Document:

Exhibit

LEIDOS, INC.
KEY EXECUTIVE STOCK DEFERRAL PLAN

Amendment and Restatement Effective January 1, 2016

     

Table of Contents

	
			
	ARTICLE I PURPOSE AND EFFECTIVE DATE
	5
	

	ARTICLE II DEFINITIONS
	5
	

	ARTICLE III PARTICIPATION
	8
	

	3.1.Designation by Deferral Authority
	8
	

	3.2.Deferral Elections.
	9
	

	3.3.Amounts Subject to Deferral
	10
	

	3.4.Deferral Election Irrevocable
	10
	

	3.5Deferrals May be Held in Trust
	11
	

	ARTICLE IV TRUST FUND
	11
	

	4.1.Trust Fund Established
	11
	

	4.2.Company, Board, Deferral Authority, Committee and Trustee Not Responsible for Adequacy of Trust Fund
	11
	

	4.3.Invasion of Trust by Creditors
	12
	

	4.4.Trust Expenses
	12
	

	ARTICLE V ACCOUNTS
	12
	

	5.1.Committee to Maintain Accounts
	12
	

	5.2.Additional Accounting Procedures
	12
	

	5.3.Limitation on Benefits.
	12
	

	5.4.Vesting of Account Balances
	13
	

	5.5.Ordinary Dividend Equivalents
	13
	

	ARTICLE VI RIGHTS IN ACQUIRED STOCK
	14
	

	6.1.Power to Vote Stock Rests With Trustee
	14
	

	6.2.Tender Offers
	14
	

	6.3.Dividends
	14
	

	ARTICLE VII DISTRIBUTIONS OF DEFERRALS MADE WITH RESPECT TO PLAN YEARS COMMENCING PRIOR TO January 1, 2015
	14
	

	7.1.Time of Commencement of Distribution
	14
	

	7.2.Form of Distribution
	14
	

	7.3.Methods of Distribution
	15
	

	ARTICLE VIII DISTRIBUTIONS OF DEFERRALS MADE WITH RESPECT TO PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 2015
	17
	

	8.1.Distribution of Retirement/Termination Account
	17
	

	8.2.Distribution of Specified Date Account.
	18
	

	8.3.Modifications to Distribution Elections
	18
	

	8.4.Effect of Vesting on Distributions
	19
	

	ARTICLE IX PROVISIONS APPLICABLE TO DISSTRIBUTION UNDER ARTICLES VII AND VIII
	20
	

	9.1.Change in Control
	20
	

	9.2.Hardship
	20
	

	9.3.Beneficiary Designation.
	21
	

	9.4.Distribution to Guardian
	22
	

	9.5.Withholding of Taxes
	22
	

	9.6.Small Balance Cashouts.
	22
	

	ARTICLE X SOURCE OF PAYMENT
	22
	

i

	
			
	10.1.No Direct Interest in Trust Assets
	23
	

	ARTICLE XI PLAN TERMINATION AND AMENDMENT
	23
	

	11.1.Termination and Amendments
	23
	

	ARTICLE XII PLAN ADMINISTRATION
	23
	

	12.1.Committee
	23
	

	12.2.Committee Powers
	23
	

	12.3.Plan Expenses
	25
	

	12.4.Reliance Upon Documents and Opinions
	25
	

	12.5.Requirement of Proof
	25
	

	12.6.Reliance on Committee Memorandum
	25
	

	12.7.Limitation on Liability
	25
	

	12.8.Indemnification
	26
	

	ARTICLE XIII MISCELLANEOUS PROVISIONS
	26
	

	13.1.Restrictions on Plan Interest
	26
	

	13.2.No Enlargement of Employee Rights
	27
	

	13.3.Rights of Repurchase and First Refusal for the Company
	27
	

	13.4.Mailing of Payments
	28
	

	13.5.Inability to Locate Participant or Beneficiary
	28
	

	13.6.Governing Law
	28
	

	13.7.Illegality of Particular Provision
	28
	

	13.8.Interpretation
	28
	

	13.9.Tax Effects
	28
	

	13.10.Receipt or Release
	29
	

	13.11.Records
	29
	

	13.12.Arbitration
	29
	

	13.13.Recoupment of Awards
	29
	

    

    
    

ii

LEIDOS, INC.
KEY EXECUTIVE STOCK DEFERRAL PLAN

ARTICLE I

PURPOSE AND EFFECTIVE DATE
This Plan is an unfunded, deferred compensation arrangement established by Leidos, Inc. (the “Company”) to provide selected Employees and Directors with a method of supplementing their retirement income by deferring a portion of their compensation and to make an indirect investment in Company Stock through a “rabbi trust” vehicle.  The Plan is effective as of January 4, 1996, and was amended and restated effective January 1, 2005 to comply with Section 409A of the Code and amended and restated effective September 27, 2013. This amendment and restatement, effective January 1, 2016, includes Amendment No. 1 to the Plan, effective as of January 1, 2015, and Amendment No. 2 to the Plan, effective as of January 1, 2016.
ARTICLE II
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.
2.1.    Account.  The Account maintained for bookkeeping purposes by the Committee with respect to each Participant to evidence the Participant’s Deferrals of Deferrable Amounts hereunder, to record the number of Share Units credited as a result of such deferrals, to record the Participant’s Ordinary Dividend Equivalent Amounts, and to record the number of Share Units credited as a result of such Ordinary Dividend Equivalent Amounts.  Separate Accounts shall be established to record amounts deferred into a Retirement/Termination Account (and any Ordinary Dividend Equivalent Amounts with respect thereto) with respect to Plan Years beginning before December 31, 2014 (the “Pre-2015 Account”), and with respect to Plan Years beginning on or after January 1, 2015 (the “Post-2014 Account”) which shall include a Retirement/Termination Account and up to five Specified Date Accounts.  Except where the context indicates otherwise, references to Account shall include any or all such Accounts.

2.2.    Beneficiary.  The person or persons properly designated by the Participant, in accordance with Section 9.3, to receive the benefits provided herein upon death of the Participant.

2.3.    Board.  The Board of Directors of Leidos, Inc., or its ultimate parent corporation, if any.
2.4.    Bonus Compensation Plan.  The Company’s 1984 Bonus Compensation Plan, and any successor plan, including the Equity Incentive Plan.
2.5.    Code.  The Internal Revenue Code of 1986, as amended. 
2.6.    Committee.  The committee composed of such members as shall be appointed from time to time by the Board to administer the Plan.
2.7.    Company.  Leidos, Inc. (or its ultimate parent corporation, if any).  In addition, unless the context indicates otherwise, as used in this Plan the term Company shall also mean and include any direct or indirect subsidiary of the Company which has been approved by the Deferral Authority for participation in this Plan by its Employees.

5

2.8.    Company Stock.  The common stock of Leidos Holdings, Inc., par value $0.0001 per share, or any other security (including preferred stock) of the Company or the Company’s ultimate parent corporation, if any, designated as Company Stock by the Committee.
2.9.    Deferral.  The amount of Deferrable Amounts a Participant has deferred in accordance with Section 3.2 or which is designated as a Deferral under this Plan in connection with an Employee's offer letter for employment with the Company.  Deferrals shall be denominated as Share Units.
2.10.    Deferral Authority.  The individual or group of individuals appointed by the Board to determine which Employees are eligible to make Deferrals and to participate in the Plan.
2.11.    Deferrable Amount(s).  Amounts determined by the Committee to be eligible for deferral hereunder, including (i) annual cash bonuses, if any, payable to an Employee under the Officer’s Incentive Plan, the Executive Incentive Plan, the Key Contributor Incentive Program and the Merit Recognition Bonus Program, (ii) sign-on bonuses (cash or vested stock) for new hires, (iii) vested stock bonuses, if any, payable to an Employee or Director, (iv) Directors’ fees, or (v) other eligible payments as determined by the Committee.  For purposes of clarity, non-annual “spot” bonuses, retention bonuses, and other incentives payable to an Employee or Director do not constitute Deferrable Amounts hereunder.  In no way does the operation of this Plan obligate the Company to pay any bonus or continue any compensation program.
2.12.    Director.  A member of the Board, other than a Director Emeritus, or a member of the Board of Directors of any subsidiary or affiliate thereof which has been approved by the Deferral Authority for participation in this Plan by its Employees or Directors.
2.13.    Distribution Date.  The date when distributions of Deferrals with respect to Plan Years beginning prior to December 31, 2014 begin under the Plan, as specified in Section 7.1. 
2.14.    Dividend Account.  The portion of a Participant’s Account maintained by the Committee to record the Participant’s Ordinary Dividend Equivalent Amounts.
2.15.    Employee.  A management or highly compensated employee of the Company.
2.16.    Equity Incentive Plan.  The 2006 Equity Incentive Plan and any successor plan.
2.17.    Fair Market Value.
1)If the Company Stock is being valued in connection with a transaction (such as the crediting of amounts to an Account or a distribution) for which the Committee determines there is a corresponding transaction by the Trust, the net price per share of Company Stock purchased or the net proceeds per share of Company Stock sold in the transaction by the Trust, in each case including all expenses of such transaction by the Trust.  

6

2)If paragraph (1) does not apply, (a) the closing price of the Company Stock on the New York Stock Exchange on the date for which the fair market value is determined, or, if there is no trading of the Company Stock on such date, then the closing price of the Company Stock on the New York Stock Exchange on the next preceding date on which there was trading in such shares; or (b) if the Company Stock is not listed, admitted or quoted, the Committee may designate such other source of data as it deems appropriate for determining such value for purposes of this Plan.

2.18.    Ordinary Dividend.  All cash dividends or other cash distributions paid by the Company on shares of Company Stock.

2.19.    Ordinary Dividend Equivalent Amount.  The amount of Ordinary Dividends credited by the Company to a Participant’s Account.  Such amount to be equal to the per share Ordinary Dividend paid by the Company on its Company Stock multiplied by the number of Share Units credited to the Participant’s Account as of the related dividend payment record date.

2.20.    Participant.  An Employee or Director designated by the Deferral Authority for participation in the Plan who timely files an election to participate and makes or receives Deferrals hereunder.

2.21.    Plan.  The Leidos, Inc. Key Executive Stock Deferral Plan, as set forth herein and as amended from time to time.

