of consulting employee shall also be considered a termination of
employment for purposes of the Plan. Further, an Employee's change in status to
a part-time Employee, which status exists for an aggregate period or periods
(whether or not consecutive) of six months, shall be considered a termination of
employment solely for purposes of the Plan, as of the end of such six-month
period, except where applicable law would preclude such treatment of part-time
Employees. For this purpose "part-time Employee" shall mean an Employee whose
scheduled work week is less than 30 hours. In the event of death of a
Participant, all of the Participant's Account(s) shall become immediately
vested. The unvested portion of a Participant's Accounts upon a termination of
employment shall be immediately forfeited by the Participant, and the shares of
Company Stock represented by such unvested portion shall be returned to the
Company or reallocated in accordance with the Committee's directions and the
terms of the Trust.

                                   ARTICLE III

                                   TRUST FUND

         3.1      TRUST FUND ESTABLISHED. The Company has established the Trust
pursuant to a trust agreement under which the Trustee will hold and administer
in trust all assets deposited with the Trustee in accordance with the terms of
this Plan. The Board shall have the authority

                                     - 3 -
<PAGE>

to select and remove the Trustee to act under the Trust agreement, and to enter
into new or amended trust agreements as it deems advisable.

         3.2      COMPANY, COMMITTEE AND TRUSTEE NOT RESPONSIBLE FOR ADEQUACY OF
TRUST FUND. Neither the Company, Committee nor Trustee shall be liable or
responsible for the adequacy of the Trust Fund to meet and discharge any or all
payments and liabilities hereunder. All Plan benefits will be paid only from the
Trust assets, and neither the Company, the Committee nor the Trustee shall have
any duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in Section 2.3 hereof.

                                   ARTICLE IV

                              ACCOUNTING PROCEDURES

         4.1      COMMITTEE TO MAINTAIN ACCOUNTS. The Committee shall open and
maintain a separate Account with respect to each Award made under the Plan for
purposes of keeping a record of the assets held in Trust for each Participant
and for recording the vesting status of each Award.

         4.2      ACCOUNTING PROCEDURES. The Committee shall establish and may
amend from time to time accounting procedures for the purpose of making
allocations, Distributions, valuations and adjustments to Accounts provided for
in this Article IV. A Participant or Beneficiary shall have no contractual or
other right to have a particular accounting procedure or convention apply, or
continue to apply, and the Committee shall be free to alter any such procedure
or convention without obligation to any Participant or Beneficiary.

         4.3      INVASION OF TRUST BY CREDITORS. If assets of the Trust should
be reduced due to action of the Company's Creditors, as provided in the Trust
document, the Committee shall reduce each Account on a pro rata basis to reflect
such reduction in Trust assets, and the Company shall have no obligation to
replace such lost assets.

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

                                    ARTICLE V

                            RIGHTS IN ACQUIRED STOCK

         5.1      POWER TO VOTE STOCK RESTS WITH TRUSTEE. The power to vote any
stock held by the Trustee shall rest solely with the Trustee, who shall vote
such stock in the same proportion

                                     - 4 -
<PAGE>

that the other shareholders vote their shares of Company Stock. For purposes of
this Section 5.1, Company Stock shall include both Class A and Class B Common
Stock.

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

         5.3      DIVIDENDS. All dividends on Company Stock held in Trust shall
be held by the Trustee and reinvested as directed by the Committee. The
Committee shall allocate such dividends among the Accounts pro rata to the
shares allocated to each Account.

                                   ARTICLE VI

                            DISTRIBUTION OF ACCOUNTS

         6.1      TIME OF DISTRIBUTION. Subject to the acceleration provisions
of Article VII, a Participant's Account shall be Distributed as follows:

                  (a)      If the Participant files an election in a manner
prescribed by the Committee within ninety (90) days following the date of the
Award contained in the Account, the Participant's Account shall be distributed
as it becomes vested, with each payment to be made within a reasonable period of
time following the date of vesting of the portion of the Account to be paid.

                  (b) If the Participant fails to make the election described in
subsection (a), the Participant's Account shall be distributed in full within a
reasonable period of time following the seventh anniversary of the date of the
Award contained in such Account.

         6.2      FORM OF DISTRIBUTION. Each distribution shall be made in the
form of Company Stock unless the Committee determines, in its sole discretion,
that distribution of Company Stock is impossible or creates adverse impact on
the Company, in which case the Committee may determine to make the distribution
in cash. A Participant shall have no right to request a cash distribution.

         6.3      BENEFICIARY DESIGNATION.

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

                                     - 5 -
<PAGE>

Committee; provided, however, that if a married Participant wishes to designate
an individual other than his or her spouse as Beneficiary, such designation
shall not be effective unless consented to in writing by the spouse.
Notwithstanding the foregoing, spousal consent shall not be necessary if it is
established to the satisfaction of the Committee that there is no spouse of the
Participant or that the required consent cannot be obtained because the spouse
cannot be located or is legally incompetent. The Company may rely upon the
designation of Beneficiary or Beneficiaries last filed by the Participant in
accordance with the terms of this Plan.

