NETWORK SOLUTIONS INC /DE/, S-1/A, 1997-08-27

NETWORK SOLUTIONS INC /DE/
S-1/A, 1997-08-27
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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1997

REGISTRATION NO. 333-30705

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------

Amendment No. 1

Form S-1

REGISTRATION STATEMENT

UNDER
THE SECURITIES ACT OF 1933
------------------------
NETWORK SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7379 52-1146119
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
incorporation or organization)
</TABLE>

505 HUNTMAR PARK DRIVE, HERNDON, VIRGINIA 20170 (703) 742-0400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
GABRIEL A. BATTISTA
Chief Executive Officer
Network Solutions, Inc.
505 Huntmar Park Drive, Herndon, Virginia 20170 (703) 742-0400
(Name, address, including zip code, and telephone number, including area code,
of agent for service of process)
------------------------
Copies to:

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<S> <C> <C>
JORGE DEL CALVO, ESQ. DOUGLAS E. SCOTT, ESQ. MICHAEL D. NATHAN, ESQ.
KEITH J. MENDELSON, ESQ. ALOMA H. AVERY, ESQ. SIMPSON THACHER & BARTLETT
DAVINA K. KAILE, ESQ. SCIENCE APPLICATIONS 425 Lexington Avenue
PILLSBURY MADISON & SUTRO LLP INTERNATIONAL New York, NY 10017
2700 Sand Hill Road CORPORATION (212) 455-2000
Menlo Park, CA 94025 10260 Campus Point Drive
(415) 233-4500 San Diego, CA 92121
(619) 546-6000
</TABLE>

------------------------
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement numbers of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------

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<S> <C> <C>
- --------------------------------------------------------------------------------
PROPOSED
CLASS OF SECURITIES MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
- -----------------------------------------------------------------------------------------------------
Class A Common Stock, $0.001 par value............... $42,320,000 $12,825
=====================================================================================================
</TABLE>

(1) Estimated solely for the purpose of computing the registration fee. The
estimate is made pursuant to Rule 457(o) of the Securities Act of 1933, as
amended.

(2) A filing fee of $10,606 was paid by the Registrant on July 3, 1997.

-----------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS

OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 27, 1997

PROSPECTUS

2,300,000 SHARES

LOGO

CLASS A COMMON STOCK

All of the 2,300,000 shares of Class A Common Stock offered hereby are
being sold by Network Solutions, Inc. ("NSI" or the "Company"). The Company has
two classes of authorized Common Stock, Class A Common Stock and Class B Common
Stock. Holders of Class A Common Stock generally have identical rights to
holders of Class B Common Stock, except that holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to ten votes per share on all matters submitted to a vote of
stockholders. See "Relationship with SAIC and Certain Transactions" and
"Description of Capital Stock."

The Company is a wholly-owned subsidiary of Science Applications
International Corporation, a Delaware corporation ("SAIC"). Upon completion of
this offering, SAIC will own 100% of the Company's outstanding Class B Common
Stock, which will represent approximately 84.5% of the outstanding Common Stock
of the Company (approximately 82.5% if the Underwriters' over-allotment option
is exercised in full) and approximately 98.2% of the combined voting power of
the Company's outstanding Common Stock (approximately 97.9% if the Underwriters'
over-allotment option is exercised in full), and will continue to control the
Company. See "Principal Stockholders" and "Relationship with SAIC and Certain
Transactions." The Underwriters have reserved up to 5% of the shares of the
Class A Common Stock offered hereby for sale at the initial public offering
price to certain employees, officers and directors of SAIC and the Company and
other persons designated by the Company. See "Underwriting."

Prior to this offering, there has been no public market for the Class A
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $14.00 and $16.00 per share. See "Underwriting"
for a discussion of the factors to be considered in determining the initial
public offering price. The Company has applied to have the Class A Common Stock
approved for quotation on the Nasdaq National Market under the symbol NSOL.

------------------

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 7.

------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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===========================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- -----------------------------------------------------------------------------------------------------------
Per Share............................ $ $ $
- -----------------------------------------------------------------------------------------------------------
Total(3)............................. $ $ $
===========================================================================================================
</TABLE>

(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.

(2) Before deducting expenses payable by the Company estimated at $1,100,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 345,000 additional shares of Class A Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

------------------

The shares of Class A Common Stock are offered by the several Underwriters
subject to prior sale, receipt and acceptance by them and subject to the right
of the Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1997, at the office of the agent of Hambrecht
& Quist LLC in New York, New York.

HAMBRECHT & QUIST
J.P. MORGAN & CO.
PAINEWEBBER INCORPORATED
, 1997
<PAGE> 3

[INSIDE FRONT COVER OF PROSPECTUS]

Bar graph depicting domain name registration growth from September 1995 to June
1997 appears here

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."

The Company's name and logo are service marks of the Company. This
Prospectus also includes trademarks of companies other than the Company.

2
<PAGE> 4

[GATE FOLD]

Depiction of Registration Process

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<S> <C>
THE REGISTRATION PROCESS

DEPICTION OF DOMAIN NAME REQUEST
COMPUTER SCREEN RECEIVED VIA INTERNET

NETWORK SOLUTIONS LOGO NSI ASSIGNS DOMAIN
NAME

DEPICTION OF ROOT SERVERS POPULATED
ROOT SERVERS DAILY BY NSI

.GOV .NET .COM .ORG .NET DOMAIN NAME GLOBALLY
ACCESSIBLE
</TABLE>
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus. Unless the context requires otherwise, all references to the
"Company," "Network Solutions" and "NSI" shall refer to Network Solutions, Inc.,
a Delaware corporation, and its predecessor, Network Solutions Incorporated, a
Washington, D.C. corporation. The Class A Common Stock offered hereby involves a
high degree of risk. See "Risk Factors." References in this Prospectus to the
"Common Stock" shall include both the Company's Class A Common Stock, par value
$0.001 per share (the "Class A Common Stock"), and the Company's Class B Common
Stock, par value $0.001 per share (the "Class B Common Stock"). As used herein,
net registrations are defined as the gross number of domain name registrations
less management's estimates of uncollectible registrations and of non-renewals.
Except as otherwise noted, all information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option. See "Description of Capital
Stock," "Underwriting" and Notes to Financial Statements.

THE COMPANY

Network Solutions is the leading Internet domain name registration service
provider worldwide. The Company currently acts as the exclusive registrar for
second level domain names within the .com, .org, .net, .edu and .gov top-level
domains ("TLDs"). By registering Internet domain names, the Company enables
businesses, other organizations and individuals to establish a unique Internet
presence from which to communicate and conduct commerce. Net registrations
within the TLDs maintained by the Company increased by 206% from approximately
340,000 domain names registered at June 30, 1996 to approximately 1,040,000
domain names registered at June 30, 1997. The Company believes that commercial
enterprises and individual Internet users worldwide are increasingly recognizing
the .com TLD as a desirable address for commercial presence on the Internet. Net
registrations in the .com TLD increased from approximately 304,000 at June 30,
1996 to approximately 908,000 at June 30, 1997, representing 87% of the
Company's total net registrations at June 30, 1997. With over 10 million
businesses and over 750,000 active trademarks and service marks in the United
States alone, the Company believes that the potential for continued growth of
domain name registrations by commercial entities and services related to those
registrations is substantial. Net revenue from Internet domain name registration
subscriptions accounted for 81.0% of the Company's net revenue for the six
months ended June 30, 1997.

The Company also provides Intranet consulting and network design and
implementation services to large companies that desire to establish or enhance
their Internet presence or "re-engineer" legacy network infrastructures to
accommodate the integration of both Internet connectivity and Intranet network
technology into their information technology base. The Company's Intranet
services presently include: (i) Intranet development and re-engineering; (ii)
network and systems security; and (iii) Intranet-enabled business solutions.
According to Zona Research, Inc., the market for Intranet services in the year
1999 will exceed $14 billion, up from $3 billion in 1996. There can be no
assurance that such market forecast will be achieved. Net revenue from Intranet
services accounted for 19.0% of the Company's net revenue for the six months
ended June 30, 1997.

The Company currently acts as the registrar for second level domain names
within the .com, .org, .net, .edu and .gov TLDs pursuant to a cooperative
agreement (the "Cooperative Agreement") with the National Science Foundation
(the "NSF"). Prior to September 14, 1995, the Cooperative Agreement was a cost
reimbursement plus fixed-fee contract and the Company was paid directly by the
NSF for providing registration services. Effective September 14, 1995, the NSF
and the Company amended the Cooperative Agreement to authorize the Company to
charge customers a subscription fee of $50 per year for each second level domain
name registered. The Company's registration services customers in the .com, .org
and .net TLDs are invoiced for a two-year subscription fee of $100 for initial
registrations and $50 per year for renewals of initial registrations. Pursuant
to the Cooperative Agreement, the Company presently is required to set aside 30%
of the subscription fees collected for the enhancement of the intellectual
infrastructure of the Internet. These funds are not recognized as revenue by the
Company and will be disbursed in a manner approved by the NSF. The Cooperative
Agreement by its terms expires in March 1998, although the NSF may, at its
option, extend the Cooperative Agreement to September 1998. The Cooperative
Agreement is subject to review by the NSF and may be terminated at any time by
the NSF at its discretion or by mutual agreement. The NSF has stated that the
Cooperative Agreement will not be re-awarded to the Company or awarded to any
other entity. See "Risk Factors -- Uncertain Status of the Cooperative
Agreement," "-- Recommendations and

3
<PAGE> 6

Proposals to Increase Competition in Registration Services" and
"Business -- Relationship with the NSF; Recent Developments in the Internet
Community."

The Company believes that it has certain competitive advantages in the
domain name registration business, including: (i) a large established customer
base; (ii) recognition of the .com TLD; (iii) strategic agreements with Internet
access providers; (iv) an established technical infrastructure; (v) experience
in the administration of a domain name dispute policy; and (vi) skilled
technical personnel who are experienced in the domain name registration
business. The Company believes that the technical and procedural requirements to
build and to operate a competitive domain name registry are significant.
Substantial portions of the Company's registration software have been custom-
developed and are proprietary. The Company's in-house registration software
includes an automated registration capability which currently processes in
excess of 90% of all new registration requests without human intervention. In
connection with the Company's domain name registration service, the Company: (i)
cooperates with government and nonprofit organizations that develop and
implement Internet standards and policies; (ii) provides customer service
support, which includes back office capability, a telephone help desk and
electronic support via e-mail and the World Wide Web; and (iii) disseminates
domain name database information to root servers throughout the world.

The Company is working to expand its domain name registration business and
to continue to improve the registration process by: (i) increasing the use of
the .com TLD worldwide; (ii) expanding its relationships with Internet access
providers by offering enhanced registration services to their customers; (iii)
stimulating demand for domain names in targeted customer segments; (iv) working
with major platform providers to embed the registration function into server
software applications; (v) facilitating ease of use of and access to
registration services; and (vi) establishing international alliances and
developing multilingual capability. In addition, the Company intends to develop
a portfolio of Internet-enabling products and services, which may include
directory and distribution services, that allows the Company to build upon its
position in the registration process and makes proper use of the customer data
that the Company collects.

The Company was incorporated in Washington, D.C. in 1979 as Network
Solutions Incorporated and was reincorporated as Network Solutions, Inc. in
Delaware in November 1996. The Company's principal executive offices are located
at 505 Huntmar Park Drive, Herndon, Virginia 20170, and its telephone number is
(703) 742-0400.

THE OFFERING

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<S> <C>
Class A Common Stock offered by the Company...... 2,300,000 shares
Common Stock to be outstanding after the offering
Class A Common Stock........................... 2,300,000 shares(1)
Class B Common Stock........................... 12,500,000 shares(2)
Total.................................. 14,800,000 shares
Voting Rights.................................... Holders of Class A Common Stock vote
together as a class with, and generally
have identical rights, including as to
dividends, to, those of holders of Class
B Common Stock, except that holders of
Class A Common Stock are entitled to one
vote per share and holders of Class B
Common Stock are entitled to ten votes
per share. See "Description of Capital
Stock -- Common Stock -- Voting Rights."
Use of Proceeds.................................. For working capital and general corporate
purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol........... NSOL
</TABLE>

- ------------------------------

(1) Excludes 2,556,250 shares of Class A Common Stock reserved for issuance
under the Company's 1996 Stock Incentive Plan, of which 1,539,725 shares
were subject to options outstanding as of July 31, 1997, with a weighted
average exercise price of $13.18 per share. See "Capitalization" and
"Management -- 1996 Stock Incentive Plan" and Notes 10 and 14 of Notes to
Financial Statements.

(2) Upon completion of the offering, SAIC will own 100% of the Class B Common
Stock.

4
<PAGE> 7

SUMMARY FINANCIAL AND OPERATING INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------- -----------------
1992 1993 1994 1995(1) 1996 1996 1997
------ ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue............................................. $1,160 $4,369 $5,029 $ 6,486 $18,862 $ 6,829 $18,724
Income (loss) from continuing operations................ 93 (110) 189 (1,434) (1,625) (1,458) 1,256
Net income (loss)....................................... $ 681 $ (386) $ (980) $(2,837) $(1,625) $(1,458) $ 1,256
Unaudited pro forma net income (loss) per share......... $ (0.12) $ (0.11) $ 0.09
Unaudited pro forma shares used in computing net income
(loss) per share(2)................................... 13,349 13,349 13,349
OTHER OPERATING DATA(3):
Net new registrations................................... -- 13 24 141 489 180 429
Less: registrations not renewed......................... -- -- -- 1 39 17 16
Net registrations at period end......................... -- 13 37 177 627 340 1,040
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED(4)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................. $25,967 $ 46,952
Working capital(5).................................................................... 6,280 27,265
Total assets(6)....................................................................... 92,250 113,235
Deferred revenue, net(5).............................................................. 45,628 45,628
Capital lease obligations............................................................. 2,348 2,348
Total stockholders' equity............................................................ 2,693 23,678
</TABLE>

SUMMARY QUARTERLY FINANCIAL AND OPERATING INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1996 1996 1996 1996 1997 1997
-------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue..................................... $1,533 $ 2,333 $ 4,496 $ 5,180 $ 6,853 $ 8,655 $10,069
Income (loss) from continuing operations........ (844) (1,102) (356) (293) 126 516 740
Net income (loss)............................... $ (851) $(1,102) $ (356) $ (293) $ 126 $ 516 $ 740
Unaudited pro forma net income (loss) per
share......................................... $ (0.08) $ (0.03) $ (0.02) $ 0.01 $ 0.04 $ 0.06
Unaudited pro forma shares used in computing net
income (loss) per share(2).................... 13,349 13,349 13,349 13,349 13,349 13,349
OTHER OPERATING DATA(3):
Net new registrations........................... 43 75 105 139 170 197 232
Less: registrations not renewed................. 1 6 11 18 4 6 10
Net registrations as of period end.............. 177 246 340 461 627 818 1,040
</TABLE>

- ------------------------------

(1) The Summary Financial Data for the year ended December 31, 1995 was derived
by combining the Company's Results of Operations for the period January 1,
1995 through March 10, 1995 and the period March 11, 1995 through December
31, 1995 which, respectively, are periods before and after the date of the
SAIC acquisition discussed below. The data for these two periods were
prepared on differing bases of accounting and, accordingly, the
comparability of such data with other periods is limited, primarily as a
result of goodwill amortization, new corporate services agreements and the
repayment of outstanding debt balances. See Note 1 of Notes to Financial
Statements for a discussion of the presentation for each of these periods.

(2) See Note 2 of Notes to Financial Statements for an explanation of the
determination of shares used in computing the unaudited pro forma net income
(loss) per share.

(3) Net new registrations for each period include gross new registrations less
an estimate of registrations that are uncollectible. Net registrations
include net new registrations less management's estimate of registrations
not renewed. Prior to September 14, 1995, net registrations equaled gross
registrations because the Company was reimbursed by the NSF for all
registrations under a cost reimbursement plus fixed-fee contract.

(4) As adjusted to give effect to the $10,000 dividend to be paid to SAIC
declared on August 21, 1997 and payable on August 31, 1997 and to reflect
the sale of 2,300,000 shares of Class A Common Stock offered by the Company
hereby at an assumed initial public offering price of $15.00 per share and
the receipt of the estimated net proceeds therefrom. See "Use of Proceeds,"
"Dividend Policy" and "Capitalization."

(5) Includes $31,990 of current deferred revenue at June 30, 1997.

(6) Total assets include $31,056 of restricted assets at June 30, 1997. See

Notes 2 and 3 of Notes to Financial Statements.

5
<PAGE> 8

RELATIONSHIP WITH SAIC AND FINANCIAL PRESENTATION

The Company was acquired by Science Applications International Corporation
("SAIC"), an employee-owned, diversified professional and technical services
company, on March 10, 1995. The financial statements of the Company presented
for periods subsequent to March 10, 1995 are presented on the new basis of
accounting arising from the SAIC acquisition. The Company is currently a wholly-
owned subsidiary of SAIC. Upon completion of the offering, SAIC will own 100% of
the Company's outstanding Class B Common Stock, which will represent
approximately 84.5% of the outstanding Common Stock of the Company
(approximately 82.5% if the Underwriters' over-allotment option is exercised in
full) and approximately 98.2% of the combined voting power of the Company's
outstanding Common Stock (approximately 97.9% if the Underwriters'
over-allotment option is exercised in full). As a result, SAIC will continue to
have the ability to elect all of the directors of the Company and otherwise
exercise control over the business and affairs of the Company. See "Principal
Stockholders," "Risk Factors -- Control By SAIC," "-- Potential Conflicts of
Interest" and "Relationship with SAIC and Certain Transactions."

Upon completion of the offering, SAIC will continue to provide certain
services to the Company in a manner generally consistent with past practices.
Prior to completion of the offering, the Company and SAIC will enter into a
number of intercompany agreements with respect to such services and other
matters, including a tax sharing agreement. See "Risk Factors -- Intercompany
Agreements Not Subject to Arm's Length Negotiations; Reliance on SAIC for
Certain Corporate Services," "-- Control of Tax Matters; Tax and ERISA
Liability" and "Relationship With SAIC and Certain Transactions."

6
<PAGE> 9

RISK FACTORS

An investment in the shares of Class A Common Stock offered hereby involves
a high degree of risk. Prospective investors should consider carefully the
following risk factors, in addition to the other information presented in this
Prospectus, before purchasing the shares of Class A Common Stock offered hereby.
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements as a result of certain
factors, including, but not limited to, those set forth under "Risk Factors" and
elsewhere in this Prospectus.

Limited Operating History. While the Company has been in business since
1979, it has only been involved in the domain name registration business
pursuant to the Cooperative Agreement since 1993. Further, prior to September
14, 1995, the Company operated its domain name registration business under a
cost reimbursement plus fixed-fee contract with the NSF and the Company was paid
directly by the NSF for providing registration services. Accordingly, the
Company has only a limited operating history under its current
subscription-based pricing model for its domain name registration business upon
which an evaluation of the Company and its prospects can be based. In 1995 and
1996, the Company incurred net losses in part as a result of the Company's
transition to a subscription-based pricing model, where revenue is recognized on
a straight-line basis over the subscription period, combined with the increased
costs to support the increase in its subscriber base, including costs for
product and services development, increased sales and marketing operations,
upgrading systems and infrastructure, developing new distribution channels and
broadening customer support capabilities. The Company incurred a net loss of
approximately $1.6 million for the year ended December 31, 1996 and had an
accumulated deficit of approximately $1.8 million through June 30, 1997. The
Company's prospects must be considered in light of the risks frequently
encountered by companies in their early stages of development, particularly
companies in new and rapidly evolving markets. To address these risks, the
Company must, among other things, respond to competitive developments, increase
its sales and marketing organization, continue to identify, attract, retain and
motivate qualified persons and continue to upgrade its technologies and
commercialize products and services incorporating such technologies. While the
Company has been involved in network services and consulting since its
inception, due to the rapidly evolving nature of Internet technologies, the
Company's Intranet services business faces similar risks. An Intranet is an
internal network which uses Internet technologies. There can be no assurance
that the Company will be successful in addressing such risks or that the Company
will continue to obtain new registrations at current rates or renew the
registration of a significant portion of its customers. See "-- Absence of Sales
and Marketing Experience; Evolving Distribution Channels" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

As a result of the Company's limited operating history, especially with
regard to its subscription-based registration services business, the Company
does not have significant historical financial data on which to base planned
operating expenses. Accordingly, the Company's expense levels are based in part
on its expectations as to future revenue and to a large extent are fixed. As a
result, quarterly sales and operating results generally depend on the volume of
and ability to fulfill registration requests, which are difficult to forecast.
The Company may be unable to adjust spending in a timely manner to compensate
for any unexpected revenue shortfall. Accordingly, any significant shortfall of
demand for the Company's services in relation to the Company's expectations
would have an immediate adverse impact on the Company's business, operating
results and financial condition. In addition, the Company expects a significant
increase in its operating expenses as it funds greater levels of product and
services development, increases its sales and marketing operations, upgrades
systems and infrastructure, opens new offices, develops new distribution
channels and broadens its customer support capabilities. To the extent that such
expenses precede or are not subsequently followed by an increase in revenue, the
Company's business, operating results and financial condition will be materially
and adversely affected.

Uncertain Status of the Cooperative Agreement. In 1993, the Company
entered into the Cooperative Agreement with the NSF to act as the registrar for
second level domain names within the .com,

7
<PAGE> 10

.org, .net, .edu and .gov TLDs. With the commercialization of the Internet, the
role, if any, that the NSF will play in the Internet and the legal authority
underlying its role are at present unclear. Withdrawal of or challenges to the
NSF's sponsorship or authorization of the Company's activities could create a
public perception or result in a finding that the Company lacks authority to
continue in its role as registrar or to charge fees for its domain name
registration services. The impact, if any, of any such public perception or
finding is unknown but could materially and adversely affect the Company's
business, financial condition and results of operations. Further, the
Cooperative Agreement by its terms expires in March 1998, although the NSF may,
at its option, extend the Cooperative Agreement to September 1998. The terms of
the Cooperative Agreement are subject to review and adjustment by the NSF on an
annual basis. In addition, the Cooperative Agreement may be terminated by the
NSF at any time at its discretion or by mutual agreement. When the Cooperative
Agreement is terminated or if there is a change in the terms of the Cooperative
Agreement or the Company's status as the exclusive registrar for domain names in
the .com TLD, the Company's business, financial condition and results of
operations could be materially and adversely affected. The NSF has stated that
the Cooperative Agreement will not be re-awarded to the Company or awarded to
any other entity. However, there can be no assurance that the NSF will not award
the Cooperative Agreement to another entity and, if the Cooperative Agreement is
awarded to another entity, the Company's business, financial condition and
results of operations would be materially and adversely affected. See
"-- Uncertainty of Internet Governance and Regulation" and
"Business -- Relationship with the NSF; Recent Developments in the Internet
Community."

Competition in Domain Name Registration Business. The Company currently is
the exclusive registrar for second level domain names in the .com, .org, .net,
.edu and .gov TLDs. Multiple registries do not currently register names in the
same TLD, but this may change in the future. The Company currently faces
competition in the domain name registration business from registries for country
codes, third level domain name providers such as Internet access providers and
registries of TLDs other than those TLDs currently being registered by the
Company. A number of entities have already begun to offer competing registration
services using other TLDs. Future competition in the Company's domain name
registration business could come from many different companies, including, but
not limited to, major telecommunications firms, cable companies and Internet
access providers. Such entities have core capabilities to deliver registration
services, such as help desks, billing services and network management, along
with strong name recognition and Internet industry experience. Other companies
with some or all of these capabilities may also enter the registration business.
Also emerging is a growing contingent of domain name resellers. The Company's
position as the leading registrar of domain names could be materially and
adversely affected by the emergence of any of the foregoing competitors and
potential competitors, many of which have longer operating histories and
significantly greater name recognition and greater financial, technical,
marketing, distribution and other resources than the Company. In addition, the
Company's revenue and subscription fees could be reduced due to increasing
competition. For example, other entities may bundle domain name registrations
with other products or services, effectively providing such registration
services for free. If operational and administrative arrangements or technology
permitting multiple competitors to register domain names in the same or other
TLDs are developed and competition occurs in the domain name registration
business, the Company's business, financial condition and results of operations
could be materially and adversely affected. See "Business -- Competition."

Recommendations and Proposals to Increase Competition in Registration
Services. The Cooperative Agreement does not prohibit the establishment of
competing registries. No single organization or entity (including the NSF)
currently has formal authority over all aspects of the Internet and the Internet
currently operates under a system of mutual cooperation. As a result, it is
unclear which organization or entity, if any, will govern the authorization for
the registration of domain names. Various governmental, technical and Internet
groups are currently discussing how the award and administration of future
contracts for registration services in the .com TLD, other existing TLDs and new
TLDs may take place and are considering whether and how to enable other parties
to enter the domain name registration business. The Company is also an active
participant in this process. A

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<PAGE> 11

consensus regarding such issues could be reached and implemented in the near
future and prior to the expiration of the Cooperative Agreement. For example,
some members of the Internet community have discussed various concepts such as
adding new TLDs, which could result in significant competition for domain name
registrations, including competition on the price charged by the Company for
domain name registrations. In February 1997, an international ad hoc committee
(the "IAHC"), the members of which have been selected by certain entities
involved in the Internet and intellectual property fields, issued its
recommendation designed to increase competition in domain name registration in
which it proposed the creation of additional registries, additional TLDs and the
possible sharing of new and existing TLDs. In April 1997, the IAHC issued a
Memorandum of Understanding ("MOU") seeking support for its recommendations.
This MOU has been signed by a number of organizations in the Internet community.
In April 1997, the Company issued its own recommendations to increase
competition in domain name registration. The Company's recommendations focus on
creating additional TLDs as well as on the future administration and technical
operation of the Internet. Other groups or entities may also make other
proposals concerning these and other issues. Implementation of competing
registries, additional TLDs, the sharing of the Company's TLDs or other
recommendations or proposals of these groups could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "-- Uncertainty of Internet Governance and Regulation" and
"Business -- Relationship with the NSF; Recent Developments in the Internet
Community."

Uncertainty of Internet Governance and Regulation. The Internet
historically has been loosely administered by a number of government agencies
which were involved in the creation of its infrastructure, initially the
Department of Defense's Advanced Research Projects Agency ("ARPA") and, more
recently, the NSF. No single organization or entity (including the NSF)
currently has formal authority over all aspects of the Internet and it currently
operates under a system of mutual cooperation. Since the original role of the
Internet was to link computers at governmental and academic institutions to
facilitate communication and research, the Internet was historically
administered by entities which were involved in sponsoring research rather than
by any of the traditional federal or state regulatory agencies. With the
commercialization and internationalization of the Internet, the role of these
entities in Internet administration has become less clear and private parties
have begun to assume a larger role in the enhancement and maintenance of the
Internet's infrastructure. This lack of regulation and the legal uncertainties
arising from it poses risks to the Company and to the commercial Internet
industry in general. As described above, it is unclear which organization or
entity, if any, will govern the authorization for the registration of domain
names in the future. The lack of an appropriate organization or entity to govern
the authorization for the registration of domain names could have a material
adverse effect on the Company's business, financial condition and results of
operations.

The effective operation of the Internet is dependent on the continued
mutual cooperation and consensus among an increasing number of entities, many of
which have widely divergent interests. For example, the IP addresses allocated
by Internet service providers ("ISPs") to their customers are originally
allocated by the Internet Assigned Numbers Authority (the "IANA"). Thus, the
effective operation of the Internet is dependent on such continued allocation of
IP addresses by IANA. Continuing to achieve consensus may become difficult or
impossible and may become extremely time-consuming and costly. Achieving
consensus may be made more difficult because of the lack of leadership by any
one entity. This lack of regulation also creates great uncertainty as to the
legality of any action, making business planning and operations difficult.
Conversely, the lack of regulation could theoretically result in individuals and
entities taking harmful or disruptive actions with respect to the Internet with
impunity. There is a risk that a failure to achieve consensus among the various
groups which are now informally administering the Internet could result in the
disruption of Internet operations, the inability of any user to communicate with
another user or otherwise utilize the Internet or the delay of infrastructure
improvements necessary to the maintenance and expansion of the Internet.

Any disruption to the administration, effective operation or maintenance
and expansion of the Internet, in general, or the domain name registration
system in particular, would have a material

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<PAGE> 12

adverse effect on the Company's business, financial condition and results of
operation. See "-- Uncertain Status of the Cooperative Agreement;
"-- Recommendations and Proposals to Increase Competition in Registration
Services" and "Business -- Relationship with the NSF; Recent Developments in the
Internet Community."

The current lack of any centralized Internet management could also cause
the U.S. federal or other governments to intervene with uncertain results. The
U.S. government has formed an interagency task force ("ITF") consisting of
various federal agencies to study the issues surrounding domain name
registration and governance of the Internet. The ITF is expected to solicit
broad public input to these and other issues. This process is expected to be
completed in early 1998. On July 1, 1997, the National Telecommunications
Information Administration of the Department of Commerce ("the NTIA") published
a request for comments on the registration and administration of Internet domain
names. This request appeared in the form of a notice of inquiry (the "NOI") in
the U.S. Federal Register with August 18, 1997 as the closing date for receipt
of comments. The NOI requested specific input in five broad areas: general
principles, general/organizational framework issues, creation of new TLDs,
policy issues for new registrars and trademark dispute issues. The Company has
submitted a response to the NOI request which includes a recommendation, among
others, that an international public advisory group with U.S. government
sponsorship be established to manage the Internet, including the domain name
system, and that the U.S. government sponsorship of this international public
advisory group continue through a transition period until a suitable
international sponsor is selected. The NTIA is expected to issue a report on the
results of this NOI and to recommend a future course of action prior to June
1998 for the role of the U.S. government in Internet domain name registration.
The ITF or NTIA processes or any other government-sponsored process could result
in policies which may not be favorable to the Company or consistent with the
Company's current or future plans. The outcome of these activities, therefore,
could have a material adverse effect on the Company's business, financial
condition and results of operations.

In the United States, apart from its obligations under the Cooperative
Agreement, the Company is not currently subject to direct regulation other than
federal and state regulation applicable to businesses generally. However,
changes in the regulatory environment could result in the Company being subject
to direct regulation by the Federal Communications Commission (the "FCC") or
other U.S. regulatory agencies. For example, the Company is aware of certain
industry requests to the FCC to review the impact of Internet usage on the U.S.
telecommunications service providers, in particular, the generally lower cost
structure for data transmission versus voice. In addition, as Internet usage
becomes more widespread internationally, there is an increased likelihood of
international regulation. The Company cannot predict whether or to what extent
any such new regulation will occur; however, such regulation could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Additionally, the applicability to the Company of existing laws governing
issues such as intellectual property ownership is uncertain. Courts have
indicated that, under certain circumstances, ISPs could be held responsible for
the failure to prevent the distribution of material that infringes on others'
copyrights and other intellectual property. The future interpretation by the
courts of the obligation of domain name registration providers to prevent
trademark infringement and other legal issues is uncertain. See "-- Litigation;
Antitrust Investigation" and "Business -- Litigation; Antitrust Investigation."

Costs incurred or decisions rendered as a result of government actions,
including enactment of new laws or adoption of new regulations, investigations
or lawsuits relating to any of the foregoing, could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Uncertainty of Internet Governance and Regulation."

Reliance on Third Parties. Reliable communications over the Internet are
dependent upon Internet root servers, which serve as the equivalent of master
"white pages" of the Internet. Currently, there are 13 root servers, ten of
which are located in the United States, two of which are located in Europe and
one of which is located in Asia. Nine of the root servers currently are
populated with the domain names registered by the Company, while these nine and
the other four also contain

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<PAGE> 13

information with respect to other TLDs, including country TLDs. When
communication with a particular host within a domain name is required and the IP
address of that host is not known locally, the root servers make that
information available or "point" to a direct or indirect source of the
information. Multiple root servers are required for purposes of load balancing
and redundancy.

The location and control of these root servers has been determined by
consensus of various members of the Internet community. The Company controls
only one of these root servers and currently temporarily administers another
root server. The other eleven root servers are maintained and controlled by
independent operators on a volunteer basis. These volunteer operators may at any
time, for any reason, fail to properly maintain such servers or abandon such
servers. The occurrence of any such events would have a material adverse effect
on the Company's business, financial condition and results of operations.

Further, as no single organization or entity currently has formal authority
over all aspects of the Internet, no organization or entity (including the
Company) has the legal authority to direct where the root servers are to be
pointed. However, the operators of the root servers have historically taken
guidance from the IANA. It is possible that IANA could direct the root servers
not to accept information updates from the Company or that the operators of the
root servers could choose to no longer carry the Company's information. In the
event that the root servers were changed to exclude the information maintained
by the Company, all new domain names registered by the Company since the last
update of the data in the TLDs for which the Company acts as the registrar would
no longer be accessible by other users of the Internet. If some, but not all, of
the root servers were changed to exclude the Company's data, the multiple root
servers would contain inconsistent information. The failure by any or all of the
root servers to include or provide accessibility to the Company's data would
materially and adversely affect the Internet and the Company's business,
financial condition and results of operations.

The Company's success and ability to compete are also dependent upon the
relationships between the Company and ISPs worldwide. Thus, if ISPs were to
elect not to route Internet communications to or from domain names registered by
the Company or if enough ISPs were to elect to provide routing to a set of
accepted root servers which did not point to the Company's TLD servers, the
Company's business, financial condition and results of operations would be
materially and adversely affected.

Litigation; Antitrust Investigation. As of July 31, 1997, the Company had
received approximately 2,700 written objections to the registration and use of
certain domain names. Of these, approximately 1,400 were disputes in which the
Company's domain name dispute policy was involved. As of July 31, 1997, the
Company had been named as a defendant in 36 lawsuits. As of such date, the
Company had been dismissed as a party from 25 of the 36 lawsuits and no damages
have been awarded against the Company to any plaintiff. The lawsuits have
generally involved domain name disputes between trademark owners and domain name
holders. The Company's domain name dispute policy seeks to take a neutral
position regarding these competing claims and is designed to address claims that
a domain name registered by the Company infringes a third party's federal
trademark. The Company is drawn into such disputes, in part, as a result of
claims by trademark owners that the Company is legally required, upon request by
a trademark owner, to terminate the right the Company granted to an alleged
trademark infringer to register the domain name in question. Further, trademark
owners have also alleged that the Company should be required to monitor future
domain name registrations and reject registrations of domain names which are
identical or similar to their federally registered trademark. The holders of the
domain name registrations in dispute have, in turn, questioned the Company's
right, absent a court order, to take any action which suspends their
registration or use of the domain names in question. Such litigation has
resulted in, and any future litigation can be expected to result in, substantial
legal and other expenses to the Company and a diversion of the efforts of the
Company's personnel.

On June 27, 1997, SAIC received a Civil Investigative Demand ("CID") from
the U.S. Department of Justice ("DOJ") issued in connection with an
investigation to determine whether there is, has been,

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<PAGE> 14

or may be a violation of antitrust laws under the Sherman Act relating to
Internet registration products and services. The CID seeks documents and
information from SAIC and the Company relating to their Internet registration
business. Neither SAIC nor the Company is aware of the scope or nature of the
investigation. The Company cannot reasonably estimate the potential impact of
the investigation nor can it predict whether a civil action will ultimately be
filed by the DOJ or by private litigants as a result of the DOJ investigation
or, if filed, what such action would entail. The Company is unable to predict
the form of relief that might be sought in such an action or that might be
awarded by a court or imposed as a result of any settlement between the Company
and the DOJ or private litigants. Any such relief could have a material adverse
effect on the Company's business, financial condition and results of operations.

On March 20, 1997, PG Media, Inc., a New York-based corporation ("PG
Media"), filed a lawsuit against the Company in the United States District
Court, Southern District of New York alleging that the Company had restricted
access to the Internet by not adding TLDs in violation of the Sherman Act. In
its complaint, PG Media has, in addition to requesting damages, asked that the
Company be ordered to amend the root zone configuration file so that the file
includes reference to PG Media's TLDs and nameservers. The Company has answered
the complaint, but no motions are pending. In addition, the Company recently
received written direction from the NSF not to take any action to create
additional TLDs or to add any new TLDs to the Internet root servers until
further guidance is provided by the NSF. The Company believes that it has
meritorious defenses and intends to vigorously defend itself against the claims
made by PG Media. While the Company cannot reasonably estimate the potential
impact of such claims, a successful claim under the plaintiff's theory could
have a material adverse effect on the Company's business, financial condition
and results of operations.

There can be no assurance that the Company will not be involved in
additional litigation, investigations or other proceedings in the future,
including proceedings challenging the Company's authority to continue in its
role as a registrar or to charge fees for its domain name registration services.
Any such proceedings, with or without merit, could be costly and time-consuming
to defend and could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Litigation;
Antitrust Investigation."

System Interruption and Security Risks. The Company's operations are
dependent upon its ability to maintain its computer and telecommunications
equipment in effective working order and to reasonably protect its systems
against interruption from fire, natural disaster, sabotage, power loss,
telecommunication failure, human error or similar events. The vast majority of
the Company's computer and telecommunications equipment is located in a single
facility. Although the Company is in the process of establishing back-up
facilities at another site, this measure, when implemented, will not eliminate
the significant risk to the Company's operations from a natural disaster or
system failure at its principal site. Despite the implementation of security
measures and standard operating procedures, the Company's infrastructure may
also be vulnerable to computer viruses, hackers, human error or similar
disruptive problems caused by its employees, customers or other Internet users.
Computer break-ins and other disruptions may jeopardize the security of
information stored in and transmitted through the computer systems of the
Company and may deter potential customers from utilizing the Company's services.
In addition, growth of the Company's customer base may put strain on the
capacity of its computers and telecommunications systems and the Company's
inability to sufficiently maintain or upgrade its systems could lead to
degradation in performance or system failure. Any damage, failure or delay that
causes significant interruptions in the Company's systems would have a material
adverse effect on the Company's business, financial condition and results of
operations.

On July 17, 1997, during a routine update of the root server domain name
files, the Company inadvertently released corrupted database files for the .com
and .net TLDs, causing disruption throughout the Internet. The original problem,
which was caused by a database error, was compounded when the normal quality
control mechanisms used to validate the .com and .net TLD files were incorrectly
overridden by Company personnel and the corrupted files were released. As a
result, certain Internet users were unable to access certain websites. The
database error was subsequently

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<PAGE> 15

fixed and the corrected files were regenerated and re-released by the Company
within four hours, although the length of time during which certain Internet
users experienced disruption in accessing the Internet varied.