2.22.    Plan Year.  January 1 through December 31. 

2.23.    Retirement Date.  The date of an Employee's termination of employment from the Company or a Director's ceasing to be an active Director as determined by the Committee, on or after attaining age 59 1⁄2.  Effective January 1, 2005, a Retirement Date shall not occur unless the Employee or Director has had a Separation From Service.

2.24.    Retirement/Termination Account.  The Account established by the Committee for a Participant to record Deferrals made with respect to Plan Years beginning on or after January 1, 2015 that are payable upon the Participant’s Separation from Service.

2.25.    Separation From Service.  The death, retirement or termination of the Employee’s employment with the Company, or in the case of a Director, ceasing to perform services for the Company as a member of the Board.  This definition of Separation From Service shall be interpreted and construed in a manner intended to comply with Code Section 409A and the published authorities thereunder.  

2.26.    Share Unit.  The interest of a Participant in a share of Company Stock held in the Participant's Account.  A full Share Unit shall be equivalent to a full share of Company Stock, and a partial Share Unit shall be equivalent to the corresponding fraction of a share of Company Stock.

2.27.    Specified Date Account.  The Account(s) established by the Committee for a Participant to record Deferrals made with respect to Plan Years beginning on or after January 1, 2015 that are payable at a specified future date designated by the Participant.  Unless the Committee determines otherwise, a Participant may establish no more than five (5) Specified Date Accounts.

7

2.28.    Termination of Affiliation.  Any termination of employment with the Company by an Employee, as determined by the Committee, whether by reason of death, disability, voluntary resignation, layoff, discharge or otherwise, prior to attaining age 59 1⁄2 and, in the case of a Director, ceasing to be an active Director prior to attaining age 59 1⁄2.  The Committee shall have the discretion to establish rules and make determinations as to what constitutes a Termination of Affiliation including, without limitation, change of status (e.g., part-time, consulting Employee, etc.) or leave of absence.  Notwithstanding the foregoing, a Termination of Affiliation shall not occur unless the Employee or Director has had a Separation From Service.

2.29.    Trust.  The Leidos, Inc. Key Executive Stock Deferral Trust established by the Company to hold assets used by the Company to provide for benefits to Participants and Beneficiaries under the Plan.

2.30.    Trustee.  Wachovia Bank or such successor trustee as shall be appointed pursuant to the Trust instrument.
ARTICLE III
PARTICIPATION
3.1.    Designation by Deferral Authority.  The Deferral Authority in its sole discretion shall designate those Employees or Directors who are to be eligible to participate in the Plan with respect to Deferrals for a particular Plan Year or with respect to a particular Deferrable Amount or Amounts.  Designating an individual as eligible to participate in the Plan for a particular Plan Year or with respect to a particular Deferrable Amount shall not require the Deferral Authority to designate such individual for any subsequent Plan Year or with respect to any subsequent Deferrable Amounts.  The designation of eligibility by the Deferral Authority may be made in such manner as determined by the Deferral Authority, including, without limitation, establishment of criteria such as compensation level or level or authority.

8

3.2.    Deferral Elections.
a)An eligible Employee or Director shall not become a Participant in the Plan unless and until he or she has executed and delivered to the Committee a Deferral election, including any forms or agreements as may be prescribed by the Committee, and the Committee shall have accepted such Deferral election and/or additional forms or agreements.  Participation in the Plan and any elections made by a Participant, including Deferral elections and elections as to form of distribution under Article(s) VII or VIII, is conditioned on the Participant executing an agreement with the Company, in a manner prescribed by the Committee, relating to the Company’s right of repurchase of Company Stock (to the extent applicable) and such other matters as the Committee shall prescribe.  To initially participate in the Plan, the Employee or Director must submit his or her Deferral election, including any forms or agreements prescribed by the Committee, during the applicable Deferral election period established by the Committee.  The last day of the Deferral election period for any Deferrable Amounts other than “performance-based compensation” (as defined below) shall be no later than the last day of the calendar year prior to the first calendar year during which the Employee or Director performs services for which such Deferrable Amount is earned.  Except as otherwise provided by the Committee and communicated to Participants, a Participant’s election shall be carried forward automatically to future Plan Years for which the Participant is eligible to participate unless, during the applicable election period for such future Plan Year, the Participant elects to modify or cancel the prior election under procedures established by the Committee.  In addition to amounts deferred pursuant to a Deferral election, additional Deferrals may be credited to a Participant’s Account pursuant to the terms of an offer letter with an Employee made at the time of commencement of employment with the Company, as determined and approved by the Deferral Authority in its sole discretion.  Furthermore, the Committee may to the extent consistent with satisfying Code Section 409A, permit an Employee or Director to make a Deferral election prior to or within 30 days following the date the Employee or Director first becomes eligible to participate in the Plan, as indicated by the effective date of his status change in the Plan’s records.  Such a Deferral election shall be with respect to compensation earned for services performed after the election.  

9

b)If a Deferrable Amount constitutes “performance-based compensation,” then the Committee may, but need not, delay the last day of the Deferral election period.  The last day of the Deferral election period with respect to any Deferrable Amount which is considered to be performance-based compensation shall be no later than six (6) months before the end of the service period over which such Deferrable Amount is earned.  For this purpose, “performance-based compensation” means compensation where the amount of or entitlement to the compensation is contingent on the satisfaction of pre-established written performance criteria relating to a performance period of at least twelve (12) consecutive months, provided that performance-based compensation does not include any amount that will be paid regardless of performance, or based upon a level of performance that is substantially certain to be met at the time the criteria is established.  Performance-based compensation must also meet any other applicable requirements established under authority issued pursuant to Code Section 409A.  

c)With respect to Deferrals made for Plan Years commencing prior to January 1, 2015, a Participant elected on his or her initial Deferral election the form of distribution to be applied with respect to his or her Retirement distribution (if any) from among the forms of distribution specified in Section 7.3(b).  With respect to Deferrals made for Plan Years commencing on or after January 1, 2015, a Participant shall allocate his or her Deferrals for a Plan Year to the Retirement/Termination Account and/or to one or more Specified-Date Accounts, and shall specify the form of distribution applicable to each such Account.  

d)If no allocation is made pursuant to Section 3.2(c) above, all Deferrals for a Plan Year shall be allocated to the Retirement/Termination Account of the Participant.  If no form of distribution is elected, the form of distribution shall be a single lump sum payment.

3.3.    Amounts Subject to Deferral.  The total Deferrals elected for a particular Plan Year may be in an amount up to a specified percentage of Deferrable Amounts, such maximum percentage to be up to one hundred percent (100%) as determined by the Deferral Authority.

3.4.    Deferral Election Irrevocable.  Any Deferral election by a Participant for a particular Plan Year shall be irrevocable for that Plan Year following the end of such Plan Year’s Deferral election period. 

10

		
	3.5
	Deferrals May be Held in Trust. 

a)With respect to Deferrals before January 1, 2005, within a reasonable period of time following the date on which a Deferrable Amount would have been paid to a Participant but for the Deferral hereunder, the Company shall contribute, to the Trust, Company Stock or money in an amount sufficient to purchase shares of Company Stock equal in value (based, prior to any public offering of Company Stock, on the then prevailing Formula Price as determined under the Company’s Certificate of Incorporation) to the Deferral.  The Trustee shall apply such contribution toward the purchase of Company Stock in accordance with directions of the Committee and terms of the Trust and the Participant shall be credited with the applicable number of Share Units.

b)Effective January 1, 2005, contributions to the Trust with respect to Deferrals shall be made only if the Company, in its sole discretion, determines to make such contributions. Regardless of whether the Company makes contributions to the Trust with respect to Deferrals, the Participant shall be credited with a number of Share Units equal to the Deferral.  If it becomes necessary to determine the value of a full or partial Share Unit prior to any public offering of Company Stock, such value shall be based on the then prevailing Formula Price (as determined under the Company’s Certificate of Incorporation) as of the date the Deferrable Amount would have been paid to the Participant but for the Deferral hereunder.  Following any public offering of Company Stock, such value shall be determined according to the Fair Market Value of the Company Stock as of the date the Deferrable Amount would have been paid to the Participant but for the Deferral hereunder.  However, for Deferrals made by Directors, such value shall be determined according to the Fair Market Value of the Company Stock as of the third business day of the calendar quarter following the calendar quarter in which the Deferrable Amount was earned by the Director.
ARTICLE IV
TRUST FUND
4.1.    Trust Fund Established.  The Company has established the Trust pursuant to a trust agreement under which the Trustee will hold and administer in trust all assets deposited with the Trustee in accordance with the terms of this Plan.  The Board shall have the authority to select and remove the Trustee to act under the Trust agreement, and to enter into new or amended trust agreements as it deems advisable.

4.2.    Company, Board, Deferral Authority, Committee and Trustee Not Responsible for Adequacy of Trust Fund.  Neither the Company, Board, Deferral Authority, Committee nor Trustee shall be liable or responsible for the adequacy of the funds held in the Trust to meet and discharge any or all payments and liabilities hereunder.  All Plan benefits will be paid from the Trust assets or by the Company to the extent not paid from Trust assets, and neither the Board, Deferral Authority, Committee nor Trustee shall have any duty or liability to pay such benefits or furnish the Trust with any funds, securities or other assets.  

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 for which the Trust held assets on a pro rata basis to reflect such reduction in Trust assets, and the Company shall have no obligation to replace such lost assets.

4.4.    Trust Expenses.  Expenses of the Trust which are not paid by the Company shall be applied to reduce each Account for which the Trust holds assets on a pro rata basis.
ARTICLE V
ACCOUNTS
5.1.    Committee to Maintain Accounts.  The Committee shall open and maintain a separate Account for each Participant to record the Deferrals made by the Participant and the number of Share Units credited as a result of the Deferrals. Deferrals shall be credited to the Participant’s Account as of the date the compensation would have otherwise been paid to Participant.  Notwithstanding anything to the contrary herein, if a Participant Separates from Service under circumstances that would trigger an immediate lump sum distribution of all of the Participant’s Accounts under Articles VII and VIII, or if an immediate lump sum distribution of all of the Participant’s Accounts is made under Section 9.6 upon a Participant’s Separation from Service (excluding Participants for whom an immediate payment is not permitted in accordance with Section 7.3(f) or 8.1(e)), then any Deferrals that would otherwise have been credited to the Participant’s Account under the Plan shall not be so credited, but shall instead be distributed to the Participant on the date the Deferral would otherwise have been made.

