Document:

Ex104-FormofPerformanceShareAwardAgreementApril2014

EXHIBIT 10.4
FORM OF 
LEIDOS HOLDINGS, INC.
2006 EQUITY INCENTIVE PLAN  
PERFORMANCE SHARE AWARD AGREEMENT

BY ACCEPTING THE AWARD DESCRIBED IN THIS AGREEMENT, YOU VOLUNTARILY AGREE TO ALL OF THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT, THE AWARD GRANT NOTICE AND IN THE PLAN.

This Performance Share Award Agreement (this “Agreement”), effective as of the Grant Date (as defined below), is between Leidos Holdings, Inc., Inc., a Delaware corporation (the “Company”), and Recipient (as defined below).
This Agreement sets forth the terms and conditions applicable to the award granted to Recipient pursuant to the Award Grant Notice (as defined below) representing a right to receive a number of shares of the Company’s Common Stock (the “Shares”) based on the extent, if any, to which the applicable Performance Goals (as defined below) have been achieved for the Performance Period (as defined below) (the “Performance Share Award”). 
1.    DEFINITIONS.  The following terms shall have the meanings as defined below.  Capitalized terms used herein and not defined shall have the meanings attributed to them in the Company’s 2006 Equity Incentive Plan (as may be amended from time to time, the “Plan”).
“Award Goal Notices” means the notices delivered to Recipient setting forth the Performance Goals for each fiscal year during the Performance Period, which are hereby made a part hereof and incorporated by reference into this Agreement.
“Award Grant Notice” means the notice delivered to Recipient concurrently with this Agreement and which is hereby made a part hereof and incorporated by reference into this Agreement.
“Determination Date” means the date following the end of the Performance Period (and within two and one-half months following the end of the Performance Period) on which the Committee makes a final determination of whether and to what extent the Performance Goals set forth in the Award Goal Notices have been achieved for the entire Performance Period, as described in Section 3 hereof. 
“Executive Officer” means an officer of the Company designated as such for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

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“Grant Date” means the effective date of the grant of the Performance Share Award as set forth in the Award Grant Notice.
“Ineligible Position” means a position of employment with the Company or an Affiliate that is not eligible to receive Performance Share Awards as determined by the Committee. 
“Performance Goals” means the goals approved by the Committee for the Performance Period, or for each fiscal year during the Performance Period, to be set forth in the Award Goal Notices, which shall be used to determine whether, and to what extent, the Performance Share Award shall be earned and therefore Shares shall be issued to Recipient after the Determination Date pursuant to this Agreement.
“Performance Period” means the period of three fiscal years from fiscal year 20__ through fiscal year 20__, inclusive, based on the Company’s audited annual financial statements. 
“Permanent Disability” means the status of disability determined conclusively by the Committee based upon certification of disability by the Social Security Administration or upon such other proof as the Committee may require, effective upon receipt of such certification or other proof by the Committee. 
“Recipient” means the person granted a Performance Share Award as named in the Award Grant Notice who is affiliated with the Company or an Affiliate as an employee. 
“Section 409A” means Section 409A of the Code together with the regulations promulgated thereunder.
“Target Shares” means the target number of Shares as set forth in the Award Grant Notice. 
“Special Retirement” means: (i) retirement by the Recipient after reaching age 591⁄2 with at least ten (10) years of service with the Company or an Affiliate; (ii) retirement by the Recipient after reaching age 591⁄2 and Recipient’s age plus years of service with the Company or an Affiliate equals at least 70; or (iii) if the Recipient is an Executive Officer at the time of retirement, retirement after reaching age 65 by the Recipient, regardless of years of service with the Company.  For Special Retirement purposes, years of service shall mean the period of service determined conclusively by the Committee.
2.    PERFORMANCE SHARE AWARD SUBJECT TO TERMINATION.  Except in the event of death, Permanent Disability or Special Retirement as set forth below, the Performance Share Award shall be terminated automatically without compensation and no Shares shall be issued to Recipient pursuant to this Agreement if, prior to the end of the Performance Period, Recipient’s employment with the Company or any Affiliate terminates, or if Recipient is an employee of an Affiliate and such entity ceases to be an Affiliate, whether by Committee action or otherwise, on the date such entity ceases to be an Affiliate.  