The Company has taken several steps to avoid any future occurrences of this
or similar problems, including, but not limited to, adding software code to make
it more difficult to transmit a problematic file and additional quality checks
by a senior level person prior to each file transmission. There can be no
assurance, however, that the Company's standard operating procedure or the
additional measures recently implemented by the Company will prevent or mitigate
a similar occurrence in the future.

Separately, in July 1997, an entity which offers competing registration
services using other TLDs exploited a security vulnerability in a third-party
Internet software to temporarily redirect traffic intended for the Company's
website. The Company is working with CERT (Computer Emergency Response Team)
from Carnegie Mellon University to address this problem.

If any of these or similar problems should recur or occur in the future, it
could result in, among other things, damage to the Company's reputation and
credibility, increased intervention by government regulators or reduced customer
confidence, which could in turn materially and adversely affect the Company's
business, financial condition and results of operations.

Competition in Intranet Services and Internet-Enabling
Businesses. Companies with Internet expertise are current or potential
competitors to the Company's Intranet services business. Such companies include
systems integrators and consulting firms, such as Andersen Consulting, IBM
Global Services and International Network Services. The Company also competes
with certain companies that have developed products that automate the management
of Internet Protocol ("IP") addresses and name maps throughout enterprise-wide
Intranets and with companies with internally-developed systems integration
efforts. An IP address allows a router, a computer which connects networks
together, to determine the network to which the router should send the data it
receives. A number of these competitors and potential competitors have longer
operating histories, greater name recognition and significantly greater
financial, technical, marketing, distribution and other resources than the
Company. There can be no assurance that the Company will be able to successfully
compete in the Intranet services area. Failure by the Company to compete
successfully in the Intranet services area could have a material adverse effect
on the Company's business, financial condition and results of operations.

In developing and distributing future products and services for the
Internet-enabling services markets, the Company faces intense competition and
expects to have multiple competitors for each of the products or services, if
any, which it develops or sells. Many of the Company's potential competitors
have longer operating histories, greater name recognition and significantly
greater financial, technical, marketing, distribution and other resources than
the Company. Furthermore, the industry in which the Company intends to compete
is characterized by rapid changes and frequent product and service
introductions. To the extent a competitor introduces a competitive product or
service prior to the introduction of the same or similar product or service by
the Company, market acceptance of the competitor's product or service may
adversely affect the Company's competitive position. See
"Business -- Competition."

Uncollectible Receivables; Modifications to Billing Practices. The Company
was reimbursed by the NSF for providing domain name registration services prior
to September 14, 1995, at which time the Company began charging its customers
fees for new domain name registrations pursuant to an amendment to the
Cooperative Agreement. Currently, the Company invoices customers and permits
them to pay the subscription fee after the domain name is registered. The
Company believes it has experienced a high level of uncollectible receivables
due to, among other factors, the large number of individuals and corporations
that have registered multiple domain names with the apparent intention of
reselling such names at a profit. The Company's experience has been that such
resellers have a greater tendency than other customers to default on their
subscription fees. Management has established a provision for uncollectible
accounts which it believes to be adequate to cover anticipated

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<PAGE> 16

uncollectible receivables; however, actual results could differ from
management's estimate and could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 3 of Notes to Financial Statements.

The Company continually reviews its billing practices for modification to
respond to market conditions and to implement operational improvements. Any such
modification could have unanticipated consequences which could result in a
material adverse effect on the Company's business, financial condition and
results of operations.

Limited Service Offerings to Date; Reliance on Domain Name Registration
Services and Intranet Services for Substantially All Revenue. The Company's
domain name registration services and Intranet services businesses have in the
past generated substantially all of the Company's revenue from continuing
operations and are expected to continue to account for substantially all of the
Company's revenue from continuing operations in the near term. The Company's
future success will be highly dependent upon the continued increase in domain
name registrations with the Company, renewal rates of its customers, the ability
of the Company to maintain its current position both as a registrar of domain
names and as the leading registrar of domain names within the .com TLD and the
successful development, introduction and market acceptance of new services that
address the demands of Internet users. Although the Company has experienced
revenue growth in recent periods, such growth may not be sustainable and may not
be indicative of future operating results. There can be no assurance that the
Company will be able to successfully retain its current position in providing
domain name registration services or develop or market additional services.
Failure to do so would materially and adversely affect the Company's business,
financial condition and results of operations.

The Company's future success will also be dependent on its ability to
maintain and expand its Intranet services business. NationsBanc Services, Inc.
("NationsBanc"), the Company's largest Intranet services customer, accounted for
41.3% of the Company's Intranet services net revenue and 7.8% of the Company's
total net revenue from continuing operations for the six months ended June 30,
1997. NationsBanc originally contracted with the Company in 1993 to provide
ongoing analysis, design, implementation and support engineering for its
enterprise network. The Company currently provides network design and
engineering services as well as a variety of project specific services for
NationsBanc. The Company's current contract with NationsBanc is a three-year
contract which commenced January 1, 1997 and is a requirements contract under
which the Company's services are ordered by task orders issued by NationsBanc.
The NationsBanc contract may be terminated by NationsBanc at any time upon
30-days' prior written notice to the Company. During the first quarter of 1997,
task orders for a number of services the Company had historically performed for
NationsBanc were not renewed. The Company believes that this reflects
NationsBanc's focus on increasing its internal information technology staff as
well as its continued efforts to integrate information technology staff from
recent acquisitions. The Company believes NationsBanc will continue to be a
significant customer for its Intranet services group but less so than in
previous years, both in terms of dollars and as a percentage of the Company's
total net revenue. There can be no assurance that the Company will obtain any
additional task orders under the NationsBanc contract or maintain or be able to
expand its Intranet services business. Failure to do so would materially and
adversely affect the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

Technological Change and Additional Technology, Products and Services. The
development of RWhois, a Company-developed, standard open protocol, and the
associated technology, allows remote registration by others. The Company's
efforts to standardize and proliferate RWhois as the registration standard may
result in a material adverse effect on the Company's future competitive position
by enabling others to establish registries more easily. RWhois is also the
protocol that the Company may utilize for any global directory services which
the Company might offer. The successful introduction of such directory services
may blur the distinction between directory services and domain name
registration. Should this or another global directory service become widely
proliferated, domain name

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<PAGE> 17

registration may be subsumed into such a service. In that case, should the
Company fail to secure a leadership position in providing such a global
directory service or establish a system for charging for such service, the
Company's business, financial condition and results of operations would be
materially and adversely affected. See "Business -- NSI Services -- Registration
Services" and "-- Other Products and Services Development."

The Company's future financial success will be highly dependent upon its
ability to develop and commercialize in a timely manner new technology, products
and services that can be offered in conjunction with the Company's current
domain name registration and Intranet services and that can meet the changing
requirements of its current and future customers. The market for such
technology, products and services is characterized by rapidly changing
technology, evolving industry standards and frequent introductions of new
Intranet and Internet-related products and services. Generally, the successful
development and commercialization of new technology, products and services
involves many risks, including the identification of new Intranet and
Internet-related product and service opportunities, the successful completion of
the development process, and the identification, retention and hiring of
appropriate research, development and technical personnel. There can be no
assurance that the Company can successfully identify new products and service
opportunities and develop and bring to market in a timely manner new
technologies, products or services, or that technologies, products or services
developed by others will not render those of the Company noncompetitive or
obsolete. Failure by the Company to develop new technologies, products or
services and bring them to market in a timely manner could have a material
adverse effect on the Company's business, financial condition and results of
operations.

Dependence on Future Growth of the Internet and Internet
Infrastructure. The Company's future success is substantially dependent upon
continued growth in the use of the Internet. Rapid growth in the use of and
interest in the Internet is a relatively recent phenomenon and there can be no
assurance that use of the Internet will continue to grow at its current pace.
Even if the Internet continues to experience significant growth in the number of
users and level of use, there can be no assurance that the Internet
infrastructure will continue to be able to support the demands placed upon it by
such growth. The Company's success and the viability of the Internet as an
information medium and commercial marketplace will depend in large part upon the
development of a robust infrastructure for providing Internet access and
carrying Internet traffic. Failure to develop a reliable network system, or
timely development of complementary products, such as high speed modems, could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, the Internet could lose its viability
due to delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity or due to increased
government regulation. The lack of Internet governance or the future imposition
of restrictive governance or regulation could adversely affect the growth of the
use of the Internet and have a material adverse effect on the Company's
business, financial condition and results of operations. Because global commerce
and on-line exchange of information on the Internet are new and evolving, it is
difficult to predict with any assurance that the infrastructure or complementary
products will be developed, or, if developed, that the Internet will become a
viable information medium or commercial marketplace. If the use of the Internet
does not continue to grow, if the necessary infrastructure or complementary
products are not developed or do not effectively support growth that may occur,
or if the Internet does not become a viable information medium or commercial
marketplace, the Company's business, financial condition and results of
operations would be materially and adversely affected. See "-- System
Interruption and Security Risks" and "Business -- Industry Background."

Intellectual Property Rights. The Company's principal intellectual
property consists of, and its success is dependent upon, the Company's
proprietary software utilized in its registration services business and certain
methodologies and technical expertise it utilizes in both the design and planned
implementation of its current and future registration service and proposed
Internet-enabling services businesses. Some of the software and protocols used
by the Company in its registration service and proposed Internet-enabling
services businesses are in the public domain or are otherwise available to

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<PAGE> 18

the Company's competitors. In addition, in-depth technical knowledge and unique
processes are critical to the Company's Intranet services business, in which a
full range of consulting and systems integration services are offered in order
to transition organizations from private, legacy networks to more scalable and
efficient Intranets. The Company has no patents or registered copyrights but has
several trademarks and service marks, including the Company's logo.

The Company has compiled a database of information relating to customers in
its registration business. While a portion of this database is available to the
public, the Company believes that it has certain ownership rights in this
database and is seeking to protect such rights. If it were determined that the
Company does not have ownership rights in this database or if the Company is
unable to protect such rights in this database or is required to share the
database with its potential competitors, there could be a material adverse
effect on the Company's business, financial condition and results of operations.

The Company relies upon a combination of nondisclosure and other
contractual arrangements with its employees and third parties and trade secret
laws to protect its proprietary rights and limit the distribution of its
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of proprietary
information or that the Company will be able to detect unauthorized use of its
proprietary information and take appropriate steps to enforce its intellectual
property rights. Furthermore, even if these steps are successful, there can be
no assurance that others will not develop technologies that are similar or
superior to the Company's proprietary technology. Although the Company believes
that its services do not infringe on the intellectual property rights of others
and that it has all rights necessary to utilize the intellectual property
employed in its business, the Company is subject to the risk of claims alleging
infringement of third party intellectual property rights. Any such claims could
require the Company to spend significant sums in litigation, pay damages and
develop non-infringing intellectual property or acquire licenses to the
intellectual property which is the subject of asserted infringement. Failure by
the Company to adequately protect its proprietary rights or litigation relating
to intellectual property rights could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Intellectual Property Rights."

Potential Fluctuations in Quarterly Results. The Company believes that
future operating results will be subject to quarterly fluctuations due to a
variety of factors, many of which are beyond the Company's control. Such factors
may include, but are not limited to, termination of the Cooperative Agreement or
the award of the Cooperative Agreement to another entity, the introduction of
additional competing registrars or TLDs, variations in the number of requests
for domain name registrations or demand for the Company's services, introduction
or enhancements of services by the Company or its competitors, market acceptance
of new service offerings, increased competition, costs associated with providing
domain name registration services, litigation costs, patterns of growth in the
use of and interest in the Internet and general economic conditions. The Company
is continuing to increase its operating expenses for personnel, facilities and
new services development and, if its revenues do not correspondingly increase,
the Company's business, financial condition and results of operations would be
materially and adversely affected.

Since professional services revenue for Intranet services is recognized by
the Company only when network systems engineers are engaged on client projects,
the relative utilization of network systems engineers directly affects the
Company's operating results. In addition, a majority of the Company's Intranet
services operating expenses, particularly personnel and related costs,
depreciation and rent, are substantially fixed in advance of any particular
quarter. As a result, any underutilization of network systems engineers may
cause significant variations in operating results in any particular quarter and
could result in losses for such quarter. Termination or completion of contracts
in the Company's Intranet services business or failure to obtain additional
contracts in its Intranet services business could have a material adverse effect
on the Company's business, financial condition and results of operation. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

16
<PAGE> 19

Management of Growth; Dependence on Key Personnel. The Company has
recently experienced growth in the number of its employees and in the scope of
its operating and financial systems. This growth has resulted in an increase in
responsibilities for both existing and new management personnel. In addition,
the Company is currently seeking additional key marketing and business
development personnel. The Company's ability to manage growth effectively will
require it to successfully integrate its management team, continue to implement
and improve its operational, financial and management information systems and to
train, motivate, manage and retain its employees. There can be no assurance that
the Company will be able to manage its expansion effectively and a failure to do
so could have a material adverse effect on the Company's business, financial
condition and results of operations.

The rapid growth of the Company's domain name registration business during
1995 and 1996 significantly exceeded the Company's back office capabilities and
control infrastructure. As a result, the Company was unable to keep current in
the processing, billing, collection, reconciliation and other administrative and
financial functions relating to the domain name registration business. In late
1996, the Company entered into outsourcing arrangements with third parties,
which, in conjunction with new invoicing procedures implemented in 1997, enabled
the Company to become current in these functions. There can be no assurance that
such outsourcing arrangements and procedural changes will continue to be
successful in addressing the current or future needs of the Company's domain
name registration business or that the Company will remain current on the
various administrative and financial functions relating to the domain name
registration business. In addition, growth of the Company's customer base may
strain the capacity of its computers and telecommunications systems, and the
Company's inability to sufficiently maintain or upgrade its systems could lead
to degradation in performance or system failure.

The Company's future success depends in part on the continued service of
its key engineering, sales, marketing, executive and administrative personnel,
and its ability to identify, hire and retain additional personnel. In addition,
the future success of the Company's Intranet services will depend in large part
on its ability to hire, train and retain network systems engineers who have
expertise in a wide array of network and computer systems and a broad
understanding of the industries the Company serves. An inability of the Company
to identify, hire, train and retain a sufficient number of qualified network
systems engineers could impair the Company's ability to adequately manage and
complete its existing projects or to obtain new projects, which, in turn, could
have a material adverse effect on the Company's business, financial condition
and results of operations and could impair the Company's expansion of its
business. Competition for engineering, sales, marketing and executive personnel
is intense and there can be no assurance that the Company can retain existing
personnel or identify, hire or retain additional qualified personnel. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Absence of Sales and Marketing Experience; Evolving Distribution
Channels. The Company has limited experience in marketing and selling its
services under its current subscription-based pricing model. The Company's
ability to achieve revenue growth in the future will depend in large part on its
ability to establish a sales and marketing organization. There can be no
assurance that the Company will be able to identify, attract and retain
experienced sales and marketing personnel with relevant experience, that the
cost of such personnel will not exceed the revenue generated or that the
Company's sales and marketing organization will be able to successfully compete
against the significantly more extensive and well-funded sales and marketing
operations of the Company's current or potential competitors.

In addition to establishing its direct sales channels, the Company's
distribution strategy is to develop multiple distribution channels. Accordingly,
the Company's ability to achieve revenue growth in the future will also depend
in large part on establishing and maintaining relationships with Internet access
providers and other third parties and on effectively using the Internet as a
medium of distribution. There can be no assurance that the Company will be able
to successfully establish its sales and marketing organization, develop third
party distribution channels, develop its own capabilities to

17
<PAGE> 20

distribute services using the Internet or that any such expansion will result in
an increase in revenue. Any failure by the Company to establish its sales and
marketing organization, expand its distribution channels or use the Internet as
a medium of distribution could materially and adversely affect the Company's
business, financial condition and results of operations.

Control by SAIC. Upon completion of this offering, SAIC will own 100% of
the Company's outstanding Class B Common Stock, which will represent
approximately 84.5% of the outstanding Common Stock of the Company
(approximately 82.5% if the Underwriters' over-allotment option is exercised in
full) and approximately 98.2% of the combined voting power of the Company's
outstanding Common Stock (approximately 97.9% if the Underwriters'
over-allotment option is exercised in full). As a result, SAIC will be able to
effectively control all matters requiring approval by the stockholders of the
Company, including the election of members of the Company's Board of Directors,
changing the size and composition of the Board of Directors and preventing a
change in control of the Company. The Class B Common Stock is convertible into
Class A Common Stock, subject to certain limitations set forth in the Company's
Second Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation"). See "Description of Capital Stock." SAIC has no agreement with
the Company not to sell or distribute its shares of the Company's Common Stock
and, except for the restrictions in the Underwriting Agreement set forth below,
there can be no assurance that SAIC will maintain its ownership of the Company's
Class B Common Stock. Pursuant to the Underwriting Agreement, SAIC has agreed,
subject to certain exceptions, not to sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock owned by it for a period of 180 days
after the date of this Prospectus without the prior written consent of Hambrecht
& Quist LLC.

The Internal Revenue Code of 1986, as amended (the "Code"), requires
beneficial ownership by SAIC of at least 80% of the total voting power and value
of the outstanding Common Stock of the Company in order to include the Company
in its consolidated group for federal income tax purposes. In addition, SAIC
must beneficially own at least 80% of the total voting power and 80% of each
class of nonvoting capital stock of the Company in order to be able to effect a
tax-free spin-off of the Company under the Code. Because SAIC may seek to
maintain its beneficial ownership percentage of the Company for tax planning
purposes or otherwise and may not desire to acquire additional shares of Common
Stock in connection with a future issuance of shares by the Company, the Company
may be constrained in its ability to raise equity capital in the future or to
issue Common Stock or other equity securities in connection with acquisitions.
See "Relationship with SAIC and Certain Transactions."

Intercompany Agreements Not Subject to Arm's-Length Negotiations; Reliance
on SAIC for Certain Corporate Services. Since its acquisition by SAIC, the
Company has not been operated independently of SAIC. Prior to the completion of
the offering, SAIC and the Company will enter into certain intercompany
agreements, including an agreement pursuant to which SAIC will provide various
corporate services to the Company that may be material to the conduct of the
Company's business (the "Corporate Services Agreement"). These services include
certain routine and ordinary corporate services, including financial, insurance,
accounting, employee benefits, payroll, tax and legal services as well as
strategic corporate planning services as described in the Corporate Services
Agreement. Subsequent to the acquisition of the Company by SAIC, the Company's
Statements of Operations include revenue and costs directly attributable to the
Company, as well as certain allocations from SAIC of indirect costs. Such
allocations generally are based upon a number of factors, including, but not
limited to, the proportionate labor costs of the Company to the rest of SAIC.
The results of operations also include allocations of: (i) costs for
administrative functions and services performed on behalf of the Company by
centralized staff groups within SAIC; (ii) SAIC's general corporate expenses;
(iii) other benefit costs, including, but not limited to, health insurance,
disability and retirement costs; and (iv) cost of capital (through December 31,
1996). Through August 9, 1996, the amounts allocated by SAIC to the Company
included both administrative and overhead costs, which are included in selling,
general and administrative expenses and cost of revenue, respectively. Effective
August 10, 1996, SAIC stopped allocating costs based upon pro rata labor and
began assessing the Company for corporate services provided by SAIC at a fee
equal to 2.5% of net revenue, with such percentage to be re-evaluated by both
parties on an annual basis. This fee is included in its entirety in

18
<PAGE> 21

selling, general and administrative expenses. With respect to matters covered by
the Corporate Services Agreement, the relationship between SAIC and the Company
is intended to continue in a manner generally consistent with past practices.
Because the Company is currently a wholly-owned subsidiary of SAIC, none of the
intercompany agreements will result from arm's-length negotiations. These
agreements may include terms and conditions that may be more or less favorable
to the Company than terms contained in similar agreements negotiated with third
parties. After SAIC's ownership of the Company's Common Stock drops below 50% of
the Company's issued and outstanding Common Stock, the Corporate Services
Agreement will be terminable by either party upon 180 days' prior written
notice. Certain individual services are also terminable by either party upon 180
days' prior written notice, regardless of SAIC's stock holdings. In the event
that SAIC elects to terminate the Corporate Services Agreement, there can be no
assurance that the Company would be able to secure alternative sources for such
services within 180 days or that such services could be obtained for costs
comparable to costs to be charged by SAIC. See "Relationship with SAIC and
Certain Transactions."

Control of Tax Matters; Tax and ERISA Liability. By virtue of its
controlling ownership and the terms of a tax sharing agreement (the "Tax Sharing
Agreement") to be entered into between the Company and SAIC, SAIC will
effectively control all of the Company's tax decisions. Under the Tax Sharing
Agreement, SAIC will have sole authority to respond to and conduct all tax
proceedings (including tax audits) relating to the Company, to file federal,
state and local returns on behalf of the Company and to calculate the amount of
the Company's liability to SAIC under the Tax Sharing Agreement. Further,
pursuant to the terms of the Tax Sharing Agreement, upon deconsolidation, the
Company's ability to recognize a benefit for tax losses it incurs is subject to
SAIC's approval. SAIC may choose to contest, compromise or settle any adjustment
or deficiency proposed by the relevant taxing authority in a manner that may be
beneficial to SAIC and detrimental to the Company.

Each member of a consolidated group for federal income tax purposes is
jointly and severally liable for the federal income tax liability of each other
member of the consolidated group. In addition, under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and federal income tax law,
each member of the controlled group is jointly and severally liable for funding
and termination liabilities of tax qualified defined benefit retirement plans as
well as certain plan taxes. Accordingly, during the period in which the Company
is included in SAIC's consolidated or controlled group, the Company could be
liable if such liability or tax is incurred, and not discharged, by any other
member of SAIC's consolidated or controlled group. See "Relationship with SAIC
and Certain Transactions -- Tax Sharing Agreement."

Potential Conflicts of Interest. Various conflicts of interest between the
Company and SAIC could arise following the completion of this offering, and
persons serving as directors, officers and employees of both the Company and
SAIC may have conflicting duties to each. Currently, Michael A. Daniels, the
Company's Chairman of the Board, also serves as a Sector Vice President and
Sector Manager of SAIC, Donald N. Telage, the Company's Senior Vice President,
Internet Relations and Special Programs and one of the Company's directors, also
serves as a Group Senior Vice President of SAIC, Robert J. Korzeniewski, the
Company's Chief Financial Officer, also serves as a Corporate Vice President for
Administration of SAIC, Raymond S. Corson, the Company's Senior Vice President,
Business Development, also serves as a Vice President of SAIC, A. Scott
Williamson, the Company's Vice President, Engineering, also serves as a Vice
President of SAIC and Russell L. Helbert, the Company's Controller, also serves
as an Assistant Vice President for Administration of SAIC. Further, J. Robert
Beyster, a director of the Company, is also the Chief Executive Officer and
Chairman of the Board of SAIC, John E. Glancy, a director of the Company, is
also a Corporate Executive Vice President and a director of SAIC and William A.
Roper, Jr., a director of the Company, is also Senior Vice President and Chief
Financial Officer of SAIC. It is currently contemplated that, upon completion of
the offering, all of the Company's executive officers who currently also hold
positions with SAIC (other than Donald N. Telage) will resign from their
respective positions with SAIC. Ownership interests of directors or officers of
the Company in the common stock of SAIC could also create or appear to create
potential conflicts of interest when directors and officers are faced with
decisions that could have different

19
<PAGE> 22

implications for the Company and SAIC. In addition, for financial reporting
purposes, the Company's financial results will be included in SAIC's
consolidated financial statements. The members of the Board of Directors of the
Company and executive officers of the Company who are affiliated with SAIC will
consider not only the short-term and long-term impact of financial and operating
decisions on the Company, but also the impact of such decisions on SAIC's
consolidated financial results. In some instances, the impact of such decisions
could be disadvantageous to the Company while advantageous to SAIC.

Certain Charter Provisions and Limitations on Liability. The Company's
Certificate of Incorporation includes provisions relating to competition by SAIC
with the Company, allocations of corporate opportunities, transactions with
interested parties and intercompany agreements and provisions limiting the
liability of certain persons. See "Description of Capital Stock -- Certain
Certificate of Incorporation and Bylaw Provisions." The enforceability under
Delaware corporate law of such provisions which eliminate certain rights that
might have been available to stockholders under Delaware law had such provisions
not been included has not been established and thus counsel to the Company is
not able to render an opinion regarding the enforceability of such provisions.
The Company's Certificate of Incorporation provides that any person purchasing
or acquiring an interest in shares of capital stock of the Company, including
the Underwriters, shall be deemed to have consented to the provisions in the
Certificate of Incorporation relating to competition by SAIC with the Company,
conflicts of interest, corporate opportunities and intercompany agreements, and
such consent may restrict such person's ability to challenge transactions
carried out in compliance with such provisions. The Company intends to disclose
the existence of such provisions in its Annual Reports on Form 10-K as well as
in certain other filings with the Securities and Exchange Commission (the
"Commission"). The corporate charter of SAIC does not include comparable
provisions and, as a result, persons who are directors and/or officers of the
Company and who are also directors and/or officers of SAIC may choose to take
action in reliance on such provisions rather than act in a manner that might be
favorable to the Company but adverse to SAIC. See "Description of Capital
Stock -- Certain Certificate of Incorporation and Bylaw Provisions."

Under the Company's Certificate of Incorporation, the personal monetary
liability of the directors of the Company for breach of their fiduciary duty of
care, including actions involving gross negligence, is eliminated to the fullest
extent permitted under Delaware law. See "Description of Capital Stock --
Certain Certificate of Incorporation and Bylaw Provisions."

International Operations. The Company anticipates that revenue from
sources outside the U.S. may increase in the future. As a result, the Company
will increasingly be subject to the risks of conducting business
internationally, including unexpected changes in regulatory requirements,
fluctuations in the U.S. dollar, tariffs and other barriers and restrictions and
the burdens of complying with a variety of foreign laws. In addition, the
Company will increasingly be subject to general geo-political risks, such as
political and economic instability and changes in diplomatic and trade
relationships, in connection with its international operations. There can be no
assurance that such regulatory, geo-political and other factors will not
adversely impact the Company's operations in the future or require the Company
to modify its business practice. In addition, the laws of certain foreign
countries may not protect the Company's proprietary rights to the same extent as
do the laws of the United States.

Shares Eligible for Future Sale. Sales of substantial amounts of Class A
Common Stock in the public market, whether by purchasers in the offering or
other stockholders of the Company, or the perception that such sales could
occur, may materially and adversely affect the market price of the Class A
Common Stock.

Upon completion of the offering, SAIC will own 100% of the Company's
outstanding Class B Common Stock, which will represent approximately 84.5% of
the outstanding Common Stock of the Company (approximately 82.5% if the
Underwriters' over-allotment option is exercised in full). A decision by SAIC to
sell such shares could materially and adversely affect the market price of the
Class A Common Stock. The Company and SAIC have entered into a registration
rights agreement (the

20
<PAGE> 23

"Registration Rights Agreement") which requires the Company to effect a
registration statement covering some or all of the shares of Class A Common
Stock to be owned by SAIC upon conversion of the Class B Common Stock owned by
SAIC and any other shares of Class A Common Stock otherwise acquired by SAIC,
subject to certain terms and conditions. The Company has agreed to indemnify
SAIC in connection with any such registration. The Company intends to register a
total of 2,556,250 shares of Class A Common Stock reserved for issuance under
its 1996 Stock Incentive Plan as soon as practicable following the date of this
Prospectus. See "Relationship with SAIC and Certain Transactions -- Registration
Rights Agreement," "Shares Eligible for Future Sale" and "Description of Capital
Stock."

In certain circumstances, including without limitation, a public offering
or distribution of Class B Common Stock by SAIC, the Class B Common Stock would
trade separately from the Class A Common Stock in the public market. Separate
trading of the Class B Common Stock in the public market, or the perception that
such trading could occur, may materially and adversely affect the market price
of the Class A Common Stock.

Upon completion of the offering, the shares of Class A Common Stock offered
hereby will be freely tradable without restriction or further registration under
the Securities Act by persons other than executive officers and directors of
SAIC or the Company (the "Restricted Persons"). The shares of Common Stock which
are held by SAIC and certain Restricted Persons are subject to a "lock-up"
agreement under which SAIC and such Restricted Persons have agreed, subject to
certain exceptions, not to offer, sell, contract to sell or otherwise dispose of
any shares of Common Stock without the prior written consent of Hambrecht &
Quist LLC, for a period of 180 days after the date of this Prospectus. Following
such period, SAIC and any such Restricted Person who is an affiliate of the
Company may sell such shares only pursuant to the requirements of Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act") or pursuant to an
effective registration statement under the Securities Act. The Securities and
Exchange Commission has recently enacted revisions to Rule 144 which shortened
the holding periods under Rule 144 from two years to one year and under Rule
144(k) from three years to two years. See "Shares Eligible for Future Sale" and
"Underwriting."

Lack of Prior Public Market and Possible Volatility of Stock Price. Prior
to this offering, there has been no public market for the Company's Class A
Common Stock and there can be no assurance that an active trading market will
develop or be sustained after this offering. The initial public offering price
will be determined through negotiations among the Company and the
representatives of the Underwriters based on several factors and may not be
indicative of the market price of the Class A Common Stock after this offering.
See "Underwriting." The market price of the shares of Class A Common Stock is
likely to be highly volatile and may be significantly affected by factors such
as actual or anticipated fluctuations in the Company's results of operations,
announcements of technological innovations, changes in Internet governance,
announcement of additional competing registrars or TLDs, introduction of new
products or services by the Company or its competitors, developments with
respect to patents, copyrights or proprietary rights, conditions and trends in
the networking and other technology industries, changes in or failure by the
Company to meet securities analysts' expectations, general market conditions and
other factors. In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stocks of technology companies. These broad market
fluctuations may adversely affect the market price of the Company's Class A
Common Stock. In the past, following periods of volatility in the market price
of a particular company's securities, securities class action litigation has
often been brought against that company. There can be no assurance that such
litigation will not occur in the future with respect to the Company. Such
litigation could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect upon the
Company's business, financial condition and results of operations.

Dilution. Based upon the assumed initial public offering price per share
of $15.00 (and assuming no exercise of the Underwriters' over-allotment option),
the Company's net tangible book value per share of Common Stock as of June 30,
1997, after giving effect to the transactions set forth in

21
<PAGE> 24

"Capitalization," would have been $1.47. This represents an immediate increase
in net tangible book value of $2.21 per share to the existing stockholder and an
immediate dilution of $13.53 per share to purchasers of the Class A Common Stock
in the offering. See "Dilution."

Effect of Certain Charter Provisions; Anti-takeover Effects of Certificate
of Incorporation and Delaware Law. The holders of Class A Common Stock are
entitled to one vote per share and holders of Class B Common Stock are entitled
to ten votes per share. Holders of Class A Common Stock and Class B Common Stock
generally vote together as a single class. The Class B Common Stock held by SAIC
is convertible into Class A Common Stock under certain conditions set forth in
the Company's Amended and Restated Certificate of Incorporation. See
"Description of Capital Stock." Upon completion of this offering, the Company's
Board of Directors will have the authority to issue up to 10,000,000 shares of
Preferred Stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights of such shares, without any further vote
or action by the Company's stockholders. Such charter provisions could have the
effect of delaying or preventing a change of control of the Company. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. The Company has no
current plans to issue shares of Preferred Stock. Further, certain provisions of
the Company's Certificate of Incorporation and of Delaware law could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. See "Description of Capital Stock -- Preferred Stock" and "-- Delaware
Antitakeover Law and Certain Charter Provisions."

Discretion as to Use of Proceeds. The Company intends to use the proceeds
of this offering for working capital and other general corporate purposes,
including business development, marketing and promotional activities, continued
development of enhancements or new services complementary to the Company's
registration business and other uses as deemed appropriate by the Board of
Directors. The amounts and timing of these expenditures will vary significantly
depending upon a number of factors, including the amount of cash generated by
the Company's operations, the progress of the Company's product and services
development activities and the market response to the introduction of any new
products and services. In addition, the Company may use a portion of the net
proceeds of this offering to acquire or invest in businesses, products, services
or technologies complementary to the Company's current business, through
mergers, acquisitions, joint ventures or otherwise. However, the Company has no
specific agreements or commitments and is not currently engaged in any
negotiations with respect to such transactions. Accordingly, the Company's
management will retain broad discretion as to the allocation of the net proceeds
of this offering. See "Use of Proceeds."

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<PAGE> 25

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,300,000 shares of
Class A Common Stock offered by the Company hereby at an assumed initial public
offering price of $15.00 per share are estimated to be $30,985,000 ($35,797,750
if the Underwriters' over-allotment option is exercised in full). The Company
intends to use the proceeds of this offering for working capital and other
general corporate purposes, including business development, marketing and
promotional activities, continued development of enhancements or new services
complementary to the Company's registration business and other uses as deemed
appropriate by the Board of Directors. The amounts and timing of these
expenditures will vary significantly depending upon a number of factors,
including the amount of cash generated by the Company's operations, the progress
of the Company's product and services development activities and the market
response to the introduction of any new products and services. In addition, the
principal purposes of this offering include increasing the Company's equity
capital, creating a public market for the Company's Class A Common Stock,
providing liquidity for the Company's stockholders and facilitating future
access by the Company to public equity markets. A $10,000,000 dividend to be
paid to SAIC was declared on August 21, 1997 and is payable on August 31, 1997.

In addition, the Company may use a portion of the net proceeds of this
offering to acquire or invest in businesses, products, services or technologies
complementary to the Company's current business, through mergers, acquisitions,
joint ventures or otherwise. However, the Company has no specific agreements or
commitments and is not currently engaged in any negotiations with respect to
such transactions. Accordingly, the Company's management will retain broad
discretion as to the allocation of the net proceeds of this offering. Pending
the uses described above, the Company intends to invest the net proceeds of this
offering in short-term, interest-bearing investment grade securities.

DIVIDEND POLICY

With the exception of a $10,000,000 dividend to be paid to SAIC declared on
August 21, 1997 and payable on August 31, 1997, to date, the Company has neither
declared nor paid dividends on its Common Stock. Other than the dividend to be
paid to SAIC, the Company currently intends to retain its earnings, if any, for
future growth and does not anticipate paying any dividends in the foreseeable
future. The Company's future dividend policy will be determined by its Board of
Directors on the basis of various factors, including the Company's results of
operations, financial condition, capital requirements and investment
opportunities.

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<PAGE> 26

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997: (i) on an actual basis, (ii) on a pro forma basis to give effect to
the dividend to be paid on August 31, 1997 to SAIC and (iii) as adjusted to give
effect to the sale by the Company of the 2,300,000 shares of Class A Common
Stock offered hereby at an assumed initial public offering price of $15.00 per
share and the application of the estimated net proceeds therefrom. This table
should be read in conjunction with the Financial Statements of the Company and
the Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------------------------
ACTUAL PRO FORMA(2) AS ADJUSTED
------ ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.001 par value, 10,000,000 shares
authorized; none issued and outstanding........... $ -- $ -- $ --
Class A Common Stock, $0.001 par value, 100,000,000
shares authorized; none issued and outstanding,
actual and pro forma; 2,300,000 issued and
outstanding, as adjusted(1)....................... -- -- 2
Class B Common Stock, $0.001 par value, 40,000,000
shares authorized; 12,500,000 issued and
outstanding, actual and pro forma; 12,500,000
issued and outstanding, as adjusted............... 12 12 12
Additional paid-in capital.......................... 4,468 4,468 35,451
Accumulated deficit................................. (1,787) (11,787) (11,787)
------ -------- ---------
Total stockholders' equity..................... 2,693 (7,307) 23,678
------ -------- ---------
Total capitalization...................... $2,693 $ (7,307) $ 23,678
====== ======== =========
</TABLE>

- ------------------------------

(1) Excludes 2,556,250 shares of Class A Common Stock reserved for issuance
under the Company's 1996 Stock Incentive Plan, of which 1,539,725 shares
were subject to outstanding options as of July 31, 1997 at a weighted
average exercise price of $13.18 per share. See "Management -- 1996 Stock
Incentive Plan" and Notes 10 and 14 of Notes to Financial Statements.

(2) Adjusted to reflect the dividend to be paid to SAIC. See policy regarding
Pro Forma Balance Sheet and Earnings per Share at Note 2 of Notes to
Financial Statements.

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<PAGE> 27

DILUTION

As of June 30, 1997, the Company had a pro forma net tangible book value
before the offering of approximately $(9,230,000) or $(0.74) per share of Common
Stock. Pro forma net tangible book value per share is equal to the amount of
total tangible assets (including deferred tax assets of $17,470,000 at June 30,
1997) of the Company less total liabilities after giving effect to the dividend
to SAIC, divided by the number of shares of Common Stock outstanding. Without
taking into account any other changes in the pro forma net tangible book value
after June 30, 1997, other than to give effect to the receipt by the Company of
the net proceeds from the sale of the 2,300,000 shares of Class A Common Stock
offered by the Company hereby at an assumed initial public offering price of
$15.00 per share and the application of the estimated net proceeds therefrom,
the pro forma net tangible book value of the Company at June 30, 1997 after the
offering would have been approximately $21,755,000 or $1.47 per share. This
represents an immediate increase in such net tangible book value of $2.21 per
share to the existing stockholder and an immediate dilution of $13.53 per share
to new investors purchasing shares of Class A Common Stock in this offering. The
following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $15.00
------
Net tangible book value per share before the offering.......... $ 0.06
Decrease in net tangible book value attributable to dividend... (0.80)
------
Pro forma net tangible book value per share before the
offering...................................................... (0.74)
Increase per share attributable to new investors............... 2.21
------
Pro forma net tangible book value per share after the offering...... 1.47
------
Dilution per share to new investors............................ $13.53
======
</TABLE>

The following table summarizes, on a pro forma basis, as of June 30, 1997,
the differences between the existing stockholder and purchasers of shares in
this offering with respect to the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average consideration per
share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholder......... 12,500,000 84.5% $ 4,480,000 11.5% $ 0.36
New investors................ 2,300,000 15.5% 34,500,000 88.5% $ 15.00
---------- ------- ----------- ------- --------
Total................... 14,800,000 100.0% $38,980,000 100.0%
========= ======= ========== =======
</TABLE>

The foregoing table is based on the total consideration paid by SAIC for
its shares based on the price of the shares of SAIC Class A Common Stock (as
determined by the Board of Directors of SAIC in accordance with established
procedures) used to acquire the entire Company, including the government-based
business which was later transferred to SAIC, and does not give effect to the
$10,000,000 dividend payable to SAIC. The foregoing table also assumes (i) an
initial public offering price of $15.00 per share before deduction of estimated
underwriting discounts and commissions and offering expenses payable by the
Company and (ii) no exercise of the Underwriters' over-allotment option or of
any outstanding stock options. As of July 31, 1997, there were outstanding
options to purchase 1,539,725 shares of Class A Common Stock, with a weighted
average exercise price of $13.18 per share. To the extent that options are
granted and exercised, there may be further dilution to new investors. See
"Management -- 1996 Stock Incentive Plan" and Notes 10 and 14 of the Notes to
Financial Statements.