5.2.    Additional Accounting Procedures.  The Committee shall establish and may amend from time to time additional accounting procedures for the purpose of making allocations, distributions, valuations and adjustments to Accounts, and to allocate Trust earnings expenses and losses to such accounts.  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 notice or obligation to any Participant or Beneficiary.
5.3.    Limitation on Benefits.  Benefits payable to a Participant or Beneficiary under the Plan shall be limited to the vested Account balance credited to such Participant or Beneficiary.

5.4.    Vesting of Account Balances.  A Participant's Account balance shall be one hundred percent (100%) vested except with respect to the portion of the Account balance attributable to vesting bonuses awarded under the Bonus Compensation Plan.  Such portion of a Participant's Account balance shall become vested (and the nonvested portion forfeited) at the time or times the bonus would have become vested (and the nonvested portion forfeited) under the Bonus Compensation Plan without regard to deferral under this Plan.  The Share Units represented by such forfeited portion shall be returned to the Company or reallocated in accordance with the Committee's directions and the terms of the Trust.

5.5.    Ordinary Dividend Equivalents. As of any date that the Company pays an Ordinary Dividend, each Participant’s Dividend Account shall be credited with an Ordinary Dividend Equivalent Amount.  Such Ordinary Dividend Equivalent Amount shall be credited to each Participant’s  Account in the form of  a number of Share Units (including partial Share Units) determined by dividing the Participant’s  Ordinary Dividend Equivalent Amount (expressed in dollars) by the Fair Market Value of a share of Company Stock as of the crediting date.  Amounts credited to a Participant’s Dividend Account shall be fully vested at all times; provided, however, that amounts credited to a Participant’s Dividend Account with respect to the portion of the Account balance attributable to bonuses of vesting restricted stock units shall vest (or be forfeited) in accordance with the provisions of Section 5.4.

13

ARTICLE VI
RIGHTS IN ACQUIRED STOCK
6.1.    Power to Vote Stock Rests With Trustee.  The power to vote any stock held by the Trustee shall rest solely with the Trustee, who shall vote such stock in the same proportion that the other shareholders vote their shares of stock of the Company.  For purposes of this Section 6.1, in determining how other shareholders voted, the Trustee shall take into account the votes of shareholders with respect to all classes of voting stock, including but not limited to Class A and Class B Common Stock. 

6.2.    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.

6.3.    Dividends.  All Ordinary Dividends on Company Stock held in Trust shall be held by the Trustee and reinvested as directed by the Committee.
ARTICLE VII
DISTRIBUTIONS OF DEFERRALS MADE WITH RESPECT TO PLAN YEARS COMMENCING PRIOR TO JANUARY 1, 2015
7.1.    Time of Commencement of Distribution.  Subject to the acceleration provisions of Article VIII, the balance credited to a Participant's Account shall be distributed, or commence to be distributed, to the Participant on the first to occur of the following events:

a)the Participant's Retirement Date; or

b)the date of the Participant's Termination of Affiliation with the Company.

7.2.    Form of Distribution.  Each distribution shall be made in the form of Company Stock, except that fractional Share Units shall, as determined according to procedures established by the Committee, be distributed in kind as fractional shares or applied towards satisfying tax withholding obligations with respect to Participants’ distributions.  A Participant shall have no right to request a cash distribution.

14

7.3.    Methods of Distribution.
a)Lump Sum on Death.  If a Participant dies having an Account balance (regardless of whether distributions have begun under the Plan), the remaining balance in the Participant's Account shall be paid in the form of a lump sum to the Beneficiary or Beneficiaries designated in accordance with Section 9.3, or as otherwise provided in Sections 9.3 and 9.4, within a reasonable period following the date when the Committee receives notice of the Participant's death.

b)Election for Retirement Distributions.  Subject to the acceleration provisions in Article VIII, distributions made on account of a Participant's Retirement Date shall be made to the Participant in accordance with a valid election made by the Participant under this subsection (b).  The Participant may elect in a manner prescribed by the Committee to have his or her Account paid in one of the following forms:

1)A lump sum payment of the entire Account Balance; or

2)A series of annual payments over a five (5) or ten (10) year period.  Each installment shall include one-fifth or one-tenth, as applicable, of the number of shares of Company Stock distributable to the Participant.  Effective for new Participants making Deferral elections for the 2004 and subsequent Plan years, a series of annual payments over a fifteen (15) year period shall be an available option for distributions following the Participant’s Retirement Date.  Each installment shall include one-fifteenth of the number of shares of Company Stock distributable to the Participant. 

In the event Participant elects a lump sum payment as described in Section 7.3(b)(1) and Participant has an Account balance attributable to vesting bonuses under the Bonus Compensation Plan that will continue vesting after such lump sum payment, additional distributions shall be made within a reasonable period of time following each date Share Units vest.  In the event Participant elects a series of annual payments as described in Section 7.3(b)(2) and Participant has an Account balance attributable to vesting bonuses under the Bonus Compensation Plan that will continue vesting after any annual distribution of Participant’s Account balance occurs, any Share Units that vest after a distribution will be added to the Account balance and distributed ratably over the remaining series of annual payments.

Effective January 1, 2005, a Participant’s election of the form of distribution shall be made at the time the Participant first makes a Deferral election.  Such election of form of distribution shall be applicable to all subsequent Deferral elections by the Participant.  

c)Change of Distribution Election.  Except as set forth in this Section 7.3(c), a Participant’s election of form of distribution shall be irrevocable.  Each of the forms of distribution set forth in Section 7.3(b) shall be considered a single payment for purposes 

15

of Code Section 409A.  Accordingly, Participants shall be allowed to make a new form of distribution election, provided that the following requirements are satisfied:  

1)    the election does not take effect until at least twelve (12) months after the date the election is made, and the election must be made at least twelve (12) months prior to the date the first payment would be made to the Participant absent the election; and

2)    the commencement date of the first payment to the Participant shall be five (5) years following the date the payment would have commenced absent the change in the Participant’s election.

Any attempt to change a distribution election that does not satisfy these requirements shall be void.
d)Other Distributions.  Distributions other than those specified in subsection (a) or (b) above shall be made as a lump sum within a reasonable period of time following a Participant's Termination of Affiliation.

e)Default Distribution.  If the Participant fails to make a valid election as described in subsection (b), the Participant's Account shall be distributed in full as a lump sum payment within a reasonable period of time following the Distribution Date.  If Participant has an Account balance attributable to vesting bonuses under the Bonus Compensation Plan that will continue vesting after such lump sum payment is made, additional distributions shall be made within a reasonable period of time following each date Share Units vest.

f)Notwithstanding the foregoing, if any stock of the Company is publicly traded on an established securities market, the distribution to any Participant who is a “specified employee” under Code Section 409A(a)(1)(B)(i) shall not be made (or commence to be made in the case of installment payments) before the earlier of (i) the date which is six (6) months after such Participant’s Separation From Service or (ii) the date of the Participant’s death.  For any twelve (12) month period commencing April 1 and ending March 31, an Employee is a “specified employee” if the Employee was a “key employee” at any time during the calendar year ending before such April 1.  A key employee is defined in Code Section 416(i) without regard to Code Section 416(i)(5).  

g)Notwithstanding Section 7.3(c), pursuant to a transition rule issued by the Internal Revenue Service under Code Section 409A, each Participant who has not had a Separation from Service as of December 31, 2006, shall be permitted to elect among the forms of distribution specified in Section 7.3(b) with respect to distributions made on account of the Participant’s Retirement Date.  The elections under this Section 7.3(g) shall be made pursuant to rules prescribed by the Committee, but shall in no event be made after December 31, 2006.  If a Participant does not make an election under this subsection (g), then the Participant’s previous election among forms of distribution shall continue to apply.

16

ARTICLE VIII
DISTRIBUTIONS OF DEFERRALS MADE WITH RESPECT TO PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 2015
8.1.    Distribution of Retirement/Termination Account.  A Participant who has a Separation from Service shall receive a distribution of the balance of his or her Retirement/Termination Account, valued as of the end of the month in which such Separation from Service occurred, or such other date as the Company determines, in the month following the month of Separation from Service.  Each distribution shall be made in the form of Company Stock, except that fractional shares shall, as determined according to procedures established by the Committee, be distributed in kind as fractional shares or applied towards satisfying tax withholding obligations with respect to Participants’ distributions.  A Participant shall have no right to request a cash distribution.

a)The Participant shall elect from among the forms of distribution specified in paragraph (b) the form of distribution that will apply to the Retirement/Termination Account.  The election shall be made on the Deferral election form submitted for the Plan Year commencing on January 1, 2015, or, if later, on his or her initial Deferral election form.  If no form of distribution is elected, the form of distribution shall be a single lump sum payment.

b)A Participant may elect that his or her Retirement/Termination Account be distributed in a single lump sum, or in annual installments over 5, 10 or 15 years. Distribution shall be made or commence in the month following the month of Separation from Service, and subsequent installments shall be made on the anniversary of the date the first installment is paid.  Each installment shall be one-fifth, one-tenth, or one-fifteenth (as applicable) of the number of shares of Company Stock distributable to the Participant.

c)A Participant may modify the form of distribution elected for the Retirement/Termination Account in accordance with the provisions of Section 8.3.  For purposes of Section 8.3, installment payments shall be treated as a single payment.

d)If a Participant dies before the Retirement/Termination Account has been completely distributed, the remaining balance shall be distributed to the Participant’s Beneficiary in a single lump sum within 90 days of the Participant’s death or as soon thereafter as administratively practicable.

e)Notwithstanding Section 8.1 above, the provisions of Section 7.3(f) of the Plan shall apply to payment of the Retirement/Termination Account with respect to any Participant who is a “specified employee” as defined therein.