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3.    PERFORMANCE REQUIREMENTS.
		
	a)
	Performance Goals.  Following the end of the Performance Period, the Committee shall determine whether and the extent to which each of the Performance Goals have been achieved for the entire Performance Period and shall determine the number of Shares, if any, issuable to Recipient with respect to the level of achievement of each individual Performance Goal; provided that with respect to any Performance Share Award to a “covered employee” within the meaning of Section 162(m) of the Code, the Committee shall have certified the achievement of the Performance Goals.  The aggregate number of Shares potentially issuable to Recipient with respect to all Performance Goals shall be between 0% and 150% of the number of Target Shares.  If applicable, the Committee’s determinations with respect to the achievement of Performance Goals shall be based on the Company’s financial results reported in its annual report on Form 10-K as filed with the SEC, subject to any adjustments made by the Committee in accordance with Section 3 (c) below.

		
	b)
	Committee Discretion to Reduce Performance Share Award.  Notwithstanding satisfaction, achievement or completion of the Performance Goals set forth in the Award Goal Notices (or any adjustments thereto as provided below), the number of Shares issuable hereunder may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine. 

		
	c)
	Adjustment of Performance Goals.  To the extent it is intended that this Performance Share Award comply with the performance-based exception to Section 162(m) of the Code, the Committee shall make no adjustment to the Performance Goals set forth in the Award Goal Notices with respect to a “covered employee” within the meaning of Section 162(m) of the Code, including the performance targets or the method of calculating the actual performance achieved relative to the Performance Goals, except to exclude the impact of (i) changes in accounting standards or adoption of any new accounting standards in accordance with generally accepted accounting principles in the United States, (ii) changes in federal statutory corporate tax rates, and (iii) extraordinary or unusual gains or losses, events or circumstances over which the Company has no or limited control, including the occurrence of any disaster, act of God or any other force majeure event.  

		
	d)
	Section 162(m).  To the extent the Committee has determined that this Performance Share Award is intended to comply with the performance-based exception to Section 162(m) of the Code and the Recipient is a “covered employee” within the meaning of Section 162(m) of the Code, all actions taken hereunder (including without limitation any adjustments of Performance Goals or determination of whether a Fundamental Transaction has occurred) shall be made in a manner which would comply with Section 162(m) of the Code.

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4.    ISSUANCE OF SHARES.  
		
	a)
	Shares.  Shares shall be issued, if and to the extent earned based on the achievement of the Performance Goals as determined by the Committee, on (or as promptly as administratively practicable following) the Determination Date, and in no event later than ninety (90) days following the end of the Performance Period.

		
	b)
	Accrued Dividends.  If the Company pays any cash dividends on its common stock, Recipient will be entitled to receive an amount in cash (less any required withholding for taxes) equal in value to the cash dividends that would have been paid on Shares earned and issued under this Agreement assuming that such Shares had been outstanding as of the record date for such dividends declared on or after the Grant Date and prior to the issuance date of the Shares (“Accrued Dividends”). Such Accrued Dividends will be retained by the Company (without interest) and paid in cash when, and if, and to the extent that Shares are earned and issued based on the achievement of the Performance Goals. To the extent that Recipient has elected to defer receipt of the Shares in accordance with the terms of the applicable non-qualified deferral plan, payment of Accrued Dividends with respect to such Shares will be subject to the terms and conditions of such plan. The right to receive Dividend will cease and be forfeited upon the forfeiture and cancellation of this Performance Share Award.

		
	c)
	Taxes, Deferrals and Other Matters.  As a condition to the issuance of Shares hereunder, Recipient must have satisfied his or her tax withholding obligations as specified in this Agreement and must have completed, signed and returned any documents and taken any additional action that the Company deems appropriate to enable it to accomplish the delivery of the Shares.  In no event will the Company be obligated to issue a fractional share.  Notwithstanding the foregoing, (i) the Company shall not be obligated to deliver any Shares during any period when the Company determines that the issuance or the delivery of Shares hereunder would violate any federal, state or other applicable laws and/or may issue Shares subject to any restrictive legends that, as determined by the Company, is necessary to comply with securities or other regulatory requirements, and (ii) the date on which Shares are issued may include a delay (but not later than the next December 31st after the end of the Performance Period) in order to provide the Company such time as it determines appropriate to address tax withholding and other administrative matters.  If eligible, Recipient shall be given the opportunity to elect to defer receipt of the Shares.  Such deferral election shall be in accordance with the terms of the applicable non-qualified deferral plan of the Company or an Affiliate and the requirements of Section 409A and subject to such additional terms and conditions as are set by the Committee. 