25
<PAGE> 28

SELECTED FINANCIAL DATA

The following table sets forth selected financial and operating data of the
Company for the periods indicated and should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Financial Statements and the Notes related thereto included
elsewhere in this Prospectus. The selected financial data for the years ended
December 31, 1996 and 1994 and for the periods January 1, 1995 to March 10, 1995
and March 11, 1995 to December 31, 1995 were derived from the Company's audited
financial statements included elsewhere in this Prospectus. The information for
fiscal years 1992 and 1993 and the six months ended June 30, 1996 and 1997 is
derived from the Company's unaudited financial statements which, in the opinion
of management, reflect all adjustments (consisting only of normal recurring
items) necessary to present fairly the financial position and results of
operations for the periods then ended. The selected financial data for the year
ended December 31, 1995 was derived by combining the Company's Results of
Operations for the period January 1, 1995 through March 10, 1995 and the period
March 11, 1995 through December 31, 1995, both as derived from the Company's
audited financial statements included elsewhere in this Prospectus.
Comparability of pre-acquisition periods to post-acquisition periods is limited
because the financial statements have been prepared on differing bases of
accounting as a result of the acquisition by SAIC. See Note 1 of Notes to
Financial Statements. The accompanying financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
all periods presented for continuing operations reflect the results of
operations of the commercial business of the Company, which includes
registration services and Intranet services. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview -- The
SAIC Acquisition" and "-- Registration Services."

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------------- -----------------
1992 1993 1994 1995(1) 1996 1996 1997
------ ------ ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue............................ $1,160 $4,369 $ 5,029 $ 6,486 $18,862 $ 6,829 $18,724
Cost of revenue........................ 695 2,924 3,073 5,704 14,666 6,521 11,435
------ ------ ------- ------- ------- ------- -------
Gross profit........................... 465 1,445 1,956 782 4,196 308 7,289
Research and development expenses...... -- -- -- -- 680 58 718
Selling, general and
administrative expenses.............. 275 1,401 1,544 2,394 6,280 2,370 4,788
Interest expense (income).............. 42 120 109 61 (496) (86) (484)
------ ------ ------- ------- ------- ------- -------
Income (loss) from continuing
operations before income taxes and
cumulative effect of a change in
accounting principle.............. 148 (76) 303 (1,673) (2,268) (2,034) 2,267
Provision (benefit) for income taxes... 55 34 114 (239) (643) (576) 1,011
------ ------ ------- ------- ------- ------- -------
Income (loss) from continuing
operations........................... 93 (110) 189 (1,434) (1,625) (1,458) 1,256
Income (loss) from discontinued
operations, net of income taxes(2)... 588 (936) (1,169) (1,403) -- -- --
Cumulative effect of change in
accounting for income taxes.......... -- 660 -- -- -- -- --
------ ------ ------- ------- ------- ------- -------
Net income (loss)...................... $ 681 $ (386) $ (980) $(2,837) $(1,625) $(1,458) $ 1,256
====== ====== ======= ======= ======= ======= =======
Unaudited pro forma net income (loss)
per share............................ $ (0.12) $ (0.11) $ 0.09
======= ======= =======
Unaudited pro forma shares used in
computing net income (loss) per
share(3)............................. 13,349 13,349 13,349
======= ======= =======
OTHER OPERATING DATA(4):
Net new registrations.................. -- 13 24 141 489 180 429
Less: registrations not renewed........ -- -- -- 1 39 17 16
Net registrations at period end........ -- 13 37 177 627 340 1,040
</TABLE>

26
<PAGE> 29

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents......... $ -- $ -- $ 136 $ 5 $15,540 $ 27 $25,967
Working capital(5).... (307) (179) (1,340) (559) 1,362 (6,423) 6,280
Total assets(6)....... 1,272 3,124 2,448 11,748 66,118 30,220 92,250
Deferred revenue,
net................. 32 73 137 3,346 29,352 14,356 45,628
Long-term obligations,
excluding current
portion............. 479 344 81 1,353 9,440 5,183 15,193
Total stockholders'
equity.............. 56 1,221 252 3,062 1,437 1,604 2,693
</TABLE>

- ------------------------------

(1) The Selected Financial Data for the year ended December 31, 1995 was derived
by combining the Company's Results of Operations for the period January 1,
1995 through March 10, 1995 and the period March 11, 1995 through December
31, 1995, which, respectively, are periods before and after the date of the
SAIC acquisition. The data for these two periods were prepared on differing
bases of accounting and, accordingly, the comparability of such data with
other periods is limited, primarily as a result of goodwill amortization,
new corporate services agreements and the repayment of outstanding debt
balances. See Note 1 of Notes to Financial Statements for a discussion of
the presentation for each of these periods.

(2) See Note 11 of Notes to Financial Statements for a discussion of
discontinued operations.

(3) See Note 2 of Notes to Financial Statements for an explanation of the
determination of shares used in computing the unaudited pro forma net income
(loss) per share.

(4) Net new registrations for each period include gross new registrations less
an estimate of registrations that are uncollectible. Net registrations
includes net new registrations less an estimate of registrations not
renewed. Prior to September 14, 1995, net registrations equaled gross
registration because the Company was reimbursed by the NSF for all
registrations under a cost plus fixed-fee contract.

(5) Working capital calculation includes $32, $73, $137, $1,993, $19,912,
$9,173, and $31,990 of current deferred revenue as of December 31, 1992,
1993, 1994, 1995 and 1996 and June 30, 1996 and 1997, respectively.

(6) Total assets include $0, $0, $0, $1,408, $17,453, $7,453 and $31,056 of
restricted assets as of December 31, 1992, 1993, 1994, 1995 and 1996 and
June 30, 1996 and 1997, respectively. See Notes 2 and 3 of Notes to
Financial Statements.

27
<PAGE> 30

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's Financial Statements and Notes
thereto included elsewhere in this Prospectus. Except for the historical
information contained herein, the discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this Prospectus should be read as being applicable
to all related forward-looking statements wherever they appear in this
Prospectus. The Company's actual results may differ materially from the results
discussed in the forward-looking statements as a result of certain factors,
including, but not limited to, those discussed in "Risk Factors" and elsewhere
in this Prospectus. Unless otherwise indicated, the accompanying financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for all periods presented for continuing operations
reflect the financial position and results of operations of the Company's
commercial business, which includes registration services and Intranet services.

OVERVIEW

The SAIC Acquisition. The Company was incorporated in the District of
Columbia in 1979 and was reincorporated in Delaware in 1996. The Company was
acquired by SAIC on March 10, 1995 in a stock-for-stock transaction accounted
for as a purchase and is currently a wholly-owned subsidiary of SAIC. Prior to
the acquisition of the Company by SAIC, the Company's principal lines of
business consisted of providing integration, engineering for computer and
telecommunications networks for government and commercial customers and domain
name registration services. The Company's business included commercial and
government contracts awarded to the Company on a competitive basis, including
government contracts that were awarded to the Company based partially upon the
Company's then minority-owned status. The contracts which had been awarded to
the Company based in part on the Company's then minority-owned status were
transferred into a separately-owned entity prior to the acquisition of the
Company by SAIC. In November 1995, SAIC adopted a plan to transfer the Company's
remaining government-based business to SAIC in order to enable the Company to
focus on the growth of its commercial business, which includes registration
services and Intranet services. This transfer was effective as of February 1996.
The operating results of both the minority-based government contracts business
and the remaining government-based business are reflected as discontinued
operations in the Company's financial statements for all periods presented.

The Company. The Company currently acts as the registrar for second level
domain names within the .com, .org, .net, .edu and .gov TLDs pursuant to the
Cooperative Agreement with the NSF. Net registrations (gross registrations less
management's estimates of uncollectible registrations and of non-renewals)
within the TLDs maintained by the Company increased by 206% from approximately
340,000 domain names registered at June 30, 1996 to approximately 1,040,000
domain names registered at June 30, 1997. Net registrations in the .com TLD
represented 87% of the Company's total net registrations as of June 30, 1997.
Net revenue from Internet domain name registration subscriptions accounted for
59.1% and 81.0% of the Company's net revenue for the year ended December 31,
1996 and the six months ended June 30, 1997, respectively.

The Company also provides Intranet consulting services to large companies
that desire to establish or enhance their Internet presence or "re-engineer"
legacy network infrastructures to accommodate the integration of both Internet
connectivity and Intranet network technology into their information technology
base. The Company's Intranet services presently include: (i) Intranet
development and re-engineering; (ii) network and systems security; and (iii)
Intranet-enabled business solutions. Net revenue from Intranet services
accounted for 40.9% and 19.0% of the Company's net revenue for the year ended
December 31, 1996 and the six months ended June 30, 1997, respectively.

Registration Services. In January 1993, the Company entered into the
Cooperative Agreement with the NSF under which the Company provides Internet
registration services for five TLDs: .com, .org, .net, .edu and .gov. With the
commercialization of the Internet, the role, if any, that the NSF will

28
<PAGE> 31

play in the Internet and the legal authority underlying its role are at present
unclear. The Cooperative Agreement is subject to review by the NSF and may be
terminated by the NSF at any time at its discretion or by mutual agreement. The
Cooperative Agreement by its terms expires in March 1998, although the NSF may,
at its option, extend the Cooperative Agreement to September 1998. The NSF has
stated that the Cooperative Agreement will not be re-awarded to the Company or
awarded to any other entity. See "Risk Factors -- Limited Operating History,"
"-- Uncertain Status of the Cooperative Agreement," and "-- Recommendations and
Proposals to Increase Competition in Registration Services."

Originally, the Cooperative Agreement was structured as a cost
reimbursement plus fixed-fee contract. Effective September 14, 1995, the NSF and
the Company amended the Cooperative Agreement to authorize the Company to begin
charging customers a subscription fee of $50 per year for each second level
domain name in the .com, .org, .net, .edu and .gov TLDs. The Company's
registration services customers in the .com, .org and .net TLDs are invoiced for
a two-year subscription fee of $100 for initial registrations and $50 per year
for renewals of initial registrations. The NSF has agreed to pay the
registration and renewal fees for registrations within the .edu and .gov TLDs
through March 31, 1997. The Company has recently agreed with the NSF to provide
registrations in the .gov and .edu TLDs free of charge from April 1, 1997
through March 31, 1998. The cost of providing these registration services is not
expected to have a material adverse effect on the Company's business, financial
condition or results of operations. At September 14, 1995, the Company had
approximately 131,000 registered domain names that were subject to annual
renewal. From September 14, 1995 through June 30, 1997, the Company had
approximately 965,000 net new registrations. At June 30, 1997, of the
approximate 1,040,000 net registrations, 75,000 were subject to annual renewal.
The remaining 965,000 represent the net new registrations since September 14,
1995 and, therefore, will begin annual renewals commencing September 1997 based
upon their respective two-year anniversaries of initial registration. There can
be no assurance that the Company will continue to obtain new registrations at
current rates or renew the registration of a significant portion of its
customers.

Under the terms of the amendment to the Cooperative Agreement, 30% of the
new registration and renewal fees collected is required to be set aside to be
reinvested for the enhancement of the intellectual infrastructure of the
Internet and, as such, is not recognized as revenue by the Company. The Company
reflects these funds along with the appropriate percentage of net accounts
receivable as restricted assets and has recorded an equivalent, related current
liability. The Company maintains the cash received relating to the set aside
funds in a separate interest bearing account. These funds, plus any interest
earned, will be disbursed in a manner approved by the NSF. At June 30, 1997, the
restricted assets totaled $31.1 million. None of the restricted set aside funds
have been disbursed. Future disbursements of these funds will not have an effect
on the Company's business, financial condition or results of operations.

The Company was reimbursed by the NSF for providing domain name
registration services prior to September 14, 1995, at which time the Company
began charging its customers fees for new domain name registrations pursuant to
the amendment to the Cooperative Agreement. The Company began charging its
customers fees for renewals of existing domain name registrations in December
1995. Currently, the Company invoices customers and permits them to pay the
subscription fee after the customer's domain name is registered. The Company's
experience has been that, for the period from September 1995 to June 1997,
approximately 30% of registrations have ultimately been deactivated for
non-payment. As a consequence, the Company has recorded a comparable provision
for uncollectible accounts in determining net registration revenue. This 30%
provision has been consistently applied for the period September 1995 to June
1997 and is considered adequate by the Company. The growth in the allowance for
uncollectible accounts receivable is primarily driven by the growth of the
Company's registration services business during this period. Write-offs of
accounts receivable are charged to the allowance for uncollectible accounts as
registrations are deactivated. Due to the growth of the registration business in
1995 and 1996, deactivations due to non-payment of fees were not current as of
December 31, 1996. The Company is now current in this function. However, the
delay in

29
<PAGE> 32

deactivation did not have an impact on the adequacy of the allowance and the
current provision rate of 30% is still considered adequate by the Company. See
Note 3 of Notes to Financial Statements.

The Company believes that it has experienced a high level of uncollectible
receivables due to, among other factors, the large number of individuals and
corporations that have registered multiple domain names with the apparent
intention of reselling such names at a profit. The Company's experience has been
that such resellers have a greater tendency than other customers to default on
their subscription fees. The Company believes that the new procedures
implemented in 1997 regarding invoicing and prompt deactivation of delinquent
customers has significantly improved timeliness of customer payments. See "Risk
Factors -- Limited Operating History," "-- Uncertain Status of the Cooperative
Agreement," "-- Uncollectible Receivables; Modifications to Billing
Practices, -- Management of Growth; Dependence on Key Personnel" and
"Business -- Operations."

Prior to September 14, 1995, the Company recognized revenue under the
Cooperative Agreement on the basis of direct cost plus allowable indirect costs
and the earned portion of the fee. Since September 14, 1995, fees for services
provided by the Company pursuant to new registrations have been recognized as
revenue evenly over the initial 24-month subscription period. Fees from renewals
are recognized as revenue evenly over the 12-month subscription period. The
Company records revenue net of an estimated provision for uncollectible
accounts. At June 30, 1997, the Company had net deferred revenue of $45.6
million, of which $32.0 million will be recognized over the next twelve months.
See Notes 2 and 3 of Notes to Financial Statements.

Expenses for the Company increased each quarter during 1995, 1996 and the
first two quarters of 1997 as a result of increased business activities,
primarily attributable to subscriber growth for the Company's registration
services business. The Company believes continued investments in its back office
infrastructure as well as significant expansion of its sales and marketing and
product development activities are critical to the achievement of its goals and
anticipates that costs and expenses will continue to increase in each quarter
for the forseeable future.

Intranet Services. Substantially all of the Company's Intranet services
revenue is derived from professional services which are generally provided to
clients on a "time and expense" basis. Professional services revenue is
recognized as services are performed. The Company also performs a limited number
of fixed-price projects under which revenue is recognized using the
percentage-of-completion method. The Company also derives revenue from remote
monitoring and hosting services; however, such revenue has not been significant
to date. Remote monitoring and hosting revenue is recognized ratably over the
term of the contract.

Since professional services revenue for Intranet services is recognized by
the Company only when network systems engineers are engaged on client projects,
the relative utilization of network systems engineers directly affects the
Company's operating results. In addition, a majority of the Company's Intranet
services operating expenses, particularly personnel and related costs,
depreciation and rent, are substantially fixed in advance of any particular
quarter. As a result, any underutilization of network systems engineers may
cause significant variations in operating results in any particular quarter and
could result in losses for such quarter. Termination or completion of contracts
in the Company's Intranet services business or failure to obtain additional
contracts in its Intranet services business could have a material adverse effect
on the Company's business, financial condition and results of operation. See
"Risk Factors -- Potential Fluctuations in Quarterly Results."

NationsBanc is the Company's largest Intranet services customer and
accounted for 47.6% and 41.3% of the Company's Intranet services net revenue and
19.5% and 7.8% of the Company's total net revenue for the year ended December
31, 1996 and the six months ended June 30, 1997, respectively. NationsBanc
originally contracted with the Company in 1993 to provide ongoing analysis,
design, implementation and support engineering for its enterprise network. The
Company currently provides network design and engineering services as well as a
variety of project specific services for NationsBanc. The Company's current
contract with NationsBanc is a three-year contract which commenced January 1,
1997 and is a requirements contract under which the Company's services are
ordered by task orders issued by NationsBanc. The NationsBanc contract may be
terminated by

30
<PAGE> 33

NationsBanc at any time upon 30-days' prior written notice to the Company.
During the first quarter of 1997, task orders for a number of services the
Company had historically performed for NationsBanc were not renewed. The Company
believes this reflects NationsBanc's focus on increasing its internal
information technology staff as well as its continued efforts to integrate
information technology staff from recent acquisitions. There can be no assurance
that the Company will obtain any additional task orders under the NationsBanc
contract or maintain or be able to expand its Intranet services business.
Failure to do so would materially and adversely affect the Company's business,
financial condition and results of operations. See "Risk Factors -- Limited
Service Offerings to Date; Reliance on Domain Name Registration Services and
Intranet Services for Substantially All Revenue."

Financial Presentation. The accompanying historical financial statements
for all periods presented reflect the results of continuing operations related
to the commercial activities of the Company only. The operating results of both
the minority-based government contracts business, which was transferred into a
separate entity prior to the acquisition of the Company by SAIC, and the
remaining government-based business, which was transferred to SAIC effective
February 1996, are reflected as discontinued operations in the Company's
financial statements.

Subsequent to the acquisition of the Company by SAIC, SAIC has provided to
the Company from time to time, upon request of the Company certain routine and
ordinary corporate services, including financial, insurance, accounting,
employee benefits, payroll, tax and legal services. SAIC has also provided
strategic corporate planning services. The Company has also shared certain SAIC
systems, including its management information system, accounting system and
human resource system. Therefore, the Company's Statements of Operations include
revenue and costs directly attributable to the Company, as well as certain
allocations from SAIC of indirect costs associated with such services and shared
systems. Such allocations include allocations of: (i) costs for administrative
functions and services performed on behalf of the Company by centralized staff
groups within SAIC; (ii) SAIC's general corporate expenses; (iii) other benefit
costs, including, but not limited to, health insurance, disability and
retirement costs; and (iv) cost of capital (through December 31, 1996). Through
August 9, 1996, such allocations were generally based on, the proportionate
labor costs of the Company to the rest of SAIC and were included in selling,
general and administrative expenses and cost of revenue, respectively. Effective
August 10, 1996, SAIC stopped allocating costs based upon pro rata labor and
began assessing the Company for corporate services provided by SAIC at a fee
equal to 2.5% of net revenue. This fee is included in its entirety in selling,
general and administrative expenses with such percentage to be re-evaluated by
both parties on an annual basis. The arrangement will continue indefinitely
until terminated by either party upon 180 days' prior written notice. Current
and deferred income taxes and related tax expense have been recorded by the
Company as if it were a separate taxpayer. The allocations and estimates in the
financial statements are based on assumptions that the Company's management
believes are reasonable under the circumstances.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationship to net revenue of certain items in the Company's Statement of
Operations. The percentage relationships for the year ended December 31, 1995
were derived by combining the Company's results of operations for the period
January 1, 1995 through March 10, 1995 and the period March 11, 1995 through
December 31, 1995 which, respectively, are periods before and after the date of
the SAIC acquisition. Accordingly, the data for these two periods and the
periods preceding and following the acquisition were prepared on differing bases
of accounting and, as a result, the comparability of such percentage

31
<PAGE> 34

relationships with other periods is limited, primarily as a result of the
goodwill amortization, new corporate services agreements and interest expense
related to outstanding debt balances.

<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUE
---------------------------------------------
SIX MONTHS
FISCAL YEAR ENDED
ENDED DECEMBER 31, JUNE 30
------------------------- ---------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net revenue....................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue................................... 61.1 87.9 77.8 95.5 61.1
----- ----- ----- ----- -----
Gross profit...................................... 38.9 12.1 22.2 4.5 38.9
Research and development expenses................. -- -- 3.6 0.8 3.8
Selling, general and administrative expenses...... 30.7 36.9 33.3 34.7 25.6
Interest expense (income)......................... 2.2 0.9 (2.7) (1.2) (2.6)
----- ----- ----- ----- -----
Income (loss) from continuing operations before
income taxes.................................... 6.0 (25.7) (12.0) (29.8) 12.1
Provision (benefit) for income taxes.............. 2.2 (3.6) (3.4) (8.5) 5.4
----- ----- ----- ----- -----
Income (loss) from continuing operations, net of
income taxes.................................... 3.8% (22.1)% (8.6)% (21.3)% 6.7%
===== ===== ===== ===== =====
</TABLE>

In September 1995, the Cooperative Agreement between the Company and the
NSF was amended from a cost reimbursement plus fixed-fee contract to a fee-based
registration contract. The Company believes that the change to a
subscription-based pricing model, combined with the Company's recent growth,
make period to period comparisons of its operating results less meaningful and
that the results for any period should not be relied upon as an indication of
future performance. The limited operating history of the Company in its current
business model makes the prediction of future results of operations difficult
and, therefore, the recent revenue growth experienced by the Company should not
be taken as being indicative of the rate of revenue growth, if any, that can be
expected in the future. See "Risk Factors -- Limited Operating History" and
"-- Potential Fluctuations in Quarterly Results."

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 AND 1997

Net Revenue. Net revenue increased 174% from $6.8 million for the six
months ended June 30, 1996 to $18.7 million for the six months ended June 30,
1997. This increase in net revenue was primarily attributable to the increase in
the number of domain name subscriptions, principally in the .com TLD.
Subscription growth has been driven by the widespread use and adoption of the
Internet and Intranets by businesses and individuals. Net revenue from
registration services increased 424% from $2.9 million for the six months ended
June 30, 1996 to $15.2 million for the six months ended June 30, 1997. Net
registrations increased 206% from approximately 340,000 at June 30, 1996 to
approximately 1,040,000 at June 30, 1997. Notwithstanding the $45.6 million of
deferred revenue at June 30, 1997, of which $32.0 million will be recognized
over the next twelve months, the Company's revenue is dependent in large part on
the continued growth of the Internet and the Company's ability to maintain its
position as the leading Internet domain name registration service provider
worldwide.

Net revenue from Intranet services decreased 10% from $4.0 million for the
six months ended June 30, 1996 to $3.6 million for the six months ended June 30,
1997. This decrease was primarily attributable to a decrease in business from
NationsBanc.

NationsBanc, the Company's largest Intranet services client, accounted for
$1.5 million or 7.8% of the Company's total net revenue for the six months ended
June 30, 1997 and $1.8 million or 26.7% of the Company's total net revenue for
the six months ended June 30, 1996. These actions will have a negative financial
impact on the Company's Intranet services revenue for the balance of 1997. The
Company believes NationsBanc will continue to be a significant customer of its
Intranet services business, but to a lesser extent than in previous years, both
in terms of dollars and as a percentage of the Company's total net revenue. See
"Risk Factors -- Uncertain Status of the Cooperative Agree-

32
<PAGE> 35

ment," "-- Competition in Domain Name Registration Business,"
"-- Recommendations and Proposals to Increase Competition in Registration
Services" "-- Limited Services to Date; Reliance on Domain Name Registration
Services and Intranet Services for Substantially All Revenue," and
"-- Dependence on Future Growth of the Internet and Internet Infrastructure."

Cost of Revenue. Cost of revenue consists primarily of salaries and
employee benefits, fees paid to subcontractors for work performed in connection
with projects, depreciation, lease costs of the operations infrastructure and
the associated operating overhead. Cost of revenue increased 75% from $6.5
million for the six months ended June 30, 1996 to $11.4 million for the six
months ended June 30, 1997. This increase was primarily associated with
additional labor costs of $3.5 million required to support the Company's
registration services business. The Company continues to invest in improvements
to the back office component of its domain name registration business and has
made investments in additional hardware, software, staffing and facilities and
currently anticipates that it will continue to make significant investments in
its back office for the foreseeable future. On June 16, 1997, the Company opened
a 31,000 square foot facility to support its Internet business operations. This
leased facility is designed to meet current registration services customer
support needs as well as to provide expansion capability for future business.

As a percentage of net revenue, cost of revenue decreased from 95.5% for
the six months ended June 30, 1996 to 61.1% for the six months ended June 30,
1997. This decrease primarily reflects economies of scale that the Company has
begun to achieve due to the growth of its subscription-based domain name
registration business. In the near term, the continued need for back-office
investments is expected to significantly offset any overall margin improvements
arising from economies of scale.

Research and Development Expenses. Research and development expenses
consist primarily of compensation expenses to support the development and
enhancement of the Company's technologies. Research and development expenses for
the six months ended June 30, 1996 were $58,000 and for the six months ended
June 30, 1997 were $718,000, or 3.8% of net revenue. To date, all of the
Company's development costs have been expensed as incurred. The Company expects
that the level of research and development expenses will increase significantly
in the near future in absolute dollars and as a percentage of net revenue as the
Company invests in new product and service offerings.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of salaries of business development,
general management, administrative and financial personnel, outside professional
fees and amortization of goodwill associated with the Company's acquisition by
SAIC. Selling, general and administrative expenses increased 102% from $2.4
million for the six months ended June 30, 1996 to $4.8 million for the six
months ended June 30, 1997. The increase was primarily attributable to increased
management and administrative labor of $1.2 million and an increase in legal
costs of $542,080 associated with the administration of the Company's domain
name dispute policy. During the first quarter of 1997, the Company was notified
that one of its Intranet services customers had filed for bankruptcy, resulting
in a $194,000 bad debt write-off. These expenses include $325,000 of expenses
allocated from SAIC during the six months ended June 30, 1996 in accordance with
the then current intercompany agreement and $468,000 of expenses which were
charged by SAIC during the six months ended June 30, 1997 based on the fee of
2.5% of net revenue. If the expenses for the six months ended June 30, 1996 were
based on the fee of 2.5% of net revenue under the current intercompany
agreement, such expenses would have been $171,000.

As a percentage of net revenue, selling, general and administrative
expenses decreased from 34.7% for the six months ended June 30, 1996 to 25.6%
for the six months ended June 30, 1997. The decrease in percentage of net
revenue reflects economies the Company has begun to achieve due primarily to the
growth of its domain name registration business. The Company expects that the
level of selling, general and administrative expenses will increase
significantly in the near future in absolute dollars as operations expand.

Interest Expense (Income). The Company had interest income of $86,000 for
the six months ended June 30, 1996 as compared to $484,000 for the six months
ended June 30, 1997. The change is attributable to increased cash flow
associated with the Company's registration services business.

33
<PAGE> 36

Income Taxes (Benefit). The income tax benefit was $576,000 for the six
months ended June 30, 1996 as compared to an income tax expense of $1,011,000
for the six months ended June 30, 1997. The effective tax rate changed from
28.3% for the six months ended June 30, 1996 to 44.6% for the six months ended
June 30, 1997. The difference between the effective rates was attributed to the
relative impact that non-deductible goodwill had on pre-tax operating income or
loss for the quarter. The goodwill amount is being amortized by the Company over
five years and is associated with the acquisition of the Company by SAIC.

Although the Company has a history of net losses, it has not established a
valuation allowance for its deferred tax assets since, in the opinion of
management, it is more likely than not that all of the deferred tax assets will
be realized. The deferred tax assets relate primarily to registration fee
revenues which are taxable upon registration but are recognized in the financial
statements over the next 12 to 24 months -- the subscription period.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1996

Net Revenue. Net revenue increased 191% from $6.5 million in 1995 to $18.9
million in 1996. This increase in net revenue was primarily attributable to the
increase in the number of domain name subscriptions, principally in the .com
TLD, as well as the Company's shift to a subscription-based pricing model. Net
revenue from registration services increased 594% from $1.6 million in 1995 to
$11.1 million in 1996. Net revenue in 1995 primarily reflects the cost
reimbursement plus fixed-fee contract with the NSF whereas net revenue for 1996
reflects the Company's subscription-based pricing model. Net registrations to
the Company's domain name registration service increased 254% from 177,000 at
December 31, 1995 to approximately 627,000 at December 31, 1996.

Net revenue from Intranet services increased 57% from $4.9 million in 1995
to $7.7 million in 1996, including an increase in net revenue from NationsBanc,
the Company's largest Intranet services customer, which increased 42% from $2.6
million in 1995 to $3.7 million in 1996. The growth was primarily attributable
to increased funding within NationsBanc to support internal network integration
and expansion. The Company also experienced growth from a number of new Intranet
services customers, many of which were obtained through subcontracting with and
utilizing leads from SAIC.

NationsBanc accounted for 19.5% of total net revenue in 1996. NationsBanc
accounted for 40.8% of total net revenue and the NSF (under the cost
reimbursement plus fixed-fee contract) accounted for 20.8% of total net revenue
in 1995. No other source of revenue accounted for more than 7.1% of total net
revenue in either year.

Cost of Revenue. Cost of revenue increased 157% from $5.7 million in 1995
to $14.7 million in 1996. The increase in cost was related primarily to an
increase in the cost of labor of $3.7 million as a result of the Company's rapid
growth. Effective with the September 14, 1995 amendment to the Cooperative
Agreement which implemented the subscription-based pricing model, the Company
has established and continues to develop its back office capability. This
required the Company to make significant investments in hardware and software as
well as to utilize a number of third-party vendors in support of back office
requirements. In particular, the Company began to outsource portions of its back
office operations during the fourth quarter of 1996. The principal benefit of
outsourcing was to increase the capacity and efficiency of its back office
operations; however, such action alone has not significantly impacted operating
margins.

As a percentage of net revenue, cost of revenue decreased from 87.9% in
1995 to 77.8% in 1996. This decrease reflects economies of scale that the
Company has begun to achieve due to the growth of its subscription-based
registration business.

Research and Development Expenses. There were no research and development
expenses in 1995, in large part because registration system enhancements were
reimbursable under the Cooperative Agreement. In 1996, research and development
expenses were $680,000 or 3.6% of net revenue. To date, all of the Company's
development costs have been expensed as incurred.

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<PAGE> 37

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 162% from $2.4 million in 1995 to $6.3 million
in 1996. This increase was primarily attributable to increases in management,
administrative and business development staff, as well as increased legal costs
associated with the administration of the Company's domain name dispute policy.
Selling, general and administrative expenses include $237,000 in 1995 and
$822,000 in 1996 of expenses allocated from SAIC in accordance with the then
current intercompany agreement. If the expenses were based on the fee of 2.5% of
net revenue under the current intercompany agreement, such expenses would have
been $133,000 and $472,000, respectively.

As a percentage of net revenue, selling, general and administrative
expenses decreased from 36.9% in 1995 to 33.3% in 1996, reflecting the generally
fixed nature of certain general and administrative expenses as well as
management's control of such costs.

Interest Expense (Income). The Company had net interest expense of $61,000
in 1995 as compared to interest income of $496,000 in 1996. The change is
primarily attributable to positive cash flow in 1996 associated with the
Company's subscription-based registration business.

Income Taxes (Benefit). The income tax benefit was $239,000 in 1995 as
compared to $643,000 in 1996. The effective tax rate increased from 14.3% in
1995 to 28.4% in 1996. The difference between the effective tax rates was
primarily attributable to non-deductible goodwill comprising a higher percentage
of the Company's net loss in 1995.

Discontinued Operations. Immediately prior to the acquisition of the
Company by SAIC, the portion of the Company's business relating to the
minority-based government business had been transferred into a separately-owned
entity. In November 1995, SAIC adopted a plan to transfer the Company's
remaining government-based business to SAIC in order to enable the Company to
focus on the growth of its commercial business, which includes registration
services and Intranet services. This transfer was effective as of February 1996.
November 1995 was the measurement date for discontinued operations for
accounting purposes. The activities of both the minority-based government
business and the remaining government-based business are reflected as
discontinued operations. Net income (loss) from discontinued operations excludes
general corporate overhead of the Company. No gain or loss was incurred as a
consequence of the transfer of these businesses.

In 1995, discontinued operations incurred a net loss of $1.4 million. The
loss was primarily attributable to the Company's remaining government business,
which increased the Company's provision for uncollectable accounts associated
with the bankruptcy of a prime contractor, high interest costs associated with
payment issues from other prime contractors and over-runs of fixed-price and
fixed-rate contracts. As mentioned above, this business was transferred to SAIC
effective as of February 1996.

COMPARISON OF YEARS ENDED DECEMBER 31, 1994 AND 1995

Net Revenue. Net revenue increased 29% from $5.0 million in 1994 to $6.5
million in 1995. The increase in net revenue was primarily attributable to the
Company's Intranet services business which increased its revenue 26% from $3.9
million in 1994 to $4.9 million in 1995. The Company developed a number of new
customers mainly in the banking industry, as well as subcontracting with and
utilizing leads from SAIC. NationsBanc and the NSF (under the cost reimbursement
plus fixed-fee contract) together accounted for 85.2% and 61.6% of net revenue
in 1994 and 1995, respectively. No other source of revenue accounted for more
than 7.1% of net revenue in either year.

Cost of Revenue. Cost of revenue increased 86% from $3.1 million or 61.1%
of net revenue in 1994 to $5.7 million or 87.9% of net revenue in 1995. The 1995
increase in absolute dollars and as a

35
<PAGE> 38

percentage of net revenue was attributable to increased costs in the Company's
Intranet services business as the Company invested in technical support and
additional infrastructure in order to attract and maintain clients in 1995. In
addition, the Company began to significantly expand its back office capability
in support of the September 14, 1995 amendment to its Cooperative Agreement with
the NSF, which introduced a subscription-based pricing model for its domain name
registration services.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 55% from $1.5 million or 30.7% of net revenue
in 1994 to $2.4 million or 36.9% of net revenue in 1995. This increase was
primarily attributable to additional costs necessary to support the growth in
the Company's business and professional staff during 1995.

Interest Expense (Income). Net interest expense decreased 44% from
$109,000 or 2.2% of net revenue in 1994 to $61,000 or 0.9% of net revenue in
1995. The decrease was primarily attributable to cash flow improvements from the
Company's Intranet services business.

Income Taxes (Benefit). The income tax provision was $114,000 in 1994
compared with a $239,000 benefit for income taxes in 1995. The 1994 effective
tax rate was 37.6% as compared to the 1995 effective tax rate of 14.3%. The
difference between the effective rates was attributed to the relative impact
which non-deductible goodwill had on pre-tax operating income or loss for the
year.

Discontinued Operations. Discontinued operations incurred a net loss of
$1.2 million in 1994 as compared to a net loss of $1.4 million in 1995. The 1994
loss was primarily attributable to the minority-based government business which
experienced several large over-runs related to fixed-price and fixed-rate
contracts. This business was transferred into a separately-owned entity
immediately prior to the acquisition of the Company by SAIC on March 10, 1995.
The loss in 1995 was primarily attributable to the Company's remaining
government business, which increased the Company's provision for uncollectable
accounts associated with the bankruptcy of a prime contractor, high interest
costs associated with payment issues from other prime contractors and over-runs
of fixed-price and fixed-rate contracts. As mentioned above, this business was
transferred to SAIC effective as of February 1996.

FACTORS AFFECTING OPERATING RESULTS

As a result of the Company's limited operating history, especially with
regard to its subscription-based registration service business, the Company does
not have significant historical financial data on which to base planned
operating expenses. Accordingly, the Company's expense levels are based in part
on its expectations as to future revenue and to a large extent are fixed. As a
result, quarterly sales and operating results generally depend on the volume of
and ability to fulfill registration requests, which are difficult to forecast.
The Company may be unable to adjust spending in a timely manner to compensate
for any unexpected revenue shortfall. Accordingly, any significant shortfall of
demand for the Company's services in relation to the Company's expectations
would have an immediate adverse impact on the Company's business, operating
results and financial condition. In addition, the Company expects a significant
increase in its operating expenses as it funds greater levels of product and
services development, increases its sales and marketing operations, updates
systems and infrastructure, opens new offices, develops new distribution
channels and broadens its customer support capabilities. While no individual
expenditure is anticipated to have a material impact on the Company's operating
results, the combined effect could be significant and cannot be reasonably
estimated at this time. To the extent that such expenses precede or are not
subsequently followed by an increase in revenue, the Company's business,
operating results and financial condition will be materially and adversely
affected.

The Company believes that future operating results will be subject to
quarterly fluctuations due to a variety of factors, many of which are beyond the
Company's control. Such factors may include, but are not limited to, the
introduction of competing TLDs, variations in the number of requests for domain
name registrations, demand for the Company's services, introduction or
enhancements of services by the Company or its competitors, market acceptance of
new service offerings, increased competition, costs associated with providing
domain name registration services, litigation costs, termination or completion
of contracts in the Company's Intranet service business or failure to obtain
additional contracts in its Intranet services business, patterns of growth in
the use of and interest in the

36
<PAGE> 39

Internet and general economic conditions. Operating results would be adversely
affected by a downturn, or increased competition, in the market for domain name
registrations or a failure to maintain existing or obtain anticipated contracts
in its Intranet services business. Because the Company expects an increase in
its operating expenses for personnel and new services development, the Company
would be materially and adversely affected if its revenues did not
correspondingly increase. The Company's operations are dependent upon its
ability to maintain its computer and telecommunications equipment in effective
working order and to reasonably protect its systems against damage from fire,
natural disaster, sabotage, power loss, telecommunication failure, human error
or similar events. In addition, growth of the Company's customer base may put
strain on the capacity of its computers and telecommunications systems and the
Company's inability to sufficiently maintain or upgrade its systems could lead
to degradation in performance or system failure. Any damage, failure or delay
that causes significant interruptions in the Company's systems would have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, when the Cooperative Agreement is terminated
or if there is a change in the Company's status as the exclusive registrar for
domain names in the .com TLD the Company's business, financial condition and
results of operations could be materially and adversely affected. See "Risk
Factors -- Uncertain Status of the Cooperative Agreement," "-- Competition in
Domain Name Registration Business," "-- Recommendations and Proposals to
Introduce Competition in Registration Services," "-- Competition in Intranet
Services and Internet-Enabling Businesses," "-- Uncollectible Receivables;
Modifications to Billing Practices," "-- Technological Change and Additional
Technology, Products and Services," and "-- Potential Fluctuations in Quarterly
Results."