17

8.2.    Distribution of Specified Date Account.  A Participant who establishes a Specified Date Account shall specify on the Deferral election form with which the Account is established the date on which the balance of the Account shall be distributed or commence to be distributed.  For Deferrals that are subject to vesting, the specified date may not be sooner than the beginning of the first Plan Year following the date such amounts become vested.  For Deferrals that are 100% vested when made, the specified date may not be sooner than one year after the last day of the Plan Year in which Deferrals will first be allocated to the Account.  

a)The Participant shall elect from among the forms of distribution specified in paragraph (b) the form of distribution that will apply to each Specified Date Account.  The election shall be made on the Deferral election form for the Plan Year with respect to which the Account is established.  If no form of distribution is elected, the form of distribution shall be a single lump sum payment.

b)A Participant may elect that a Specified Date Account be distributed in a single lump sum, or in annual installments over 2 to 5 years. Distribution shall be made or commence in the month following the month in which the date specified in Section 8.2 falls, and subsequent installments shall be made on the anniversary of the date the first installment is paid.  Each installment shall be equal to one-half, one-third, one-fourth, or one-fifth (as applicable) of the number of shares of Company Stock distributable to the Participant.

c)A Participant may modify the time or form of distribution elected for a Specified Date Account in accordance with the provisions of Section 8.3.  For purposes of Section 8.3, installment payments shall be treated as a single payment.

d)If a Participant has a Separation from Service prior to the complete distribution of a Specified Date Account, the remaining balance will be distributed in a single lump sum, at the same time as any balance in the Participant’s Retirement/Termination Account is distributed.

e)If a Participant dies prior to the complete distribution of a Specified Date Account, the remaining balance will be distributed to the Participant’s Beneficiary in a single lump sum within 90 days of the Participant’s death or as soon thereafter as administratively practicable.

8.3.    Modifications to Distribution Elections.  Participants shall be allowed to modify the form of distribution elected for the Retirement/Termination Account and/or the time and form of payment elected for one or more Specified Date Accounts, subject to the other provisions of this Section 8.3.

18

a)A requested modification must be submitted to the Company no later than 12 months prior to the date payments from the applicable Account are scheduled to commence, shall be irrevocable as of the date submitted, and shall take effect 12 months after submission.

b)If a Participant modifies the form of distribution applicable to the Retirement/Termination Account, payment from such Account shall be made or begin on the date that is 5 years following the date payment would have been made or commenced absent the modification.  If a Participant modifies the form of distribution applicable to a Specified Date Account, payment from such Account shall be made or begin on the date that is 5 years following the date payment would have been made or commenced absent the modification, unless the Participant specifies a later date.  If a Participant modifies the time of distribution applicable to a Specified Date Account, the time specified shall be no earlier than 5 years following the date payment would have been made or commenced absent the modification.

8.4.    Effect of Vesting on Distributions.  In the event Participant elects a lump sum payment of the Retirement/Termination Account or a Specified Date Account and Participant has an Account balance attributable to vesting bonuses under the Bonus Compensation Plan that will continue vesting after such lump sum payment, additional distributions shall be made within a reasonable period of time following each date Share Units vest.  In the event a Participant elects a series of annual payments for the Retirement/Termination Account or a Specified Date Account and Participant has an Account balance attributable to vesting bonuses under the Bonus Compensation Plan that will continue vesting after any annual distribution of Participant’s Account balance occurs, any Share Units that vest after a distribution will be added to the Account balance and distributed ratably over the remaining series of annual payments.

19

ARTICLE IX      
PROVISIONS APPLICABLE TO DISSTRIBUTION UNDER ARTICLES VII AND VIII 
9.1.    Change in Control.  All Accounts shall be immediately distributed to the Participants to whom such Accounts belong, upon the occurrence of a Change in Control (as hereinafter defined) of the Company.  A “Change in Control” shall be deemed to occur if any person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”)) other than the Company, any subsidiary or employee benefit plan or trust maintained by the Company or subsidiary, during any 12-month period ending on the date of the most recent acquisition by such person, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of the Company’s stock representing thirty-five percent (35%) or more of the voting power of the Company’s then-outstanding stock; provided, however, that a transaction shall not constitute a Change in Control unless it is a “Change in the ownership or effective control” of the Company, or a change “in the ownership of a substantial portion of the assets” of the Company within the meaning of Code Section 409A.  For purposes of the foregoing, a subsidiary is any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations, other than the last corporation in such chain, owns at least fifty percent (50%) of the total voting power in one of the other corporations in such chain.  

9.2.    Hardship.  
a)Notwithstanding the provisions of Articles VII or VIII hereof, a Participant shall be entitled to request a hardship withdrawal of all or any portion of his or her Account.  A Participant or legal representative of the 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 and, in so doing, may rely on the Participant’s statements, and a hardship distribution may be approved without further investigation unless the Committee has reason to believe such statements are false.

b)Effective January 1, 2005, a withdrawal under this Section 9.2 shall be permitted only if the Participant incurs an “unforeseeable emergency” as defined below.  Any such distribution shall be limited to the amount for which distribution is reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, State or local income taxes or penalties reasonably anticipated to result from the distribution).  For purposes of this Section 9.2(b), an “unforeseeable emergency” is a severe financial hardship of the Participant resulting from (i) an illness or accident of the Participant, the Participant’s spouse or dependent, (ii) the loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home to the extent not otherwise covered by insurance), or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  The determination of whether a Participant has an unforeseeable emergency shall be made in accordance with the authorities published pursuant to Code Section 409A.

20

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

21

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 the intestate succession or other legal provision in effect at the Participant’s death in the jurisdiction having authority over disposition of the Participant’s estate.

9.4.    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 therefore 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, to the extent thereof, discharge the liabilities of the Company to the Participant or Beneficiary under this Plan.

9.5.    Withholding of Taxes.  To the extent any distribution is subject to withholding taxes, the Committee shall require, as a condition to the payment of such distribution, that the taxes be withheld from such distribution.  With respect to amounts paid from the Trust, the Trustee shall deliver the withheld amounts to the Company which shall pay over the withheld taxes as required by law.  The Committee may, but need not, allow the Participant to make payment to the Company in the form of a check for such withholding taxes, and the Committee may provide in its discretion for other methods of withholding acceptable to the Company.

9.6.    Small Balance Cashouts.  The Committee may at any time pay the value of the Participant’s Accounts in a single lump sum if the balance of all such Accounts (inclusive of all Accounts established under Article VII and Article VIII) is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), provided the payment represents the complete liquidation of the Participant’s interest in the Plan.  If, at the time of a Separation from Service, the value of a Participant’s Accounts is not greater than the applicable dollar amount under Code Section 402(g)(1)(B), such Accounts shall be distributed in a single lump sum payment, provided the payment represents the complete liquidation of the Participant’s interest in the Plan.
ARTICLE X
SOURCE OF PAYMENT

22

10.1.    No Direct Interest in Trust Assets.  All distributions hereunder shall be paid solely from the Trust or from the assets of the Company, as determined by the Company.  The Company shall pay any distributions not paid by the Trust.  No special or separate funds shall be established and no other segregation of assets shall be made to assure the payment of benefits hereunder.  A Participant shall have no right, title, or interest whatever in or to any investments which the Company may make through the Trust to meet its obligations hereunder.  Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create any kind of a fiduciary relationship between the Company and a Participant or any other person.  
ARTICLE XI
PLAN TERMINATION AND AMENDMENT
11.1.    Termination and Amendments.  The Plan shall continue until all amounts credited to the Participants' Accounts have been distributed in accordance with the terms of the Plan.  Notwithstanding the foregoing sentence, the Company retains the right to amend or terminate the Plan for any reason, including but not limited to adverse changes in tax laws or the bankruptcy, receivership or dissolution of the Company.  In the event of a Plan termination, benefits will be paid out when due under the terms of the Plan.  To the extent feasible, the Committee shall use its best efforts to avoid adversely affecting the rights of any existing Participants in the Plan, but prior to a Change in Control, the Committee shall be under no specific duty or obligation in this regard.  Following a Change in Control, no amendment or termination of the Plan shall adversely affect any benefits earned by Participants prior to the amendment or termination.
ARTICLE XII 
PLAN ADMINISTRATION
12.1.    Committee.  The Plan shall be administered by the Committee.  Subject to the provisions of the Plan and the authority granted to the Deferral Authority, the Committee shall have exclusive power to determine the manner and time of Deferrals and payment of benefits to the extent herein provided and to exercise any other discretionary powers granted to the Committee pursuant to the Plan.  The decisions or determinations by the Committee shall be final and binding upon all parties, including shareholders, Participants, Beneficiaries and other Employees.  The Committee shall have the authority to interpret the Plan, to make factual findings and determinations, to adopt and revise rules and regulations relating to the Plan and to make any other determinations which it believes necessary or advisable for the administration of the Plan.  The Committee's discretion shall be as broad and unfettered as permitted by law.  Notwithstanding the foregoing, after a Change in Control, any findings, adoption or revision of rules or regulations, interpretations, decisions or determinations made by the Committee (including under Section 12.2) shall not be given any deference by a court or arbitrator, and if challenged by a Participant or Beneficiary, shall be reviewed on a de novo basis. 

12.2.    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;

23

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 whatsoever, including but not limited to all questions relating to eligibility to participate in the Plan, and the amount of benefits to which any Participant may be entitled;

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

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 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

24

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

Prior to a Change in Control, any action taken in good faith by the Committee in the exercise of authority conferred upon it by this Plan shall be conclusive and binding upon the Participants and their Beneficiaries, and all discretionary powers conferred upon the Committee shall be absolute.  Following a Change in Control, the actions of the Committee and its exercise of discretionary powers shall be reviewed on a de novo basis if challenged by a Participant or Beneficiary.

12.3.    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. 

12.4.    Reliance Upon Documents and Opinions.  The members of the Committee, the Deferral Authority, the Board, and the Company shall be entitled to rely upon any tables, valuations, computations, estimates, certificates, opinions and reports furnished by any consultant, or firm or corporation which employs one or more consultants or advisors.  The Committee may, but is not required to, rely upon all records of the Company with respect to any matter or thing whatsoever, and may likewise treat such records as conclusive with respect to all Employees, Participants, Beneficiaries and any other persons whomsoever, except as otherwise provided by law.