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5.    PARTIAL PAYMENT ON CERTAIN EVENTS.
		
	a)
	Disability, Special Retirement or Transfer to an Ineligible Position.  

		
	(i)
	If Recipient ceases to be employed by the Company or an Affiliate as a result of Recipient’s Permanent Disability or Special Retirement and is not in an Ineligible Position at the time of such event, Recipient shall remain eligible to receive, on (or as promptly as administratively practicable following) the Determination Date, a prorated portion of the Shares that would otherwise be issuable to Recipient under the Performance Share Award in the absence of such employment termination based on the actual achievement of the Performance Goals for each fiscal year during the Performance Period in which Recipient remains so employed; provided that the prorated amount for the year in which such termination of employment occurs shall be determined based on the ratio of (x) the number of days elapsed from the beginning of the fiscal year to the employment termination date over (y) the number of days in the fiscal year (and not reflecting any shortening of the Performance Period as a result of a Fundamental Transaction as described below).  

		
	(ii)
	If Recipient is transferred to an Ineligible Position and either (i) remains employed by the Company or an Affiliate through the end of the Performance Period or, if applicable, through the time of consummation of a Fundamental Transaction as set forth in Section 5(c) below, or (ii) ceases to be employed by the Company or an Affiliate at any time prior to the end of the Performance Period as a result of Recipient’s Permanent Disability or Special Retirement, Recipient shall remain eligible to receive, on (or as promptly as administratively practicable following) the Determination Date, a prorated portion of the Shares that would otherwise be issuable to Recipient under the Performance Share Award in the absence of such transfer to an Ineligible Position based on the actual achievement of the Performance Goals for each fiscal year during the Performance Period in which Recipient remained employed by the Company and not in an Ineligible Position; provided that the prorated amount for the year in which Recipient transfers to an Ineligible Position shall be determined based on the ratio of (x) the number of days elapsed from the beginning of the fiscal year to the date of transfer to an Ineligible Position over (y) the number of days in the fiscal year (and not reflecting any shortening of the Performance Period as a result of a Fundamental Transaction as described below).

		
	(iii)
	Notwithstanding the foregoing, Recipient shall not be entitled to any Shares under the Performance Share Award if Recipient: (i) fails to execute and deliver, no later than ninety (90) days following the end of the Performance Period, a general release of claims if requested by, and in a form satisfactory to, the Company or an Affiliate, (ii) violates the terms of his or her inventions, 

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copyright and confidentiality agreement with the Company or an Affiliate, or (iii) breaches his or her other contractual or legal obligations to the Company or an Affiliate, including the non-solicitation obligations set forth in Section 13 of this Agreement. 
		
	b)
	Death.  If Recipient’s employment with the Company and its Affiliates terminates due to the death of Recipient, then Recipient’s estate shall receive, promptly after the date of death, a prorated portion of the Shares that Recipient would have been issued pursuant to the Performance Share Award based on the formula set forth in subsection (c) below as if a Fundamental Transaction had occurred on such date of death. 

		
	c)
	Change in Control of Company.  If a Fundamental Transaction (as defined in the Plan) occurs prior to the end of the Performance Period while Recipient is employed by the Company or an Affiliate or remains entitled to receive Shares pursuant to Section 5(a) above, the Performance Period shall be terminated and Recipient shall be entitled to receive, immediately prior to the consummation of such Fundamental Transaction, the following number of Shares (the “CIC Earned Shares”):

		
	(i)
	If the Fundamental Transaction occurs following completion of one or more fiscal years in the Performance Period, the number of Shares earned by Recipient for each such completed fiscal year based on the achievement of the applicable Performance Goals as determined by the Committee; plus 

		
	(ii)
	If the Fundamental Transaction occurs prior to completion of any fiscal year in the Performance Period a number of Shares based on the achievement of the Performance Goals for such fiscal year at the time of consummation of the Fundamental Transaction as determined by the Committee and prorated to reflect the portion of the fiscal year that has elapsed through the date of consummation of the Fundamental Transaction (or, if Recipient earlier transfers to an Ineligible Position, through the date of such transfer).  