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<PAGE> 40

SELECTED QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain unaudited quarterly financial
information for each of the seven quarters in the period ended June 30, 1997. In
the opinion of management, this information has been presented on the same basis
as the audited financial statements appearing elsewhere in this Prospectus, and
all necessary adjustments (consisting only of normal recurring adjustments) have
been included in the amounts stated below to present fairly the unaudited
quarterly results when read in conjunction with the audited financial statements
of the Company and notes thereto. The operating results for any quarter are not
necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1996 1996 1996 1996 1997 1997
-------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue.................... $ 1,533 $ 2,333 $4,496 $ 5,180 $6,853 $8,655 $10,069
Cost of revenue................ 1,911 2,950 3,571 3,719 4,426 5,294 6,141
-------- -------- -------- --------- -------- -------- --------
Gross profit (loss)............ (378) (617) 925 1,461 2,427 3,361 3,928
Research and development
expenses..................... -- -- 58 226 396 311 407
Selling, general and
administrative expenses...... 607 921 1,449 1,932 1,978 2,301 2,487
Interest expense (income)...... 34 -- (86) (288) (122) (149) (335)
-------- -------- -------- --------- -------- -------- --------
Income (loss) from continuing
operations before income
taxes........................ (1,019) (1,538) (496) (409) 175 898 1,369
Provision (benefit) for income
taxes........................ (175) (436) (140) (116) 49 382 629
-------- -------- -------- --------- -------- -------- --------
Income (loss) from continuing
operations................... $ (844) $(1,102) $ (356) $ (293) $ 126 $ 516 $ 740
======== ======== ======== ======== ======== ======== ========

PERCENTAGE OF TOTAL NET REVENUE
---------------------------------------------------------------------------------
Net revenue.................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenue................ 124.7 126.4 79.4 71.8 64.6 61.2 61.0
-------- -------- -------- --------- -------- -------- --------
Gross profit (loss)............ (24.7) (26.4) 20.6 28.2 35.4 38.8 39.0
Research and development
expenses..................... -- -- 1.3 4.4 5.8 3.5 4.0
Selling, general and
administrative expenses...... 39.6 39.5 32.2 37.3 28.9 26.6 24.7
Interest expense (income)...... 2.2 -- (1.9) (5.6) (1.8) (1.7) (3.2)
-------- -------- -------- --------- -------- -------- --------
Income (loss) from continuing
operations before income
taxes........................ (66.5) (65.9) (11.0) (7.9) 2.5 10.4 13.5
Provision (benefit) for income
taxes........................ (11.4) (18.7) (3.1) (2.2) 0.7 4.4 6.2
-------- -------- -------- --------- -------- -------- --------
Income (loss) from continuing
operations................... (55.1)% (47.2)% (7.9)% (5.7)% 1.8% 6.0% 7.3%
======== ======== ======== ======== ======== ======== ========
</TABLE>

38
<PAGE> 41

LIQUIDITY AND CAPITAL RESOURCES

From its acquisition by SAIC in March 1995 until December 1996, the Company
participated in SAIC's centralized cash management system whereby cash received
from operations was transferred to SAIC's centralized cash accounts and cash
disbursements were funded from such centralized cash accounts. Accordingly, cash
requirements for operating purposes and for capital expenditures were met from
this source. Beginning in 1997, the Company implemented its own cash management
system.

At June 30, 1997, the Company's cumulative net obligations to SAIC of $6.6
million were classified under current liabilities on the balance sheet as due to
parent. The intercompany activity primarily comprises corporate tax payments
made by SAIC on behalf of the Company in accordance with the tax sharing
arrangement between the Company and SAIC and salaries and benefits paid by SAIC
on behalf of the Company. Effective in the second quarter of 1997, corporate
taxes are paid to SAIC on a quarterly basis, with all other intercompany
balances between SAIC and the Company paid on a monthly basis.

At June 30, 1997, the Company had unrestricted cash and cash equivalents
totaling $26.0 million, as well as $3.6 million of short-term investments. The
$10 million dividend to SAIC will be paid out of such cash balances. Pursuant to
the terms of the September 14, 1995 amendment to the Cooperative Agreement, the
Company is required to set aside 30% of collected registration and renewal fees.
The Company reflects NSF's set aside funds along with the appropriate percentage
of net accounts receivable as restricted assets and has recorded an equivalent,
related current liability. At June 30, 1997, the restricted assets totaled $31.1
million. See Notes 2 and 3 to the Financial Statements.

Revenue from the Company's two-year initial registration fee is effectively
taxable in full in the year of registration, while for financial reporting
purposes, the revenue is deferred and recognized ratably over the 24-month
period. Thus, the provision (benefit) for income taxes based on book income
(loss) from operations is significantly different from the required tax payments
based on taxable income. Due to this accelerated revenue recognition for tax
purposes, the Company's resultant tax liability is funded in advance of the
corresponding financial reporting revenue. At June 30, 1997, the Company had
$17.5 million of deferred tax assets primarily due to this revenue timing
difference. See "Relationship with SAIC -- Corporate Services Agreement."

The rapid growth of the Company's registration business in 1995 and 1996
significantly exceeded the Company's back office capabilities. As a result, the
Company was unable to keep current in the processing, billing, collection,
reconciliation and other administrative and financial functions related to the
registration services business. Although the delay did not have a material
impact on the Company's financial performance, it did have a significant impact
on the Company's 1996 cash flows. During 1997, the Company became current in
these functions. Accordingly, the Company's cash flows for 1997 were higher than
normal and may not be indicative of future cash flows.

In addition, the Company believes that the historical and anticipated costs
associated with its legal proceedings are part of the Company's normal operating
costs. There can be no assurance that the Company will not be involved in
additional litigation, investigations or other proceedings in the future.
Certain current and future proceedings, with or without merit, could be costly
and time-consuming to defend and could have a material adverse effect on the
Company's liquidity. See "Business -- Litigation; Antitrust Investigation."

Capital expenditures for continuing operations were $1.9 million and $2.9
million for the year ended December 31, 1996 and the six months ended June 30,
1997, respectively. These expenditures were primarily for computer equipment.
Commencing in August 1996, the Company adopted a program of leasing most of its
computer equipment under noncancellable 24- and 36-month leases to allow the
Company to maintain the latest technology within its operating infrastructure.
The Company is currently reviewing its 1997 capital expenditure plans and
anticipates expenditures of approximately $5 million to $7 million for the
balance of 1997. The Company expects that a majority of these expenditures will
be financed under lease agreements ranging from 24 to 36 months.

39
<PAGE> 42

The Company believes that the net proceeds from the sale of Class A Common
Stock offered hereby, together with its current cash balances, will be
sufficient to meet its working capital and capital expenditure requirements for
at least the next 12 months. Although operating activities may provide cash in
certain periods, to the extent that the Company experiences growth in the
future, the Company anticipates that its operating and investing activities may
use cash. Consequently, any such growth may require the Company to obtain
additional equity or debt financing. There can be no assurance that such
additional financing will be available to the Company. The sale of additional
equity or convertible debt securities will result in additional dilution to the
Company's stockholders. In addition, although there are no present
understandings, commitments or agreements with respect to any acquisitions of
other businesses, products or technologies, the Company from time to time
evaluates potential acquisitions of other businesses, products and technologies
and may in the future require additional equity or debt financings to consummate
such potential acquisitions.

40
<PAGE> 43

BUSINESS

The following discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements as a result of
certain factors including, but not limited to, those discussed in "Risk Factors"
and elsewhere in the Prospectus.

Network Solutions is the leading Internet domain name registration service
provider worldwide. The Company currently acts as the exclusive registrar for
second level domain names within the .com, .org, .net, .edu and .gov TLDs. By
registering Internet domain names, the Company enables businesses, other
organizations and individuals to establish a unique Internet presence from which
to communicate and conduct commerce. Net registrations within the TLDs
maintained by the Company increased by 206% from approximately 340,000 domain
names registered at June 30, 1996 to approximately 1,040,000 domain names
registered at June 30, 1997. The Company believes that commercial enterprises
and individual Internet users worldwide are increasingly recognizing the .com
TLD as a desirable address for commercial presence on the Internet. Net
registrations in the .com TLD increased from approximately 304,000 at June 30,
1996 to approximately 908,000 at June 30, 1997, representing 87% of the
Company's total net registrations at June 30, 1997. With over 10 million
businesses and over 750,000 active trademarks and service marks in the United
States alone, the Company believes that the potential for continued growth of
domain name registrations by commercial entities and services related to those
registrations is substantial. Net revenue from Internet domain name registration
subscriptions accounted for 81.0% of the Company's net revenue for the six
months ended June 30, 1997.

The Company also provides Intranet consulting services to large companies
that desire to establish or enhance their Internet presence, or "re-engineer"
legacy network infrastructures to accommodate the integration of both Internet
connectivity and Intranet network technology into their information technology
base. The Company's Intranet services include: (i) Intranet development and
re-engineering; (ii) network and systems security; and (iii) Intranet-enabled
business solutions. According to Zona Research, Inc., the market for Intranet
services in the year 1999 will exceed $14 billion, up from approximately $3
billion in 1996. There can be no assurance that such market forecast will be
achieved. Net revenue from Intranet services accounted for 19.0% of the
Company's net revenue for the six months ended June 30, 1997.

The Company also intends to develop a portfolio of Internet-enabling
products and services, which may include directory and distribution services,
that allows the Company to build upon its position in the registration process
and makes proper use of the customer data that it collects.

INDUSTRY BACKGROUND

The Internet is a global network of millions of interconnected computers
and computer networks that allow businesses, other organizations and individuals
to communicate. Historically, the Internet had been used by a limited number of
academic institutions, defense contractors and government agencies to facilitate
remote access to host computers and transmit electronic mail. Recently, however,
use of the Internet has increasingly become dominated by a broad range of
commercial organizations and individuals who utilize the Internet to communicate
electronically, to distribute and retrieve information and to conduct commerce.
Advances in technology, low-cost Internet access and an increasing corporate
reliance on distributed information environments have fueled the rapid growth of
the Internet. According to estimates published by the International Data
Corporation, the number of World Wide Web users will be approximately 163
million by the end of 2000, compared to approximately 35 million at the end of
1996.

The Internet has been and continues to be loosely administered by a number
of government agencies that were involved in the creation of its infrastructure
(initially ARPA and, more recently, the NSF) and a number of nonprofit groups
formed to address specific Internet governance issues. As no single organization
has formal authority over all aspects of the Internet, it continues to operate
under a system of mutual collaboration and cooperation. With the
commercialization of the Internet, the role of many of these entities in future
Internet administration has become less clear and private parties

41
<PAGE> 44

have begun to assume a larger role in the enhancement and maintenance of the
Internet's infrastructure. The NSF, for example, has completed a two-year phased
withdrawal of its funding for the Internet "backbone" and has transferred this
responsibility to a group of private telecommunications carriers that are
commercially funded.

The Company believes that in order to support the demands placed on this
evolving and rapidly growing medium of commerce and information exchange, a wide
range of products and services will need to be developed and enhanced,
including: (i) domain name registration services; (ii) Intranet services; and
(iii) Internet-enabling products and services.

Domain Name Registration Services. All communication on the Internet
requires an electronic address. Currently, the Internet functions through the
establishment of a unique Internet identity (a "domain name") for an electronic
address and the proliferation of such domain name in the global Internet root
servers. Currently, there are 13 root servers, ten of which are located in the
United States, two of which are located in Europe and one of which is located in
Asia. When communication with a particular host within a domain name is required
and the IP address of that host is not known locally, the root servers make that
information available or "point" to a direct or indirect source of the
information. See "Risk Factors -- Reliance on Third Parties."

An Internet domain name is made up of a top-level domain ("TLD"), such as
.com or .net, and additional domain levels consisting of at least one additional
domain level, referred to as a second level domain name. For example, in the
domain name "companyX.com," "companyX" is the second level domain name. With the
increased commercialization of the Internet, second level domain names are being
utilized not only by large corporations but also increasingly by other users,
including small businesses, organizations and individuals. Particularly within
the .com TLD, users are also registering domain names to establish Internet
identities for other purposes such as trademarks, products and events. The most
common TLDs include .com, used primarily by commercial entities, .org for
nonprofit organizations, .net for network service providers, .edu for
universities and .gov for United States governmental entities, as well as
country code TLDs represented by "." followed by two letter country codes (e.g.,
.us for the United States, .uk for the United Kingdom and .de for Germany).

Because the Internet is not bound by geography or lines of business,
coordination and administrative services are required for the registration,
allocation and use of TLDs and for the effective operation of the Internet.
Initially, in the United States, registration of domain names was primarily
performed by government or nonprofit agencies. In 1993, the NSF entered into the
Cooperative Agreement with the Company for the performance of these functions
for the .com, .org, .net, .edu and .gov TLDs. The Cooperative Agreement by its
terms expires in March 1998, although the NSF may, at its option, extend the
Cooperative Agreement to September 1998. The Cooperative Agreement is subject to
review by the NSF and may be terminated at any time by the NSF at its discretion
or by mutual agreement. See "Risk Factors -- Uncertain Status of the Cooperative
Agreement," "-- Recommendations and Proposals to Increase Competition in
Registration Services" and "-- Relationship with the NSF; Recent Developments in
the Internet Community."

Intranet Services. Many enterprises are adopting "Intranets" that employ
Internet data formats and communications protocols. Intranets enhance user
productivity and connectivity allowing users controlled access to internal
information while also accessing and exchanging information on the Internet. As
more businesses, organizations and individuals establish an Internet presence
and begin to deploy Intranets, there will be an increasing demand for Intranet
development and re-engineering services, network and systems security services
and Intranet-enabled business solutions. In addition, the Company believes that
Intranets are becoming increasingly sophisticated and are allowing users
increased capabilities and improved access to information. As a result,
corporations are increasingly seeking experienced networking firms to enable all
of these services. According to Zona Research, Inc., the market for Intranet
services in the year 1999 will exceed $14 billion, up from approximately $3
billion in 1996.

Internet-Enabling Products and Services. The proliferation of Internet
users provides businesses, other organizations and individuals with new means by
which to conduct business. To facilitate

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business-to-business and business-to-consumer transactions, Internet users are
seeking important enabling products and services, such as transaction security
services, electronic payment mechanisms and directory and information services.
The Company believes there will be opportunities for entities which can
facilitate, develop and distribute such products and services and make them more
readily accessible and easy to use.

THE NSI SOLUTION

Network Solutions is the leading Internet domain name registration service
provider worldwide. The Company currently acts as the exclusive registrar of
second level domain names within the .com, .org, .net, .edu and .gov TLDs. In
this capacity, the Company enables the efficient operation of the Internet by
supplying each of the Internet root servers located around the world with an
identical copy of the file for all second level domain names in these TLDs. By
registering Internet domain names, the Company enables businesses, other
organizations and individuals to establish a unique Internet presence from which
to communicate and conduct commerce. The Company believes that it has been at
the forefront of the development, administration and coordination of standards,
policies and functions needed to facilitate the registration process, including
dissemination of domain name database information to root servers throughout the
world and administration of a domain name dispute policy.

The Company is working to expand its domain name registration business and
to continue to improve the registration process by: (i) increasing the use of
the .com TLD worldwide; (ii) expanding its relationships with Internet access
providers by offering enhanced registration services to their customers; (iii)
stimulating demand for domain name registrations in targeted customer segments;
(iv) working with major platform providers to embed the registration function
into server software applications; (v) facilitating ease of use of and access to
its registration service; and (vi) establishing international alliances and
developing multilingual capability. The Company intends to develop a portfolio
of Internet-enabling products and services, which may include directory and
distribution services, that allows the Company to build upon its position in the
registration process and makes proper use of the customer data that it collects.

The Company also provides Intranet consulting and network design and
implementation services to large companies that desire to establish or enhance
their Internet presence or "re-engineer" legacy network infrastructures to
accommodate the integration of both Internet connectivity and Intranet network
technology into their information technology base. The Company's Intranet
services have evolved from the Company's Internet pioneering efforts that date
back to 1979 and presently include: (i) Intranet development and re-engineering;
(ii) network and systems security; and (iii) Intranet-enabled business
solutions.

THE NSI STRATEGY

The Company's goal is to maintain its position as the leader in Internet
domain name registration services and to build on this position to be a leading
provider of Intranet services and Internet enabling products and services. The
Company's strategy includes the following key elements:

Maintain Position as a Leading Provider of Registration Services. The
Company intends to maintain and enhance its position as a leader in domain name
registration by promoting the .com TLD as the accepted and preferred Internet
address for commercial presence on the Internet worldwide. The Company also
intends to develop and implement standards, policies and functions designed to
enhance the ease, speed and security of the registration process by adding new
capabilities to facilitate the registration process and providing quality
customer service and support.

Establish and Expand Marketing Relationships. The Company intends to
establish and expand relationships with companies worldwide to promote its
services, penetrate new customer bases and integrate third party products and
services. The Company has established, and is seeking to further pursue
relationships with, Internet access providers to enhance its ability to offer
second level domain names and pursue its Intranet services opportunities.

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Maintain Active Role in Establishment of Future Internet Standards and
Policies. The Internet currently operates under a system of mutual
collaboration and cooperation and has historically been administered by
governmental and nonprofit organizations. The Company intends to continue to
cooperate with these organizations and maintain an active role in the global
Internet community to ensure that the Internet continues to flourish and that
the Company remains at the forefront of continuing change in the Internet. The
Company believes that its expertise in the Internet and its participation in the
Internet community should enable it to facilitate the proliferation of Internet
usage worldwide and provide it with a competitive advantage in the development
of its service offerings.

Build and Strengthen Intranet Services Business. The Company intends to
further develop its existing in-depth knowledge of and experience in Internet
technologies to develop a leading Intranet services business. The Company
believes that delivering dependable, high-quality Intranet solutions is critical
to strengthening its relationships with existing clients, gaining repeat
business and generating new business from referrals. Further, the Company
intends to utilize its relationship with SAIC in this area by continuing to work
with SAIC on a subcontract basis and seeking referrals to SAIC's customers and
strategic partners.

Provide Complementary Enabling Products and Services. The Company intends
to develop a portfolio of Internet-enabling products and services that build on
its registration activities and the customer data that the Company collects.
These enabling products and services could include directory and other services
to be developed by the Company and distribution of third party product and
service offerings through on-line enrollment for such products and services
embedded within the Company's domain name registration home page.

Leverage Technology Leadership. The Company has assembled management and
engineering teams with extensive experience in the information technology
industry and specifically the Internet and intends to leverage this experience
in the development of enabling technologies to support the continued enhancement
of infrastructure flexibility and scalability, customer ease of use and
embeddedness in access sources. The Company is committed to integrating
state-of-the-art technology in its service offerings and believes that service
quality and reliability should be a significant differentiating factor in its
market.

Pursue Strategic Acquisitions. The Company intends to identify and, where
appropriate, pursue acquisition opportunities which would provide businesses,
products, services or technologies complementary to the Company's current
business, although it is not currently contemplating any such acquisitions.

The Company's strategy involves substantial risk. There can be no assurance
that the Company will be successful in implementing its strategy or that its
strategy, even if implemented, will lead to successful achievement of the
Company's objectives. If the Company is unable to implement its strategy
effectively, the Company's business, financial condition and results of
operations would be materially and adversely affected.

NSI SERVICES

Registration Services. Registration services is the Company's core
business. The Company registers second level domain names in the .com, .org,
.net, .edu and .gov TLDs, enabling registrants to establish a unique identity on
the Internet. The Company's largest source of customers are Internet access
providers, which request domain names on behalf of their subscribers.

Prior to September 14, 1995, the Company was reimbursed by the NSF for
providing registration services under a cost reimbursement plus fixed-fee
contract. On September 14, 1995, the NSF amended the Cooperative Agreement to
authorize the Company to begin charging customers a subscription fee of $50 per
year for each second level domain name registered. The Company's registration
services customers in the .com, .org and .net TLDs are invoiced for a two-year
subscription fee of $100 for initial registrations and $50 per year for renewals
of initial registrations. Under the terms of the amendment to the Cooperative
Agreement, 30% of the subscription fees collected are required to be set aside
to be

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disbursed in a manner approved by the NSF for the enhancement of the
intellectual infrastructure of the Internet. See "-- Relationship with the NSF;
Recent Developments in the Internet Community."

The Company believes that high quality customer support is vital to client
satisfaction. The registration subscription fee provides the customer with
access to a registry help desk and an on-line processing facility and account
information updates. The Company's help desk and on-line processing facility are
factors in the success of the Company's registration business because they are
the front line to the customer and provide initial and ongoing customer service
and support. This facility currently processes over 40,000 telephone calls and
over 300,000 electronic transactions monthly. At the end of 1996, the Company
entered into arrangements to outsource certain back office operations, which the
Company believes has improved customer service and account handling and expanded
the Company's capacity to service larger volumes of registrants. See
"-- Operations."

The Company has been registering domain names pursuant to the Cooperative
Agreement since 1993 and has made significant investments in its registration
services business. The Company believes that it currently possesses the
following competitive advantages in the domain name registration business:

- - Large, Established Customer Base. The Company currently maintains in excess
of one million unique domain name registrations. As a result, the Company
believes it has the infrastructure required to realize significant scale
efficiencies throughout the registration process and believes that it has
established credibility in the Internet community. In addition, this large
customer base allows the Company to benefit from its policy which requires
that customers prepay for two years for rights to a unique domain name
registration. As customers invest in their web sites for advertising,
branding and other business-critical activities, the Company believes they
will be increasingly inclined to renew at the end of the initial two-year
subscription period.

- - Recognition of the .com TLD. The Company believes that the .com TLD, of
which the Company is currently the exclusive registrar, has perceived value
to commercial users on the Internet. Further, the Company believes that
there is an emerging trend among commercial entities outside of the United
States to establish an Internet presence within the .com TLD, rather than
within or in addition to a country code TLD.

- - Strategic Agreements with Internet Access Providers. The Company has
entered into agreements to provide specialized services to certain Internet
access providers who register a significant number of second-level domain
names with the Company on behalf of such providers' customers. This program
provides such Internet access providers with customized registration
services and provides the Company with a multi-year registration stream from
such providers. To date, the Company has entered into agreements with 29
Internet access providers, including: MCI, Inc., America Online,
Incorporated (PrimeHost Division), TABNet and Rapidsite, Inc.

- - Established Technical Infrastructure. The Company believes that the
technical requirements to build and to operate a competitive domain name
registry are significant. Substantial portions of the Company's software is
custom-developed and proprietary. The Company's internal software includes
an automated registration capability which currently processes in excess of
90% of all new registration requests without human intervention. See
"-- Operations."

- - Experience in the Administration of Domain Name Dispute Policy. The
Company's staff is experienced in the establishment and administration of
the Company's domain name dispute policy, which is an integral part of the
maintenance and administration of the Company's domain name registration
business. As of July 31, 1997, the Company had received over 2,700 written
objections to the registration and use of certain domain names. Of these,
approximately 1,400 were disputes in which the Company's domain name dispute
policy was involved. Although 36 of these objections have resulted in
litigation involving the Company, as of July 31, 1997, no damages have been
awarded against the Company to any plaintiff. The Company expends
considerable management and legal resources in the development, refinement
and administration of its domain name dispute policy.

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- - Skilled Technical Personnel. The Company believes that significant
engineering talent is required to create a registration services capability
and that knowledge of DNS structures, Internet security, data routing and
routing protocols is critical to creating and enhancing registration service
capabilities. The Company developed RWhois, a standard open protocol, that
is used for the registration services business. The Company's engineering
staff has significant expertise in the RWhois protocol. The Company believes
that engineers skilled in protocol development are difficult to identify,
hire and retain and thus its staff of engineers represents a valuable
resource.

The Company believes that these competitive advantages are significant and that
existing and additional competing registries will need similar capabilities.

In addition, the Company is working to expand its domain name registration
business and to continue to improve the registration process by:

- - Increasing the Use of the .com TLD Worldwide. The Company believes that it
can continue to grow its Internet registration business by promoting global
recognition of the .com TLD. The Company has begun and intends to continue
to promote the use of the .com TLD and to establish .com as the most
recognized domain for individuals and organizations conducting business on
the Internet.

- - Expanding Relationships With Internet Access Providers. The Company intends
to build upon its current relationships with certain Internet access
providers that have agreed to participate in its Premier Domain Registration
Service program and intends to pursue relationships with additional Internet
access providers. Through these relationships, the Company believes it will
be able to deliver enhanced registration services and identify additional
opportunities to expand its registration services business.

- - Stimulating Demand for Domain Name Registrations in Targeted Customer
Segments. The Company is seeking to expand the number of registrations in
targeted customer segments both domestically and internationally. The
Company believes that customer segments such as small business users,
individuals, holders of trademarks, service marks and product marks and
event sponsors could offer significant potential for growth if the Company
actively markets a portfolio of registration services to these segments.

- - Working with Major Platform Providers to Embed the Registration
Function. The Company is seeking to expand its domain name registration
business through agreements with major platform providers (i.e., operating
system manufacturers or hardware vendors who provide bundled operating
system software) to embed an automated registration function through a
"point-and-click" interface directly into the installation procedures. For
example, in December 1996, the Company entered into an agreement with
Microsoft Corporation ("Microsoft") to provide a "point-and-click" interface
intended to allow users to automatically register a domain name with the
Company upon initialization of the server.

- - Facilitating Ease of Use and Access to Registration Services. The Company
has undertaken a number of initiatives that are intended to make the
registration process easier, more streamlined and more accessible. The
Company believes that ease of use is becoming increasingly important as the
Internet is being more widely adopted by users who are less technically
sophisticated. The Company is currently in the process of simplifying the
registration template accessed by customers to effect registration of a
domain name. To facilitate payment of registration renewal fees, the Company
intends to implement electronic payment mechanisms that will allow the user
to pay for the domain name directly from the user's host machine.

- - Establishing International Alliances and Developing Multilingual
Capability. The Company intends to establish strategic alliances with
international registries to build a foundation for its international
operations. As these entities add Internet service to their offerings for
their customers, the Company intends to offer "ease of use" solutions for
entities worldwide for registration in the .com, .org and .net TLDs. The
Company also intends to establish a multilingual call center capability to
further assist with international registrations.

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Intranet Services. The Company provides consulting and network systems
integration services for clients utilizing Internet technologies for internal
networks (i.e., Intranets). The Company's network systems engineers have
extensive knowledge of and experience in such areas as local area network
("LAN")/wide area network ("WAN") Internet protocols, router technology,
switching technology, remote access technology, virtual private network
technology, network security technology, network management technology, network
components, IP addressing strategy, domain name architecture, efficient IP
address space usage, Web applications development, UNIX systems (highly modular
and flexible computer systems) and network operating systems. By leveraging this
knowledge and experience, the Company is able to provide solutions to clients'
complex network needs.

As part of its Intranet services offering, the Company provides Intranet
development and re-engineering; network and systems security; and
Intranet-enabled business solutions.

- - Intranet Development and Re-engineering. The Company offers a full line of
services to help develop, optimize, and integrate Intranet solutions in a
manner tailored to individual clients. Some of the more significant services
include Intranet business workflow and service level analysis; IP address
space engineering; domain name system ("DNS") and dynamic host configuration
protocol ("DHCP") architecture engineering; routing and switching
architecture engineering; Extranet (IP networks through which companies run
Web applications for external use by their customers) architecture
engineering; virtual private network architecture engineering; electronic
messaging architecture engineering; network capacity and performance
management; and new technology integration. The Company also provides
planning and analysis to implement disaster recovery and contingencies for
network system failures.

- - Network and Systems Security. The Company provides a full range of security
consulting services, including security architecture assessment, planning
and implementation. The security architecture establishes the access and
protection controls that will permit internal and remote users to access
computer systems, databases and applications on the network, while
protecting against unauthorized or inadvertent access to information or
misuse of systems services. The Company's methods to secure the backbone,
LAN-to-WAN access, remote access and facilities can supplement or replace
existing systems security measures. The Company maintains resident expertise
in emerging network protocols, encryption and key technologies, firewalls,
packet filters, proxy services, secure remote access strategies and secure
Intranet servers.

- - Intranet-Enabled Business Solutions. The Company offers Intranet- and
Extranet-enabled solutions for client business applications and services. In
this regard, the Company leverages Internet technologies to deliver
enterprise-wide solutions and develop business automation systems that can
be accessed by any client system, are quickly adaptable, and are easily
maintained. Such solutions may include: implementation of Extranets to
support clients' electronic commerce applications; planning and
implementation of clients' Internet presence and commerce capabilities;
re-engineering of legacy applications for Intranet-based delivery; and
hosting of private and public Intranet servers.

The Company also maintains an Intranet Solutions Center which provides
outsourcing services for remote network and security systems monitoring, network
performance management and management of the development and hosting of clients'
total Web presence.

NationsBanc is currently the Company's largest Intranet services client,
accounting for 41.3% of the Company's Intranet services business net revenue and
7.8% of the Company's total net revenue in the six months ended June 30, 1997.
NationsBanc originally contracted with the Company in 1993 and the Company
currently provides network design and engineering services as well as a variety
of project specific services for NationsBanc. The Company's current contract
with NationsBanc is a three-year contract commencing January 1, 1997 and is a
requirements contract under which the Company's services are ordered by task
orders issued by NationsBanc.

The Company sells and markets its Intranet services business primarily to
large companies that desire to establish or enhance their Internet presence. The
Company's Intranet services are generally

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provided to customers on a time and expense basis. The Company also performs a
limited number of engagements on a fixed-price basis. Many of the Company's
recent Intranet services clients have been developed through direct contact or
referrals from its parent company, SAIC. The Company intends to continue to
leverage its relationship with SAIC to access SAIC's major customers and
strategic partners. The Company has recently begun to provide Intranet services
on a limited basis in the Latin American market through Informatica, Negocios y
Tecnologia S.A. ("INTESA"), SAIC's joint venture with Petroleos de Venezuela,
S.A., the Venezuela National Oil Company. As part of this joint venture, the
Company is currently subject to a noncompetition arrangement pursuant to which
the Company has agreed to provide, with certain limited exceptions, Intranet
services in the Latin American market solely through INTESA. See "Risk
Factors -- Limited Service Offerings to Date; Reliance on Domain Name
Registration Services and Intranet Services for Substantially All Revenue."

MARKETING AND DISTRIBUTION RELATIONSHIPS

The Company intends to establish and expand relationships with companies
worldwide to promote its services, penetrate new customer bases and integrate
third party products and services.

Strategic Agreements with Internet Access Providers. The Company has
developed a service offering which provides specialized services to Internet
access providers who register a significant number of second-level domain names
per month on behalf of their customers. The Company's Premier Domain
Registration Service offering provides an Internet access provider with
personalized account management, customized billing and financial reports,
priority registration with 24-hour customer support, private e-mail boxes and
other customized features. To date, the Company has entered into agreements with
29 Internet access providers, including: MCI, Inc., America Online, Incorporated
(PrimeHost Division), TABNet and Rapidsite, Inc.

Server Software Applications. The Company has entered into an agreement
with Microsoft to provide a "point-and-click" interface for an automated
registration function. This interface is designed to facilitate the ease of the
registration process for users of the server software and to allow for the
Company to have a preferred provider position on the registration wizard screen
that appears during the server initialization process. The Company is currently
in discussions with certain other server platform providers pursuant to which
such a "point-and-click" interface will be embedded in their server software.

Internet-Enabling Products and Services. The Company has entered into
several agreements designed to allow the Company to build upon its strategy of
becoming an Internet-enabling business center where a business or individual can
have access to companies which provide the enabling products and services to
conduct business on the Internet.

The Company has entered into an agreement with VeriSign, Inc. ("VeriSign")
pursuant to which the Company provides its customers with direct access to
VeriSign's server security certificates through the Company's domain name
registration process. The Company will receive a portion of VeriSign's
subscription fees for providing such access to VeriSign subscribers. The Company
has also entered into an agreement with First Virtual Holdings Corporation
("First Virtual") pursuant to which the Company implemented First Virtual's
VirtualPIN as a form of payment for the Company's customers. Under the
agreement, users may register for First Virtual VirtualPINs through the
registration process for which the Company receives a portion of the fee,
assuming certain targets are met. Several other initiatives are being pursued,
all focusing on utilizing the registration process to provide access to Internet
enabling products and services.

OPERATIONS

To register a domain name within the .com, .org, .net, .edu and .gov TLDs,
the Company's customer or the customer's Internet access provider completes a
registration template which is submitted to the Company via e-mail. Once the
customer is registered, the Company loads the domain name into the root servers
located around the United States and in Europe. The Company believes that the
technical requirements to build and to operate a competitive domain name
registry are significant. Substantial

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portions of the Company's in-house registration software have been
custom-developed and are proprietary. The Company's in-house registration
software includes an automated registration capability which currently processes
in excess of 90% of all new registration requests without human intervention.
The Company maintains a help desk and on-line processing facility which provides
initial and ongoing customer service and support. This facility currently
processes over 40,000 telephone calls and over 300,000 electronic transactions
monthly.

The Company's registration services are supported by six T1 (high speed
data communications line) links connected to four ISPs, with additional T1 links
on order. By connecting to four different providers, the Company seeks to ensure
constant access to the Internet. The Company currently uses an average of fifty
percent of the bandwidth provided by the T1s and believes its current network
and the anticipated increased capacity should sustain continued growth for the
foreseeable future.

The Company leases its computer equipment which allows the Company to
maintain the latest technology within its operating infrastructure. The Company
has approximately 100 UNIX workstations running a variety of applications to
evenly distribute operations. Additionally, the Company utilizes several large
network file servers to support its directory and registration services. These
servers provide a mirrored file system for enhanced reliability and back-up
coverage.

On June 16, 1997, the Company opened a 31,000 square foot facility to
support its Internet business operations. This leased facility is designed to
meet current registration services customer support needs as well as to provide
expansion capability for future business. It includes: (i) a call center; (ii) a
training center equipped for both computer and telephone training, including a
simulated operations environment; and (iii) a new computer room with expanded
systems and telecommunications services. The Company believes that this new
facility with the accompanying system enhancements should provide the
environment and tools that are essential for quality customer support.

Since November 1996, the Company has been outsourcing certain back office
functions, including invoicing, check processing and credit card payment
processing. The Company is not outsourcing its core proprietary automated
registration process and associated security system. These outsourcing efforts,
in conjunction with new invoicing procedures implemented in 1997, have improved
customer service and account handling and expanded the Company's capacity to
service larger volumes of registrants.

OTHER PRODUCTS AND SERVICES DEVELOPMENT

The Company's products and services development activities in areas other
than registration services and Intranet services are focused primarily on the
development of Internet-enabling products and services, including a possible
directory service based on the RWhois protocol (an enhanced server version of
the Whois protocol) developed by the Company. The Company's current directory
service technology, which is made available free of charge, employs a look-up
method called "Whois," a widely accepted Internet protocol and the interface to
the Company's global registry database. Whois allows a user to perform simple
queries for second level domain names and to retrieve additional information
about a customer, including the customer's name, location and points of contact.
The Company's Whois server currently receives more than 15 million queries per
month. The Company intends to develop a portfolio of Internet-enabling products
and services that allows the Company to build upon its position in the
registration process and makes proper use of the customer data that it collects.

There were no research and development expenses in 1995, in large part
because any such expenditures were generally reimbursable under the NSF
contract. In 1996, research and development expenses were $680,000 or 3.6% of
net revenue. For the six months ended June 30, 1997, research and development
expenses were $718,000 or 3.8% of net revenues. The Company believes that
significant and continuing investments in products and services development will
be required to maintain its position as the leader in the domain name
registration business and to achieve its strategy of leveraging its registration
services business to offer and distribute other enabling services. The Company's
future

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financial performance will be dependent upon its ability to develop and
commercialize in a timely manner new services that can be offered in conjunction
with the Company's current domain name registration services and that meet the
changing requirements of its customers.

The successful development and commercialization of new technology,
products and services involves many risks, including the identification of new
Intranet and Internet-related product and service opportunities, the successful
completion of the development process, and the identification, retention and
hiring of appropriate research, development and technical personnel. There can
be no assurance that the Company can successfully identify new products and
service opportunities and develop and bring to market in a timely manner new
technologies, products or services, or that technologies, products or services
developed by others will not render those of the Company noncompetitive or
obsolete. Failure by the Company to develop new technologies, products or
services and bring them to market in a timely manner could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Risk Factors -- Technological Change and Additional Technology,
Products and Services."

RELATIONSHIP WITH THE NSF; RECENT DEVELOPMENTS IN THE INTERNET COMMUNITY

In 1993, the Company entered into the Cooperative Agreement with the NSF,
which had been funding the Defense Information Systems Agency, to act as the
registrar for second level domain names within the .com, .org, .net, .edu and
.gov TLDs. Under the Cooperative Agreement, the Company was given the
responsibility for ensuring the quality, timeliness and effective management of
registration services to non-military Internet users and networks. The
registration services to be provided by the Company under the Cooperative
Agreement included domain name registration, domain name server registration,
network number assignment and autonomous system number assignment and IP address
mapping and allocation worldwide. During the term of the Cooperative Agreement,
the Company is required to file periodic reports regarding its status and
proposed budget and goals. At the conclusion of the Cooperative Agreement, the
Company will be required to submit a final report describing all work performed
and problems encountered.

Originally, the Cooperative Agreement was a cost reimbursement plus
fixed-fee contract but expressly contemplated that possible future changes under
the Cooperative Agreement could include the imposition of a user-based fee
structure. In 1995, in response to the rapidly growing volume of registrations
from commercial entities (primarily in the .com TLD), the NSF and the Company
mutually agreed to move from a cost reimbursement plus fixed-fee contract to a
subscription fee based contract. Effective September 14, 1995, the NSF and the
Company amended the Cooperative Agreement to authorize the Company to begin
charging customers a subscription fee of $50 per year for each second level
domain name registered. The Company's registration services customers in the
.com, .org and .net TLDs are invoiced for a two-year subscription fee of $100
for initial registrations and $50 per year payable for renewals of initial
registrations. Under the terms of the amendment to the Cooperative Agreement,
70% of the subscription fees collected are retained by the Company and 30% are
required to be set aside to be disbursed in a manner approved by the NSF for the
enhancement of the intellectual infrastructure of the Internet.

With the commercialization of the Internet, the role, if any, that the NSF
will play in the Internet and the legal authority underlying its role are at
present unclear. Withdrawal of or challenges to the NSF's sponsorship or
authorization of the Company's activities could create a public perception or
result in a finding that the Company lacks authority to continue in its role as
registrar or to charge fees for its domain name registration services. The
impact, if any, of any such public perception or finding is unknown but could
materially and adversely affect the Company's business, financial condition and
results of operations. Further, the Cooperative Agreement by its terms expires
in March 1998, although the NSF may, at its option, extend the Cooperative
Agreement to September 1998. The terms of the Cooperative Agreement are subject
to review and adjustment by the NSF on an annual basis. In addition, the
Cooperative Agreement may be terminated by the NSF at any time at its discretion
or by mutual agreement. When the Cooperative Agreement is terminated or if there
is a change in the terms of the Cooperative Agreement or the Company's status as
the exclusive registrar for domain names in

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the .com TLD, the Company's business, financial condition and results of
operations could be materially and adversely affected. The NSF has stated that
the Cooperative Agreement will not be re-awarded to the Company or awarded to
any other entity. However, there can be no assurance that the NSF will not award
the Cooperative Agreement to another entity and, if the Cooperative Agreement is
awarded to another entity, the Company's business, financial condition and
results of operations would be materially and adversely affected.