12.5.    Requirement of Proof.  The Committee, the Deferral Authority, the Board, or the Company may require satisfactory proof of any matter under this Plan from or with respect to any Employee, Director, consultant, 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.

12.6.    Reliance on Committee Memorandum.  Any person dealing with the Committee may rely on and shall be fully protected in relying on a certificate or memorandum in writing signed by any Committee member so authorized, or by a quorum of the members of the Committee, as constituted as of the date of such certificate or memorandum, as evidence of any action taken or resolution adopted by the Committee.

12.7.    Limitation on Liability.  No Employee or Director of the Company 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.

25

12.8.    Indemnification.
a)To the extent permitted by law, the Company shall indemnify each member of the Deferral Authority, the Committee, and any other Employee or Director of the Company who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative, or investigative, by reason of his or her conduct in the performance in connection with the establishment or administration of the Plan or any amendment or termination of the Plan.

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

c)The termination of any proceeding by judgment, order, settlement, conviction, upon a plea of nolo contendere or its equivalent shall not, in and of itself, create 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 12.8.

e)The right of indemnification set forth in this Section 12.8 shall be in addition to any other right to which any Committee member or other person may be entitled as a matter of law, by corporate bylaws or otherwise.

ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1.    Restrictions on Plan Interest.
a)A Participant's interest in this Plan shall be limited to his or her Account and he or she shall have no other interest in any assets of the Company nor any right as against the Company, Deferral 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.

26

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 his or her Account, so that if the Company should become insolvent, the Participant or Beneficiary will have a claim against the Company and Trust assets equal to that of the Company's other general creditors (regardless of whether assets are removed from the Trust by a trustee in bankruptcy).

e)Whenever a provision of this Plan restricts or limits a Participant or a Participant's Account, benefit or distribution, such limitation shall also apply to a Beneficiary unless otherwise specified.

13.2.    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 Director, or be consideration for, or an inducement to, or a condition of, the employment of any Employee or affiliation of any Director.

b)The employment of any Employee is not for any specified term and may be terminated by any Employee or by the Company at any time, for any reason, with or without cause.  Nothing contained in the Plan shall be deemed to give any Employee the right to be retained in the employ of the Company, to 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 to interfere with the right of the Company to discharge or retire any Employee at any time.

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

13.3.    Rights of Repurchase and First Refusal for the Company.  Any Company Stock distributed from the Plan may be subject to a right of repurchase and right of first refusal by the Company, as well as any conditions, limitations or restrictions contained in an agreement specified in Section 3.2.  The terms and conditions of the right of repurchase and right of first refusal to the extent applicable, shall be in addition to those applied to Company Stock by the Restated Certificate of Incorporation of Leidos Holdings, Inc., as amended.

27

13.4.    Mailing of Payments.  All payments under the Plan shall be delivered in person or mailed to the last address of the Participant (or, in the case of the death of the Participant to that of any other person entitled to such payments under the terms of the Plan).  Each Participant shall be responsible for furnishing the Committee with his or her correct current address and the correct current name and address of his or her Beneficiary.

13.5.    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.

13.6.    Governing Law.  All legal questions pertaining to the Plan shall be determined in accordance with the laws of Delaware, excluding its rules governing conflicts of laws.  Without limiting Section 13.9, it is intended that this Plan be administered and interpreted in a manner consistent with the applicable requirements of Code Section 409A, and further that the Plan be interpreted in a manner that satisfies the applicable requirements of Rule 16b-3 promulgated under the Exchange Act, so that elective deferrals will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act and will not be subjected to avoidable liability thereunder.  

13.7.    Illegality of Particular Provision.  If any particular provision of this Plan shall be found to be illegal or unenforceable, such provision shall not affect the other provisions thereof, but the Plan shall be construed in all respect as if such invalid provision were omitted. 

13.8.    Interpretation.  Section headings are for convenient reference only and shall not be deemed to be part of the substance of this instrument or in any way to enlarge or limit the contents of any article or section.

13.9.    Tax Effects.  The Company makes no representations or warranties as to the tax consequences to a Participant or to a Participant's Beneficiary from Deferrals hereunder or the subsequent receipt of any benefits as a result thereof.  Each Participant must rely solely on his or her own tax advisor with respect to the tax consequences arising from the Deferrals or the receipt of benefits hereunder, or from any other related transaction.

28

13.10.    Receipt or Release.  Any payment to any Participant or Beneficiary in accordance with the provisions of this Plan shall, to the extent thereof, be in full satisfaction of all claims against the 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.

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

13.12.    Arbitration.  Any person disputing a decision of the Committee shall submit such dispute to binding arbitration pursuant to the rules of the American Arbitration Association, to be held in Fairfax County, Commonwealth of Virginia.  In any arbitration with respect to a decision or action of the Committee taken before a Change in Control, the losing party in such arbitration proceedings shall bear the costs of arbitration, and each party shall bear its own attorneys' fees.  In any arbitration with respect to a decision or action of the Committee taken after a Change in Control, the Company shall bear the costs of arbitration (other than attorneys’ fees), and the arbitrator may make an award of attorneys’ fees; any such award shall be made according to the then-prevailing standards for judicial awards of attorneys’ fees applicable to civil actions brought under the Employee Retirement Income Security Act of 1974, as amended.

13.13.    Recoupment of Awards. Notwithstanding any other provision herein including, but not limited to, Sections 9, 11.1, 12.1 and 13.1(b), and notwithstanding any other provisions in any Deferral election or other agreement with respect to the Plan, payments made under the Plan and Accounts under the Plan shall be subject to recoupment or reduction by the Company pursuant to the Company’s recoupment policy originally adopted on June 18, 2009 by the Human Resources and Compensation Committee of the Board, as such policy may subsequently be amended (the “Recoupment Policy”).  Although consent to the Recoupment Policy by a Participant is not a prerequisite to the effectiveness of the Recoupment Policy with respect to the Participant, the filing of an election by a Participant with respect to any Deferral under the Plan shall be deemed to constitute consent by the Participant to the terms and conditions of the Recoupment Policy with respect to the Participant’s Deferrals and any and all prior Deferrals under the Plan.  For purposes of clarity, to the extent provided by the Recoupment Policy, a Participant may be required to return certain payments of Plan benefits made to the Participant, and payments that otherwise would have been made to the Participant with respect to the Participant’s Account under the Plan may be reduced or entirely eliminated.  Such actions may be taken pursuant to the Recoupment Policy without regard to whether such payments and the Participant’s Account were otherwise vested. 

29

	
		
	LEIDOS, INC.

	 

	By:

	 
	/s/ Sarah K. Allen

	 
	Name:   Sarah K. Allen

	 
	Title:   Chief Human Resource Officer

30Exhibit

FORM OF SEVERANCE PROTECTION AGREEMENT
This SEVERANCE PROTECTION AGREEMENT is effective as of [insert date] by and between Leidos Holdings, Inc., a Delaware corporation (the “Company”), and «Executive_Name» (the “Executive”). 
PURPOSE 
The Board of Directors of the Company (the “Board”) recognizes that the possibility of a Change in Control (as hereinafter defined) of the Company exists and that the threat or occurrence of a Change in Control may result in the distraction of its key management personnel because of the uncertainties inherent in such a situation. 
The Board has determined that it is essential and in the best interests of the Company and its stockholders to retain the services of the Executive in the event of the threat or occurrence of a Change in Control and to ensure the Executive’s continued dedication and efforts in such event without undue concern for the Executive’s personal financial and employment security. 
In order to induce the Executive to remain in the employ of the Company, particularly in the event of the threat or occurrence of a Change in Control, the Company desires to enter into this Agreement to provide the Executive with certain benefits in the event the Executive’s employment is terminated as a result of, or in connection with, a Change in Control. 
NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 
SECTION 1. Definitions. 
For purposes of this Agreement, the following terms have the meanings set forth below: 
“Accrued Compensation” means an amount which includes all amounts earned or accrued by the Executive through and including the Termination Date but not paid to the Executive on or prior to such date, including (a) all base salary, (b) reimbursement for all reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, (c) all vacation pay and (d) all bonuses and incentive compensation (other than the Pro Rata Bonus). 
“Base Salary Amount” means the greater of the Executive’s annual base salary (a) at the rate in effect on the Termination Date and (b) at the highest rate in effect at any time during the 180-day period prior to a Change in Control, and will include all amounts of the Executive’s base salary that are deferred under any qualified or non-qualified employee benefit plan of the Company or any other agreement or arrangement. 
“Beneficial Owner” has the meaning as used in Rule 13d-3 promulgated under the Securities Exchange Act. The terms “Beneficially Owned” and “Beneficial Ownership” each have a correlative meaning. 

 

“Board” means the Board of Directors of the Company. 
“Bonus Amount” means the annual target bonus established and payable to the Executive pursuant to any annual bonus or incentive plan maintained by the Company in respect of the fiscal year ending during the fiscal year in which the Termination Date occurs (or actual annual bonus paid or payable in respect of the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the fiscal year in which the Termination Date occurs). Bonus Amount includes only the short-term incentive portion of the annual bonus and does not include restricted stock awards, options or other long-term incentive compensation awarded to the Executive. 
“Cause” for the termination of the Executive’s employment with the Company will be deemed to exist if (a) the Executive has been convicted, or entered a plea of nolo contendere,  for committing an act of fraud, embezzlement, theft or other act constituting a felony (other than traffic related offenses or as a result of vicarious liability), (b) the Executive willfully engages in illegal conduct or gross misconduct that is significantly injurious to the Company; however, no act or failure to act, on the Executive’s part shall be considered “willful” unless done or omitted to be done, by the Executive not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company or (c) failure to perform his or her duties in a reasonably satisfactory manner after the receipt of a notice from the Company detailing such failure if the failure is incapable of cure, and if the failure is capable of cure, upon the failure to cure such failure within 30 days of such notice or upon its recurrence. 
“Change in Control” of the Company means, and shall be deemed to have occurred upon, any of the following events: 
(a)    The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of the outstanding voting power; provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (a): (A) any acquisition directly from the Company; (B) any acquisition by the Company or any of its Subsidiaries; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries; or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subparagraph (c) below; or 
(b)    Individuals who at the beginning of any two year period constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (i) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (ii) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or 

2

(c)    Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case unless following such Business Combination, (i) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the outstanding shares and outstanding voting securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company, as the case may be, of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities (provided, however, that for purposes of this clause (i) any shares of common stock or voting securities of such resulting entity received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners’ ownership of outstanding shares or outstanding voting securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting entity); (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities of such entity resulting from the Business Combination unless such Person owned twenty-five percent (25%) or more of the outstanding shares or outstanding voting securities immediately prior to the Business Combination; and (iii) at least a majority of the members of the Board of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or 
(d)    Approval by the Company’s stockholders of a complete liquidation or dissolution of the Company. 
For purposes of clause (c), any Person who acquires outstanding voting securities of the entity resulting from the Business Combination by virtue of ownership, prior to such Business Combination, of outstanding voting securities of both the Company and the entity or entities with which the Company is combined shall be treated as two Persons after the Business Combination, who shall be treated as owning outstanding voting securities of the entity resulting from the Business Combination by virtue of ownership, prior to such Business Combination of, respectively, outstanding voting securities of the Company, and of the entity or entities with which the Company is combined. 
“Code” means the Internal Revenue Code of 1986, as amended. 