Notwithstanding the foregoing, if the Company determines that this Performance Share Award is “deferred compensation” for purposes of Section 409A and is not eligible for any exemption from or exception to Section 409A, and that the Fundamental Transaction is not also a “change in ownership”, “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company under Section 409A, then the CIC Earned Shares (or a comparable amount of cash or acquiring company stock, depending on the consideration received by Company stockholders on such Fundamental Transaction) shall only be issued to Recipient on the date such Shares would have been issued pursuant to Section 4 if a Fundamental Transaction had not occurred), unless this Performance Share Award is terminated in a manner compliant with Section 409A. 
6.    TAX MATTERS.  
		
	a)
	Tax Withholding.  If the Company or an Affiliate is required to withhold any federal, state, local or other taxes upon the vesting or any acceleration of vesting of the RSUs, 

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or any issuance of Common Stock or otherwise under this Agreement, Recipient authorizes the Company to withhold a sufficient number of shares of Common Stock issuable upon settlement of the RSUs at the then current Fair Market Value (as defined in the Plan) to meet the withholding obligation based on the minimum rates as required and/or permitted by law.  Recipient further authorizes the Company, in the Company’s sole discretion, to sell a sufficient number of shares of Common Stock on behalf of Recipient to satisfy such obligations, accept payment to satisfy such obligations in the form of cash or delivery to the Company of shares of Company stock already owned by Recipient, withhold amounts from Recipient’s compensation, or any combination of the foregoing or other actions as may be necessary or appropriate to satisfy any such tax withholding obligations as permitted by law.  
		
	b)
	Section 409A.

(i)    This Performance Share Award is intended to qualify for the short-term deferral exception to Section 409A of the Code (“Section 409A”) described in the regulations promulgated under Section 409A to the maximum extent possible, and for the Determination Date (and issuance of Shares hereunder) to be within 2 and 1⁄2 months following the end of the Performance Period.  
(ii)     To the extent Section 409A is applicable to this Performance Share Award, this Performance Share Award is intended to comply with Section 409A and to be interpreted and construed consistent with such intent.
(iii)    With respect to any Recipient who is eligible for Special Retirement, this Performance Share Award is intended to be paid on fixed payment dates under Sections 4(a) and 5 of this Agreement and such payments may not be accelerated except as set forth in Section 5(b) hereof or otherwise to the extent permitted under Section 409A. 
(iv)    Without limiting the generality of the foregoing, if Recipient is a “specified employee” within the meaning of Section 409A, as determined under the Company’s established methodology for determining specified employees, on the date of Recipient’s termination of service at a time when this Performance Share Award pursuant its terms would be settled, then to the extent required in order to comply with Section 409A, shares of Common Stock that would be issued under this Performance Share Award (or any other amount due hereunder) at such termination of service shall not be issued before the first business day following the earlier of (x) the date that is six months following Recipient’s termination of employment and (y) the date of Recipient’s death.
(v)    For purposes of this Agreement, the terms “terminate,” “terminated”, “termination” and “ceases to employed” and similar terms mean a termination of the Recipient’s employment that constitutes a “separation from service” within the meaning of the default rules of Section 409A.  

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7.    RIGHTS, RESTRICTIONS AND LIMITATIONS.  Any Shares issued to Recipient pursuant to this Agreement are subject to the rights, restrictions and limitations set forth in the Company’s Restated Certificate of Incorporation.  Recipient shall not have the rights of a stockholder until Shares, if any, are issued following the Determination Date.  The Performance Share Award and rights under this Agreement may be not transferred by Recipient.
8.    RESTRICTIONS UNDER SECURITIES LAW.  The Performance Share Award and Shares potentially issuable pursuant this Agreement are subject to any restrictions which may be imposed under applicable state and federal securities laws and are subject to obtaining all necessary consents which may be required by, or any condition which may be imposed in accordance with, applicable state and federal securities laws or regulations.
9.    EMPLOYMENT AT WILL.
		
	a)
	Recipient’s employment or affiliation with the Company or an Affiliate is not for any specified term and may be terminated by Recipient or by the Company or an Affiliate at any time, for any reason, with or without cause and with or without notice.  Nothing in this Agreement, the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall:  (i) confer upon Recipient any right to continue in the employ of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right to terminate Recipient at will and without regard to any future vesting opportunity that Recipient may have.

		
	b)
	Recipient acknowledges and agrees that the right to receive Shares pursuant to this Agreement is earned, among other requirements, only by continuing as an employee at the will of the Company (not through the act of being hired, being granted the Performance Share Award or any other award or benefit) and that the Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to time, as it deems appropriate (a “reorganization”).  Recipient acknowledges and agrees that such a reorganization could result in the termination of Recipient’s relationship as an employee to the Company or an Affiliate, or the termination of Affiliate status of Recipient’s employer and the loss of benefits available to Recipient under this Agreement, including but not limited to, the termination of the right to receive Shares under this Agreement.  Recipient further acknowledges that if the Performance Goals are not met, it is possible that no Shares will be issued hereunder.