The Cooperative Agreement does not prohibit the establishment of competing
registries. No single organization or entity (including the NSF) currently has
formal authority over all aspects of the Internet and the Internet currently
operates under a system of mutual cooperation. As a result, it is unclear which
organization or entity, if any, will govern the authorization for the
registration of domain names. Various governmental, technical and Internet
groups are currently discussing how the award and administration of future
contracts for registration services in the .com TLD, other existing TLDs and new
TLDs may take place, and are considering whether and how to enable other parties
to enter the domain name registration business. The Company is also an active
participant in this process. A consensus regarding such issues could be reached
and implemented in the near future and prior to the expiration of the
Cooperative Agreement. For example, some members of the Internet community have
discussed various concepts such as adding new TLDs, which could result in
significant competition for domain name registrations, including competition on
the price charged by the Company for domain name registrations. In February
1997, the IAHC issued its recommendation designed to increase competition in
domain name registrations in which it proposed the creation of additional
registries, additional TLDs and the possible sharing of new and existing TLDs.
In April 1997, the IAHC issued an MOU seeking support for its recommendations.
This MOU has been signed by a number of organizations in the Internet community.
In April 1997, the Company issued its own recommendations to increase
competition in domain name registration. The Company's recommendations focus on
creating additional TLDs as well as on the future administration and technical
operation of the Internet. Other groups or entities may also make other
proposals concerning these and other issues. Implementation of competing
registries, additional TLDs, the sharing of the Company's TLDs or other
recommendations or proposals of these groups could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "-- Uncertainty of Internet Governance and Regulation" and "Risk
Factors -- Uncertain Status of the Cooperative Agreement" and
"-- Recommendations and Proposals to Increase Competition in Registration
Services."

The description of the Cooperative Agreement set forth above and elsewhere
herein is intended to be a summary, and, while, material terms of the
Cooperative Agreement are set forth herein, the description is qualified by
reference to the Cooperative Agreement and the amendments thereto filed as
exhibits to the Registration Statement of which this Prospectus forms a part.

The Company has recently received authorization from the NSF to shift the
allocation and administration of IP addresses to a not-for-profit organization.
In support of this initiative, the Company has incorporated a not-for-profit
organization named the American Registry for Internet Numbers (the "ARIN") to
administer IP addresses for North and South America and parts of Africa. The
Company anticipates that the responsibility for the allocation and
administration of IP addresses will be transferred to ARIN by the fourth quarter
of 1997. The Company has agreed with the NSF to provide financial support to
ARIN through the end of the first quarter of 1998. The Company believes that the
amount of such support will not differ materially from the amount which the
Company currently pays in support of such activities.

COMPETITION

The Company currently is the exclusive registrar for second level domain
names within the .com, .org, .net, .edu and .gov TLDs. Multiple registries do
not currently register names in the same TLD, but this may change in the future.
The Company currently faces competition in the domain name registration business
from registries for country codes, third level domain name providers such as
Internet access providers and registries of TLDs other than those TLDs currently
being registered by the Company. A number of entities have already begun to
offer competing registration services using

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other TLDs. Future competition in the Company's domain name registration
business could come from many different companies, including, but not limited
to, major telecommunications firms, cable companies and Internet access
providers. Such entities have core capabilities to deliver registration
services, such as help desks, billing services and network management, along
with strong name recognition and Internet industry experience. Other companies
with some or all of these capabilities may also enter the registration business.
Also emerging is a growing contingent of domain name resellers. The Company's
position as the leading registrar of domain names could be materially and
adversely affected by the emergence of any of the foregoing competitors and
potential competitors, many of which have longer operating histories and
significantly greater name recognition and greater financial, technical,
marketing, distribution and other resources than the Company. In addition, the
Company's revenue and subscription fees could be reduced due to increasing
competition. For example, other entities may bundle domain name registrations
with other products or services, effectively providing such registration
services for free. If operational and administrative arrangements or technology
permitting multiple competitors to register domain names in the same or other
TLDs are developed or if competition occurs in the domain name registration
business, the Company's business, financial condition and results of operations
could be materially and adversely affected. See "Risk Factors -- Competition in
Domain Name Registration Business."

Companies with Internet expertise are current or potential competitors to
the Company's Intranet consulting services. Such companies include systems
integrators and consulting firms, such as Andersen Consulting, IBM Global
Services and International Network Services. The Company also competes with
certain companies that have developed products that automate the management of
IP addresses and name maps throughout enterprise-wide Intranets, and with
companies with internally-developed systems integration efforts. A number of
these competitors and potential competitors have longer operating histories and
greater name recognition and significantly greater financial, technical,
marketing, distribution and other resources than the Company. There can be no
assurance that the Company will be able to successfully compete in the Intranet
services area. Failure by the Company to successfully compete in the Intranet
services area could have a material adverse effect on the Company's business,
financial condition and results of operations.

In developing and distributing future products and services for the
Internet-enabling services markets, the Company faces intense competition and
expects to have multiple competitors for each of the products or services, if
any, which it develops or sells. Many of the Company's potential competitors
have longer operating histories, greater name recognition and significantly
greater financial, technical, marketing, distribution and other resources than
the Company. Furthermore, the industry in which the Company intends to compete
is characterized by rapid changes and frequent product and service
introductions. To the extent a competitor introduces a competitive product or
service prior to introduction of the same or similar product or service by the
Company, market acceptance of the competitor's product or service may adversely
affect the Company's competitive position. See "Risk Factors -- Competition in
Intranet Services and Internet-Enabling Businesses."

UNCERTAINTY OF INTERNET GOVERNANCE AND REGULATION

The Internet historically has been loosely administered by a number of
government agencies which were involved in the creation of its infrastructure,
initially ARPA and, more recently, the NSF. No single organization or entity
(including the NSF) currently has formal authority over all aspects of the
Internet and it currently operates under a system of mutual cooperation. Since
the original role of the Internet was to link computers at governmental and
academic institutions to facilitate communication and research, the Internet was
historically administered by entities which were involved in sponsoring research
rather than by any of the traditional federal or state regulatory agencies. With
the commercialization and internationalization of the Internet, the role of
these entities in Internet administration has become less clear and private
parties have begun to assume a larger role in the enhancement and maintenance of
the Internet's infrastructure. The NSF, for example, has completed a two-year
phased withdrawal of its funding for the Internet "backbone" and has transferred
this responsibility to a group of private telecommunications carriers which are
commercially funded. This

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lack of regulation and the legal uncertainties arising from it poses risks to
the Company and to the commercial Internet industry in general. As described
above, it is unclear which organization or entity, if any, will govern the
authorization for the registration of domain names in the future. The lack of an
appropriate organization or entity to govern the authorization for the
registration of domain names could have a material adverse effect on the
Company's business, financial condition and results of operations.

The effective operation of the Internet is dependent on the continued
mutual cooperation and consensus among an increasing number of entities, many of
which have widely divergent interests. For example, the IP addresses allocated
by ISPs to their customers are originally allocated by the IANA. Thus, the
effective operation of the Internet is dependent on such continued allocation of
IP addresses by IANA. Continuing to achieve consensus may become difficult or
impossible and may become extremely time-consuming and costly. Achieving
consensus may be made more difficult because of the lack of leadership by any
one entity. This lack of regulation also creates great uncertainty as to the
legality of any action, making business planning and operations difficult.
Conversely, the lack of regulation could theoretically result in individuals and
entities taking harmful or disruptive actions with respect to the Internet with
impunity. There is a risk that a failure to achieve consensus among the various
groups which are now informally administering the Internet could result in the
disruption of Internet operations, the inability of any user to communicate with
another user or the delay of infrastructure improvements necessary to the
maintenance and expansion of the Internet. Any disruption to the administration,
effective operation or maintenance and expansion of the Internet, in general, or
the domain name registration system in particular, would have a material adverse
effect on the Company's business, financial condition and results of operation.
See "-- Relationship with the NSF; Recent Developments in the Internet
Community" and "Risk Factors -- Uncertain Status of the Cooperative Agreement;
Recommendations and Proposals to Increase Competition in Registration Services."

The current lack of any centralized Internet management could also cause
the U.S. federal or other governments to intervene with uncertain results. The
U.S. government formed the ITF to study the issues surrounding domain name
registration and governance of the Internet. The ITF is expected to solicit
broad public input to these and other issues. This process is expected to be
completed in early 1998. On July 1, 1997, the NTIA published a request for
comments on the registration and administration of Internet domain names. This
request appeared in the form of the NOI in the U.S. Federal Register with August
18, 1997 as the closing date for receipt of comments. The NOI requested specific
input in five broad areas: general principles, general/organizational framework
issues, creation of new TLDs, policy issues for new registrars and trademark
dispute issues. The Company has submitted a response to the NOI request which
includes a recommendation, among others, that an international public advisory
group with U.S. government sponsorship be established to manage the Internet,
including the domain name system, and that the U.S. government sponsorship of
this international public advisory group continue through a transition period
until a suitable international sponsor is selected. NTIA is expected to issue a
report on the results of this NOI and to recommend a future course of action
prior to June 1998 for the role of the U.S. government in Internet domain name
registration. The ITF or NTIA processes or any other government-sponsored
process could result in policies which may not be favorable to the Company or
consistent with the Company's current or future plans. The outcome of these
activities, therefore, could have a material adverse effect on the Company's
business, financial condition and results of operations.

In the United States, apart from its obligations under the Cooperative
Agreement, the Company is not currently subject to direct regulation other than
federal and state regulation applicable to businesses generally. However,
changes in the regulatory environment could result in the Company being subject
to direct regulation by the FCC or other U.S. regulatory agencies. For example,
the Company is aware of certain industry requests to the FCC to review the
impact of Internet usage on the U.S. telecommunications service providers, in
particular, the generally lower cost structure for data transmission versus
voice. In addition, as the Internet becomes more widespread internationally,
there is an increased likelihood of international regulation. The Company cannot
predict whether or to what

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<PAGE> 56

extent any such new regulation will occur; however, such regulation could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Costs incurred or decisions rendered as a result of government actions,
including enactment of new laws or adoption of new regulations, investigations
or lawsuits relating to any of the foregoing, could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Risk Factors -- Uncertainty of Internet Governance and Regulation."

LITIGATION; ANTITRUST INVESTIGATION

As of July 31, 1997, the Company had received approximately 2,700 written
objections to the registration and use of certain domain names. Of these,
approximately 1,400 were disputes in which the Company's domain name dispute
policy was involved. As of July 31, 1997, the Company had been named as a
defendant in 36 lawsuits. As of such date, the Company has been dismissed as a
party from 25 of the 36 lawsuits and no damages have been awarded against the
Company to any plaintiff. The lawsuits have generally involved domain name
disputes between trademark owners and domain name holders. The Company's domain
name dispute policy seeks to take a neutral position regarding these competing
claims and is designed to address claims that a domain name registered by the
Company infringes a third party's federal trademark. The Company is drawn into
such disputes, in part, as a result of claims by trademark owners that the
Company is legally required, upon request by a trademark owner, to terminate the
right it granted to an alleged trademark infringer to register the domain name
in question. Further, trademark owners have also alleged that the Company should
be required to monitor future domain name registrations and reject registrations
of domain names which are identical or similar to their federally registered
trademark. The holders of the domain name registrations in dispute, have, in
turn, questioned the Company's right, absent a court order, to take any action
which suspends their registration or use of the domain names in question. Such
litigation has resulted in, and any future litigation can be expected to result
in, substantial legal and other expenses to the Company and a diversion of the
efforts of the Company's personnel.

Currently, domain name registration requests are allocated by the Company
on a first-come, first-serve basis. The Company's domain name dispute policy is
triggered when the Company is presented with a certified copy of a federal
trademark certificate, proof that the trademark owner gave prior notice to the
domain name registrant and an allegation of legal harm to the trademark owner.
This policy provides for a detailed set of procedures designed to facilitate the
resolution of such disputes between the parties. The policy also provides for
the Company to be indemnified for any damages arising in connection with any
litigation arising out of a dispute between claimants regarding the registration
of a domain name. The Company bears its own costs and expenses associated with
any litigation.

On June 27, 1997, SAIC received a CID from the DOJ issued in connection
with an investigation to determine whether there is, has been, or may be a
violation of antitrust laws under the Sherman Act relating to Internet
registration products and services. The CID seeks documents and information from
SAIC and the Company relating to their Internet registration business. Neither
SAIC nor the Company is aware of the scope or nature of the investigation. The
Company cannot reasonably estimate the potential impact of such investigation,
nor can it predict whether a civil action will ultimately be filed by the DOJ or
by private litigants as a result of the DOJ investigation or, if filed, what
such action would entail. The Company is unable to predict the form of relief
that might be sought in such an action or that might be awarded by a court or
imposed as a result of any settlement between the

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<PAGE> 57

Company and the DOJ or private litigants. Any such relief could have a material
adverse effect on the Company's business, financial condition and results of
operations.

On March 20, 1997, PG Media filed a lawsuit against the Company in the
United States District Court, Southern District of New York alleging that the
Company had restricted access to the Internet by not adding TLDs in violation of
the Sherman Act. In its complaint, PG Media has, in addition to requesting
damages, asked that the Company be ordered to amend the root zone configuration
file so that the file includes reference to PG Media's TLDs and nameservers. The
Company has answered the complaint, but no motions are pending. In addition, the
Company recently received written direction from the NSF not to take any action
to create additional TLDs or to add any new TLDs to the Internet root servers
until further guidance is provided by the NSF. The Company believes that it has
meritorious defenses and intends to vigorously defend itself against the claims
made by PG Media. While the Company cannot reasonably estimate the potential
impact of such claims, a successful claim under the plaintiff's theory could
have a material adverse effect on the Company's business, financial condition
and results of operations.

There can be no assurance that the Company will not be involved in
additional litigation, investigations or other proceedings in the future,
including proceedings challenging the Company's authority to continue in its
role as a registrar or to charge fees for its domain name registration services.
Any such proceedings, with or without merit, could be costly and time-consuming
to defend, could divert management's attention and resources and could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors -- Litigation; Antitrust
Investigation."

INTELLECTUAL PROPERTY RIGHTS

The Company's principal intellectual property consists of, and its success
is dependent upon, the Company's proprietary software utilized in its
registration services business and certain methodologies and technical expertise
it utilizes in both the design and planned implementation of its current and
future registration service and proposed Internet-enabling services businesses.
Some of the software and protocols used by the Company in its registration
service and, proposed Internet-enabling businesses are in the public domain or
are otherwise available to the Company's competitors. In addition, in-depth
technical knowledge and unique processes are critical to the Company's Intranet
services business, in which a full range of consulting and systems integration
services are offered in order to transition organizations from private, legacy
networks to more scalable and efficient Intranets. The Company has no patents or
registered copyrights but has several trademarks and service marks, including
the Company's logo.

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infringement of third party intellectual property rights. Any such claims could
require the Company to spend significant sums in litigation, pay damages and
develop non-infringing intellectual property or acquire licenses to the
intellectual property which is the subject of asserted infringement. Failure by
the Company to adequately protect its proprietary rights, or litigation relating
to intellectual property rights, could have a material adverse effect on the
Company's business, financial condition and results of operations. See "Risk
Factors -- Intellectual Property Rights."

EMPLOYEES

As of June 30, 1997, the Company had approximately 220 full-time employees.
None of the Company's employees are covered by collective bargaining agreements.
The Company believes that its relations with its employees are good.

FACILITIES

The Company's principal executive office is located in Herndon, Virginia,
in a 45,000 square foot facility subleased from SAIC under a sublease expiring
in November 2002. The Company also leases an additional 31,000 square feet in a
facility in Herndon, Virginia under a lease expiring in July 2002 and subleases
a 10,000 square foot facility, also in Herndon, from SAIC under a sublease
expiring in October 1999. Additionally, the Company subleases approximately
10,000 square feet in a facility in Charlotte, North Carolina, with portions of
the sublease expiring in August 1998 and July 2002. The Company believes that
its current facilities will be adequate for the next 12 months and that any
additional facilities will be available in the future as needed on commercially
reasonable terms.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Executive officers and directors of the Company and their ages as of July
31, 1997 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -------------------------------------------------
<S> <C> <C>
Gabriel A. Battista.................. 52 Chief Executive Officer and Director
Michael A. Daniels(1)................ 51 Chairman of the Board
Donald N. Telage..................... 52 Senior Vice President, Internet Relations and
Special Programs and Director
Robert J. Korzeniewski............... 40 Chief Financial Officer
Raymond S. Corson.................... 51 Senior Vice President, Business Development
David H. Holtzman.................... 40 Senior Vice President, Engineering
A. Scott Williamson.................. 39 Vice President, Engineering
Michael G. Voslow.................... 37 Treasurer
Russell L. Helbert................... 40 Controller
J. Robert Beyster(1)................. 72 Director
Craig I. Fields(2)................... 51 Director
John E. Glancy(2).................... 51 Director
William A. Roper, Jr.(2)............. 51 Director
Stratton D. Sclavos(1)............... 35 Director
</TABLE>

- ------------------------------

(1) Member of Compensation Committee.

(2) Member of Audit Committee.

Gabriel A. Battista has served as Chief Executive Officer of the Company
since October 1996 and as a director of the Company since November 1996. From
September 1995 to October 1996, Mr. Battista served as President and Chief
Executive Officer of Cable & Wireless, Inc., a telecommunications company and
U.S. subsidiary of Cable & Wireless, P.L.C. From 1991 to 1995, Mr. Battista
served as President and Chief Operating Officer of Cable & Wireless, Inc. and
from 1987 to 1991, he served as the Chief Operating Officer of National
Telephone Services, a long distance operator service company. Mr. Battista also
serves as a director of Axent Technologies, Inc. and Systems & Computer
Technology Corporation. Mr. Battista received a BSEE from Villanova University,
an MSEE from Drexel University and an MBA from Temple University.

Michael A. Daniels has served as Chairman of the Board of the Company since
May 1995. Since 1986, Mr. Daniels has served in various positions with SAIC and
has served as a Sector Vice President and Sector Manager for the Technology
Applications Sector of SAIC since 1993. Prior thereto, Mr. Daniels served as a
Group Senior Vice President of SAIC from 1991 to 1993. Mr. Daniels received a
B.S. and an M.A. from Northwestern University and received a J.D. from the
University of Missouri School of Law.

Donald N. Telage has served as Senior Vice President of Internet Relations
and Special Programs since February 1997 and as a director since May 1995. Dr.
Telage also served as President and Chief Operating Officer of the Company from
May 1995 to February 1997. Since 1986, Dr. Telage has served in various
positions with SAIC and has served as a Group Senior Vice President of SAIC
since 1993. Prior thereto, Dr. Telage served as a Corporate Vice President of
SAIC from 1992 to 1993. Based on Dr. Telage's seniority, it was deemed
appropriate for Dr. Telage to retain his titles with both SAIC and the Company.
It is currently contemplated, however, that Dr. Telage will be devoting
substantially all of his working time to the affairs of the Company. Dr. Telage
received his B.A. in Psychology from the University of Connecticut and received
an M.A. and a Ph.D. in Mathematics from Clark University.

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Robert J. Korzeniewski has served as Chief Financial Officer of the Company
since March 1996. Since 1987, Mr. Korzeniewski has held a variety of senior
financial positions with SAIC and has served as a Corporate Vice President for
Administration of SAIC since 1989. Prior to SAIC, Mr. Korzeniewski was the
Corporate Controller of Halifax Corporation, a publicly traded technology
services company. Mr. Korzeniewski is a Certified Public Accountant and received
a B.S. in Business Administration from Salem State College.

Raymond S. Corson has served as Senior Vice President, Business
Development, of the Company since July 1996. Mr. Corson has also served as a
Vice President of SAIC since 1995. Since 1987, Mr. Corson served in various
positions with the Company, including serving as Vice President of Marketing
from March 1995 to July 1996, Vice President of Operations from January 1994 to
March 1995 and Vice President of Network Support Services from July 1989 to
January 1994. Prior to joining the Company, Mr. Corson served as Department
Manager of Command, Control, and Intelligence in Unisys' Defense Systems. Mr.
Corson attended Virginia Polytechnic Institute and State University from 1963
through 1966, majoring in Economics.

David H. Holtzman has served as Senior Vice President for Product
Development and Technology of the Company since February 1997. From September
1995 until January 1997, he served as Chief Scientist, IBM Internet Information
Technology (InfoMarket) group. Prior to this, he served as a Senior Associate at
Booz-Allen & Hamilton. Mr. Holtzman has a B.A. in Philosophy from the University
of Pittsburgh and a B.S. in Computer Science from the University of Maryland.

A. Scott Williamson rejoined the Company as Vice President, Directory
Services, in March 1996 and has served as Vice President, Engineering, of the
Company since November 1996. Mr. Williamson has also served as a Vice President
of SAIC since 1996. Prior to rejoining the Company, Mr. Williamson served as
Thomson Technology Internet Lab's Principal Researcher for the Thomson
Corporation, a publishing company, from January 1995 to March 1996. Mr.
Williamson originally joined the Company in 1985 and served in a variety of
positions, including serving as a program manager from January 1992 to December
1994. Mr. Williamson received an A.A. from Northern Virginia Community College.

Michael G. Voslow has served as Treasurer of the Company since January
1997. From January 1995 to January 1997, Mr. Voslow was Vice President and
Corporate Controller for MAXM Systems Corporation ("MAXM"), a worldwide provider
of computer software and professional services. Prior to joining MAXM, Mr.
Voslow was a Senior Manager at Price Waterhouse where he served from August 1983
to January 1995. Mr. Voslow is a Certified Public Accountant and received a B.S.
in Business Administration from Miami University (Ohio) and an M.B.A. in Finance
from Duke University.

Russell L. Helbert has served as Controller of the Company since December
1990 and as Manager of Finance for the Company since August 1985. Mr. Helbert
has also served as an Assistant Vice President for Administration of SAIC since
1995. Prior to joining the Company, Mr. Helbert was a Division Controller with
Browning-Ferris, Industries, a waste management services company. Mr. Helbert
received his B.A. in Business Administration from the University of Buffalo.

J. Robert Beyster has served as a director of the Company since November
1996. Dr. Beyster is the Chief Executive Officer and Chairman of the Board of
SAIC, a company he founded in 1969. Dr. Beyster is a Fellow of the American
Nuclear Society and a Fellow of the American Physical Society. Dr. Beyster is
also the founder, President and a member of the Board of Trustees of the
Foundation for Enterprise Development, a non-profit organization that promotes
employee ownership. Dr. Beyster received his B.S.E. in Engineering and Physics
and an M.S. and Ph.D. in Nuclear Physics from the University of Michigan.

Craig I. Fields has served as a director of the Company since January 1997.
Dr. Fields has served as a consultant to SAIC since 1994. Prior thereto, Dr.
Fields served as Vice Chairman of Alliance Gaming Corporation, a diversified
entertainment company, from 1994 to 1997. From 1990 until 1994, Dr. Fields
served as Chairman and Chief Executive Officer of the Microelectronics and
Computer Technology Corporation, a research and development consortium. In
addition, Dr. Fields serves as a director of

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ENSCO International Incorporated, Projectavision, Inc., Perot Systems
Corporation, Muzak Incorporated, Intertech and Firearms Training Systems, Inc.
Dr. Fields received a B.S. from the Massachusetts Institute of Technology and a
Ph.D. from the Rockefeller University.

John E. Glancy has served as a director of the Company since July 1996. Dr.
Glancy has held a number of senior positions with SAIC since February 1980. Dr.
Glancy has served as a Corporate Executive Vice President of SAIC since January
1994 and as a director of SAIC since July 1994. From April 1991 until January
1994, Dr. Glancy served as a Sector Vice President of SAIC. Dr. Glancy received
a B.S. in Physics from the University of Pittsburgh, an M.S. degree in Nuclear
Engineering from Cornell University and a Ph.D. in Applied Physics from Cornell
University.

William A. Roper, Jr. has served as a director of the Company since July
1996. Since April 1990, Mr. Roper has served as Senior Vice President and Chief
Financial Officer of SAIC. Mr. Roper received a B.A. in Mathematics from the
University of Mississippi.

Stratton D. Sclavos has served as a director of the Company since January
1997. Mr. Sclavos has served as the President and Chief Executive Officer of
VeriSign, Inc. since July 1995. From 1994 until July 1995, Mr. Sclavos served as
Vice President of Worldwide Marketing and Sales for Taligent, Inc., a joint
venture of Apple Computer, Inc., IBM Corporation and The Hewlett-Packard
Company, Inc. From 1992 until 1993, Mr. Sclavos served as Vice President of
Worldwide Sales and Business Development for GO Corporation, a mobile computing
company. From 1988 until 1993, Mr. Sclavos served in various executive positions
with MIPS Computers Systems. Mr. Sclavos received a B.S. in Electrical and
Computer Engineering from the University of California, Davis.

The Company currently has authorized eight (8) directors. All directors are
elected to hold office until the next annual meeting of stockholders of the
Company and until their successors have been elected. Officers are elected at
the first board of directors meeting following the stockholders' meeting at
which the directors are elected and serve at the discretion of the Board of
Directors. There are no family relationships among any of the directors or
executive officers of the Company.

COMPENSATION OF DIRECTORS

The Company's non-employee directors ("Outside Directors") currently
receive no cash fees or annual retainer payments as part of their compensation.
All directors are reimbursed for expenses incurred in connection with attending
Board and committee meetings. The Company's 1996 Stock Incentive Plan provides
that the Board of Directors may determine to allow an Outside Director to elect
to receive his or her annual retainer payments, if any, and meeting fees from
the Company in the form of cash, NSOs, Stock Units or a combination thereof. The
number of NSOs to be granted to Outside Directors in lieu of annual retainers
and meeting fees that would otherwise be paid in cash will be calculated in a
manner determined by the Board of Directors. The number of Stock Units to be
granted to Outside Directors will be calculated by dividing the amount of the
annual retainer or the meeting fee that would otherwise be paid in cash by the
arithmetic mean of the fair market values of one share of Common Stock on the 10
consecutive trading days ending with the date such retainer or fee is payable.
In January 1997, Craig I. Fields and Stratton D. Sclavos each received NSOs to
purchase 30,750 shares of the Company's Class A Common Stock with exercise
prices of $14.00 per share (which was equal to 100% of the fair market value as
determined in the good faith judgment of the Board of Directors on the date of
grant). All such stock options vest as to 30%, 30%, 20% and 20% on the first,
second, third and fourth year anniversaries of the date of grant, respectively.

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EXECUTIVE COMPENSATION

The following table summarizes all compensation earned by or paid to the
Company's current and former Chief Executive Officer and to each of the
Company's four most highly compensated executive officers other than the Chief
Executive Officer whose total annual salary and bonus exceeded $100,000 for
services rendered in all capacities to the Company and SAIC during the fiscal
year ended December 31, 1996 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITY
---------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) AWARDS ($)(1) OPTIONS (#)(2) COMPENSATION ($)
- ------------------------------ ---------- --------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Gabriel A. Battista(3)........ 60,577 37,500 -- 461,250 --
Chief Executive Officer
Donald N. Telage.............. 165,719 35,010(4) 29,984(5) 153,750 13,209(6)
Senior Vice President,
Internet Relations and Special
Programs
Robert J. Korzeniewski........ 120,731 20,011 19,989(7) 115,300 9,954(6)
Chief Financial Officer
Raymond S. Corson............. 118,519 7,524 7,476(8) 30,750 9,815(6)
Senior Vice President,
Business Development
Emmit J. McHenry(9)........... 17,523 -- -- -- 875,011(10)
</TABLE>

- ------------------------------

(1) Represents restricted shares of SAIC Class A Common Stock. The amount
reported represents the market value on the date of grant (calculated by
multiplying the Formula Price of SAIC's Class A Common Stock on the date of
grant by the number of shares awarded), without giving effect to the
diminution in value attributable to the restriction on such stock. As of
December 31, 1996, the aggregate restricted stock holding of SAIC Class A
Common Stock for the Named Executive Officers were as follows: Gabriel A.
Battista -- none; Donald N. Telage -- 1,930 shares, with a market value as
of such date of $44,062; Robert J. Korzeniewski -- 261 shares, with a
market value as of such date of $5,959; Raymond S. Corson -- 220 shares,
with a market value as of such date of $5,023; Emmit J. McHenry -- none;
and all other employees -- 571,260 shares, with a market value as of such
date of $13,041,866. Dividends are payable on such restricted stock if and
when declared. However, SAIC has never declared or paid a cash dividend on
its capital stock and no cash dividends on its capital stock are
contemplated in the foreseeable future.

(2) Represents options to acquire shares of the Company's Class A Common Stock.

(3) Gabriel A. Battista joined the Company in October 1996. Mr. Battista's
annual salary for 1996 would have been $350,000.

(4) Includes the award of 193 shares of SAIC Class A Common Stock which had a
market value on the date of grant (calculated by multiplying the Formula
Price of the SAIC Class A Common Stock on the date of grant by the number
of shares awarded) of $5,010.

(5) Represents 1,155 shares of SAIC Class A Common Stock which vest as to 20%,
20%, 20% and 40% on the first, second, third and fourth year anniversaries
of the date of grant, respectively.

(6) Represents amounts contributed by SAIC for the Named Executive Officers
under SAIC's Cash or Deferred Arrangement, SAIC's Profit Sharing Plan and
SAIC's Employee Stock Ownership Plan.

(7) Represents 770 shares of SAIC Class A Common Stock which vest as to 20%,
20%, 20% and 40% on the first, second, third and fourth year anniversaries
of the date of grant, respectively.

(8) Represents 288 shares of SAIC Class A Common Stock which vest as to 20%,
20%, 20% and 40% on the first, second, third and fourth year anniversaries
of the date of grant, respectively.

(9) Emmit J. McHenry served as Chief Executive Officer of the Company until
January 1996.

(10) Represents amounts paid to Emmit J. McHenry in connection with the
settlement of an earnout, covenant not to compete and other agreements.

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<PAGE> 63

STOCK OPTION GRANTS

The following table summarizes options to acquire shares of the Company's
Class A Common Stock granted during the Company's fiscal year ended December 31,
1996 to the Company's Named Executive Officers. The amounts shown as potential
realizable values on the options identified in the table are based on assumed
annualized rates of appreciation in the price of the Company's Class A Common
Stock of five percent and ten percent over the term of the options, as set forth
in the rules of the Securities and Exchange Commission. Actual gains, if any, on
stock option exercises are dependent upon the future performance of the
Company's Class A Common Stock. There can be no assurance that the potential
realizable values reflected in this table will be achieved. No stock
appreciation rights were granted during the Company's 1996 fiscal year.

NSI OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENTAGE OF ANNUAL RATES OF STOCK
UNDERLYING TOTAL OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM($)(5)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME (#)(1) 1996(2) ($/SHARE)(3) DATE(4) 5% 10%
- ------------------------- ---------- ------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gabriel A. Battista...... 461,250 37.6 11.25 10/14/01 1,433,642 3,167,975
Chief Executive Officer
Donald N. Telage......... 153,750 12.6 14.00 11/24/01 594,696 1,314,123
Senior Vice President,
Internet Relations and
Special Programs
Robert J. Korzeniewski... 115,300 9.4 14.00 11/24/01 445,974 985,485
Chief Financial Officer
Raymond S. Corson........ 30,750 2.5 14.00 11/24/01 118,939 262,825
Senior Vice President,
Business Development
Emmit J. McHenry(6)...... -- -- -- -- -- --
</TABLE>

- ------------------------------

(1) The stock options vest as to 30%, 30%, 20% and 20% on the first, second,
third and fourth year anniversaries of the date of grant, respectively.
Under the terms of the Company's 1996 Stock Incentive Plan (the "Stock
Plan"), the committee designated by the Board of Directors to administer the
Stock Plan retains the discretion, subject to certain limitations within the
Stock Plan, to modify, extend or renew outstanding options and to reprice
outstanding options. Options may be repriced by canceling outstanding
options and reissuing new options with an exercise price equal to the fair
market value on the date of reissue, which may be lower than the original
exercise price of such canceled options.

(2) Based on options to purchase an aggregate of 1,225,725 shares of Class A
Common Stock granted to NSI employees in 1996, including the Named Executive
Officers.

(3) The exercise price on the date of grant was equal to 100% of the fair market
value on the date of grant as determined in the good faith judgment of the
Board of Directors. The exercise price may be paid in cash, check, by
delivery of already-owned shares of the Company's Class A Common Stock
subject to certain conditions, or pursuant to a cashless exercise procedure
under which the optionee provides irrevocable instructions to a brokerage
firm to sell the purchased shares and to remit to the Company, out of the
sale proceeds, an amount equal to the aggregate exercise price plus all
applicable withholding taxes.

(4) The options have a term of 5 years, subject to earlier termination in
certain events related to termination of employment.

(5) Based on a base price per share equal to the exercise price. The exercise
price was equal to 100% of the fair market value on the date of grant as
determined in the good faith judgment of the Board of Directors. The 5% and
10% assumed rates of appreciation are mandated by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Class A Common Stock price. There can
be no assurance that any of the values reflected in the table will be
achieved.

(6) Emmit J. McHenry served as Chief Executive Officer of the Company until
January 1996.

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<PAGE> 64

The following table summarizes options to acquire shares of SAIC Class A
Common Stock granted during the Company's fiscal year ended December 31, 1996 to
the Company's Named Executive Officers. The amounts shown as potential
realizable values on the options identified in the table are based on assumed
annualized rates of appreciation in the price of SAIC Class A Common Stock of
five percent and ten percent over the term of the options, as set forth in the
rules of the Securities and Exchange Commission. Actual gains, if any, on stock
option exercises are dependent upon the future performance of SAIC Class A
Common Stock. There can be no assurance that the potential realizable values
reflected in this table will be achieved. No SAIC stock appreciation rights were
granted during the Company's 1996 fiscal year.

SAIC OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF PERCENTAGE OF PRICE APPRECIATION
SECURITIES TOTAL OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM($)(5)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED (#)(1) FISCAL YEAR(2) ($/SHARE)(3) DATE(4) 5% 10%
- ----------------------- -------------- -------------- ------------ ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Gabriel A. Battista.... -- -- -- -- -- --
Chief Executive Officer
Donald N. Telage....... 7,000 * 19.33 3/28/01 37,384 82,608
Senior Vice President,
Internet Relations and
Special Programs
Robert J.
Korzeniewski........... 5,100 * 19.33 3/28/01 27,237 60,186
Chief Financial Officer
Raymond S. Corson...... 810 * 19.33 2/08/01 4,326 9,559
Senior Vice President, 1,000 * 19.33 3/28/01 5,341 11,801
Business Development
Emmit J. McHenry(6).... -- -- -- -- -- --
</TABLE>

- ------------------------------
* Less than 1% of the total options granted to employees in 1996.

(1) Although the following grants of options were made during 1996, such grants
relate to the individual's service during 1995. These non-qualified stock
options vest as to 20%, 20%, 20% and 40% on the first, second, third and
fourth year anniversaries of the date of grant, respectively. Under the
terms of SAIC's 1995 Stock Option Plan (the "Stock Plan"), the committee
designated by the Board of Directors to administer the Stock Plan retains
the discretion, subject to certain limitations within the Stock Plan, to
modify, extend or renew outstanding options and to reprice outstanding
options. Options may be repriced by canceling outstanding options and
reissuing new options with an exercise price equal to the fair market value
on the date of reissue, which may be lower than the original exercise price
of such canceled options.

(2) Based on options to purchase an aggregate of 3,581,132 shares granted to
employees, consultants and directors of SAIC and its subsidiaries in 1996,
including the Company's Named Executive Officers.

(3) The exercise price on the date of grant was equal to the Formula Price of
the SAIC Class A Common Stock on the date of grant.

(4) The options have a term of 5 years, subject to earlier termination in
certain events related to termination of employment.

(5) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future price of the SAIC Class A Common Stock.
There can be no assurance that any of the values reflected in the table will
be achieved.

(6) Emmit J. McHenry served as Chief Executive Officer of the Company until
January 1996.

62
<PAGE> 65

The following table summarizes the value realized on the exercise of
options to acquire SAIC Class A Common Stock during the fiscal year ended
December 31, 1996. No options to acquire shares of the Company's Common Stock
were exercised during the Company's 1996 fiscal year. The following table also
presents the number and value of unexercised options to acquire SAIC Class A
Common Stock and unexercised options to acquire the Company's Common Stock as of
December 31, 1996 for the Company's Named Executive Officers.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 (#) DECEMBER 31, 1996 ($)
SHARES ACQUIRED VALUE --------------------------- -------------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- --------------- ------------- ----------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Gabriel A. Battista --(N) --(N) --(N) 461,250(N) --(N) 1,268,438(N)(2)
Chief Executive --( S ) --( S ) --( S ) --( S ) --( S ) --( S )
Officer
Donald N. Telage --(N) --(N) --(N) 153,750(N) --(N) --(N)(2)
Senior Vice President, 6,100( S ) 60,771( S )(1) 4,580( S ) 14,970( S ) 40,887( S )(3) 89,138( S )(3)
Internet Relations and
Special Programs
Robert J. Korzeniewski --(N) --(N) --(N) 115,300(N) --(N) --(N)(2)
Chief Financial --( S ) --( S ) 9,000( S ) 14,100( S ) 91,310( S )(3) 90,530( S )(3)
Officer
Raymond S. Corson --(N) --(N) --(N) 30,750(N) --(N) --(N)(2)
Senior Vice President, --( S ) --( S ) 200( S ) 2,610( S ) 1,284( S )(3) 11,471( S )(3)
Business Development
Emmit J. McHenry(4) --(N) --(N) --(N) --(N) --(N) --(N)(2)
--( S ) ( S ) 2,000( S ) 8,000( S ) 12,840( S )(3) 51,360( S )(3)
</TABLE>

- ------------------------------
(N) Options to acquire the Company's Class A Common Stock.

(S) Options to acquire SAIC's Class A Common Stock.

(1) Calculated by multiplying the difference between the Formula Price of
SAIC's Class A Common Stock underlying the option as of the date of
exercise and the exercise price of the option by the number of shares of
SAIC's Class A Common Stock acquired on exercise of the option.

(2) Based on the fair market value of the Company's Class A Common Stock as of
such date less the exercise price of such options.