3

“Company” means Leidos Holdings, Inc., a Delaware corporation, provided that in recognition of the fact that the Executive may be employed by Leidos, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Leidos”), or by another direct or indirect Subsidiary of Leidos, Inc., the term “Company” when referring to the employment relationship and the compensation or benefits related thereto shall include the employer of Executive as the context requires. 
“Continuation Period” has the meaning set forth in Section 3.1(b)(iii). 
“Disability” means the status of disability determined conclusively by the Company based upon certification of disability by the Social Security Administration or upon such other proof as the Company may reasonably require, effective upon receipt of such certification or other proof by the Company. 
“Full Release” means a written release, timely executed so that it is fully effective as of the date of payment pursuant to Section 3.1(c), in a form satisfactory to the Company (and similar to the Agreement set forth in Exhibit A) pursuant to which the Executive fully and completely releases the Company from all claims that the Executive may have against the Company (other than any claims that may or have arisen under this Agreement). 
“Good Reason” means the occurrence of any of the events or conditions described in clauses (a) through (f) hereof, without the Executive’s prior written consent: 
(a)(i)    any material adverse change in the Executive’s authority, duties or responsibilities (including reporting responsibilities) from the Executive’s authority, duties or responsibilities as in effect at any time within 90 days preceding the date of the Change in Control or at any time thereafter, or (ii) in the case of an Executive who is an executive officer of the Company a significant portion of whose responsibilities relate to the Company’s status as a public company, the failure of such Executive to continue to serve as an executive officer of a public company, in each case except in connection with the termination of the Executive’s employment for Disability, Cause, as a result of the Executive’s death or by the Executive other than for Good Reason; 
(b)    a material reduction in Executive’s base salary or any failure to pay the Executive any cash compensation to which the Executive is entitled within 15 days after the date when due; 
(c)    the imposition of a requirement (other than for reasonably required travel on Company business which is not materially greater in frequency or duration than prior to the Change in Control) that the Executive be based (i) at any place outside a 50-mile radius from the Executive’s principal place of employment immediately prior to the Change in Control and which has a material adverse effect on the Executive’s commuting requirements, or (ii) at any location other than the Company’s corporate headquarters or, if applicable, the headquarters of the business unit by which he or she was employed immediately prior to the Change in Control, and which has a material adverse effect on the Executive’s commuting requirements. ; 
(d)    any material breach by the Company of any provision of this Agreement; 

4

(e)    any purported termination of the Executive’s employment for Cause by the Company which does not comply with the terms of this Agreement; or 
(f)    the failure of the Company to obtain, as contemplated in Section 7, an agreement  from any Successor to assume and agree to perform this Agreement. 
Notwithstanding anything to the contrary in this Agreement, no termination will be deemed to be for Good Reason hereunder unless (i) the Executive provides written notice to the Company identifying the applicable event or condition within 120 days of the occurrence of the event or the initial existence of the condition, and (ii) the Company fails to remedy the event or condition within a period of 30 days following such notice.
“Notice of Termination” means a written notice from the Company or the Executive of the termination of the Executive’s employment which indicates the specific termination provision in this Agreement relied upon and which 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. 
“Person” has the meaning as defined in Section 3(a)(9) of the Securities Exchange Act and used in Section 13(d) or 14(d) of the Securities Exchange Act, and will include any “group” as such term is used in such sections. 
“Pro Rata Bonus” means an amount equal to the Bonus Amount multiplied by a fraction, the numerator of which is the number of days elapsed in the then fiscal year through and including the Termination Date and the denominator of which is 365. 
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended. 
“Subsidiary” means any corporation with respect to which another specified corporation has the power under ordinary circumstances to vote or direct the voting of sufficient securities to elect a majority of the directors. 
“Successor” means a corporation or other entity acquiring all or substantially all the assets and business of the Company, whether by operation of law, by assignment or otherwise. 
“Termination Date” means (a) in the case of the Executive’s death, the Executive’s date of death, (b) in the case of the termination of the Executive’s employment with the Company by the Executive for Good Reason,  the date the Company’s 30-day cure period expires, and (c) in all other cases, the date specified in the Notice of Termination.  Notwithstanding anything to the contrary herein, to the extent necessary to comply with Code Section 409A, an Executive’s employment shall be considered to have terminated if the executive has experienced a “separation from service,” as defined in Code Section 409A and the regulations thereunder.

5

SECTION 2. Term of Agreement. 
The term of this Agreement (the “Term”) will commence on the date of this Agreement, and will continue in effect until December 31, 2016; provided that on December 31, 2016 and each anniversary of such date thereafter, the Term shall automatically be extended for one additional year unless, not later than October 1 of such year, the Company or the Executive shall have given notice not to extend the Term; and further provided that in the event a Change in Control occurs during the Term, the Term will be extended to the date 24 months after the date of the occurrence of such Change in Control. 
Notwithstanding the foregoing, the Term shall be deemed to have immediately expired without any further action and this Agreement will immediately terminate and be of no further effect if, prior to a Change in Control,    the Executive’s employment with the Company is terminated (whether by the Company or the Executive) for any reason. 
SECTION 3. Termination of Employment. 
3.1     If, during the Term, the Executive’s employment with the Company is terminated within three months prior to or within 24 months following a Change in Control, the Executive will be entitled to the following compensation and benefits: 
(a)     If the Executive’s employment with the Company is terminated (i) by the Company for Cause or Disability, (ii) by reason of the Executive’s death or (iii) by the Executive other than for Good Reason, the Company will pay to the Executive the Accrued Compensation and, if such termination is by the Company for Disability or by reason of the Executive’s death, a Pro Rata Bonus. 
(b)     If the Executive’s employment with the Company is terminated (whether by the Company or the Executive) for any reason other than as specified in Section 3.1(a), the Executive will be entitled to the following: 
(i)    the Company will pay the Executive all Accrued Compensation and a Pro Rata Bonus; 
(ii)    subject to the Executive providing the Company with a Full Release, the Company will pay the Executive as severance pay, and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount in cash equal to two and one-half (21⁄2) times the sum of (A) the Base Salary Amount and (B)  the Bonus Amount; 

6

(iii)    subject to the Executive providing the Company with a Full Release and complying with his or her obligations under Section 6, the Company will, for a period of 30 months (the “Continuation Period”), at its expense provide to the Executive and the Executive’s dependents and beneficiaries the same or equivalent life insurance, disability, medical and dental benefits (the “Continuation Period Benefits”) provided to other similarly situated executives who continue in the employ of the Company during the Continuation Period (“similarly situated executives”).  The Executive will be responsible for the payment of any taxes related to all or any portion of such Continuation Period Benefits, and the Company will provide no amount to the Executive for the gross-up of any such taxes. The obligations of the Company to provide the Executive and the Executive’s dependents and beneficiaries with the Continuation Period Benefits shall not restrict or limit the Company’s right to terminate or modify the benefits made available by the Company to its similarly situated executives or other employees and following any such termination or modification, the Continuation Period Benefits that Executive (and the Executive’s dependents and beneficiaries) shall be entitled to receive shall be so terminated or modified. The Company’s obligation hereunder with respect to the foregoing benefits will be limited to the extent that the Executive becomes eligible to obtain any such benefits pursuant to a subsequent employer’s benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the coverages and benefits of the combined benefit plans are no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This Section 3.1(b)(iii) will not be interpreted so as to limit any benefits to which the Executive or the Executive’s dependents or beneficiaries may be entitled under any of the Company’s employee benefit plans, programs or practices following the Executive’s termination of employment; 
(iv)    the Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of 12 months or, if earlier, until the first acceptance by the Executive of an offer of employment; and 
(v)    such other acceleration of vesting and other benefits provided in other Company plans or agreements regarding options to purchase Company stock, restricted stock, deferral of stock or other equity compensation awards granted to or otherwise applicable to Executive. 
The benefits set forth in subsections (iii) and (iv) above shall be subject to the following conditions and restrictions:  (1) the payment or provision of a benefit in any particular year shall not (except as may be provided in the medical and dental plans in which the Executive participates) affect the benefits to be provided in any other year, (2) to the extent the Executive is entitled to reimbursement of any expenses, the reimbursement shall be made no later than the Executive’s taxable year following the taxable year in which the expense was incurred, and (3) no right to reimbursement or in-kind benefits may be subject to liquidation or exchange for any other benefit. 