10.    INCORPORATION OF PLAN.  The Performance Share Award is granted pursuant to the Plan, all the terms and conditions of which are hereby made a part hereof and are incorporated herein by reference.  In the event of any inconsistency between the terms and conditions contained herein and those set forth in the Plan, the terms and conditions of the Plan shall prevail.

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11.    RECOUPMENT OF AWARDS.  The Human Resources and Compensation Committee of the Company’s Board of Directors adopted a recoupment policy on June 18, 2009 (the “Policy”), that may require members of senior management to return incentive compensation if there is a material restatement of the financial results upon which the compensation was originally based.  The Policy also provides for recovery of incentive compensation from any employee involved in fraud or intentional misconduct, whether or not it results in a restatement of the Company’s financial results.  Recipient acknowledges and agrees that the Policy applies to the Performance Share Award and that any payments or issuances of Shares are subject to recoupment pursuant to the Policy, including any amendments to the Policy and any recoupment obligations imposed by applicable law or regulation.  This Agreement shall be deemed to include the restrictions imposed by the Policy.
12.    COPIES OF PLAN AND OTHER MATERIALS.  Recipient acknowledges that Recipient has received copies of the Plan and the Plan prospectus from the Company and agrees to receive stockholder information, including copies of any annual report, proxy statement and periodic report, electronically from the Company.  Recipient acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are also available upon written or telephonic request to the Company.  Recipient acknowledges that a copy of the Policy referenced in Section 11 is available on the Company’s intranet, and is also available upon written or telephonic request to the Company.
13.    NON-SOLICITATION.  
		
	a)
	Solicitation of Employees.  Recipient agrees that, both while employed by the Company or an Affiliate and for one year afterward, Recipient will not solicit or attempt to solicit any employee of the Company or an Affiliate to leave his or her employment or to violate the terms of any agreement or understanding that employee may have with the Company or an Affiliate. The foregoing obligations apply to both the Recipient’s direct and indirect actions, and apply to actions intended to benefit Recipient or any other person, business or entity. 

		
	b)
	Solicitation of Customers.  Recipient agrees that, for one year after termination of employment with the Company or an Affiliate, Recipient will not participate in any solicitation of any customer or prospective customer of the Company or an Affiliate concerning any business that:

		
	(i)
	involves the same programs or projects for that customer in which Recipient was personally and substantially involved during the 12 months prior to termination of employment; or 

		
	(ii)
	has been, at any time during the 12 months prior to termination of employment, the subject of any bid, offer or proposal activity by the Company or an Affiliate in respect of that customer or prospective customer, or any negotiations or discussions about the possible performance of services by the Company or an Affiliate to that customer or potential customer, in which Recipient was personally and substantially involved. 

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In the case of a governmental, regulatory or administrative agency, commission, department or other governmental authority, the customer or prospective customer will be determined by reference to the specific program offices or activities for which the Company or an Affiliate provides (or may reasonably provide) goods or services.
		
	c)
	Remedies.  Recipient acknowledges and agrees that a breach of any of the promises or agreements contained in this Section 13 will result in immediate, irreparable and continuing damage to the Company for which there is no adequate remedy at law, and the Company or an Affiliate will be entitled to injunctive relief, a decree for specific performance, and other relief as may be proper, including money damages. 