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

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

         6.5      WITHHOLDING OF TAXES. To the extent any Distribution from the
Trust is subject to withholding taxes, the Committee may require, as a condition
to the payment of such Distribution, that the Participant or Beneficiary who is
eligible for the Distribution:

                  (a)      make payment to the Company in the form of a check
for such withholding taxes; or

                  (b)      consent to the withholding of shares of Company Stock
by the Trustee sufficient in value to satisfy such withholding taxes, in which
case such shares shall be delivered to the Company which shall make the
appropriate tax withholding.

The Committee may offer either or both of these options to the Participant or
Beneficiary in the Committee's sole discretion.

                                     - 6 -
<PAGE>

                                   ARTICLE VII

                    ACCELERATION OF DISTRIBUTION AND VESTING

         7.1      TERMINATION OF EMPLOYMENT OR DEATH. Unless sooner distributed
in accordance with Section 6.1, the vested portion of a Participant's Accounts
shall be distributed from the Trust as soon as practicable following termination
of the Participant's employment with the Company for any reason, including
death. Termination of employment shall include certain leaves of absence and
changes in status as specified in Section 2.4. The Participant shall forfeit any
unvested portion of the Accounts at the time of such termination.

         7.2      CHANGE IN CONTROL. Every Account shall become fully vested and
shall be immediately distributed to the Participants to whom such Accounts
belong, upon the occurrence of a Change in Control (as hereinafter defined) of
the Company. A Change in Control shall be deemed to occur upon any "person" (as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934), other than
the Company, any subsidiary or any employee benefit plan or trust maintained by
the Company or subsidiary becoming the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of
more than 25% of the Company Stock outstanding at such time, without the prior
approval of the Board. For purposes of the foregoing, a subsidiary is any
corporation in an unbroken chain of corporations beginning with the Company if
each of the corporations, other than the last corporation in such chain, owns at
least fifty percent (50%) of the total voting power in one of the other
corporations in such chain.

         7.3      HARDSHIP. Notwithstanding the provisions of Section 6.1
hereof, a Participant shall be entitled to request a hardship Distribution of
all or any portion of the vested portion of his or her Account(s). A Participant
must make a written request for a hardship Distribution, stating the reasons
such withdrawal is necessary because of a financial hardship. The Committee, in
its sole discretion, shall determine whether or not to grant the hardship
Distribution of such Participant's Account(s) and, in so doing, may rely on the
Participant's statements, and a hardship Distribution may be approved without
further investigation unless the Committee has reason to believe such statements
are false.

                                  ARTICLE VIII

                         PLAN TERMINATION AND AMENDMENT

         8.1      TERMINATION AND AMENDMENTS. The Plan shall continue until all
amounts have been distributed in accordance with the terms of the Plan.
Notwithstanding the foregoing sentence, the Board retains the right to amend or
terminate the Plan for any reason, including but not limited to adverse changes
in accounting rules or tax laws or the bankruptcy,

                                     - 7 -
<PAGE>

receivership or dissolution of the Company. In the event of a Plan amendment or
termination, benefits will either be paid out when due under the terms of the
Plan or as soon as possible as determined by the Committee in its sole
discretion. To the extent feasible, the Committee shall use its best efforts to
avoid adversely affecting the rights of any existing Participants in the Plan,
but the Committee shall be under no specific duty or obligation in this regard.

                                   ARTICLE IX

                               PLAN ADMINISTRATION

         9.1      COMMITTEE. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan and the authority granted hereunder to the
Awarding Authority, the Committee shall have exclusive power to determine the
manner and time of Awards and payment of benefits to the extent herein provided
and to exercise any other discretionary powers granted to the Committee pursuant
to the Plan. The decisions or determinations by the Committee shall be final and
binding upon all parties, including shareholders, Participants and other
Employees. Without limiting the generality of the foregoing, the Committee shall
have the authority to determine whether a termination of employment has occurred
for purposes of the Plan's vesting and forfeiture provisions, and such
determinations need not be uniformly applied as among Employees. The Committee
shall have the authority to interpret the Plan, to make factual findings and
determinations, to adopt and revise rules and regulations relating to the Plan
and to make any other determinations which it believes necessary or advisable
for the administration of the Plan. The Committee's discretion in these matters
shall be as broad and unfettered as permitted by law.

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

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

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

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

                                     - 8 -
<PAGE>

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

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

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

                  Any action taken in good faith by the Committee in the
exercise of authority conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their beneficiaries. All discretionary powers
conferred upon the Committee shall be absolute.

         9.3      PLAN EXPENSES. Members of the Committee shall serve as such
without compensation from the Plan, but may receive compensation from the
Company for so serving. All Plan administration expenses shall be borne by the
Company or the Trust as determined by the Committee in its sole discretion.

                                     - 9 -
<PAGE>

         9.4      RELIANCE UPON DOCUMENTS AND OPINIONS.

                  (a)      The members of the Committee, the Board, and the
Company shall be entitled to rely upon any:

                           (i)      Tables, valuations, computations, estimates,
         certificates, opinions and reports furnished by any consultant, or firm
         or corporation which employs one or more consultants or advisors; and

                           (ii)     Computations, estimates and reports
         furnished by any consultants or consulting firms.