7

(c)    The amounts provided for in Section 3.1(a) and Sections 3.1(b)(i) and (ii) will be paid in a single lump sum cash payment by the Company to the Executive within 55 days after the Termination Date, provided that such payment will be made no later than the last date to be considered a short-term deferral of compensation within the meaning of Treasury Regulation Section 1.409A-1(a)(4).  
(d)    The Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and no such payment will be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment, except as specifically provided in Section 3.1(b)(iii) and 3.1(b)(iv). 
3.2    Except as otherwise noted herein, the compensation to be paid to the Executive pursuant to this Section 3 will be in lieu of any similar severance or termination compensation (i.e., compensation based directly on the Executive’s annual salary or annual salary and bonus) to which the Executive may be entitled under any other Company severance or termination agreement, plan, program, policy, practice or arrangement. The Executive’s entitlement to any compensation or benefits of a type not provided in this Agreement will be determined in accordance with the Company’s employee benefit plans and other applicable programs, policies and practices as in effect from time to time. 
SECTION 4. Notice of Termination. Following a Change in Control, any purported termination of the Executive’s employment by the Company will be communicated by a Notice of Termination to the Executive. For purposes of this Agreement, no such purported termination will be effective without such Notice of Termination. 
SECTION 5. Excise Tax Adjustments. 
5.1    In the event Executive becomes entitled to receive the benefits provided pursuant to Sections 3.1(b) or 3.2 herein, and the Company determines that such benefits (the “Total Payments”) will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code, or any similar tax that may hereafter be imposed, the Company shall compute the “Net After-Tax Amount,” and the “Reduced Amount,” and shall adjust the Total Payments as described below. The Net After-Tax Amount shall mean the present value of all amounts payable to the Executive hereunder, net of all federal income, excise and employment taxes imposed on the Executive by reason of such payments. The Reduced Amount shall mean the largest aggregate amount of the Total Payments that if paid to the Executive would result in the Executive receiving a Net After-Tax Amount that is equal to or greater than the Net After-Tax Amount that the Executive would have received if the Total Payments had been made. If the Company determines that there is a Reduced Amount, the Total Payments will be reduced to the Reduced Amount. Such reduction to the Total Payments shall be made by first reducing or eliminating any cash severance benefits, then by reducing or eliminating any accelerated vesting of stock options, then by reducing or eliminating any accelerated vesting of other equity awards, then by reducing or eliminating any other remaining Total Payments, in each case in reverse order beginning with the payments which are to be paid the farthest in time from the date of the transaction triggering the Excise Tax.  

8

5.2    For purposes of determining whether the Total Payments will be subject to the Excise Tax and the amounts of such Excise Tax and for purposes of determining the Reduced Amount and the Net After-Tax Amount: 
(a)    Any other payments or benefits received or to be received by the Executive in connection with a Change in Control of the Company or the Executive’s termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with the Company, or with any individual, entity, or group of individuals or entities (individually and collectively referred to in this subsection (a) as “Persons”) whose actions result in a change in control of the Company or any Person affiliated with the Company or such Persons) shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of a tax advisor selected by the Company and reasonably acceptable to the Executive (“Tax Counsel”), such other payments or benefits (in whole or in part) should be treated by the courts as representing reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code), or otherwise not subject to the Excise Tax; 
(b)    The amount of the Total Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (i) the total amount of the Total Payments; or (ii) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (a) above); 
(c)    In the event that the Executive disputes any calculation or determination made by the Company, the matter shall be determined by Tax Counsel, the fees and expenses of which shall be borne solely by the Company; and 
(d)    The Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Change in Control of the Company occurs, and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the effective date of the Change in Control of the Company, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes, taking into account the reduction in itemized deduction under Section 68 of the Code. 
SECTION 6. Covenants of the Executive. During the Continuation Period following any Change in Control pursuant to which the Executive receives the benefits pursuant to Section 3.1(b)(iii), the Executive covenants and agrees as follows: 
(a)    the Executive agrees to comply with his or her obligations under any agreement that he or she has entered into with the Company relating to proprietary information, confidentiality and non-solication; 

9

(b)    the Executive acknowledges that the Executive has knowledge of confidential and proprietary information concerning the current salary, benefits, skills, and capabilities of Company employees and that it would be improper for the Executive to use such Company proprietary information in any manner adverse to the Company’s interests. The Executive agrees that he or she will not recruit or solicit for employment, directly or indirectly, any employee of the Company during the Continuation Period;
(c)    the Executive agrees to not make remarks, comments, or statements whether written or oral, that impugn the character, integrity, reputation, or abilities of the Company, its directors or officers; and
(d)     the Executive agrees to reasonably cooperate with the Company at times and on schedules and at locations that are reasonably consistent with Executive’s other business and personal activities and commitments and provided such cooperation is not adverse to Executive’s legal or economic interests.  The Executive shall cooperate with respect to those matters during the Executive’s employment with the Company, including, but not limited to any dispute during the Executive’s period of employment with the Company or thereafter with one or more third parties, internal investigation or administrative, regulatory or judicial investigation or proceeding which relates to a matter that Executive has knowledge of as a result of the Executive’s employment with the Company.  In the event the Company requires Executive’s cooperation in accordance with this Section 6(d) after the Termination Date, the Company shall reimburse Executive for reasonable travel expenses (including lodging and meals), upon submission of receipts. In addition, if Executive provides such assistance beyond the Continuation Period, the Executive shall receive reasonable compensation for assisting the Company but not for Executive’s time providing sworn testimony. 
SECTION 7. Successors; Binding Agreement. 
This Agreement will be binding upon and will inure to the benefit of the Company and its Successors, and the Company will require any Successors to expressly assume 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 or assignment had taken place. Neither this Agreement nor any right or interest hereunder will be assignable or transferable by the Executive or by the Executive’s beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement will inure to the benefit of and be enforceable by the Executive’s legal representatives. 

10

SECTION 8. Fees and Expenses. 
The Company will pay as they become due all reasonable legal fees and related expenses (including the reasonable costs of experts) incurred by the Executive, in good faith, in (a) contesting or disputing, any such termination of employment and (b) seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits. If the dispute is resolved by a final decision of an arbitrator pursuant to Section 15 in the favor of the Company, the Executive shall reimburse the Company for all such legal fees and related expenses (including costs of experts) paid by the Company on behalf of the Executive. To the extent necessary to comply with Code Section 409A, any reimbursements pursuant to this Section 8 shall be paid to the Executive on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  Such reimbursements are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that the Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Executive receives in any other taxable year.
SECTION 9. Notice. 
For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) will be in writing and will be deemed to have been duly given (i) when personally delivered, (ii) upon acknowledgment of receipt when sent by e-mail or other electronic transmission (excluding acknowledgements generated automatically without an affirmative act by the recipient), or (iii) when sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company will be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications will be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address will be effective only upon receipt. 

11

SECTION 10. Nonexclusivity of Rights. 
Nothing in this Agreement will prevent or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company for which the Executive may qualify, nor will anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company will be payable in accordance with such plan or program, except as specifically modified by this Agreement. 
SECTION 11. No Set-Off. 
The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder will not be affected by any circumstances, including any right of set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others. 
SECTION 12. Miscellaneous. 
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representation, oral or otherwise, express or implied, with respect to the subject matter hereof has been made by either party which is not expressly set forth in this Agreement. 
SECTION 13. Governing Law and Binding Arbitration. 
This Agreement will be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. All disputes relating to this Agreement, including its enforceability, shall be resolved by final and binding arbitration before an arbitrator appointed by, and in accordance with the rules and procedures of arbitration of, the Judicial Arbitration and Mediation Service (JAMS), , with the arbitration to be held in Fairfax County, Virginia. Judgment upon the award may be entered in any court having jurisdiction thereof. 
SECTION 14. Severability. 
The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof. 

12

SECTION 15.     Entire Agreement. 
This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to severance protection in connection with a Change in Control. If the Company and the Executive have previously entered into a Severance Protection Agreement dated prior to the date hereof (the “Prior Agreement”), the parties acknowledge and agree that the term of the Prior Agreement shall expire effective December 31, 2015, and the terms and provisions of this Agreement shall control effective January 1, 2016.  
SECTION 16. Code Section 409A. 
It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Code Section 409A”) so as not to subject the Executive to payment of any interest or additional tax imposed under Code Section 409A.  To the extent that any amount payable under this Agreement would trigger the additional tax, penalty or interest imposed by Code Section 409A, this Agreement shall be modified to avoid such additional tax, penalty or interest yet preserve (to the nearest extent reasonably possible) the intended benefit payable to the Executive.  If the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the Termination Date, the Executive shall not be entitled to any payment or benefit pursuant to Section 3(b) until the earlier of (i) the date which is six months after the Termination Date, or (ii) the date of the Executive’s death.  The provisions of this Section 18 shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A.  Any amounts otherwise payable to the Executive upon or in the six month period following the Executive’s Termination Date that are not so paid by reason of this Section 18 shall be paid (without interest) as soon as practicable (and in all events within five days) after the date that is six months after the Executive’s Termination Date (or, if earlier, as soon as practicable, and in all events within five days, after the date of the Executive’s death).

(Remainder of page intentionally left blank)

13

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the date first above written. 
 
	
	
	 

	Leidos Holdings, Inc.

	 

	 

	[Executive Name]

	«Executive_Name»
Employee Number: «emp_no»

	 

	 

	Signature

14

Exhibit A 
RELEASE OF ALL CLAIMS AND POTENTIAL CLAIMS
1.    This Release of All Claims and Potential Claims (“Release”) is entered into by and between ______________________ (“________”) and Leidos Holdings, Inc. (hereinafter the “Company”). _____________ and the Company have previously entered into a Severance Protection Agreement dated _________ (“Severance Agreement”). In consideration of the promises made herein and the consideration due ____________ under the Severance Agreement, this Release is entered into between the parties. 
2.    (a) The purposes of this Release is to settle completely and release the Company, its individual and/or collective officers, directors, stockholders, agents, parent companies, subsidiaries, affiliates, predecessors, successors, assigns, employees (including all former employees, officers, directors, stockholders and/or agents), attorneys, representatives and employee benefit programs (including the trustees, administrators, fiduciaries and insurers of such programs) (referred to collectively as “Releasees”) in a final and binding manner from every claim and potential claim for relief, cause of action and liability of any and every kind, nature and character whatsoever, known or unknown, that ________ has or may have against Releasees arising out of, relating to or resulting from any events occurring prior to the execution of this Release, including but not limited to any claims and potential claims for relief, causes of action and liabilities arising out of, relating to or resulting from the employment relationship between ________ and the Company and its subsidiaries, affiliates and predecessors, and/or the termination of that relationship including any and all claims and rights under the Age Discrimination in Employment Act, and any personal gain with respect to any claim arising under the qui tam provisions of the False Claims Act, 31 U.S.C. 3730, but excluding any rights or benefits to which _______ is entitled under the Severance Agreement. 
(b) This is a compromise settlement of all such claims and potential claims, known or unknown, and therefore this Release does not constitute either an admission of liability on the part of ________ and the Company or an admission, directly or by implication, that ________ and/or the Company, its subsidiaries, affiliates or predecessors, have violated any law, rule, regulation, contractual right or any other duty or obligation. The parties hereto specifically deny that they have violated any law, rule, regulation, contractual right or any other duty or obligation. 
(c) This Release is entered into freely and voluntarily by ________ and the Company solely to avoid further costs, risks and hazards of litigation and to settle all claims and potential claims and disputes, known or unknown, in a final and binding manner. 
3.    For and in consideration of the promises and covenants made by ________ to the Company and the Company to ________, contained herein, ________ and the Company have agreed and do agree as follows: 