(3) Based on the Formula Price of SAIC's Class A Common Stock as of such date
less the exercise price of such options.

(4) Emmit J. McHenry served as Chief Executive Officer of the Company until
January 1996.

1996 STOCK INCENTIVE PLAN

The 1996 Stock Incentive Plan (the "Incentive Plan") of the Company was
adopted by the Board of Directors and approved by the Company's stockholder on
September 18, 1996. The Incentive Plan provides for awards in the form of
restricted shares, stock units, options (including incentive stock options
("ISOs") and nonstatutory stock options ("NSOs")) or stock appreciation rights
("SARs"). Employees, Outside Directors, consultants and advisors of the Company
are eligible for the grant of restricted shares, stock units, SARs and NSOs.
Only employees are eligible for the grant of ISOs. The Outside Directors may
elect to receive any director fees in NSOs, stock units or a combination
thereof. As of June 30, 1997, a total of 2,556,250 shares of Common Stock has
been reserved for issuance under the Incentive Plan. The Incentive Plan will be
amended to reflect two classes of Common Stock.

The Incentive Plan will be administered by a Compensation Committee and a
Non-Insider Option Committee. The Compensation Committee will consist of at
least two directors who are "non-employee directors," as defined in Rule 16b-3.
The Board of Directors may amend the Incentive Plan as desired without further
action by the Company's stockholders except as required by applicable law. The
Incentive Plan will continue in effect until terminated by the Board or, with
respect to ISOs, for a term of 10 years from its original adoption date,
whichever is earlier.

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<PAGE> 66

The consideration for each award under the Incentive Plan will be
established by the Compensation Committee, but in no event will the option price
for ISOs be less than 100% of the fair market value of the stock on the date of
grant. Awards will have such terms and be exercisable in such manner and at such
times as the Compensation Committee may determine. However, each ISO must expire
within a period of not more than ten (10) years from the date of grant.

The Incentive Plan provides that, in the event of a merger or
reorganization of the Company, outstanding options, SARs, restricted shares and
stock units shall be subject to the terms of the agreement of merger or
reorganization.

As of July 31, 1997, a total of 100,900 ISOs and 1,438,825 NSOs have been
granted under the Incentive Plan. Such options have exercise prices ranging from
$11.25 to $14.00 per share and a weighted average per share exercise price of
$13.18 and were held by 72 persons. None of such options has been exercised.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

The Company does not currently have any employment contracts in effect with
any of the Named Executive Officers other than Gabriel A. Battista, the
Company's Chief Executive Officer.

The Company and Mr. Battista are parties to a letter agreement dated
September 24, 1996 governing his employment with the Company. The agreement sets
forth Mr. Battista's compensation level and eligibility for bonuses, benefits
and option grants under the 1996 Stock Incentive Plan. Pursuant to the
agreement, if Mr. Battista's employment is terminated for other than cause or
non-performance, Mr. Battista will be eligible to receive, if terminated during
his first year of employment, his first year base salary and an additional
$150,000 in bonus, and, if terminated during his second year of employment, his
first year base salary and an amount equal to the bonus awarded to him for his
first year of employment. If Mr. Battista resigns during this initial two-year
period, he will not receive any separation compensation. Mr. Battista's
employment under the letter agreement is voluntary and may be terminated by the
Company or Mr. Battista at any time with or without cause or notice.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Certificate of Incorporation that
limit the liability of its directors for monetary damages for breach of their
fiduciary duty as directors, except for liability that cannot be eliminated
under the Delaware General Corporation Law (the "Delaware Law"). The Delaware
Law provides that directors of a company will not be personally liable for
monetary damages for breach of their fiduciary duty as directors, except for
liability (i) for any breach of their duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful payment
of dividend or unlawful stock repurchase or redemption, as provided in section
174 of the Delaware Law, or (iv) for any transaction from which the director
derived an improper personal benefit. Any amendment or repeal of these
provisions requires the approval of the holders of shares representing at least
66-2/3% of the shares of the Company entitled to vote in the election of
directors, voting as one class. The effect of these provisions will be to
eliminate the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages against a
director for breach of fiduciary duty as a director (including breaches
resulting from grossly negligent behavior), except in the situations described
above.

The Company's Certificate of Incorporation and Bylaws also provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by the Delaware Law. The Company intends to enter into separate
indemnification agreements with its directors that could require the Company,
among other things, to indemnify them against certain liabilities that may arise
by reason of their status or service as directors and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified. The Company believes that the limitation of liability provision in
its Certificate of Incorporation and the indemnification agreements will
facilitate

64
<PAGE> 67

the Company's ability to continue to attract and retain qualified individuals to
serve as directors and officers of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER INFORMATION

Compensation information with respect to the Named Executive Officers for
1996 reflects compensation earned while the Company was a wholly-owned
subsidiary of SAIC. During 1996, the Company had no Compensation Committee.
Executive compensation levels during 1996 were established by SAIC. The Company
has established a Compensation Committee for fiscal 1997, the members of which
are Michael A. Daniels, J. Robert Beyster and Stratton D. Sclavos. Dr. Beyster
and Mr. Sclavos are independent directors of the Company. See
"Management -- Executive Officers and Directors."

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<PAGE> 68

RELATIONSHIP WITH SAIC AND CERTAIN TRANSACTIONS

The Company was acquired by SAIC, an employee-owned, diversified
professional and technical services company, on March 10, 1995. The Company is
currently a wholly-owned subsidiary of SAIC. Upon completion of the offering,
SAIC will own 100% of the Company's outstanding Class B Common Stock (12,500,000
shares), which will represent approximately 84.5% of the outstanding Common
Stock of the Company (approximately 82.5% if the Underwriters' over-allotment
option is exercised in full) and approximately 98.2% of the combined voting
power of the Company's outstanding Common Stock (approximately 97.9% if the
Underwriters' over-allotment option is exercised in full) and thus will continue
to have the ability to elect all of the directors of the Company and otherwise
exercise a controlling influence over the business and affairs of the Company.

Prior to the acquisition of the Company by SAIC, the Company's business
included commercial and government contracts awarded to the Company on a
competitive basis, including government contracts that were awarded to the
Company based partially upon the Company's then minority-owned status. The
contracts which had been awarded to the Company based partially upon the
Company's then minority-owned status were transferred into a separately-owned
entity prior to the acquisition of the Company by SAIC. In November 1995, SAIC
adopted a plan to transfer the Company's remaining government-based business to
SAIC in order to enable the Company to focus on the growth of its commercial
business, which includes registration services and Intranet services. Such
transfer was effective as of February 1996. In connection with such transfer,
the Company assigned to SAIC all of its rights and title to certain contracts,
accounts and assets, all of which were part of the Company's remaining
government-based business. In addition, the Company assigned to SAIC certain
liabilities associated with such government-based business. No gain or loss was
incurred as a consequence of the transfer of this business. SAIC agreed to
indemnify the Company and any director, officer, employee, agent or
representative of the Company from any loss or liability associated with such
government-based business or the transferred assets. Finally, SAIC agreed to
indemnify the same entities against any loss or liability associated with
certain other government contracts whose award was based partially upon the
Company's then minority-owned status which had been transferred to a
separately-owned entity prior to the acquisition of the Company by SAIC. The
operating results of both the minority-based government contracts business, and
the remaining government-based business are reflected as discontinued operations
in the Company's financial statements for all periods presented.

For as long as SAIC continues to own shares of Common Stock representing
more than 50% of the voting power of the Common Stock of the Company, SAIC will
be able, among other things, to determine the outcome of any corporate action
requiring approval of holders of Common Stock representing a majority of the
voting power of the Common Stock, including the election of the entire Board of
Directors of the Company, without the consent of the other stockholders of the
Company. In addition, through its control of the Board of Directors and
ownership of Common Stock, SAIC will be able to control certain decisions,
including decisions with respect to the Company's dividend policy, the Company's
access to capital (including borrowing from third party lenders and the issuance
of additional equity securities), mergers or other business combinations
involving the Company, the acquisition or disposition of assets by the Company
and any change in control of the Company.

SAIC has advised the Company that its current intent is to continue to hold
all of its outstanding shares of Class B Common Stock. Further, pursuant to the
Underwriting Agreement, SAIC has agreed, subject to certain exceptions, not to
sell or otherwise dispose of any shares of Common Stock (or any security
convertible into or exchangeable or exercisable for Common Stock) owned by it
for a period of 180 days following the date of this Prospectus without the prior
written consent of Hambrecht & Quist LLC. However, after such 180 day period,
there can be no assurance concerning the period of time during which time SAIC
will maintain its ownership of Class B Common Stock. Beneficial ownership of at
least 80% of the total voting power and value of the outstanding Common Stock is
required in order for SAIC to continue to include the Company in its
consolidated group for federal income tax purposes, and ownership of at least
80% of the total voting power and 80% of each class of

66
<PAGE> 69

nonvoting capital stock is required in order for SAIC to be able to effect a
tax-free spin-off of the Company under the Code. See "Description of Capital
Stock -- Common Stock -- Conversion Rights."

The Company's Certificate of Incorporation contains provisions relating to
competition by SAIC with the Company, potential conflicts of interest that may
arise between the Company and SAIC, the allocation of business opportunities
that may be suitable for either SAIC or the Company and the approval of
transactions between the Company and SAIC. The Company's Certificate of
Incorporation also limits the liability of its directors for monetary damages
arising from a breach of their fiduciary duty as directors, except to the extent
otherwise required by the Delaware General Corporations Law. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission.

The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including in
circumstances in which indemnification is otherwise discretionary under Delaware
law. The Company has also entered into indemnification agreements with its
officers and directors containing provisions that may require the Company, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors' and
officers' insurance if available on reasonable terms.

The Company's relationship with SAIC will also be governed by the following
agreements to be entered into prior to completion of the offering: the Corporate
Services Agreement, a noncompetition agreement, a registration rights agreement
and the Tax Sharing Agreement, the material terms of which are summarized below.
Because the Company is a wholly-owned subsidiary of SAIC, none of these
arrangements will result from arm's length negotiations and, therefore, the
prices charged to the Company for services provided thereunder may be higher or
lower than prices that may be charged by third parties.

The descriptions of agreements set forth below are intended to be summaries
and, while material terms of the agreements are set forth herein, the
descriptions are qualified by reference to the relevant agreements filed as
exhibits to the Registration Statement of which this Prospectus forms a part.

The Company believes that the transactions contemplated by the following
agreements are in its best interests. It is the Company's current policy that
all transactions by the Company with its officers, directors, five percent
stockholders and their affiliates will be entered into (or amended) only if such
transactions are approved by a majority of the disinterested independent
directors, are on terms no less favorable to the Company than could be obtained
from unaffiliated parties and are reasonably expected to benefit the Company.

CORPORATE SERVICES AGREEMENT

67
<PAGE> 70

such allocations were generally based on the proportionate labor costs of the
Company to the rest of SAIC and were included in selling, general and
administrative expenses and cost of revenue, respectively. Effective August 10,
1996, SAIC stopped allocating costs based upon pro rata labor and began
assessing the Company for corporate services provided by SAIC at a fee equal to
2.5% of net revenue with such percentage to be re-evaluated by both parties on
an annual basis. This fee is included in its entirety in selling, general and
administrative expenses. The Company believes that the charges under the
Corporate Services Agreement are reasonable. The initial term of this agreement
will be one year. Thereafter, the Corporate Services Agreement will be
automatically renewed for successive one-year terms until terminated. After
SAIC's ownership of the Company's Common Stock drops below 50% of the Company's
issued and outstanding Common Stock, the agreement may be terminated by either
party upon 180 days' prior written notice. Certain individual services are also
terminable by either party upon 180 days' prior written notice, regardless of
SAIC's stockholdings.

NONCOMPETITION AGREEMENT

Prior to the completion of the offering, the Company and SAIC will enter
into a noncompetition agreement (the "Noncompetition Agreement") pursuant to
which SAIC agrees that it will not compete with the Company in the domain name
registration business within the .com, .org, .net, .edu and .gov TLDs for a
period of five years. The Noncompetition Agreement does not restrict SAIC from
competing with the Company in the domain name registration business in other
TLDs or other lines of business. The initial term of this agreement will be five
years but either party will have the right to terminate the agreement if SAIC
ceases to beneficially own 20% of the Company's Common Stock.

REGISTRATION RIGHTS AGREEMENT

Prior to the completion of the offering, the Company and SAIC will execute
the Registration Rights Agreement pursuant to which SAIC may, on not more than
two occasions, demand registration under the Securities Act of some or all of
the shares of Class A Common Stock to be owned by SAIC upon conversion of the
Class B Common Stock owned by SAIC or any other shares of Class A Common Stock
acquired by SAIC, subject to its agreement not to sell any shares prior to the
expiration of 180 days from the date of this Prospectus. The first such
registration will be at the Company's expense and the second such registration
will be at SAIC's expense. The Company may postpone such a demand under certain
circumstances. In addition, SAIC may request the Company to include shares of
the Class A Common Stock held by SAIC in any registration proposed by the
Company of such Class A Common Stock under the Securities Act. See "Description
of Capital Stock -- Registration Rights."

TAX SHARING AGREEMENT

The taxable income and losses of the Company will be included in the
consolidated federal income tax returns filed by SAIC's consolidated group for
so long as SAIC maintains beneficial ownership of at least 80% of the total
voting power and value of the outstanding Common Stock of the Company. Prior to
the completion of the offering, the Company and SAIC plan to enter into the Tax
Sharing Agreement which will require the Company to pay SAIC an amount in
respect of federal income taxes generally equal to the amount of the federal
income taxes that the Company generally would be required to pay if the Company
were to file its own federal income tax return and was never part of SAIC's
consolidated group. Effectively, this will result in the Company's annual income
tax payable/receivable being computed as if the Company filed a separate tax
return.

Further, pursuant to the terms of the Tax Sharing Agreement, upon
deconsolidation, the Company's ability to recognize a benefit for tax losses it
incurs is subject to SAIC's approval. SAIC may choose to contest, compromise or
settle any adjustment or deficiency proposed by the relevant taxing authority in
a manner that may be beneficial to SAIC and detrimental to the Company.

In general, the Company will be included in SAIC's consolidated group for
federal income tax purposes for so long as SAIC beneficially owns at least 80%
of the total voting power and value of the outstanding Common Stock. Each member
of a consolidated group is jointly and severally liable for the federal income
tax liability of each other member of the consolidated group. Accordingly,
although the

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Tax Sharing Agreement allocates tax liabilities between the Company and SAIC,
during the period in which the Company is included in SAIC's consolidated group,
the Company could be liable in the event that any federal tax liability is
incurred, but not discharged, by any other member of SAIC's consolidated group.
See "Risk Factors -- Control by SAIC," "-- Control of Tax Matters; Tax and ERISA
Liability" and "-- Potential Conflicts of Interest."

OTHER TRANSACTIONS WITH SAIC

In fiscal 1996, the Company provided the following services under
subcontracts to SAIC: (i) telecommunications design and support services to
Kaiser Permanente for which the Company received $155,000; (ii) engineering and
network services to Banco de Credito for which the Company received $864,000;
(iii) engineering support to KUB/Malaysia for which the Company received
$107,000; (iv) engineering services to the Center for Information Processing for
which the Company received $103,000 and (v) other subcontracts for which the
Company received $276,000.

In addition, in fiscal 1996, SAIC provided database, applications and
installation services to UUNET Technologies, Inc. under a subcontract to the
Company for which SAIC received $133,000 and on other subcontracts to the
Company for which SAIC received $95,000.

The Company currently subleases from SAIC facilities in Herndon, Virginia
and Charlotte, North Carolina. In fiscal 1996, the Company made lease payments
of $737,000 to SAIC.

For information concerning indemnification of directors and officers, see
"Management -- Limitation of Liability and Indemnification Matters."

DUE TO PARENT LIABILITY

The cumulative result of the transactions and relationship with SAIC
outlined above at December 31, 1996 was a liability due SAIC of $15,295,000. The
most significant component of this balance was the income taxes payable by the
Company that SAIC will report on its consolidated tax return. This balance has

subsequently been paid to SAIC.

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PRINCIPAL STOCKHOLDERS

OWNERSHIP OF THE COMPANY'S COMMON STOCK

As of the date of this Prospectus, no shares of Class A Common Stock are
outstanding. Upon completion of this offering, the only shares of Class A Common
Stock that will be outstanding are those that will be issued in the offering
(including any shares issued if the Underwriters' over-allotment option is
exercised) and those issued under the Company's stock incentive plans. See
"Management -- Executive Compensation." The only stockholder of the Company is
SAIC. The address of SAIC is 10260 Campus Point Drive, San Diego, California
92121. Upon completion of the offering, SAIC will own 100% of the Company's
outstanding Class B Common Stock (12,500,000 shares), which will represent
approximately 84.5% of the outstanding Common Stock of the Company
(approximately 82.5% if the Underwriters' over-allotment option is exercised in
full). Under Delaware law, SAIC is able, acting alone, to elect the entire Board
of Directors of the Company and to control the vote on all matters submitted to
a vote of the Company's stockholders, including extraordinary corporate
transactions. Currently, five of the Company's eight directors are also
directors and/or officers of SAIC.

OWNERSHIP OF SAIC CLASS A COMMON STOCK

The following table sets forth, at July 31, 1997, the beneficial ownership
of SAIC Class A Common Stock held by the Company's directors, the Named
Executive Officers, and all directors and executive officers as a group.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF SAIC PERCENTAGE OF SHARES
BENEFICIAL OWNER CLASS A COMMON STOCK(1)(2) OUTSTANDING(3)
- -------------------------------------------- -------------------------- ---------------------
<S> <C> <C>
Gabriel A. Battista......................... -- --
J. Robert Beyster........................... 779,252 1.6%(4)
Raymond S. Corson........................... 6,329 *
Michael A. Daniels.......................... 52,330 *
Craig I. Fields............................. 3,000 *
John E. Glancy.............................. 137,546 *
Robert J. Korzeniewski...................... 29,820 *
Emmit J. McHenry............................ 30,428 *
William A. Roper, Jr........................ 43,610 *
Stratton D. Sclavos......................... -- --
Donald N. Telage............................ 38,237 *
State Street Bank and Trust Company......... 24,204,594(5) 48.8%(6)
One Enterprise Drive
North Quincy, MA 02171
All directors and executive officers
as a group (14 persons)................... 1,092,579 2.2%(7)
</TABLE>

- ---------------

* Less than 1% of the outstanding shares of SAIC's Class A Common Stock and
less than 1% of the voting power of SAIC's Class A Common Stock and Class B
Common Stock on a combined basis.

(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect to
securities. Except as indicated by footnote, and subject to community
property laws where applicable, to the best of the Company's knowledge, the
persons named in the table above have sole voting and investment power with
respect to all shares of SAIC Class A Common Stock shown as
beneficially-owned by them. Options to purchase shares of SAIC Class A
Common Stock that are exercisable within 60 days of July 31, 1997 are deemed
to be beneficially-owned by the person holding such options for the purpose
of computing the percentage ownership of such person, but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other person.

(2) The beneficial ownership depicted in the table includes: (i) shares held for
the account of the individual by the Trustee of SAIC's Employee Stock
Ownership Plan, Profit Sharing Plan and Cash or Deferred Arrangement, as
follows: J.R. Beyster (1,005 shares), Raymond S. Corson (2,901 shares),
Michael A. Daniels (5,124 shares), John E. Glancy (26,757 shares), Robert J.
Korzeniewski (5,675 shares), Emmit J. McHenry (97 shares), William A. Roper,
Jr. (4,145 shares), Donald N. Telage (4,461 shares), and all executive
officers and directors as a group (50,259 shares); (ii) shares subject to
options which are exercisable within 60 days of July 31, 1997, as follows:
Raymond S. Corson (762 shares), Michael A. Daniels (12,800 shares), Craig I.
Fields (3,000 shares), John E. Glancy (13,800 shares), Robert J.
Korzeniewski (12,120 shares), Emmit J. McHenry (4,000 shares), William A.
Roper, Jr. (6,200 shares), Donald N. Telage (8,850 shares), and all
executive officers and directors as a group (58,032 shares); (iii) shares
held by spouses, minor children or other relatives sharing a household with
the individuals, as follows: John E. Glancy (2,870 shares) and all executive
officers and directors as a group (2,870 shares); and (iv) shares held by
certain trusts established by the individual, as follows: J.R. Beyster
(778,247 shares) and all executive officers and directors as a group
(778,247 shares).

(3) Applicable percentage of beneficial ownership is based on 49,568,419 shares
of SAIC Class A Common Stock outstanding as of July 31, 1997.

(4) Represents 1.5% of the voting power of SAIC's Class A Common Stock and Class
B Common Stock on a combined basis.

(5) As Trustee of certain retirement and stock benefit plans of SAIC and its
subsidiaries.

(6) Represents 47.3% of the voting power of SAIC's Class A Common Stock and
Class B Common Stock on a combined basis.

(7) Represents 2.1% of the voting power of SAIC's Class A Common Stock and Class
B Common Stock on a combined basis.

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DESCRIPTION OF CAPITAL STOCK

AUTHORIZED CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Class A Common Stock, par value $0.001 per share, 40,000,000 shares of Class
B Common Stock, par value $0.001 per share, and 10,000,000 shares of Preferred
Stock, par value $0.001 per share. None of the Class A Common Stock and
Preferred Stock are outstanding as of the date hereof. Of the 100,000,000 shares
of Class A Common Stock authorized, 2,300,000 are being offered hereby
(2,645,000 shares if the Underwriters' over-allotment option is exercised in
full), 12,500,000 shares will be reserved for issuance upon conversion of Class
B Common Stock into Class A Common Stock and 2,556,250 shares have been reserved
for issuance pursuant to certain employee benefits plans. See "Management --
Executive Compensation." Of the 40,000,000 shares of Class B Common Stock
authorized, 12,500,000 shares, or 100% of the outstanding shares of Class B
Common Stock, are held by SAIC. The following summary description of the capital
stock of the Company is qualified in its entirety by reference to the form of
Certificate of Incorporation of the Company and the Bylaws of the Company, a
copy of each of which is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.

COMMON STOCK

Voting Rights. The holders of Class A Common Stock and Class B Common
Stock generally have identical rights except that holders of Class A Common
Stock are entitled to one vote per share while holders of Class B Common Stock
are entitled to ten votes per share on all matters to be voted on by
stockholders. The holders of Common Stock are not entitled to cumulative voting
rights. Generally, all matters to be voted on by stockholders must be approved
by a majority (or, in the case of election of directors, by a plurality) of the
votes entitled to be cast by all shares of Class A Common Stock and Class B
Common Stock present in person or represented by proxy, voting together as a
single class, subject to any voting rights granted to holders of any Preferred
Stock. In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of shares of Common Stock would be
entitled to share ratably in all assets remaining after payment of liabilities
subject to prior distribution rights and payment of any distributions owing to
holders of shares of Preferred Stock then outstanding, if any. Holders of the
shares of Common Stock have no preemptive rights, and the shares of Common Stock
are not subject to further calls or assessment by the Company. There are no
redemption or sinking fund provisions applicable to the shares of Common Stock.

Holders of Class A Common Stock and Class B Common Stock will share in an
equal amount per share in any dividend declared by the Board of Directors,
subject to any preferential rights of any outstanding Preferred Stock. Dividends
consisting of shares of Class A Common Stock and Class B Common Stock may be
paid only as follows: (i) shares of Class A Common Stock may be paid only to
holders of Class A Common Stock and shares of Class B Common Stock may be paid
only to holders of Class B Common Stock and (ii) shares shall be paid
proportionally with respect to each outstanding share of Class A Common Stock
and Class B Common Stock.

Conversion Rights. While SAIC does not have a current intention of
effecting a Tax-Free Spin-Off (as hereinafter defined), SAIC will continually
evaluate its ownership of the Company and there can be no assurances whether
SAIC will effect a Tax-Free Spin-Off in the future. Each outstanding share of
Class B Common Stock is convertible at the holder's option into one share of
Class A Common Stock at any time prior to a Tax-Free Spin-Off. Additionally,
each share of Class B Common Stock shall automatically convert into one share of
Class A Common Stock if at any time prior to a Tax-Free Spin-Off the number of
outstanding shares of Class B Common Stock owned by SAIC or any of its
subsidiaries (or a Class B Transferee or any of its subsidiaries) represents
less than 30% of the economic ownership represented by the aggregate number of
shares of Common Stock then outstanding. If a Tax-Free Spin-Off occurs, shares
of Class B Common Stock shall not be convertible into shares of Class A Common
Stock at the option of the holder thereof.

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<PAGE> 74

Except as provided below, any shares of Class B Common Stock transferred to
a person other than SAIC or any of its subsidiaries shall automatically convert
to shares of Class A Common Stock upon such disposition. Prior to a Tax-Free
Spin-Off, shares of Class B Common Stock representing more than a 50% economic
interest in the Company transferred in a single transaction to one unrelated
person (a "Class B Transferee") or among such Class B Transferee and its
subsidiaries shall not automatically convert to shares of Class A Common Stock
upon such disposition. Any shares of Class B Common Stock retained by SAIC
following any such transfer of shares of Class B Common Stock to a Class B
Transferee shall automatically convert into shares of Class A Common Stock upon
such transfer. Shares of Class B Common Stock transferred to stockholders of
SAIC or of a Class B Transferee in a transaction intended to be on a tax-free
basis (a "Tax-Free Spin-Off") under the Code shall not convert to shares of
Class A Common Stock upon the occurrence of such Tax-Free Spin-Off.

Following a Tax-Free Spin-Off, shares of Class B Common Stock shall be
transferred as Class B Common Stock; provided, however, that shares of Class B
Common Stock shall automatically convert into shares of Class A Common Stock on
the fifth anniversary of the Tax-Free Spin-Off, unless prior to such Tax-Free
Spin-Off, SAIC, or the Class B Transferee, as the case may be, delivers to the
Company written advice of counsel reasonably satisfactory to the Company to the
effect that (i) such conversion could adversely affect the ability of SAIC or
the Class B Transferee, as the case may be, to obtain a favorable ruling from
the Internal Revenue Service that the distribution would be a Tax-Free Spin-Off
or (ii) the Internal Revenue Service has adopted a general non-ruling policy on
tax-free spinoffs and that such conversion could adversely affect the status of
the transaction as a Tax-Free Spin-Off. If such written advice is received,
approval of such conversion shall be submitted to a vote of the holders of the
Common Stock as soon as practicable after the fifth anniversary of the Tax-Free
Spin-Off, unless SAIC or the Class B Transferee, as the case may be, delivers to
the Company written advice of counsel reasonably satisfactory to the Company
prior to such anniversary that such vote could adversely affect the status of
the distribution as a Tax-Free Spin-Off, including the ability to obtain a
favorable ruling from the Internal Revenue Service. If such written advice is
delivered, such vote shall not be held. Approval of such conversion will require
the affirmative vote of the holders of a majority of the shares of both Class A
Common Stock and Class B Common Stock present and voting, voting together as a
single class, with each share entitled to one vote for such purpose. No
assurance can be given that such conversion would be consummated. The foregoing
requirements are intended to ensure that tax-free treatment of a Tax-Free
Spin-Off is preserved should the Internal Revenue Service challenge such
automatic conversion as violating the 80% vote requirement currently required by
the Code for a Tax-Free Spin-Off.

PREFERRED STOCK

There are currently no shares of Preferred Stock outstanding. Under the
Company's Certificate of Incorporation, the Board of Directors has the
authority, without further action by the stockholders, to issue from time to
time up to 10,000,000 shares of the Preferred Stock in one or more series and to
fix the number of shares, designations, preferences, powers, and relative,
participating, optional or other special rights and the qualifications or
restrictions thereof. The preferences, powers, rights and restrictions of
different series of Preferred Stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions, and purchase funds and other matters. The
issuance of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could decrease the
amount of earnings and assets available for distribution to holders of Common
Stock or affect adversely the rights and powers, including voting rights, of the
holders of Common Stock, and may have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no present plan
to issue any shares of Preferred Stock.

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REGISTRATION RIGHTS

Pursuant to the Registration Rights Agreement between the Company and SAIC,
which holds 12,500,000 shares of Class B Common Stock, SAIC is entitled to
certain rights with respect to the registration under the Securities Act of the
shares of Class A Common Stock issuable upon conversion of the Class B Common
Stock owned by SAIC. If the Company proposes to register any of its securities
under the Securities Act, either for its own account or for the account of other
securityholders, SAIC is entitled to notice of the registration and is entitled
to include, at the Company's expense, such shares therein, provided, among other
conditions, that the underwriters have the right to limit the number of such
shares included in the registration. In addition, SAIC may require the Company
on not more than two occasions, to file a registration statement under the
Securities Act with respect to its shares of Class A Common Stock, and the
Company is required to use its best efforts to effect the registration, subject
to certain conditions and limitations. The first such registration will be at
the Company's expense and the second such registration will be at SAIC's
expense. Further, SAIC may require the Company at its expense to register their
shares of Class A Common Stock on Form S-3 when such form becomes available to
the Company, subject to certain conditions and limitations. The Company has
agreed to indemnify SAIC in connection with any such registration. See
"Relationship with SAIC and Certain Transactions -- Registration Rights
Agreement."

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

Certificate of Incorporation. The Company's Certificate of Incorporation
provides that the Company's Bylaws may be repealed or amended only by a
two-thirds vote of the Board of Directors or a two-thirds stockholder vote. In
addition, those provisions of the Amended and Restated Certificate of
Incorporation may only be amended or repealed by the holders of at least
two-thirds of the voting power of all the then-outstanding shares of stock
entitled to vote generally for the election of directors voting together as a
single class. The provisions described above, together with the ability of the
Board of Directors to issue Preferred Stock as described under "Description of
Capital Stock -- Preferred Stock," may have the effect of deterring a hostile
takeover or delaying a change in control or management of the Company. See "Risk
Factors -- Effect of Certain Charter Provisions; Anti-takeover Effects of
Certificate of Incorporation and Delaware Law."

Delaware Takeover Statute. Section 203 of the Delaware General Corporation
Law ("Section 203"), subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder;
(ii) upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock that is not owned by the interested stockholder.

Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially-owned by the interested stockholder; or (v) the receipt by the
interested stockholder of

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the benefit of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation. In general, Section 203 defines
an interested stockholder as any entity or person beneficially owning 15% or
more of the outstanding voting stock of the corporation and any entity or person
affiliated with or controlling or controlled by such entity or person. As
permitted by Section 203, the Company has elected not to be governed by the
provisions of Section 203.

CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS

The Company's Certificate of Incorporation provides that any person
purchasing or acquiring an interest in shares of capital stock of the Company is
deemed to have consented to the following provisions relating to intercompany
agreements and to transactions with interested parties and corporate
opportunities. The corporate charter of SAIC does not include comparable
provisions relating to intercompany agreements, transactions with interested
parties or corporate opportunities.

Transactions with Interested Parties. The Company's Certificate of
Incorporation provides that no contract, agreement, arrangement or transaction
(or any amendment, modification or termination thereof) between the Company and
SAIC or any Related Entity (as such terms are defined below) or between the
Company and any director or officer of the Company, SAIC or any Related Entity
shall be void or voidable solely for the reason that SAIC, a Related Entity or
any one or more of the officers or directors of the Company, SAIC or any Related
Entity are parties thereto, or solely because any such directors or officers are
present at, participate in or vote with respect to the authorization of such
contract, agreement, arrangement or transaction (or any amendment, modification
or termination thereof). Further, the Company's Certificate of Incorporation
provides that neither SAIC nor any officer or director thereof or of any Related
Entity shall be presumed liable to the Company or its stockholders for breach of
any fiduciary duty or duty of loyalty or failure to act in (or not opposed to)
the best interests of the Company or the derivation of any improper personal
benefit by reason of the fact that SAIC or an officer or director thereof or of
such Related Entity in good faith takes any action or exercises any rights or
gives or withholds any consent in connection with any agreement or contract
between SAIC or such Related Entity and the Company. No vote cast or other
action taken by any person who is an officer, director or other representative
of SAIC or such Related Entity, which vote is cast or action is taken by such
person in his capacity as a director of the Company, shall constitute an action
of or the exercise of a right by or a consent of SAIC, such subsidiary or
Related Entity for the purpose of any such agreement or contract. For purposes
of the foregoing, the "Company" and "SAIC" include all corporations and other
entities in which the Company or SAIC, as the case may be, owns fifty percent or
more of the outstanding voting stock, and "Related Entity" means one or more
corporations or other entities in which one or more of the directors of the
Company have a direct or indirect financial interest.

Competition by SAIC with the Company; Corporate Opportunities. The
Company's Certificate of Incorporation provides that except as SAIC may
otherwise agree in writing: (i) neither SAIC nor any subsidiary of SAIC (other
than the Company) shall have a duty to refrain from engaging directly or
indirectly in the same or similar business activities or lines of business as
the Company; and (ii) neither SAIC nor any subsidiary (other than the Company),
officer or director thereof will be presumed liable to the Company or to its
stockholders for breach of any fiduciary duty by reason of any such activities
or of such person's participation therein.

The Company's Certificate of Incorporation also provides that if SAIC or
any subsidiary of SAIC (other than the Company) acquires knowledge of a
potential transaction or matter which may be a corporate opportunity both for
SAIC or such subsidiary and for the Company, SAIC shall be entitled to offer
such corporate opportunity to the Company or SAIC as SAIC deems appropriate
under the circumstances in its sole discretion and shall not be presumed liable
to the Company or its stockholders for breach of fiduciary duty as a stockholder
of the Company or controlling person of a stockholder by reason of the fact that
SAIC or such subsidiary pursues or acquires such opportunity for itself, directs
such corporate opportunity to another person, or does not communicate
information regarding such corporate opportunity to the Company.

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<PAGE> 77

Further, the Company's Certificate of Incorporation provides that in the
event that a director, officer or employee of the Company who is also a
director, officer or employee of SAIC acquires knowledge of a potential
transaction or matter that may be a corporate opportunity both for the Company
and SAIC (whether such potential transaction or matter is proposed by a third
party or is conceived by such director, officer or employee of the Company),
such director, officer or employee shall be entitled to offer such corporate
opportunity to the Company or SAIC as such director, officer or employee deems
appropriate under the circumstances in his or her sole discretion, and no such
director, officer or employee shall be presumed liable to the Company or its
stockholders for breach of any fiduciary duty or duty of loyalty or failure to
act in (or not opposed to) the best interests of the Company or the derivation
of any improper personal benefit by reason of the fact that (i) such director,
officer or employee offered such corporate opportunity to SAIC (rather than the
Company) or did not communicate information regarding such corporate opportunity
to the Company or (ii) SAIC pursues or acquires such corporate opportunity for
itself or directs such corporate opportunity to another person or does not
communicate information regarding such corporate opportunity to the Company.

The enforceability of the provisions discussed above under Delaware
corporate law has not been established and, due to the absence of relevant
judicial authority, counsel to the Company is not able to deliver an opinion as
to the enforceability of such provisions. These provisions of the Company's
Certificate of Incorporation eliminate certain rights that might have been
available to stockholders under Delaware law had such provisions not been
included in the Certificate of Incorporation, although the enforceability of
such provisions has not been established.

At the time of the consummation of the offering, certain of the directors
of the Company will also be directors and/or officers of SAIC.

The foregoing provisions of the Company's Certificate of Incorporation
shall expire on the date that SAIC ceases to own beneficially Common Stock
representing at least 20% of the number of outstanding shares of Common Stock
and no person who is a director or officer of the Company is also a director or
officer of SAIC or its subsidiaries.

Actions Under Intercompany Agreements. The Company's Certificate of
Incorporation will also limit the liability of SAIC and its subsidiaries for
certain breaches of their fiduciary duties in connection with action that may be
taken or not taken in good faith under the intercompany agreements. See
"Relationship with SAIC and Certain Transactions."

Advance Notice Provision. The Company's Amended and Restated Bylaws
provide for an advance notice procedure for the nomination, other than by or at
the direction of the Board of Directors, of candidates for election as directors
as well as for other stockholder proposals to be considered at annual meetings
of stockholders. In general, notice of intent to nominate a director or raise
matters at such meetings will have to be received by the Company not less than
120 days prior to any meeting of the stockholders called for the election of
directors, and must contain certain information concerning the person to be
nominated or the matters to be brought before the meeting and concerning the
stockholder submitting the proposal.

NASDAQ NATIONAL MARKET LISTING

Prior to the date of this Prospectus, there has been no established public
trading market for the Class A Common Stock. The Company has applied to have the
Class A Common Stock approved for quotation on the Nasdaq National Market under
the symbol NSOL.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock is
ChaseMellon Shareholder Services, LLC.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering there has been no public market for the Common Stock
of the Company, and no predictions can be made regarding the effect, if any,
that market sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. As described below, only a
limited number of shares will be available for sale shortly after this offering
due to certain contractual and legal restrictions on resale. Nevertheless, sales
of substantial amounts of Common Stock of the Company in the public market after
the restrictions lapse could adversely affect the prevailing market price.

Upon completion of this offering, the Company will have 2,300,000 shares of
Class A Common Stock outstanding (assuming no exercise of the Underwriters'
over-allotment option). In addition, as of July 31, 1997, the Company had
granted stock options to certain employees and directors for the purchase of an
aggregate of 1,539,725 shares of Class A Common Stock. The 2,300,000 shares of
Class A Common Stock being sold hereby will be freely tradable (other than by an
"affiliate" of the Company as such term is defined in Rule 144 of the Securities
Act) without restriction or registration under the Securities Act. All remaining
shares were issued and sold by the Company in a private transaction ("Restricted
Shares") and are eligible for public sale if registered under the Securities Act
or sold in accordance with Rule 701 thereunder.

SAIC, which owns 12,500,000 shares of Class B Common Stock and certain
Restricted Persons have agreed they will not sell any shares of Common Stock
owned by them without the prior written consent of the Representatives of the
Underwriters for a period of 180 days from the effective date of the
Registration Statement of which this Prospectus is a part (the "Lockup Period").
Following the expiration of the Lockup Period, SAIC and such Restricted Persons
may sell such shares only pursuant to the requirements of Rule 144 or pursuant
to an effective registration statement under the Securities Act. Furthermore,
the shares held by SAIC and such Restricted Persons are "restricted securities"
within the meaning of Rule 144. Following the expiration of the Lockup Period,
the 12,500,000 shares of Class B Common Stock held by SAIC will be eligible for
sale in the public market subject to compliance with Rule 144. See
"Underwriting."