14.    MISCELLANEOUS.  This Agreement (together with the Award Grant Notice) contains the entire agreement of the parties with respect to its subject matter, provided, however, that if Recipient and the Company are parties to an existing written agreement addressing the subject matter of Section 13, such agreement shall control with respect to such subject matter until the termination thereof, at which time Section 13 shall control.  This Agreement shall be binding upon and shall inure to the benefit of the respective parties, the successors and assigns of the Company, and the heirs, legatees and personal representatives of Recipient.  The parties hereby agree that should any portion of this Agreement be judicially held to be invalid, unenforceable, or void, such portion shall be construed by limiting and reducing it, so as to be enforceable to the maximum extent compatible with the applicable law as is then in effect.
15.    GOVERNING LAW.  This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware without reference to such state’s principles of conflict of laws.
16.    ACKNOWLEDGMENT.  Recipient acknowledges that the Performance Share Award constitutes full and adequate consideration for Recipient’s obligations under this Agreement, the acceptance of the Performance Share Award constitutes an unequivocal acceptance of this Agreement and any attempted modification or deletion will have no force or effect on the Company’s right to enforce the terms and conditions stated herein.
By accepting the Performance Share Award, you agree to all of the terms and conditions set forth herein and in the Plan. 

10Exhibit10_5_MOU

EXHIBIT 10.5

MEMORANDUM of UNDERSTANDING

DATE:    March 24, 2014

TO:    K. Stuart Shea

FROM:    John P. Jumper

SUBJECT:    Career Transition Benefits

1.   This Memorandum of Understanding (MOU) describes additional Career Transition Benefits you will receive in consideration for signing this MOU with Leidos (also referred to as the “Company”).  The benefits, covenants, and all other material terms contained herein are contingent upon approval of the Human Resources Compensation Committee of the Board of Directors.  This MOU does not change the at-will nature of your employment with Leidos. If your employment with Leidos is terminated for willful malfeasance before April 6, 2014, then you are no longer eligible for the Career Transition Benefits described in this MOU.

		
	2.
	Leidos acknowledges that, notwithstanding the payment of the Career Transition Benefits described herein, the parties’ execution of this Memorandum of Understanding, and the termination of your employment from Leidos on April 6, 2014, you remain eligible to receive the compensation and benefits you would normally receive as a result of your separation. Pursuant to the letter from Sarah Allen dated March 21, 2014, and signed and dated and acknowledged by you, such compensation and benefits you would normally receive as a result of your separation include a payout of any accrued and unused comprehensive leave, vested deferred compensation, an annual short-term incentive cash bonus for FY14, and the scheduled vesting of restricted stocks and stock options previously granted through the date of separation, with the ability to exercise those options for a period of 90 days post-employment.

3.   As part of the additional Career Transition Benefits described herein, you will be provided with a lump sum payment equal to $725,000.00 less applicable tax withholdings. This payment will be made within fifteen (15) business days following the end of the revocation period as described in this MOU or April 15, 2014, whichever is later.

4.   You will also be provided with the following, additional Career Transition Benefits:

a.   Upon separation from Leidos, federal law (COBRA) provides that you may continue your group medical, dental and vision benefits by paying the required premiums. More information regarding your COBRA rights, including time limitations, will be provided to you upon 

separation from Leidos. You will be provided with a lump sum payment of $12,000.00 less applicable payroll tax withholdings to help defray COBRA costs.  This payment will be made within fifteen (15) business days following the end of the revocation period as described in this MOU or April 15, 2014, whichever is later.

b.   To help defray the costs of outplacement services, you will be provided with a lump sum payment of $50,000.00 less applicable payroll tax withholdings.  This payment will be made within fifteen (15) business days following the end of the revocation period as described in this MOU or April 15, 2014, whichever is later.

c.   You will provided with an additional lump sum payment currently valued at 
$2,599,892.00 less applicable payroll tax withholdings.  This payment will be made within fifteen (15) business days following the end of the revocation period as described in this MOU or April 15, 2014, whichever is later.
    
		
	d.
	In recognition of your contributions in FY15, you will be provided with a lump sum payment based on the Company’s organizational performance as approved by the Board for other similarly situated senior executives and pro-rated based on your separation date.  This payment will be made on the normal annual cash bonus grant date in early April 2015.  

5.   If you secure another position with Leidos (or as a Leidos payrollee or temporary employee) within
52 weeks following the termination of your employment with Leidos on April 6, 2014, you agree to reimburse Leidos the amount of the lump sum Career Transition Benefit payments as described above, pro-rated by the number of weeks elapsed between April 6, 2014 and your rehire date.

6.   You understand that for a period of seven (7) days from the date you sign this MOU, you may revoke this MOU in writing to Sarah K. Allen at 11955 Freedom Drive, Reston, VA 20190 and that the MOU shall not become effective or enforceable until the revocation period has expired.