A-1

(a) ________ waives, releases and forever discharges Releasees from any claims and potential claims for relief, causes of action and liabilities, known or unknown, that [he/she] has or may have against Releasees arising out of, relating to or resulting from any events occurring prior to the execution of this Release, including but not limited to any claims and potential claims for relief, causes of action and liabilities of any and every kind, nature and character whatsoever, known or unknown, arising out of, relating to or resulting from the employment relationship between ________ and the Company and its subsidiaries, affiliates and predecessors, and the termination of that relationship including any and all claims and rights under the Age Discrimination in Employment Act, and any personal gain with respect to any claim arising under the qui tam provisions of the False Claims Act, 31 U.S.C. 3730 but excluding any rights or benefits to which _______ is entitled under the Severance Agreement.  In addition, this Release does not cover, and nothing in this Release shall be construed to cover, any claim that cannot be so released as a matter of applicable law.
(b) ________ agrees that [he/she] will not directly or indirectly institute any legal proceedings against Releasees before any court, administrative agency, arbitrator or any other tribunal or forum whatsoever by reason of any claims and potential claims for relief, causes of action and liabilities of any and every kind, nature and character whatsoever, known or unknown, arising out of, relating to or resulting from any events occurring prior to the execution of this Release, including but not limited to any claims and potential claims for relief, causes of action and liabilities arising out of, relating to or resulting from the employment relationship between ________ and the Company and its subsidiaries, affiliates and predecessors, and/or the termination of that relationship including any and all claims and rights under the Age Discrimination in Employment Act. 
(c) ________ is presently unaware of any injuries that [he/she] may have suffered as a result of working at the Company or its subsidiaries, affiliates or predecessors, and has no present intention of filing a workers’ compensation claim. Should any such claim arise in the future, ________ waives and releases any right to proceed against the Company or its subsidiaries, affiliates or predecessors, for such a claim. ________ also waives any right to bring any disability claim against the Company or its subsidiaries, affiliates or predecessors, or its or their carriers. 
4.    As a material part of the consideration for this Agreement, ________ and [his/her] agents and attorneys, agree to keep completely confidential and not disclose to any person or entity, except immediate family, attorney, accountant, or tax preparers, or in response to a court order or subpoena, the terms and/or conditions of this Release and/or any understandings, agreements, provisions and/or information contained herein or with regard to the employment relationship between ________ and the Company and its subsidiaries, affiliates and predecessors. 

A-2

5.    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 Release, or the breach thereof, or any disputes which may arise in the future, shall be settled in a final and binding before an arbitrator appointed by the Judicial Arbitration and Mediation Service in accordance with the rules and procedures of arbitration under the Company’s Dispute Resolution Program, attached hereto as Exhibit A. The prevailing party shall be entitled to recover all reasonable attorneys’ fees, costs and necessary disbursements incurred in connection with the arbitration proceeding. Judgment upon the award may be entered in any court having jurisdiction thereof. 
6.    It is further understood and agreed that ________ has not relied upon any advice whatsoever from the Company and/or its attorneys individually and/or collectively as to the taxability, whether pursuant to Federal, State or local income tax statutes or regulations, or otherwise, of the consideration transferred hereunder and that [he/she] will be solely liable for all of [his/her] tax obligations. ________ understands and agrees that the Company or its subsidiaries, affiliates or predecessors, may be required by law to report all or a portion of the amounts paid to [him/her] and/or [his/her] attorney in connection with this Release to federal and state taxing authorities. ________ waives, releases, forever discharges and agrees to indemnify, defend and hold the Company harmless with respect to any actual or potential tax obligations imposed by law. 
7.    ________ acknowledges that [he/she] has read, understood and truthfully completed the Business Ethics and Conduct Disclosure Statement attached hereto as Exhibit B. 
8.    It is further understood and agreed that Releasees and/or their attorneys shall not be further liable either jointly and/or severally to ________ and/or [his/her] attorneys individually or collectively for costs and/or attorneys fees, including any provided for by statute, nor shall ________ and/or [his/her] attorneys be liable either jointly and/or severally to the Company and/or its attorneys individually and/or collectively for costs and/or attorneys’ fees, including any provided for by statute. 
9.    ________ understands and agrees that if the facts with respect to which this Release are based are found hereafter to be other than or different from the facts now believed by [him/her] to be true, [he/she] expressly accepts and assumes the risk of such possible difference in facts and agrees that this Release shall be and remain effective notwithstanding such difference in facts. 
10.    ________ understands and agrees that there is a risk that the damage and/or injury suffered by ________ may become more serious than [he/she] now expects or anticipates. ________ expressly accepts and assumes this 
risk, and agrees that this Release shall be and remains effective notwithstanding any such misunderstanding as to the seriousness of said injuries or damage. 
11.    ________ understands and agrees that if [he/she] hereafter commences any suit arising out of, based upon or relating to any of the claims and potential claims for relief, cause of action and liability of any and every kind, nature and character whatsoever, known or unknown, [he/she] has released herein, ________ agrees to pay Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit. 

A-3

12.    It is further understood and agreed that this Release shall be binding upon and will inure to the benefit of ________’s spouse, heirs, successors, assigns, agents, employees, representatives, executors and administrators and shall be binding upon and will inure to the benefit of the individual and/or collective successors and assigns of Releasees and their successors, assigns, agents and/or representatives. 
13.    This Release shall be construed in accordance with and governed for all purposes by the laws of the State of Virginia. 
14.    ________ agrees that [he/she] will not seek future employment with, nor need to be considered for any future openings with the Company, any division thereof, or any subsidiary or related corporation or entity. 
15.     ________ and Releasees waive all rights under Section 1542 of the California Civil Code, which section has been fully explained to them by their respective legal counsel and which they fully understand, and any other similar provision or the law of any other state or jurisdiction. Section 1542 provides as follows: 
A general release does not extend to claims which the creditor does not know or suspect to exist in [his/her] favor at the time of executing the release, which if known by [him/her] must have materially affected [his/her] settlement with the debtor. 
16.    Notwithstanding anything in this Agreement to the contrary, ________ does not waive, release or discharge any rights to indemnification for actions occurring through [his/her] affiliation with the Company or its subsidiaries, affiliates or predecessors, whether those rights arise from statute, corporate charter documents or any other source nor does __________ waive, release or discharge any right ________ may have pursuant to any insurance policy or coverage provided or maintained by the Company or its subsidiaries, affiliates or predecessors. 
17.    If any part of this Agreement is found to be either invalid or unenforceable, the remaining portions of this Agreement will still be valid. 
18.    This Agreement is intended to release and discharge any claims of __________ under the Age Discrimination and Employment Act. To satisfy the requirements of the Older Workers’ Benefit Protection Act, 29 U.S.C. section 626(f), the parties agree as follows: 
		
	A.
	_________ acknowledges that [he/she] has read and understands the terms of this Agreement. 

		
	B.
	__________ acknowledges that [he/she] has been advised in writing to consult with an attorney, if desired, concerning this Agreement and has received all advice [he/she] deems necessary concerning this Agreement. 

A-4

		
	C.
	__________ acknowledges that [he/she] has been given twenty-one (21) days to consider whether or not to enter into this Agreement, has taken as much of this time as necessary to consider whether to enter into this Agreement, and has chosen to enter into this Agreement freely, knowingly and voluntarily. 

		
	D.
	For a seven day period following the execution of this Agreement, _________ may revoke this Agreement by delivering a written revocation to at the Company. This Agreement shall not become effective and enforceable until the revocation period has expired. 

19.    ________ acknowledges that [he/she] has been encouraged to seek the advice of an attorney of [his/her] choice with regard to this Release. Having read the foregoing, having understood and agreed to the terms of this Release, and having had the opportunity to and having been advised by independent legal counsel, the parties hereby voluntarily affix their signatures. 
20.    This Agreement is to be interpreted without regard to the draftsperson. The terms and intent of the Agreement shall be interpreted and construed on the express assumption that all parties participated equally in its drafting. 
21.    This Release constitutes a single integrated contract expressing the entire agreement of the parties hereto. Except for the Severance Agreement, which defines certain obligations on the part of both parties, and this Release, there are no agreements, written or oral, express or implied, between the parties hereto, concerning the subject matter herein. 

	
	
	 

	Dated: ____________________, 20__

	 

	[Signature]

	 

	[Print Name]

 
	
	
	Leidos Holdings, Inc.

	 

	By:  

	Name:  

	Its:  

A-5

BUSINESS ETHICS AND CONDUCT
DISCLOSURE STATEMENT
Are you aware of any illegal or unethical practices or conduct anywhere within Leidos Holdings, Inc. or its subsidiaries, affiliates or predecessors (the “ Company”) (including, but not limited to, improper charging practices, or any violations of the Company’s Code of Conduct)? 
Yes  ̈                                                                      No  ̈ 
(Your answer to all questions on this form will not have any bearing on the fact or terms of your Release with the Company.) 
If the answer to the preceding question is “yes,” list here, in full and complete detail, all such practices or conduct. (Use additional pages if necessary.) 

Have any threats or promises been made to you in connection with your answers to the questions on this form? 
Yes  ̈                                                                      No  ̈ 
If “yes,” please identify them in full and complete detail. Also, notify the Company’s General Counsel at (571) 526-6300 immediately. 

I declare under penalty of perjury, under the laws of the State of Virginia and of the United States, that the foregoing is true and correct. 
Executed this ____ of ___________________, 20__, at ___________________. 
	
	
	 

	 

	 

	[Signature]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}]]