                  (b)      The members of the Committee, the Board, and the
Company shall be fully protected and shall not be liable in any manner
whatsoever for anything done or action taken or suffered in reliance upon any
such consultant, firm, or corporation which employs one or more consultants or
counsel.

                  (c)      Any and all such things done or such actions taken or
suffered by the Committee, the Board, and the Company in so relying shall be
conclusive and binding on all Employees, Participants, Beneficiaries and any
other persons whomsoever, except as otherwise provided by law.

                  (d)      The Committee may, but is not required to, rely upon
all records of the Company with respect to any matter or thing whatsoever, and
may likewise treat such records as conclusive with respect to all Employees,
Participants, Beneficiaries and any other persons whomsoever, except as
otherwise provided by law.

         9.5      REQUIREMENT OF PROOF. The Committee, the Board, or the Company
may require satisfactory proof of any matter under this Plan from or with
respect to any Employee, Participant or Beneficiary, and no such person shall
acquire any rights or be entitled to receive any benefits under this Plan until
such proof shall be furnished as so required.

         9.6      LIMITATION ON LIABILITY. No employee or director of the
Company and no other person shall be subject to any liability by reason of or
arising from his or her participation in the establishment or administration or
operation of the Plan unless he or she acts fraudulently or in bad faith.

         9.7      INDEMNIFICATION.

                  (a)      To the extent permitted by law, the Company shall
indemnify each member of the Awarding Authority, of the Committee, and any other
employee or director of the Company who was or is a party, or is threatened to
be made a party, to any threatened,

                                     - 10 -
<PAGE>

pending or completed proceeding, whether civil, criminal, administrative, or
investigative, by reason of his or her conduct in the performance in connection
with the establishment or administration of the Plan or any amendment or
termination of the Plan.

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

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

                  (d)      Expenses incurred in defending any such proceeding
may be advanced by the Company prior to the final disposition of such
proceeding, upon receipt of an undertaking by or on behalf of the recipient to
repay such amount, unless it shall be determined ultimately that the recipient
is entitled to be indemnified as authorized in this Section 9.7.

                  (e)      The right of indemnification set forth in this
Section 9.7 shall be in addition to any other right to which any Awarding
Authority member, Committee member or other person may be entitled as a matter
of law, by corporate bylaws or otherwise.

                                    ARTICLE X

                            MISCELLANEOUS PROVISIONS

         10.1     RESTRICTIONS ON PLAN INTEREST.

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

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

                                     - 11 -
<PAGE>

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

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

         10.2     NO ENLARGEMENT OF EMPLOYEE RIGHTS.

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

                  (b)      An Employee's employment with the Company is not for
any specified term and may be terminated by such Employee or by the Company at
any time for any reason, with or without cause. Nothing in this Plan or in any
agreement pursuant to this Plan shall confer upon any Employee or Participant
any right to continue in the employ of or affiliation with the Company nor
constitute any promise or commitment by the Company regarding future positions,
future work assignments, future compensation or any other term or condition of
employment or affiliation.

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

                  (d)      The Plan is not intended to nor shall it be deemed
to be a Plan providing retirement income or resulting in the deferral of
income by employees for periods extending to the termination of covered
employment or beyond.

         10.3     RIGHTS OF REPURCHASE AND FIRST REFUSAL FOR THE COMPANY. Any
Company Stock distributed from the Plan shall be subject to a right of
repurchase and right of first refusal by the Company. The terms and conditions
of the right of repurchase and right of first refusal shall be those applied to
Company Stock by the Certificate of Incorporation of Science Applications
International Corporation, as in effect from time to time.

         10.4     MAILING OF PAYMENTS. All payments under the Plan shall be
delivered in person or mailed to the last address of the Participant (or, in the
case of the death of the Participant to that of any other person entitled to
such payments under the terms of the Plan). Each

                                     - 12 -
<PAGE>

Participant shall be responsible for furnishing the Committee with his or her
correct current address and the correct current name and address of his or her
Beneficiary.

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

         10.6     GOVERNING LAW. All legal questions pertaining to the Plan
shall be determined in accordance with the laws of the State of California.

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

         10.8     ILLEGALITY OF PARTICULAR PROVISION. If any particular
provision of this Plan shall be found to be illegal or unenforceable, such
provision shall not affect the other provisions thereof, but the Plan shall be
construed in all respect as if such invalid provision were omitted.

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

         10.10    ARBITRATION. The Committee's written decision on review of a
denial of benefits, as provided in Section 9.2(e), shall be final, conclusive
and binding on all Participants, Beneficiaries and Employees of the Company.
Notwithstanding the foregoing, any person disputing such a written decision
shall submit such dispute to binding Arbitration pursuant to the rules of the
American Arbitration Association, to be held in San Diego County. The losing
party in such arbitration proceedings shall bear the costs of arbitration, and
each party shall bear its own attorneys' fees.

                                     - 13 -

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