7.   You agree not to disclose the terms of this MOU to any third party other than family members, financial or legal advisors, or those with a legitimate business “need to know,” or pursuant to a subpoena, legal process, or order by an administrative tribunal or agency or court.

8.   You agree not to make statements to clients, customers and suppliers of the Company or to other members of the public that are disparaging or negative towards the Company or to its products and services. The company’s CEO, senior executives, investor relations team, communications team, and Board members agree that they will not make statements that are disparaging or negative towards you or your performance, including your performance as President and Chief Operating Officer. After your employment with Leidos ends on April 6, 2014, you will affirmatively state that you are no longer employed with Leidos if and when you are prompted to do so, and shall at no time hold yourself out as a Leidos employee, agent, or representative.  Nothing in this provision shall preclude you from testifying truthfully pursuant to a subpoena, legal process, or order by an administrative tribunal or agency or court.

9.   You acknowledge that you have had the opportunity and are in this Agreement advised to seek the advice of an attorney of your choice with regard to this MOU and that there are no agreements, written or oral, express or implied, between you and Leidos, other than this MOU.  This MOU contains the entire agreement and understanding by and between you and Leidos, and supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between 

the parties concerning the matters herein or therein, with the exception of those set forth in the letter from Sarah Allen dated March 21, 2014, and signed, dated, and acknowledged by you regarding the compensation and benefits you would normally receive as a result of your employment separation.  Furthermore, the terms of this MOU may not be modified without the written agreement of all of the signatories hereto.

10. You acknowledge that you signed an Intellectual Property Agreement on October 9, 2005. You agree that you: 1) will not take or retain any proprietary information created by you or made available to you during the course of your employment at the Company; or any other Company property such as computers, badges, etc; 2) will not disclose to any third party, any of the trade secrets or other proprietary information of the Company; 3) will not use any of the Company’s trade secrets or other proprietary information to provide services or assistance to any other company, entity or person; and 4) will not take or retain any of the Company’s intellectual property.

11. You acknowledge that you have knowledge of confidential and proprietary information concerning the current salary, benefits, skills, and capabilities of Company employees and that it would be improper for you to use such information in any manner adverse to the Company’s interests. You further agree that you will not recruit or solicit for employment, directly or indirectly, any employee of the Company during the Continuation Period of one year.

12. For a period of one year following the termination of your employment with the Company, you agree that you will not, directly or indirectly, on behalf of yourself or any other person or entity other than the Company, offer to provide products or services, perform on any program, or provide direct oversight on any program, product, or service: (1) that would cause you to use, disclose, or access confidential or proprietary Leidos information; and/or (2) with which the Company can demonstrate you were actively associated in the past two years as a Leidos (formerly SAIC) employee, or that is competitive with any program, product, or service with which the Company can demonstrate you were actively associated in the past two years as a Leidos (formerly SAIC) employee; and/or (3) that is associated with any program, product or service that is currently in the Leidos business development, capture, and/or proposal pipeline (as documented in the Leidos CRM system as of April 6, 2014) and with which you were actively associated in the past two years as a Leidos (formerly SAIC) employee. You further agree that for a period of one year following the termination of your employment, you are prohibited from providing inside, proprietary, or confidential information to any individual, company, or entity in their purchase or acquisition of Leidos, or from assisting any individual, company, or entity in pursuit of their purchase or acquisition of Leidos.

13. You hereby agree to cooperate with the Company regarding any pending or subsequently filed litigation, claims or other disputes involving the Company that relate to matters within the knowledge or responsibility of Employee.  Without limiting the foregoing, you agree (i) to meet with Company representatives, its counsel or other designees at mutually convenient times and places with respect to any items within the scope of this provision; (ii) to provide truthful testimony regarding same to any court, agency, or other adjudicatory body; and (iii) to provide the Company with notice of contact by any adverse party or such adverse party’s representative, except as may be required by law.  You will be reimbursed reasonable expenses in connection with the cooperation described in this paragraph.

14. You hereby acknowledge that you have provided Leidos with written notice of any and all concerns regarding suspected ethical and compliance issues or violations on the part of Leidos or any related person or entity, including but not limited to known violations of the Leidos Standards of Business Ethics and Code of Conduct and any Leidos policy.