Subject to certain limitations on the aggregate offering price of a
transaction and other conditions, Rule 701 may be relied upon with respect to
the resale of securities originally purchased from the Company by its employees,
directors, officers, consultants or advisers prior to the closing of this
offering, pursuant to written compensatory benefit plans or written contracts
relating to the compensation of such persons. In addition, the Commission has
indicated that Rule 701 will apply to stock options granted by the Company
before this offering, along with the shares acquired upon exercise of such
options. Securities issued in reliance on Rule 701 are deemed to be Restricted
Shares and, beginning 90 days after the date of this Prospectus (unless subject
to the contractual restrictions described above), may be sold by persons other
than affiliates subject only to the manner of sale provisions of Rule 144 and by
affiliates under Rule 144 without compliance with its one-year minimum holding
period requirements.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, an affiliate of the Company, or a holder of
Restricted Shares who owns beneficially shares that were not acquired from the
Company or an affiliate of the Company within the previous year, would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately 125,000 shares immediately after this offering, assuming no
exercise of the Underwriters' over-allotment option) or the average weekly
trading volume of Class A Common Stock during the four calendar weeks preceding
the date on which notice of the sale is filed with the Commission. Sales under
Rule 144 are subject to certain requirements relating to manner of sale, notice
and availability of current public information about the Company. However, a
person (or persons whose shares are aggregated) who is not deemed to have been
an affiliate of the Company at any time during the 90 days immediately preceding
the sale and who owns beneficially Restricted Shares is entitled to sell such
shares under

76
<PAGE> 79

Rule 144(k) without regard to the limitations described above, provided that at
least two years have elapsed since the later of the date the shares were
acquired from the Company or from an affiliate of the Company. The foregoing is
a summary of Rule 144 and is not intended to be a complete description of it.

The Company intends to file a registration statement on Form S-8 under the
Securities Act covering approximately 2,556,250 shares of Class A Common Stock
reserved for issuance under the 1996 Stock Incentive Plan. Such registration
statement is expected to be filed soon after the date of this Prospectus and
will automatically become effective upon filing. Accordingly, shares registered
under such registration statements will be available for sale in the open
market, unless such shares are subject to vesting restrictions with the Company
or the contractual restrictions described above.

In addition, after this offering and the Lockup Period, SAIC will be
entitled to certain rights to cause the Company to register the sale of its
shares of Common Stock under the Securities Act. Registration of such shares
under the Securities Act would result in such shares becoming freely tradable
without restriction under the Securities Act (except for shares purchased by
affiliates of the Company) immediately upon the effectiveness of such
registration. See "Description of Capital Stock -- Registration Rights."

77
<PAGE> 80

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC,
J.P. Morgan Securities Inc. and PaineWebber Incorporated have severally agreed
to purchase from the Company the following respective numbers of shares of Class
A Common Stock:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
--------------------------------------------------------------- ---------
<S> <C>
Hambrecht & Quist LLC..........................................
J.P. Morgan Securities Inc. ...................................
PaineWebber Incorporated.......................................

---------
Total.......................................................... 2,300,000
==========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company and its counsel and
independent auditors. The nature of the Underwriters' obligations is such that
they are committed to purchase all shares of Class A Common Stock offered hereby
if any of such shares are purchased.

The Underwriters propose to offer the shares of Class A Common Stock
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $ per share. The Underwriters may allow, and
such dealers may re-allow, a concession not in excess of $ per share to
certain other dealers. After the initial public offering of the shares, the
offering price and other selling terms may by changed by the Representatives of
the Underwriters.

The Company has granted to the Underwriters an option, exercisable no later
than 30 calendar days after the date of this Prospectus, to purchase up to an
aggregate of 345,000 additional shares of Class A Common Stock at the initial
public offering price, less the underwriting discount, set forth on the cover
page of this Prospectus. To the extent that the Underwriters exercise this
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage thereof which the number of shares of Class A
Common Stock to be purchased by it shown in the above table bears to the total
number of shares of Class A Common Stock offered hereby. The Company will be
obligated, pursuant to the option, to sell shares to the Underwriters to the
extent the option is exercised. The Underwriters may exercise such option only
to cover over-allotments made in connection with the sale of shares of Class A
Common Stock offered hereby.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.

The Company and SAIC have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

78
<PAGE> 81

The Company, SAIC and certain Restricted Persons have agreed, with certain
exceptions, that they will not, without the prior written consent of Hambrecht &
Quist LLC, offer, sell or otherwise dispose of any Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into shares of Common Stock during the 180-day period following the
date of this Prospectus.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales of Class A Common Stock offered hereby to any accounts
over which they exercise discretionary authority.

Prior to the offering, there has been no public market for the Class A
Common Stock. The initial public offering price for the Class A Common Stock
will be determined by negotiation among the Company and the Representatives.
Among the factors considered in determining the initial public offering price
are prevailing market conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to those of the
Company, estimates of the business potential and prospects of the Company, the
present state of the Company's business operations, the Company's management and
other factors deemed relevant. The estimated initial public offering price range
set forth on the cover of this preliminary prospectus is subject to change as a
result of market conditions and other factors.

Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on the
Nasdaq National Market, in the over-the-counter market, or otherwise. Such
stabilizing, if commenced, may be discontinued at any time.

The Underwriters have reserved up to 5% of the shares of Class A Common
Stock offered hereby for sale at the initial public offering price to certain
employees, officers and directors of SAIC and the Company and other persons
designated by the Company. The number of shares available for sale to the
general public will be reduced to the extent such persons purchase such reserved
shares. Any reserved shares not so purchased on the effectiveness of the
offering will be offered by the Underwriters to the general public on the same
basis as the other shares offered hereby.

In 1997, the Company and Hambrecht & Quist LLC entered into an Intranet
services agreement pursuant to which the Company performed certain Intranet
services for Hambrecht & Quist LLC. The terms of such agreement were negotiated
by the parties at arm's length after the Company's selection of Hambrecht &
Quist LLC as a Representative.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Class A Common
Stock offered hereby are being passed upon for the Company by Pillsbury Madison
& Sutro LLP, Menlo Park, California and Washington D.C. Certain legal matters in
connection with the offering will be passed upon for the Underwriters by Simpson
Thacher & Bartlett (a partnership which includes professional corporations), New
York, New York.

79
<PAGE> 82

EXPERTS

The financial statements as of December 31, 1995 and 1996 and for the year
ended December 31, 1994, the periods from January 1, 1995 to March 10, 1995 and
from March 11, 1995 to December 31, 1995 and for the year ended December 31,
1996 included in this Prospectus have been so included in reliance on the
reports of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act and the rules
and regulations promulgated thereunder, with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto. For further information with respect to
the Company and the Common Stock offered hereby, reference is hereby made to
such Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus regarding the contents of any contract or other
document are not necessarily complete; with respect to each such contract or
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference. A
copy of the Registration Statement, including the exhibits and schedules,
thereto, may be inspected without charge at the principal office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Regional Offices of the Commission at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may also be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 upon payment of the fees prescribed by the Commission. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of the Commission's web site is
http://www.sec.gov.

The Company is not currently subject to the informational requirements of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the offering of the Company's Common Stock, the Company will become
subject to the informational requirements of the Exchange Act.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by independent certified public
accountants and quarterly reports containing unaudited financial information for
the first three quarters of each fiscal year.

80
<PAGE> 83

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Report of Independent Accountants................................................. F-2, F-3
Statements of Financial Position as of
December 31, 1995 and 1996 and June 30, 1997 (Unaudited)........................ F-4
Statements of Operations for the Year Ended December 31, 1994, for the Periods
from January 1, 1995 to March 10, 1995 and March 11, 1995 to December 31, 1995,
for the Year Ended December 31, 1996, and for the Six Months Ended June 30, 1996
and 1997 (Unaudited)............................................................ F-5
Statements of Changes in Stockholder's Equity for the Year Ended December 31,
1994, for the Periods from January 1, 1995 to March 10, 1995 and March 11, 1995
to December 31, 1995, for the Year Ended December 31, 1996, and for the Six
Months Ended June 30, 1997 (Unaudited).......................................... F-6
Statements of Cash Flows for the Year Ended December 31, 1994, for the Periods
from January 1, 1995 to March 10, 1995 and March 11, 1995 to December 31, 1995,
for the Year Ended December 31, 1996, and for the Six Months Ended June 30, 1996
and 1997 (Unaudited)............................................................ F-7
Notes to Financial Statements..................................................... F-8
</TABLE>

F-1
<PAGE> 84

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholder of Network Solutions, Inc.

In our opinion, the accompanying statements of financial position and the
related statements of operations, of changes in stockholder's equity and of cash
flows present fairly, in all material respects, the financial position of
Network Solutions, Inc. (a wholly-owned subsidiary of Science Applications
International Corporation) at December 31, 1996 and 1995, and the results of its
operations and cash flows for the year ended December 31, 1996 and for the
period from March 11, 1995 to December 31, 1995 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in Note 1 to the financial statements, on March 10, 1995,
Science Applications International Corporation acquired the outstanding stock of
the Company. The financial statements for the periods subsequent to March 10,
1995 have been prepared on the basis of accounting arising from this
acquisition. The financial statements for the period from January 1, 1995 to
March 10, 1995 and for the year ended December 31, 1994 are presented on the
Company's previous basis of accounting.

PRICE WATERHOUSE LLP

Falls Church, VA
March 17, 1997, except as to Note 13
which is as of June 26, 1997

F-2
<PAGE> 85

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholder of Network Solutions, Inc.

In our opinion, the accompanying statements of operations, of changes in
stockholder's equity and of cash flows present fairly, in all material respects,
the results of operations and cash flows for Network Solutions, Inc.
("Predecessor") for the period from January 1, 1995 to March 10, 1995 and for
the year ended December 31, 1994 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

As discussed in Note 1 to the financial statements, on March 10, 1995
Science Applications International Corporation acquired the outstanding stock of
the Company. The financial statements for the periods subsequent to March 10,
1995 have been prepared on the basis of accounting arising from this
acquisition. The financial statements for the period from January 1, 1995 to
March 10, 1995 and for the year ended December 31, 1994 are presented on the
Company's previous basis of accounting.

PRICE WATERHOUSE LLP

Falls Church, VA
March 17, 1997, except as to Note 13
which is as of June 26, 1997

F-3
<PAGE> 86

NETWORK SOLUTIONS, INC.

STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
JUNE 30, 1997
DECEMBER 31, ----------------------------
-------------------------- PRO FORMA
1995 1996 ACTUAL (NOTE 2)
----------- ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 5,000 $15,540,000 $ 25,967,000 $ 25,967,000
Short-term investments................ -- -- 3,625,000 3,625,000
Accounts receivable, net.............. 4,040,000 12,587,000 6,387,000 6,387,000
Prepaids and other assets............. 11,000 936,000 1,361,000 1,361,000
Restricted assets..................... 1,408,000 17,453,000 31,056,000 31,056,000
Deferred tax asset.................... 1,310,000 10,087,000 12,248,000 12,248,000
----------- ----------- ----------- ------------
Total current assets.................... 6,774,000 56,603,000 80,644,000 80,644,000
Furniture and equipment, net............ 1,067,000 2,266,000 4,461,000 4,461,000
Deferred tax asset...................... 911,000 4,968,000 5,222,000 5,222,000
Goodwill, net........................... 2,996,000 2,281,000 1,923,000 1,923,000
----------- ----------- ----------- ------------
Total Assets............................ $11,748,000 $66,118,000 $ 92,250,000 $ 92,250,000
=========== =========== =========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued
liabilities........................ $ 1,355,000 $ 2,581,000 $ 3,959,000 $ 3,959,000
Deferred revenue, net................. 1,993,000 19,912,000 31,990,000 31,990,000
Net liabilities of discontinued
operations......................... 208,000 -- -- --
Due to parent......................... 2,369,000 15,295,000 6,566,000 16,566,000
Internet fund liability............... 1,408,000 17,453,000 31,056,000 31,056,000
Current portion of capital lease
obligations........................ -- -- 793,000 793,000
----------- ----------- ----------- ------------
Total current liabilities............... 7,333,000 55,241,000 74,364,000 84,364,000
Long-term deferred revenue, net......... 1,353,000 9,440,000 13,638,000 13,638,000
Capital lease obligations............... -- -- 1,555,000 1,555,000
----------- ----------- ----------- ------------
Total liabilities....................... 8,686,000 64,681,000 89,557,000 99,557,000
Stockholder's equity:
Preferred stock, $.001 par value,
authorized 10,000,000 shares; none
issued and outstanding............. -- -- -- --
Class A Common stock, $.001 par value;
authorized 100,000,000 shares; none
issued and outstanding............. -- -- -- --
Class B Common stock, $.001 par value,
authorized 40,000,000 shares;
12,500,000 issued and
outstanding........................ 12,000 12,000 12,000 12,000
Additional paid-in capital............ 4,468,000 4,468,000 4,468,000 4,468,000
Accumulated deficit................... (1,418,000) (3,043,000) (1,787,000) (11,787,000)
----------- ----------- ----------- ------------
Total stockholder's equity.............. 3,062,000 1,437,000 2,693,000 (7,307,000)
Commitments and contingencies........... -- -- -- --
----------- ----------- ----------- ------------
Total Liabilities and Stockholder's
Equity................................ $11,748,000 $66,118,000 $ 92,250,000 $ 92,250,000
=========== =========== =========== ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 87

NETWORK SOLUTIONS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
COMPANY
PREDECESSOR COMPANY --------------------------
-------------------------------- -------------------------------
YEAR ENDED JANUARY 1, 1995 MARCH 11, 1995 YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, TO MARCH 10, TO DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1995 1996 1996 1997
------------ ---------------- --------------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net revenue................ $ 5,029,000 $ 1,177,000 $ 5,309,000 $18,862,000 $ 6,829,000 $18,724,000
Cost of revenue............ 3,073,000 884,000 4,820,000 14,666,000 6,521,000 11,435,000
----------- ----------- ----------- ----------- ----------- ----------
Gross profit............... 1,956,000 293,000 489,000 4,196,000 308,000 7,289,000
Research and development
expenses................. -- -- -- 680,000 58,000 718,000
Selling, general and
administrative
expenses................. 1,544,000 280,000 2,114,000 6,280,000 2,370,000 4,788,000
Interest expense (income)
(includes related party
interest expense of
$52,000 for the period
March 11, 1995 to
December 31, 1995 and
interest income of
$496,000 for 1996)....... 109,000 9,000 52,000 (496,000) (86,000) (484,000)
----------- ----------- ----------- ----------- ----------- ----------
Income (loss) from
continuing operations
before income taxes...... 303,000 4,000 (1,677,000) (2,268,000) (2,034,000) 2,267,000
Provision (benefit) for
income taxes............. 114,000 48,000 (287,000) (643,000) (576,000) 1,011,000
----------- ----------- ----------- ----------- ----------- ----------
Income (loss) from
continuing operations.... 189,000 (44,000) (1,390,000) (1,625,000) (1,458,000) 1,256,000
Loss from discontinued
operations, net of income
taxes.................... (1,169,000) (1,375,000) (28,000) -- -- --
----------- ----------- ----------- ----------- ----------- ----------
Net income (loss).......... $ (980,000) $ (1,419,000) $(1,418,000) $(1,625,000) $(1,458,000) $ 1,256,000
=========== =========== =========== =========== =========== ==========
Unaudited pro forma net
income (loss) per
share.................... $ (0.12) $ (0.11) $ 0.09
=========== =========== ==========
Unaudited pro forma shares
used in computing net
income (loss) per
share.................... 13,349,000 13,349,000 13,349,000
=========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 88

NETWORK SOLUTIONS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK ADDITIONAL RETAINED TOTAL
-------------------- ------------------ PAID-IN EARNINGS STOCKHOLDER'S
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
---------- ------- ------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
Balance, December 31, 1993................. 1,159,000 $12,000 115,000 $(673,000) $1,275,000 $ 607,000 $1,221,000
Purchase of treasury stock............... -- -- 7,000 (25,000) -- -- (25,000)
Issuance of treasury stock............... -- -- (12,000) 70,000 (34,000) -- 36,000
Net loss for the year ended December 31,
1994................................... -- -- -- -- -- (980,000) (980,000)
---------- ------- ------- --------- ---------- ---------- -----------
Balance, December 31, 1994................. 1,159,000 12,000 110,000 (628,000) 1,241,000 (373,000) 252,000
Purchase of treasury stock............... -- -- 7,000 (30,000) -- -- (30,000)
Net loss for the period from January 1 to
March 10, 1995......................... -- -- -- -- -- (1,419,000) (1,419,000)
---------- ------- ------- --------- ---------- ---------- -----------
Balance, March 10, 1995.................... 1,159,000 $12,000 117,000 $(658,000) $1,241,000 $(1,792,000) $(1,197,000)
========== ======= ======= ========= ========== ========== ===========
COMPANY
Purchase of outstanding common shares by
SAIC on March 10, 1995................... 12,500,000 $12,000 $4,468,000 $ -- $4,480,000
Net loss for the period from March 11 to
December 31, 1995........................ -- -- -- (1,418,000) (1,418,000)
---------- ------- ---------- ---------- -----------
Balance, December 31, 1995................. 12,500,000 12,000 4,468,000 (1,418,000) 3,062,000
Net loss for the year ended December 31,
1996................................... -- -- -- (1,625,000) (1,625,000)
---------- ------- ---------- ---------- -----------
Balance, December 31, 1996................. 12,500,000 12,000 4,468,000 (3,043,000) 1,437,000
Net income for the six months ended June
30, 1997................................. -- -- -- 1,256,000 1,256,000
---------- ------- ---------- ---------- -----------
Balance, June 30, 1997 (Unaudited)......... 12,500,000 $12,000 $4,468,000 $(1,787,000) $2,693,000
========== ======= ========== ========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 89

NETWORK SOLUTIONS, INC.

STATEMENTS OF CASH FLOWS

PREDECESSOR COMPANY COMPANY
-------------------------------- ------------------------------- ----------------------------
YEAR ENDED JANUARY 1, 1995 MARCH 11, 1995 YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, TO MARCH 10, TO DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1995 1996 1996 1997
------------ ---------------- --------------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)............ $ (980,000) $ (1,419,000) $(1,418,000) $(1,625,000) $ (1,458,000) $ 1,256,000
Adjustments to reconcile net
loss to net cash provided
by (used in) operating
activities:
Net loss from discontinued
operations............... 1,169,000 1,376,000 28,000 -- -- --
Depreciation and
amortization............. 338,000 68,000 765,000 1,417,000 714,000 1,017,000
Provision for uncollectible
accounts receivable...... -- -- 124,000 3,597,000 1,223,000 3,624,000
Deferred income taxes...... -- -- (2,221,000) (12,834,000) (5,770,000) (2,415,000)
Change in operating assets
and liabilities:
Decrease (increase) in
accounts receivable.... 322,000 (161,000) (3,385,000) (12,144,000) (6,711,000) 2,576,000
Decrease (increase) in
prepaid and other
assets................. 22,000 (36,000) 45,000 (925,000) 11,000 (425,000)
(Increase) decrease in
deposits............... -- (49,000) 1,053,000 -- -- --
Increase in accounts
payable and accrued
liabilities............ 219,000 233,000 282,000 1,226,000 246,000 1,378,000
(Decrease) increase in
other liabilities...... (7,000) 8,000 (89,000) -- -- --
Increase (decrease) in
deferred revenue....... 64,000 (30,000) 3,239,000 26,006,000 11,010,000 16,276,000
----------- ----------- ----------- ----------- ----------- ------------
Net cash provided by
(used in) operating
activities........... 1,147,000 (10,000) (1,577,000) 4,718,000 (735,000) 23,287,000
----------- ----------- ----------- ----------- ----------- ------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of furniture and
equipment................ (266,000) (134,000) (518,000) (1,901,000) (1,870,000) (317,000)
Purchase of short-term
investments.............. -- -- -- -- -- (3,625,000)
Net investment in net
assets of discontinued
operations............... (759,000) 331,000 563,000 (208,000) (208,000) --
----------- ----------- ----------- ----------- ----------- ------------
Net cash (used in)
provided by investing
activities........... (1,025,000) 197,000 45,000 (2,109,000) (2,078,000) (3,942,000)
----------- ----------- ----------- ----------- ----------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from bank
borrowings............... 173,000 -- -- -- -- --
Repayment of bank
borrowings............... (170,000) (293,000) (834,000) -- -- --
Capital lease
obligations.............. -- -- -- -- -- (189,000)
Net transactions with
SAIC..................... -- -- 2,371,000 12,926,000 2,835,000 (8,729,000)
Issuance of treasury
stock.................... 36,000 -- -- -- -- --
Purchase of treasury
stock.................... (25,000) (30,000) -- -- -- --
----------- ----------- ----------- ----------- ----------- ------------
Net cash provided by
(used in) financing
activities........... 14,000 (323,000) 1,537,000 12,926,000 2,835,000 (8,918,000)
----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease)
in cash and cash
equivalents.......... 136,000 (136,000) 5,000 15,535,000 22,000 10,427,000
Cash and cash equivalents,
beginning of period........ -- 136,000 -- 5,000 5,000 15,540,000
----------- ----------- ----------- ----------- ----------- ------------
Cash and cash equivalents,
end of period.............. $ 136,000 $ -- $ 5,000 $15,540,000 $ 27,000 $ 25,967,000
=========== =========== =========== =========== =========== ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE> 90

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION

Network Solutions, Inc. (the "Company") was incorporated in the District of
Columbia in 1979 and was reincorporated in Delaware in 1996. The Company
currently acts as the exclusive registrar for second level domain names within
the .com, .org, .net, .edu and .gov top level domains ("TLDs") pursuant to a
Cooperative Agreement with the National Science Foundation ("NSF") (Note 2). The
Company also provides Intranet consulting services to large companies that
desire to establish or enhance their Internet presence or "re-engineer" legacy
network infrastructures to accommodate the integration of both Internet
connectivity and Intranet network technology into their information technology
base.

The Company was acquired by Science Applications International Corporation
("SAIC") on March 10, 1995. The Company is currently a wholly-owned subsidiary
of SAIC. Prior to the acquisition of the Company by SAIC, the Company's business
included commercial and government contracts awarded to the Company on a
competitive basis, including government contracts that were awarded to the
Company partially upon the Company's then minority-owned status. The contracts
which had been awarded to the Company based partially upon the Company's then
minority-owned status were transferred into a separately-owned entity prior to
the acquisition of the Company by SAIC.

In November 1995, SAIC adopted a plan to transfer the Company's remaining
government-based business to SAIC in order to enable the Company to focus on the
growth of its commercial business, which includes registration services and
Intranet services. This transfer was effective as of February 1996. The
operating results of both the minority-based government contracts business and
the remaining government-based business are reflected as discontinued operations
in the Company's financial statements for all periods presented (Note 11).

Under the terms of the acquisition agreement, the Company was acquired by
SAIC on March 10, 1995 in a stock-for-stock transaction accounted for as a
purchase. The fair market value of the SAIC stock exchanged for the outstanding
stock of the Company was approximately $3.9 million. The acquisition agreement
provided for certain purchase adjustments and related additional stock issuance
payments of approximately $600,000. After reflecting certain purchase accounting
adjustments, the net assets included on the opening balance sheet were as
follows:

<TABLE>
<S> <C>
Current assets.......................................................... $ 929,000
Furniture and equipment................................................. 734,000
Goodwill................................................................ 3,576,000
Other non-current assets................................................ 1,047,000
----------
6,286,000
Current liabilities..................................................... 1,625,000
Net liabilities of discontinued operations.............................. 181,000
----------
Net assets acquired at March 11, 1995.............................. $4,480,000
==========
</TABLE>

The excess of the purchase price over the estimated fair value of net
assets acquired has been reflected as goodwill and is being amortized over five
years.

The financial statements for periods subsequent to March 10, 1995 are
presented on the new basis of accounting arising from the acquisition. The
financial statements for the period from January 1, 1995 to March 10, 1995 and
for the year ended December 31, 1994 are presented on the Company's previous
basis of accounting. Subsequent to the acquisition, the results of continuing
and discontinued operations include allocations by SAIC of: (i) costs for
administrative functions and services per-

F-8
<PAGE> 91

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
formed on behalf of the continuing and discontinued operations of the Company by
centralized staff groups within SAIC, (ii) SAIC's general corporate expenses,
(iii) pension and other retirement benefit costs, and (iv) cost of capital
(Notes 5, 9 and 10). Only costs directly attributable to the Company's
government-based business that will not be incurred by the Company subsequent to
the transfer of this business to SAIC have been included in discontinued
operations.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NSF COOPERATIVE AGREEMENT

In January 1993, the Company entered into the Cooperative Agreement with
the NSF under which the Company provides Internet registration services for five
TLDs: .com, .org, .net, .edu and .gov. The Cooperative Agreement is subject to
review by the NSF and may be terminated by the NSF at any time at its discretion
or by mutual agreement. The Cooperative Agreement by its terms expires in March
1998, although the NSF may, at its option, extend the Cooperative Agreement to
September 1998. The NSF has stated that the Cooperative Agreement will not be
re-awarded to the Company or awarded to any other entity.

Originally, the Cooperative Agreement was structured as a cost
reimbursement plus fixed-fee contract (with a fee of 8%). Effective September
14, 1995, the NSF and the Company amended the Cooperative Agreement to authorize
the Company to begin charging customers a subscription fee of $50 per year for
each second level domain name in the .com, .org, .net, .edu and .gov TLDs. The
Company's registration services customers in the .com, .org and .net TLDs are
invoiced for a two-year subscription fee of $100 for initial registrations and
$50 per year for renewals of initial registrations. Under the terms of the
amendment to the Cooperative Agreement, 30% of the new registration or renewal
fees collected by the Company is required to be set aside to be reinvested for
the enhancement of the intellectual infrastructure of the Internet and, as such,
is not recognized as revenue by the Company. The Company has reflected these
funds with the appropriate percentage of net accounts receivable (Note 3) as
restricted assets and has recorded an equivalent, related current liability. The
Company maintains the cash received relating to the set aside funds in a
separate interest-bearing account. Restricted cash at December 31, 1996 and 1995
was approximately $13,049,000 and $122,000, respectively. These funds, plus any
interest earned, will be disbursed in a manner approved by the NSF. As of
December 31, 1996, none of these funds have been disbursed. Future receipts and
disbursements of these funds will not have an effect on the Company's business,
net financial position, or results of operations. For purposes of the Statement
of Cash Flows, amounts relating to Restricted Assets and the Internet Fund
Liability have been excluded in their entirety.

REVENUE RECOGNITION

Prior to September 14, 1995, net revenue was recognized under the
Cooperative Agreement on the basis of direct costs plus allowable indirect costs
and the earned portion of the fee. Since September 14, 1995, fees for Internet
registration services provided by the Company have been recognized on a
straight-line basis over the life of the registration term. The Company records
revenue net of an estimated provision for uncollectible accounts receivable
(Note 3).

Substantially all of the Company's Intranet services revenue is derived
from professional services which are generally provided to clients on a "time
and expense" basis. Professional services revenue is recognized as services are
performed. The Company performs a limited number of fixed-price projects under
which revenue is recognized using the percentage-of-completion method, based
upon costs incurred in comparison to total anticipated costs. The Company also
derives revenue from remote

F-9
<PAGE> 92

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
monitoring and hosting services; however, such revenue has not been significant
to date. Remote monitoring and hosting revenue is recognized ratably over the
term of the contract.

Certain aspects of a number of the Company's contracts are subject to
audits at the customer's discretion. Management believes that the results of any
such audits will not have a material effect on NSI's financial position or
results of operations.

DEFERRED REVENUE

Deferred revenue primarily represents the unearned portion of revenue
related to the unexpired term of Internet registration fees, net of an estimate
for uncollectible accounts receivable (Note 3).

CASH AND CASH EQUIVALENTS

The Company's policy is to include short-term investments with original
maturities of ninety days or less within cash and cash equivalents.

FINANCIAL INSTRUMENTS

The recorded value of the Company's financial instruments, which include
accounts receivable and accounts payable, approximates market value. Net revenue
from two customers approximated 63% and 22% in 1994, 45% and 21% for the period
from January 1, 1995 to March 10, 1995, 40% and 21% for the period from March
11, 1995 to December 31, 1995, and 20% and 0% for the year ended December 31,
1996. One of these customers was the NSF, whose impact on the above percentage
of revenues was reflective of activity prior to the September 14, 1995 amendment
of the Cooperative Agreement. Concentration of credit risk with respect to
registration receivables is limited due to the wide variety and number of
customers, as well as their dispersion across geographic areas. The Company has
no derivative financial instruments.

FURNITURE AND EQUIPMENT

Furniture and equipment are stated at cost. Depreciation on furniture,
office and computer equipment is calculated principally using a
declining-balance method over the useful lives of three to seven years.
Leasehold improvements are amortized using the straight-line method over the
shorter of the lease term or the estimated lives of the assets, generally six
years. The Company periodically reviews the carrying amounts of its furniture
and equipment to assess recoverability, and impairments are recognized in the
results of operations, as appropriate. The measurement of possible impairment is
based primarily on the ability to recover the balance of the furniture and
equipment from expected future operating cash flows on an undiscounted basis. At
December 31, 1996, management believed that there were no such impairments to
the carrying value of its property and equipment.

GOODWILL

Goodwill represents the excess of the purchase cost over the fair value of
net assets acquired in the acquisition and is amortized over five years using
the straight-line method. The Company periodically reviews goodwill to assess
recoverability, and impairments are recognized in the results of operations, as
appropriate. The measurement of possible impairment is based primarily on the
ability to recover the balance of the goodwill from expected future operating
cash flows on an undiscounted basis. Amortization expense for the period from
March 11, 1995 to December 31, 1995 of $580,000 and $715,000 for the year ended
December 31, 1996 was included in general and administrative expenses.

F-10
<PAGE> 93

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SOFTWARE DEVELOPMENT COSTS

Research and development costs are expensed as incurred. In accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86 "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed," the
Company has not capitalized software development costs incurred as of December
31, 1996. Research and development costs incurred for all periods presented
prior to December 31, 1995 were reimbursed to the Company by direct charges to
contracts and are included in cost of revenue for those periods.

INCOME TAXES

Deferred taxes are accounted for under SFAS No. 109 "Accounting for Income
Taxes," which is an asset and liability method of accounting for income taxes.
The liability method requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary differences
between carrying amounts and tax bases of assets and liabilities. A valuation
allowance is recorded if it is "more likely than not" that some portion of or
all of a deferred tax asset will not be realized. Additionally, under the
liability method, changes in tax rates and laws will be reflected in income in
the period such changes are enacted. For federal income tax purposes, the
Company's results will be included in SAIC's consolidated tax return.

For periods subsequent to the acquisition, income taxes are determined as
if the Company was a separate taxpayer. Income taxes currently payable have been
charged by the Company to the due to parent account in the period that the
liability arose. Income taxes currently receivable have been charged to the due
to parent account in the period that a refund could have been recognized by the
Company had the Company been a separate taxpayer.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make reasonable estimates
and assumptions, based upon all known facts and circumstances that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements. Actual results could
differ from those estimates. Estimates requiring relatively greater levels of
judgment include the allowance for uncollectible accounts receivable, the
assessment of the need for a tax valuation allowance and the amortization period
for goodwill.

STOCK BASED COMPENSATION

The Company accounts for stock option and employee stock purchase plans in
which its employees participate in accordance with the provisions of Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees." No compensation cost has been recognized by the Company for such
employee stock plans. SFAS No. 123, "Accounting for Stock-Based Compensation,"
provides an alternative accounting method to APB No. 25 and requires additional
pro forma disclosures (Note 10). The Company expects to continue to account for
such employee stock plans in accordance with the provisions of APB No. 25.

PRO FORMA BALANCE SHEET AND EARNINGS PER SHARE (UNAUDITED)

On August 21, 1997, the Company's Board of Directors approved a $10,000,000
dividend payable to SAIC (Note 13). This dividend is to be paid August 31, 1997.
Pursuant to Securities and Exchange

F-11
<PAGE> 94

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Commission Staff Accounting Bulletin ("SAB") No. 55, a pro forma balance sheet
is presented to reflect this dividend. Additionally, as required by SAB No. 55,
historical earnings per share are not presented and pro forma per share data is
presented which gives effect to the number of shares from the public offering
necessary to fund the amount of the $10,000,000 dividend payable to SAIC in
excess of the Company's net income for the 12 months ended June 30, 1997.

Pro forma net income (loss) per share of common stock is calculated by
dividing the net income (loss) by the sum of (i) the number of shares issued to
SAIC in connection with the Company's reincorporation in Delaware, (ii) common
stock equivalent shares from common stock options granted within one year of the
initial public offering, and (iii) the number of shares whose proceeds will be
used to pay the dividend in excess of the prior 12 months' net income as
described above. Common stock equivalent shares are calculated using the
treasury stock method. Pursuant to Securities and Exchange Commission SAB No.
83, common stock and common stock equivalent shares issued by the Company at
prices below the public offering price during the twelve month period prior to
the proposed offering date have been included in the calculations as if they
were outstanding since January 1, 1996 regardless of whether they are dilutive.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

Interim financial information for the six months ended June 30, 1996 and
1997 included herein is unaudited. However, in the opinion of the Company, the
interim financial information includes all adjustments, consisting of only
normal recurring adjustments, necessary for a fair presentation of the results
for the interim periods. The results of operations for the six months ended June
30, 1997 are not necessarily indicative of the results to be expected for the
full year ending December 31, 1997.

NOTE 3 -- RECEIVABLES

Receivables consist of the following amounts as of December 31:

<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Billed...................................................... $6,060,000 $27,430,000
Unbilled.................................................... 1,384,000 5,000,000
---------- -----------
Total accounts receivable before allowances............ 7,444,000 32,430,000
Less -- Allowance for uncollectible accounts................ (2,118,000) (15,439,000)
-- Accounts receivable allocable to 30% NSF
set-aside........................................... (1,286,000) (4,404,000)
---------- -----------
Accounts receivable, net.................................... $4,040,000 $12,587,000
========== ===========
</TABLE>

Unbilled receivables consist of costs which have been incurred on time and
expense contracts and Internet domain name registration fees which have not yet
been billed. Under the Cooperative Agreement, thirty percent of collected
registration fees is required to be set aside for disbursement at the direction
of the NSF.

In accounting for registration subscriptions, the Company initially records
the gross amount of the registration fees to accounts receivable and deferred
revenue. The allowance for estimated uncollectible accounts is recorded against
both accounts receivable and deferred revenue balances. (See Note 2 for
treatment of the 30% NSF set aside). From the net deferred revenue balance, the
Company records revenue on a straight-line basis over the subscription period.

F-12
<PAGE> 95

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 3 -- RECEIVABLES (CONTINUED)

The provision for uncollectible accounts receivable, which is recorded on a
straight-line basis over the subscription period and deducted from gross
registration fees in determining net revenue, was $124,000 and $3,597,000 for
the period from March 11, 1995 to December 31, 1995 and for the year ended
December 31, 1996, respectively. There was no provision necessary for the year
ended December 31, 1994 and for the period from January 1, 1995 to March 10,
1995. The Company's allowance for uncollectible accounts receivable is
associated solely with its registration business. The Company believes it has
been necessary to establish its provision for uncollectible accounts receivable
principally due to the large number of individuals and corporations that have
registered multiple domain names with the apparent intention of reselling such
names at a profit. The Company's experience has been that, in contrast to other
subscribers, such resellers have a higher tendency of default on their
subscription fees.

NOTE 4 -- FURNITURE AND EQUIPMENT

Furniture and equipment consist of the following amounts as of December 31:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Furniture and office equipment............................. $ 782,000 $ 879,000
Computer equipment......................................... 2,248,000 4,033,000
Leasehold improvements..................................... 214,000 234,000
---------- ----------
Furniture and equipment, at cost...................... 3,244,000 5,146,000
Less accumulated depreciation and amortization............. (2,177,000) (2,880,000)
---------- ----------
Furniture and equipment, net.......................... $ 1,067,000 $ 2,266,000
========== ==========
</TABLE>

NOTE 5 -- DEBT

Interest expense reflected in continuing operations for the year ended
December 31, 1994 and the period January 1, 1995 to March 10, 1995 was $109,000
and $9,000, respectively. Interest expense reflected in discontinued operations
for the year ended December 31, 1994 and for the period from January 1, 1995 to
March 10, 1995 was $495,000 and $51,000, respectively. Interest charges prior to
the acquisition have been reflected in continuing and discontinued operations
based on the debt balances associated with each of the continuing and
discontinued operations for each of the periods. In addition, interest expense
of $52,000 and $164,000 for the period from March 11, 1995 to December 31, 1995
was allocated by SAIC to the Company's continuing operations and discontinued
operations, respectively, based upon SAIC's cost of capital calculation. For the
year ended December 31, 1996, interest revenue of $496,000 was allocated by SAIC
based upon the cost of capital calculation. From its acquisition by SAIC in
March 1995 until December 1996, the Company participated in SAIC's centralized
cash management system whereby cash received from operations was transferred to
SAIC's centralized cash accounts and cash disbursements were funded from such
centralized cash accounts. Accordingly, the SAIC cost of capital formula
provides for charges and credits to the Company based upon management of certain
assets, including accounts receivable and fixed assets. Such amounts are not
necessarily indicative of the cost that would have been incurred if the Company
had been operated as a separate entity.

Effective January 1, 1997, the Company will no longer be subject to SAIC's
cost of capital calculation in connection with the Company fulfilling its own
treasury function. Interest paid for the year ended December 31, 1994, for the
periods from January 1, 1995 to March 10, 1995 and March 11,

F-13
<PAGE> 96

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5 -- DEBT (CONTINUED)
1995 to December 31, 1995 and for the year ended December 31, 1996 was $74,000,
$0, $103,000 and $0, respectively.

NOTE 6 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following amounts as
of December 31:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Accounts payable............................................. $ 80,000 $1,054,000
Accrued expenses............................................. 565,000 1,412,000
Accrued payroll.............................................. 710,000 115,000
---------- ----------
Total accounts payable and accrued expenses.................. $1,355,000 $2,581,000
========== ==========
</TABLE>

NOTE 7 -- PROVISION FOR INCOME TAXES

The results of the Company subsequent to its acquisition by SAIC were
included in SAIC's consolidated tax returns. The tax expense allocation
methodology is set forth in Note 2.