15. You hereby agree to indemnify the Company and hold the Company and all other Releasees (defined in paragraph 17) harmless from and against any and all losses, costs, judgments, damages or expenses, including, without limitation, attorneys’ fees, costs and expenses, incurred by Releasees in defending any claim or cause of action brought or asserted by you, which claims or cause of action was discharged by virtue of this MOU, to the extent permitted by law.  The obligations in this paragraph do not apply to claims for age discrimination under the Age Discrimination in Employment Act.

16. Any dispute, claim or controversy of any kind or nature, including but not limited to the issue of arbitrability, arising out of or relating to this MOU, or the breach thereof, or any disputes which may arise in the future, shall be settled in a final and binding arbitration held at a mutually agreeable location and conducted in conformance with the prescribed arbitration procedures of the American Arbitration Association or other similar arbitration administration organization that the parties agree to use. In the event that You or Leidos believe that any provision of this MOU has been breached by the other, You and Leidos agree that you shall give each other reasonable advanced notice of the nature and details of the alleged breach, and attempt to resolve such dispute in good faith, prior to filing for, and submitting the controversy to, binding arbitration as set forth herein.

17. In return for the consideration provided to you pursuant to this MOU, you agree to waive, release and forever discharge Leidos, its directors, officers, stockholders, agents, subsidiaries, affiliates, successors, assigns, employees, and customers, including their fiduciaries and trustees, attorneys and representatives, and plan administrators, plan fiduciaries, and agents (collectively referred to as the “Releasees”) from any claims and potential claims for relief, causes of action and liabilities, known or unknown, that you may have as of the date you sign this MOU against Releasees or relating to the employment relationship between you and Leidos and the termination of that relationship, including any and all claims and rights in law, in equity, in contract, or in tort, or pursuant to statute, including damages, attorney’s fees, costs and expenses and, without limiting the foregoing, to all claims arising under the Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967,  or any other federal, state, or local law, statute, or ordinance prohibiting unlawful discrimination or affecting your employment with or termination from Leidos.

18. Nothing in this MOU generally prevents you from filing a charge or complaint with or from participating in an investigation or proceeding conducted by the EEOC or any other federal, state or local agency charged with the enforcement of any employment laws. By signing this MOU you are waiving your right to individual relief based on claims asserted in such a charge or complaint, except with the NLRB or anywhere else such a waiver is prohibited. You understand this MOU does not apply to any claims or rights that may arise after the date that you sign the MOU, the consideration for the MOU, Leidos expense reimbursement policies, vested rights under Leidos ERISA-covered employee benefit plans as applicable on the date you sign this MOU, and any claims that the controlling law clearly states may not be released by private agreement. You acknowledge that you have 1) received all base salary due as a result of services performed for Leidos as of the time you sign this MOU, unless you sign prior to your termination date or next applicable pay day in which case you still will be due your final base salary paycheck; 2) reported to Leidos any and all work-related injuries incurred during employment; and 3) been properly provided any leave of absence because of your or a family member's health condition and have not been subjected to any improper treatment, conduct or actions due to a request for or taking such leave.

19. This Memorandum of Understanding contains the entire agreement and understanding by and between you and Leidos, and supersedes all previous and contemporaneous oral negotiations, 

commitments, writings and understandings between the parties concerning the matters herein or therein, with the exception of those set forth in the letter from Sarah Allen dated March 21, 2014, and signed, dated, and acknowledged by you, regarding the compensation and benefits you would normally receive as a result of your employment separation. No change to this Separation Agreement shall be valid or binding unless it is in writing and signed by Leidos and you.

20. This Memorandum of Understanding shall be exclusively interpreted, construed, and enforced pursuant to the laws of the Commonwealth of Virginia, irrespective of its choice of laws provisions and irrespective of the fact that any one of the parties may be a resident of a different state.  

If you wish to accept the terms described in this MOU, please signify your agreement by signing your name in the space provided on the bottom of this page of MOU. Please return the signed document to Sarah K. Allen at 11955 Freedom Drive, Reston, VA 20190 by April 2, 2014.

	
							
	AGREED:
	 
	 
	 
	For LEIDOS:
	 
	 

	 
	 
	 
	 
	 
	 
	 

	/s/ K. Stuart Shea
	 
	3/24/2014
	 
	/s/ John P. Jumper
	 
	3/24/2014

	K. Stuart Shea
	Date
	 
	John P. Jumper
	Date

	Employee Number 147001
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	/s/ Sarah K. Allen
	 
	3/24/2014

	 
	 
	 
	 
	Sarah K. Allen
	Date

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