The provision for (benefit) from income taxes charged to continuing
operations consists of the following:

<TABLE>
<CAPTION>
FOR THE PERIOD
1995
YEAR ENDED --------------------------- YEAR ENDED
DECEMBER 31, JANUARY 1 TO MARCH 11 TO DECEMBER 31,
1994 MARCH 10 DECEMBER 31 1996
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Current:
Federal...................... $ 95,000 $ 40,000 $ 1,521,000 $ 10,171,000
State........................ 19,000 8,000 311,000 2,020,000
------- ------ ----------- ------------
Total current
provision............. 114,000 48,000 1,832,000 12,191,000
------- ------ ----------- ------------
Deferred:
Federal...................... (1,759,000) (10,716,000)
State........................ (360,000) (2,118,000)
----------- ------------
Total deferred
benefit............... (2,119,000) (12,834,000)
----------- ------------
Provision for (benefit) from
income taxes.................... $114,000 $ 48,000 $ (287,000) $ (643,000)
======= ====== =========== ============
</TABLE>

Deferred tax assets are comprised of the following temporary differences as
of December 31:

<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Deferred revenue............................................ $2,082,000 $13,846,000
Accrued vacation pay........................................ 87,000 118,000
Provision for uncollectible accounts receivable............. 48,000 1,091,000
Other....................................................... 4,000 --
---------- -----------
Total deferred tax asset.................................... $2,221,000 $15,055,000
========== ===========
</TABLE>

Tax valuation allowances were provided through March 10, 1995 against the
net deferred tax assets of both continuing operations and discontinued
operations. In connection with the acquisition purchase accounting, a
determination was made that tax valuation allowances were no longer required.

F-14
<PAGE> 97

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 7 -- PROVISION FOR INCOME TAXES (CONTINUED)

A reconciliation of the provision for income taxes to the amount computed
by applying the statutory federal income tax rate to income (loss) before income
taxes is provided below. The statutory federal income tax rate used was 34% for
all periods presented through December 31, 1995 and 35% for the year ended
December 31, 1996.
<TABLE>
<CAPTION>
FOR THE PERIOD 1995 YEAR ENDED
YEAR ENDED --------------------------- DECEMBER
DECEMBER 31, JANUARY 1 TO MARCH 11 TO 31,
1994 MARCH 10 DECEMBER 31 1996
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Federal tax at statutory rate............... $103,000 $ 1,000 $(570,000) $(794,000)
State income taxes, net of Federal tax
benefit................................... 13,000 -- (68,000) (96,000)
Nondeductible goodwill amortization......... 348,000 281,000
Other....................................... 4,000 1,000 3,000 (34,000)
Valuation allowance......................... (6,000) 46,000 -- --
------- ------ --------- ---------
Provision for (benefit) from income taxes... $114,000 $ 48,000 $(287,000) $(643,000)
======= ====== ========= =========
</TABLE>

The Company paid taxes of $212,000 and $119,000 for the year ended December
31, 1994 and for the period from January 1, 1995 to March 10, 1995,
respectively.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES

COMMITMENTS

Future minimum lease payments under noncancelable operating leases,
primarily for facilities, are:

<TABLE>
<CAPTION>
OPERATING
YEARS ENDING DECEMBER 31: LEASES
------------------------------------------------------------------------ ----------
<S> <C>
1997............................................................... $1,874,000
1998............................................................... 1,959,000
1999............................................................... 1,832,000
2000............................................................... 1,007,000
2001............................................................... 946,000
Thereafter......................................................... 869,000
----------
Total future minimum lease payments..................................... $8,487,000
==========
</TABLE>

In December 1992, the Company entered into a lease agreement for the
Company's headquarters in Herndon, Virginia that extended the lease term through
2002. Subsequent to the acquisition, SAIC re-negotiated the lease with the
landlord whereby SAIC has posted a $1,000,000 letter of credit. The Company
historically has not entered directly into leases; leases are generally entered
into by SAIC and then SAIC subleases the related assets to the Company under
identical terms of the head lease. Lease expense related to the continuing
operations based upon space utilized for the year ended December 31, 1994, for
the periods from January 1, 1995 to March 10, 1995 and March 11, 1995 to
December 31, 1995 and for the year ended December 31,1996 was $194,000, $36,000,
$342,000, and

F-15
<PAGE> 98

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 8 -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
COMMITMENTS (CONTINUED)
$924,000, respectively. Lease expense incurred by the discontinued operations
for the year ended December 31, 1994 and for the periods from January 1, 1995 to
March 10, 1995 and March 11, 1995 to December 31, 1995 was $1,079,000, $208,000
and $328,000, respectively. Subsequent to March 10, 1995, the Company generated
rental income in 1995 of $135,000 and $187,000 for the year ended December 31,
1996, from two subleases, which was recorded on the same basis as rent expense.

CONTINGENCIES

The Company is involved as plaintiff and defendant in litigation and
administrative proceedings primarily arising in the normal course of its
business. In the opinion of management, the Company's recovery, if any, or the
Company's liability, if any, under any pending litigation or administrative
proceeding will not materially affect its financial condition, results of
operations or cash flow.

As it relates to registration services, the applicability to the Company of
existing laws governing issues such as intellectual property ownership is
uncertain. Courts have indicated that, under certain circumstances, Internet
service providers could be held responsible for the failure to prevent the
distribution of material that infringes on others' copyrights and other
intellectual property. As further discussed below, there exists the likelihood
that the Company will become involved in future actions regarding disputes over
domain names. The future interpretation by the courts relating to the obligation
of domain name registration providers to prevent trademark infringement and
other legal issues is uncertain. Costs incurred or decisions rendered as a
result of any future government inquiry or other proceedings relating to any of
the foregoing could have a material adverse effect on the Company's business,
financial position and results of operations.

The Company has been named as a defendant in a number of lawsuits which
have generally involved domain name disputes between trademark owners and domain
name holders. Through July 31, 1997, no damages have been awarded to the
plaintiffs in any of the domain name lawsuits. The Company's domain name dispute
policy seeks to take a neutral position between these competing claims and is
designed to address claims that a domain name registered by the Company
infringes a third party's trademark. The Company is drawn into such disputes, in
part, as a result of claims by trademark owners that the Company is legally
required to, upon being requested to do so by a trademark holder, terminate the
right it granted to an alleged trademark infringer to register the domain name
in question. Further, trademark owners have also alleged that the Company should
be required to monitor future domain name registrations and reject registrations
of domain names which are identical or similar to their registered trademark.
The holders of the domain names registrations in dispute have, in turn,
questioned the Company's right to, absent a court order, take any action which
restricts or terminates their registration of the domain names in question. The
Company intends to vigorously defend itself in all such matters. In the opinion
of the management, the outcome of the existing lawsuits will not materially
affect the Company's financial condition, results of operations or cash flow.
However, such litigation has resulted in, and any future litigation can be
expected to result in, substantial legal and other expenses to the Company and a
diversion of the efforts of the Company's personnel. Such future potential
expenses cannot be reasonably estimated at this time.

See Note 14 "Subsequent Events (Unaudited)."

F-16
<PAGE> 99

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 9 -- TRANSACTIONS WITH SAIC

The financial statements as of and for the period from March 11, 1995 to
December 31, 1995 and for the year ended December 31, 1996 include significant
transactions with other SAIC business units involving functions and services
(such as cash management, tax administration, accounting, legal, data processing
and employee benefit plans) that were provided to the Company by centralized
SAIC organizations. The costs of these functions and services have been directly
charged and/or allocated to the Company using methods that management believes
are reasonable; primarily a percentage of budgeted administrative and overhead
costs. Such charges and allocations are not necessarily indicative of the costs
that would have been incurred if the Company had been a separate entity. Through
August 9, 1996, the amounts allocated by SAIC to the Company included both
administrative and overhead costs which are included in selling, general and
administrative expenses and cost of revenue respectively. Effective August 10,
1996, SAIC stopped allocating costs based upon pro rata labor and began
assessing the Company for corporate services provided by SAIC at a fee equal to
2.5% of net revenue with such percentage to be re-evaluated by both parties on
an annual basis. This fee is included in its entirety in selling, general and
administrative expenses. The arrangement will continue indefinitely until
terminated by either party upon 180 days' prior written notice.

Amounts charged and allocated to the Company for these functions and
services for the period from March 11, 1995 to December 31, 1995 and for the
year ended December 31, 1996 were $516,000 and $1,196,000, respectively, and are
principally included in selling, general and administrative expenses.
Additionally, certain interest charges/credits are allocated by SAIC to the
Company (Note 5). Sales as a subcontractor to SAIC for the period from March 11,
1995 to December 31, 1995 and for the year ended December 31, 1996 were $509,000
and $1,505,000, respectively. In addition, because the Company is included in
SAIC's consolidated tax returns, the Company is obligated to make payment for
its current tax liability to SAIC in accordance with the tax sharing
arrangement. (See Note 7). Due to parent represents the cumulative net activity
of all transactions between the Company and SAIC.

NOTE 10 -- EMPLOYEE BENEFIT PLANS

SAIC BENEFIT PLANS

Employees of the Company participate in various SAIC benefit plans, subject
to the applicable eligibility requirements. SAIC charges the Company directly
for the costs of such employee benefit plans. Charges related to the
administration of the SAIC benefit plans in which employees of the Company
participate are included within SAIC general corporate allocations (Notes 1 and
9).

In 1995, SAIC merged two of its profit sharing retirement plans into one
principal Profit Sharing Retirement Plan in which eligible employees
participate. Participants' interests vest 25% per year in the third through
sixth year of service. Participants also become fully vested upon reaching age
59 1/2, permanent disability or death.

SAIC has an Employee Stock Ownership Plan (the "Plan") in which eligible
employees participate. Cash contributions to the Plan are based upon amounts
determined annually by the SAIC Board of Directors and are allocated to
participants' accounts based on their annual compensation. The vesting
requirements for the Plan are the same as for the Profit Sharing Retirement
Plan.

SAIC has one principal Cash or Deferred Arrangement ("CODA") which allows
eligible participants to defer a portion of their income through contributions.
Such deferrals are fully vested, are not taxable to the participant until
distributed from the CODA upon termination, retirement, permanent disability or
death and may be matched by SAIC.

F-17
<PAGE> 100

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 10 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
SAIC BENEFIT PLANS (CONTINUED)
SAIC has a Bonus Compensation Plan which provides for bonuses to reward
outstanding performance. Bonuses are paid in the form of cash, fully vested
shares of SAIC Class A common stock or vesting shares of SAIC Class A common
stock. Awards of vesting shares of SAIC Class A common stock vest at the rate of
20%, 20%, 20% and 40% after one, two, three and four years, respectively. During
the period from March 11, 1995 to December 31, 1995 and during the year ended
December 31, 1996 a total of 24,450 and 53,040 SAIC options were granted to the
Company's employees, respectively, with exercise prices ranging from $15.72 to
$17.79 and $19.33 to $22.83 per share, respectively, with a weighted average
price of $16.17 and $20.51, respectively.

In 1995, SAIC adopted the Stock Compensation Plan and the Management Stock
Compensation Plan, together referred to as the "Stock Compensation Plans." The
Stock Compensation Plans provide for awards of share units to eligible
employees, which share units generally correspond to shares of SAIC Class A
common stock which are held in trust for the benefit of participants.
Participants' interests in these share units vest on a seven year schedule at
the rate of one-third at the end of each of the fifth, sixth and seventh years
following the date of the award.

SAIC also has an Employee Stock Purchase Plan which allows eligible
employees to purchase shares of SAIC's Class A common stock, with SAIC
contributing 5% of the purchase price.

PRE-ACQUISITION BENEFIT PLANS

Prior to the acquisition, the Company had a plan (the "401(k) Plan")
covering substantially all employees which provided for employee savings under
Internal Revenue Code Section 401(k). Eligible employees under the 401(k) Plan
contributed from one percent to ten percent of gross pay to their plan savings
account. The Company matched employee contributions to the 401(k) Plan, up to
six percent of base salary. Contributions to the 401(k) Plan for the year ended
December 31, 1994 and for the period from January 1, 1995 to March 10, 1995 were
not significant. At the time of SAIC's acquisition of the Company, all
contributions to the 401(k) Plan ceased and the 401(k) Plan was subsequently
terminated.

1996 STOCK INCENTIVE PLAN

The 1996 Stock Incentive Plan (the "Incentive Plan") of the Company was
adopted by the Board of Directors on September 18, 1996. The Incentive Plan
provides for awards in the form of restricted shares, stock units, options
(including incentive stock options ("ISOs") and nonstatutory stock options
("NSOs")) or stock appreciation rights ("SARs"). Employees, outside directors,
consultants and advisors of the Company are eligible for the grant of restricted
shares, stock units, SARs and NSOs. Only employees are eligible for the grant of
ISOs. A total of 2,306,250 shares of Common Stock has been initially reserved
for issuance under the Incentive Plan. Such number of shares may be increased by
up to 2% of the total number of common shares of the Company outstanding at the
end of the most recent calendar year, subject to a cumulative increase of
1,000,000 common shares.

Consideration for each award under the Incentive Plan will be established
by the Compensation Committee of the Board of Directors, but in no event will
the option price for ISOs be less than 100% of the fair market value of the
stock on the date of grant. Awards will have such terms and be exercisable in
such manner and at such times as the Compensation Committee may determine.
However, each ISO must expire within a period of not more than ten years from
the date of grant.

F-18
<PAGE> 101

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 10 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
1996 STOCK INCENTIVE PLAN (CONTINUED)
As of December 31, 1996, a total of 100,900 ISOs and 1,124,825 NSOs have
been granted under the Incentive Plan, of which 461,250 will be exercisable at
$11.25 per share and 764,475 at $14.00 per share. The stock options become
exercisable one year after the date of the grant, vest 30%, 30%, 20% and 20% on
each anniversary date of the grant and have a term of five years. No options
have been exercised or forfeited. The weighted average contractual life of
options outstanding at December 31, 1996 was 4.9 years. No restricted shares,
stock units or SARs have been granted to date.

PRO FORMA DISCLOSURES

The weighted-average fair value of the options granted during the period
from March 11, 1995 to December 31, 1995 and during the year ended December 31,
1996 under the SAIC Bonus Compensation Plan were estimated at $3.66 and $4.30,
respectively, and $2.76 for the options granted during the year ended December
31, 1996 under the Company's Incentive Plan using the Black-Scholes model. The
following weighted average assumptions were used in calculating the option fair
values:

<TABLE>
<CAPTION>
COMPANY
STOCK
SAIC STOCK OPTIONS OPTIONS
--------------------------------- ------------
MARCH 11, 1995 YEAR ENDED YEAR ENDED
TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1996
----------------- ------------ ------------
<S> <C> <C> <C>
Expected life (years).............................. 4.0 4.0 4.0
Risk-free interest rate............................ 6.45% 5.91% 5.98%
Volatility......................................... 0.00% 0.00% 0.00%
Dividend yield..................................... 0.00% 0.00% 0.00%
</TABLE>

Under the above models, the total value of SAIC stock options granted
during 1995 and 1996 was approximately $89,000 and $228,000, respectively, and
$3,379,000 for the Company stock options granted in 1996, all of which would be
amortized ratably on a pro forma basis over the four year option terms. Had the
Company recorded compensation costs for these plans in accordance with SFAS No.
123, the Company's pro forma net loss would have been $1,430,000 for the period
March 11, 1995 to December 31, 1995 and $1,763,000 for the year ended December
31, 1996. Pro forma (unaudited) net loss per share would have been $(0.13) for
the year ended December 31, 1996.

NOTE 11 -- DISCONTINUED OPERATIONS

As discussed in Note 1, in November 1995 SAIC adopted a plan to transfer
the Company's government-based business to SAIC in order for the Company to
focus on the growth of the commercial business. Such transfer was substantially
completed in February 1996. Prior to SAIC's acquisition of the Company, the
portion of the Company's business relating to the minority-based government
business had been transferred into a separately-owned entity of the then
majority shareholder. The activities of both the minority-based government
business and the remaining government-based business are reflected as
discontinued operations in the financial statements of the Company for all
periods presented. Net income (loss) from discontinued operations exclude
general corporate overhead of the Company. No gain or loss was incurred as a
consequence of the transfer of these businesses.

F-19
<PAGE> 102

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 11 -- DISCONTINUED OPERATIONS (CONTINUED)
The net liabilities for discontinued operations consisted of the following
as of December 31, 1995:

<TABLE>
<S> <C>
Assets:
Current............................................................ $5,306,000
Non-current........................................................ 249,000
----------
5,555,000
----------
Liabilities:
Current............................................................ 5,763,000
Non-current........................................................ --
----------
5,763,000
----------
Net liabilities -- discontinued operations.............................. $ (208,000)
==========
</TABLE>

Summary operating results of the discontinued operations were as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD 1995
YEAR ENDED ----------------------------
DECEMBER 31, JANUARY 1 TO MARCH 11 TO
1994 MARCH 10 DECEMBER 31
------------ ------------ -----------

<CAPTION>
<S> <C> <C> <C>
Revenue............................................. $ 25,264,000 $ 4,270,000 $ 7,882,000
Costs and expenses.................................. (26,338,000) (5,478,000) (7,773,000)
----------- ----------- --------
Income (loss) from discontinued operations before
income taxes...................................... (1,074,000) (1,208,000) 109,000
Provision for income taxes.......................... 95,000 167,000 137,000
----------- ----------- --------
Loss from discontinued operations, net of income
taxes............................................. $ (1,169,000) $ (1,375,000) $ (28,000)
=========== =========== ========
</TABLE>

NOTE 12 -- EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share." This statement establishes standards for computing
and presenting earnings per share, simplifying previous standards for computing
earnings per share ("EPS") and making them comparable to international
standards. It replaces the presentation of primary EPS with a presentation of
basic EPS, and requires dual presentation of basic and diluted EPS on the face
of the income statement for all entities with complex capital structures. Basic
EPS excludes dilution and is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. SFAS No. 128 requires restatement of all prior
period earnings per share data presented, and is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. Earlier application is not permitted.

The Company will adopt this statement during the fourth quarter of 1997, as
required. Accordingly, all prior period EPS data will be restated. To illustrate
the effect of adoption, the Company has elected to disclose pro forma basic and
diluted EPS amounts computed using SFAS 128, as permitted

F-20
<PAGE> 103

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 12 -- EFFECT OF NEW ACCOUNTING PRONOUNCEMENT (CONTINUED)

by the standard. The pro forma basic and diluted EPS for the year ended December
31, 1996, and for the six months ended June 30, 1996 and 1997 are set forth
below:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED ----------------------
DECEMBER 31, 1996 1996 1997
----------------- ------- ------
<S> <C> <C> <C>
Pro forma basic earnings per share................ $ (0.12) $ (0.11) $ 0.09
============== ====== =====
Pro forma diluted earnings per share.............. $ (0.12) $ (0.11) $ 0.09
============== ====== =====
</TABLE>

NOTE 13 -- RECAPITALIZATION

On June 26, 1997, the Board of Directors amended the Certificate of
Incorporation to provide for two classes of common stock, designated as Class A
and Class B. The accompanying financial statements have been adjusted to reflect
this change.

NOTE 14 -- SUBSEQUENT EVENTS (UNAUDITED)

Stock Incentive Plan

On April 18, 1997, the Board of Directors increased the number of shares
initially reserved for issuance under the Incentive Plan to 2,556,250. Between
January 1, 1997 and July 31, 1997, the Company granted options to purchase
340,000 shares of the Company's Class A common stock at $14.00 per share. In
addition, options to purchase 26,000 shares were canceled during that period.

Commitments

On May 30, 1997, the Company entered into an operating lease for additional
office facilities for the period from May 30, 1997 through July 31, 2002. During
the period from January 1, 1997 through May 31, 1997, the Company acquired
$2,537,000 of equipment under a capital lease.

Contingencies

On March 20, 1997, PG Media, Inc., a New York-based corporation ("PG
Media"), filed a lawsuit against the Company in the United States District
Court, Southern District of New York alleging that the Company had restricted
access to the Internet by not adding TLDs in violation of antitrust laws under
the Sherman Act. In its complaint, PG Media has asked, in addition to requesting
damages, that the Company be ordered to amend the root zone configuration file
so that the file includes reference to PG Media's TLDs and name servers. The
Company has answered the complaint, but no motions are pending and no schedule
has yet been set by the court for these proceedings. In addition, the Company
recently received written direction from the NSF not to take any action to
create additional TLDs or to add any new TLDs to the Internet root servers until
further guidance is provided by the NSF. The Company believes that it has
meritorious defenses and intends to vigorously defend itself against the claims
made by PG Media and cannot reasonably estimate the potential impact of such
claims.

On June 27, 1997, SAIC received a Civil Investigative Demand ("CID") from
the U.S. Department of Justice ("DOJ") issued in connection with an
investigation to determine whether there is, has been, or may be a violation of
antitrust laws under the Sherman Act relating to Internet registration products
and services. The CID seeks documents and information from SAIC and the Company
relating to their Internet registration business. Neither SAIC nor the Company
is aware of the scope or nature of the

F-21
<PAGE> 104

NETWORK SOLUTIONS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 14 -- SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)

investigation. The Company cannot reasonably estimate the potential impact of
such investigation, nor can it predict whether a civil action will ultimately be
filed by the DOJ or by private litigants as a result of the DOJ investigation
or, if filed, what such action would entail. The Company is unable to predict
the form of relief that might be sought in such an action or that might be
awarded by a court or imposed as a result of any settlement between the Company
and the DOJ or private litigants. Any such relief could have a material adverse
effect on the Company's financial condition and results of operations.

Dividend

On August 21, 1997, the Board of Directors declared a $10,000,000 dividend
payable on August 31, 1997 to SAIC.

F-22
<PAGE> 105

[INSIDE BACK COVER OF PROSPECTUS]

DEPICTION OF INTRANET SERVICES BUSINESS APPEARS HERE

Intranet-Enabled
Business Solutions

INTRANET
SERVICES

<TABLE>
<S> <C>
Intranet Development Network & Systems
and Re-Engineering Security
</TABLE>

<PAGE> 106

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 7
Use of Proceeds...................... 23
Dividend Policy...................... 23
Capitalization....................... 24
Dilution............................. 25
Selected Financial Data.............. 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 28
Business............................. 41
Management........................... 57
Relationship with SAIC and Certain
Transactions....................... 66
Principal Stockholders............... 70
Description of Capital Stock......... 71
Shares Eligible for Future Sale...... 76
Underwriting......................... 78
Legal Matters........................ 79
Experts.............................. 80
Additional Information............... 80
Index to Financial Statements........ F-1
</TABLE>

------------------

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- ------------------------------------------------------
- ------------------------------------------------------

2,300,000 SHARES

[LOGO]

CLASS A COMMON STOCK

-----------------------
PROSPECTUS
-----------------------

HAMBRECHT & QUIST

J. P. MORGAN & CO.

PAINEWEBBER INCORPORATED

, 1997

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 107

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the securities
being registered hereby, other than underwriting discounts and commissions. All
amounts are estimated except the Securities and Exchange Commission registration
fee and the National Association of Securities Dealers, Inc. filing fee.

<TABLE>
<CAPTION>
PAYABLE BY
REGISTRANT*
-----------
<S> <C>
SEC registration fee......................................... $ 12,825
National Association of Securities Dealers, Inc. filing
fee........................................................ 4,000
Nasdaq Filing Fee............................................ 18,000
Blue Sky fees and expenses................................... 1,000
Accounting fees and expenses................................. 600,000
Legal fees and expenses...................................... 300,000
Printing and engraving expenses.............................. 100,000
Registrar and transfer agent's fees.......................... 11,000
Miscellaneous fees and expenses.............................. 53,175
--------
Total................................................... $ 1,100,000
========
</TABLE>

- ---------------

* All expenses listed above are estimates except for the SEC registration fee
and the NASD filing fee.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). Article VIII of the Registrant's
Certificate of Incorporation (Exhibit 3(i) hereto) provides for indemnification
of the Registrant's directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. The Registrant has also entered into agreements with its directors and
officers that will require the Registrant, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors or officers to the fullest extent not prohibited by law.

The Underwriting Agreement (Exhibit 1.1) provides for indemnification by
the Underwriters of the Registrant, its directors and officers, and by the
Registrant and SAIC of the Underwriters, for certain liabilities, including
liabilities arising under the Act, and affords certain rights of contribution
with respect thereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since January 1, 1994, the Registrant has issued and sold (without payment
of any selling commission to any person) the following unregistered securities:

1. From October 14, 1996 to July 31, 1997, the Registrant granted incentive
stock options to purchase an aggregate of 100,900 shares of the Registrant's
Class A Common Stock to employees, officers and directors of the Registrant
under its 1996 Stock Incentive Plan at exercise prices ranging from $11.25 to
$14.00 per share. Certain of these options vest over a period of time following
their respective dates of grant pursuant to the Registrant's 1996 Stock
Incentive Plan.

II-1
<PAGE> 108

2. From October 14, 1996 to July 31, 1997, the Registrant granted
nonstatutory stock options to purchase an aggregate of 1,438,825 shares of the
Registrant's Class A Common Stock to employees, officers and directors of the
Company under its 1996 Stock Incentive Plan at exercise prices ranging from
$11.25 to $14.00 per share. Certain of these options vest over a period of time
following their respective dates of grant, pursuant to the Registrant's 1996
Stock Incentive Plan.

The sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated
under Section 3(b) of the Securities Act, as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under such Rule 701.
The recipients of securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and instruments issued in such
transactions. All recipients had access, through their relationship with the
Company, to information about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3(i)** Second Amended and Restated Certificate of Incorporation.
3(ii)** Bylaws of the Registrant, as amended.
4.1 Form of Common Stock Certificate.
4.2** Reference is made to Exhibits 3(i) and 3(ii).
5.1 Opinion of Pillsbury Madison & Sutro LLP.
10.1** Cooperative Agreement between the National Science Foundation and Network Solutions,
Inc., as amended by Amendments Nos. 1, 2, 3 and 5.
10.2** Amendment No. 4 to the Cooperative Agreement dated September 13, 1995.
10.3** Master Services Agreement for System Management Services dated January 21, 1997 by
and between NationsBanc Services, Inc. and Network Solutions, Inc.
10.4** 1996 Stock Incentive Plan and forms of agreements thereunder.
10.5 Corporate Services Agreement between Network Solutions, Inc. and Science
Applications International Corporation.
10.6* Tax Sharing Agreement between Network Solutions, Inc. and Science Applications
International Corporation.
10.7 Registration Rights Agreement between Network Solutions, Inc. and Science
Applications International Corporation.
10.8 Noncompetition and Corporate Opportunities Agreement between Network Solutions, Inc.
and Science Applications International Corporation.
10.9 Letter Agreement dated September 16, 1996 between the Registrant and Gabriel A.
Battista, as amended as of September 23, 1996.
10.10 Science Applications International Corporation Employee Stock Ownership Plan and
amendments thereto.
10.11 Science Applications International Corporation 1995 Stock Option Plan.
10.12 Letter dated September 13, 1995 regarding Amendment No. 4 to the Cooperative
Agreement.
11.1 Statement of computation of earnings per share.
23.1 Consent of Price Waterhouse LLP (see Page II-5).
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
24.1** Power of Attorney.
24.2 Power of Attorney of John E. Glancy.
27.1 Financial Data Schedule.
</TABLE>

- ---------------
* To be filed by amendment.

** Previously filed.

II-2
<PAGE> 109

(b) FINANCIAL STATEMENT SCHEDULES

Schedules other than those referred to above have been omitted because they
are not applicable or not required or because the information is included
elsewhere in the Financial Statements or the notes thereto.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(3) The Registrant will provide to the underwriters at the closing(s)
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.

II-3
<PAGE> 110

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Herndon, State of Virginia, on the 27th day of August, 1997.

NETWORK SOLUTIONS, INC.

BY /s/ GABRIEL A. BATTISTA
------------------------------------
Gabriel A. Battista
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- ---------------------------------------- ----------------------------------- ----------------
<C> <S> <C>
/s/ GABRIEL A. BATTISTA Chief Executive Officer and August 27, 1997
- ---------------------------------------- Director
Gabriel A. Battista

/s/ ROBERT J. KORZENIEWSKI Chief Financial Officer (Principal August 27, 1997
- ---------------------------------------- Financial Officer)
Robert J. Korzeniewski

RUSSELL L. HELBERT* Controller (Principal Accounting August 27, 1997
- ---------------------------------------- Officer)
Russell L. Helbert

MICHAEL A. DANIELS* Chairman of the Board August 27, 1997
- ----------------------------------------
Michael A. Daniels

J. ROBERT BEYSTER* Director August 27, 1997
- ----------------------------------------
J. Robert Beyster

CRAIG I. FIELDS* Director August 27, 1997
- ----------------------------------------
Craig I. Fields

JOHN E. GLANCY* Director August 27, 1997
- ----------------------------------------
John E. Glancy

WILLIAM A. ROPER, JR.* Director August 27, 1997
- ----------------------------------------
William A. Roper, Jr.

STRATTON D. SCLAVOS* Director August 27, 1997
- ----------------------------------------
Stratton D. Sclavos

DONALD N. TELAGE* Director August 27, 1997
- ----------------------------------------
Donald N. Telage

*By: /s/ ROBERT J. KORZENIEWSKI
- ----------------------------------------
(Robert J. Korzeniewski,
Attorney-in-Fact)
</TABLE>

II-4
<PAGE> 111

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated March 17, 1997, except as
to Note 13 which is as of June 26, 1997, relating to the financial statements of
Network Solutions, Inc., for the year ended December 31, 1996 and for the period
from March 11, 1995 to December 31, 1995 and of our report dated March 17, 1997,
except as to Note 13 which is as of June 26, 1997, relating to the financial
statements of Network Solutions, Inc., for the period from January 1, 1995 to
March 10, 1995 and for the year ended December 31, 1994, which appear in such
Prospectus. We also consent to the application of such reports to the Financial
Statement Schedule for the year ended December 31, 1996, the period from March
11, 1995 to December 31, 1995, the period from January 1, 1995 to March 10, 1995
and for the year ended December 31, 1994 listed under Item 16(b) of this
Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our reports. The audits referred to in such
reports also included this schedule. We also consent to the reference to us
under the heading "Experts" in such Prospectus.

PRICE WATERHOUSE LLP
Falls Church, VA

August 21, 1997

II-5
<PAGE> 112

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
================================================================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
-------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER
BEGINNING COSTS AND ACCOUNTS-- DEDUCTIONS-- BALANCE AT
DESCRIPTION OF YEAR EXPENSES DESCRIBE DESCRIBE END OF YEAR
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994
Allowance for uncollectible
accounts, included in net assets
(liabilities) of discontinued
operations...................... $ 345,000 $ 464,000 $ -- $ -- $ 809,000
Deferred tax valuation allowance,
continuing operations........... 61,000 (5,000) -- -- 56,000
Deferred tax valuation allowance,
discontinued operations......... 377,000 135,000 -- -- 512,000
For the period from January 1, 1995 to
March 10, 1995
Allowance for uncollectible
accounts, included in net assets
(liabilities) of discontinued
operations...................... 809,000 344,000 -- -- 1,153,000
Deferred tax valuation allowance,
continuing operations........... 56,000 46,000 -- -- 102,000(1)
Deferred tax valuation allowance,
discontinued operations......... 512,000 276,000 -- -- 788,000(1)
- ----------------------------------------------------------------------------------------------------------------

For the period from March 11, 1995 to
December 31, 1995
Allowance for uncollectible
accounts, continuing
operations...................... $ -- $ 124,000 $ 1,994,000(2) $ -- $ 2,118,000
Allowance for uncollectible
accounts, included in net assets
(liabilities) of discontinued
operations...................... 1,153,000 465,000 -- -- 1,618,000
Year ended December 31, 1996
Allowance for uncollectible
accounts, continuing
operations...................... 2,118,000 3,597,000 19,270,000(2) 9,546,000 (3) 15,439,000
Allowance for uncollectible
accounts, included in net assets
(liabilities) of discontinued
operations...................... 1,618,000 -- -- 1,618,000 (4) --
</TABLE>

- ---------------

(1) In connection with the acquisition purchase accounting, a determination was
made that the tax valuation allowances were no longer required. (See Note 7
of Notes to Financial Statements.)

(2) Charged to allowance for deferred revenue (See Notes 2 and 3 of Notes to
Financial Statements).

(3) Amounts are write-offs of uncollectible accounts receivable.

(4) Disposition associated with discontinued operations (See Note 11 of Notes to
Financial Statements).
<PAGE> 113

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------ ---------------------------------------------------------------------------- ------
<S> <C> <C>
1.1* Form of Underwriting Agreement..............................................
3(i)** Second Amended and Restated Certificate of Incorporation....................
3(ii)** Bylaws of the Registrant, as amended........................................
4.1 Form of Common Stock Certificate............................................
4.2** Reference is made to Exhibits 3(i) and 3(ii)................................
5.1 Opinion of Pillsbury Madison & Sutro LLP....................................
10.1** Cooperative Agreement between the National Science Foundation and Network
Solutions, Inc., as amended by Amendments Nos. 1, 2, 3 and 5................
10.2** Amendment No. 4 to the Cooperative Agreement dated September 13, 1995.......
10.3** Master Services Agreement for System Management Services dated January 21,
1997 by and between NationsBanc Services, Inc. and Network Solutions,
Inc.........................................................................
10.4 1996 Stock Incentive Plan and forms of agreements thereunder................
10.5 Corporate Services Agreement between Network Solutions, Inc. and Science
Applications International Corporation......................................
10.6* Tax Sharing Agreement between Network Solutions, Inc. and Science
Applications International Corporation......................................
10.7 Registration Rights Agreement between Network Solutions, Inc. and Science
Applications International Corporation......................................
10.8 Noncompetition and Corporate Opportunities Agreement between Network
Solutions, Inc. and Science Applications International Corporation..........
10.9 Letter Agreement dated September 16, 1996 between the Registrant and Gabriel
A. Battista, as amended as of September 23, 1996............................
10.10 Science Applications International Corporation Employee Stock Ownership Plan
and amendments thereto......................................................
10.11 Science Applications International Corporation 1995 Stock Option Plan.......
10.12 Letter dated September 13, 1995 regarding Amendment No. 4 to the Cooperative
Agreement...................................................................
11.1 Statement of computation of earnings per share..............................
23.1 Consent of Price Waterhouse LLP (see Page II-5).............................
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1)..........
24.1** Power of Attorney...........................................................
24.2 Power of Attorney for John E. Glancy........................................
27.1 Financial Data Schedule.
</TABLE>

- ---------------
* To be filed by amendment.

** Previously filed.

<PAGE> 1
EXHIBIT 4.1

<TABLE>
<S> <C>
COMMON STOCK COMMON STOCK

NUMBER SHARES
NSOL [NETWORK SOLUTIONS LOGO]

INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE

SEE REVERSE FOR CERTAIN DEFINITIONS
AND A STATEMENT AS TO THE RIGHTS,
PREFERENCES, PRIVILEGES AND
RESTRICTIONS ON SHARES

CUSIP 64121Q 10 2

THIS CERTIFIES THAT

is the record holder of
</TABLE>

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $0.001 PAR VALUE
PER SHARE, OF NETWORK SOLUTIONS, INC.

transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

Dated:

[NETWORK SOLUTIONS INCORPORATED
CORPORATE SEAL 1979]

[SIG] [SIG]

CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER

COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR

BY
AUTHORIZED SIGNATURE

<PAGE> 2

A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights as established, from time to time, by the Certificate
of Incorporation of the Corporation and by any certificate of determination,
the number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
from the Secretary of the Corporation at the principal office of the
Corporation.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties UNIF GIFT MIN ACT ......................... Custodian .........................
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act ........................................................
(State)
UNIF TRF MIN ACT ................ Custodian (until age .......................
(Cust)
............................ under Uniform Transfers
(Minor)
to Minors Act .................................................
(State)
</TABLE>

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, __________________ hereby sell, assign, and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

- -------------------------------------------

_______________________________________________________________________________
(PLEASE TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

_______________________________________________________________________________

_________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

_______________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated________________________________

X_______________________________________________

X_______________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.

Signature(s) Guaranteed

By_______________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO
S.E.C. RULE 17Ad_15.

<PAGE> 1

Exhibit 5.1

PILLSBURY MADISON & SUTRO LLP
2700 Sand Hill Road
Menlo Park, CA 94025
Tel: (650) 233-4500
Fax: (650) 233-4545

August 22, 1997

Network Solutions, Inc.
505 Huntmar Park Drive
Herndon, Virginia 20170

Re: Registration Statement on Form S-1

Ladies and Gentlemen:

We are acting as counsel for Network Solutions, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of 2,645,000 shares of Class A Common
Stock, par value $.001 per share (the "Class A Common Stock"), of the Company
(including 345,000 shares subject to the underwriters' over-allotment option)
to be offered and sold by the Company. In this regard we have participated in
the preparation of a Registration Statement on Form S-1 relating to such
2,645,000 shares of Class A Common Stock. (Such Registration Statement, as
amended, and including any registration statement related thereto and filed
pursuant to Rule 462(b) under the Securities Act (a "Rule 462(b) registration
statement") is herein referred to as the "Registration Statement.")

We are of the opinion that the shares of Class A Common Stock to be
offered and sold by the Company (including any shares of Class A Common Stock
registered pursuant to a Rule 462(b) registration statement) have been duly
authorized and, when issued and sold by the Company in the manner described in
the Registration Statement and in accordance with the resolutions adopted by
the Board of Directors of the Company, will be legally issued, fully paid and
nonassessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.

Very truly yours,

/s/ PILLSBURY MADISON & SUTRO LLP

<PAGE> 1
EXHIBIT 10.4

NETWORK SOLUTIONS, INC.

1996 STOCK INCENTIVE PLAN

(Amended and Restated Effective July 7, 1997)
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Committee Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Committee Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 3. SHARES AVAILABLE FOR GRANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Basic Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Additional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3 Dividend Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 4. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 General Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 Incentive Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.3 Limits on Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE 5. OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.1 Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.2 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.3 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.4 Exercisability and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.5 Effect of Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.6 Modification or Assumption of Options. . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 6. PAYMENT FOR OPTION SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.1 General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.2 Surrender of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.3 Exercise/Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.4 Exercise/Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.5 Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.6 Other Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE 7. STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1 SAR Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.2 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.3 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.4 Exercisability and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.5 Effect of Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.6 Exercise of SARs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.7 Modification or Assumption of SARs. . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>

-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.1 Time, Amount and Form of Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.2 Payment for Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.3 Vesting Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.4 Form and Time of Settlement of Stock Units . . . . . . . . . . . . . . . . . . . . . 6
8.5 Death of Recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8.6 Creditors' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 9. VOTING AND DIVIDEND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.1 Restricted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.2 Stock Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 10. PROTECTION AGAINST DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10.1 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10.2 Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 11. AWARDS UNDER OTHER PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 12. PAYMENT OF DIRECTOR'S FEES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 8
12.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
12.2 Elections to Receive NSOs or Stock Units . . . . . . . . . . . . . . . . . . . . . . 8
12.3 Number and Terms of NSOs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12.4 Number and Terms of Stock Units . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE 13. LIMITATION ON RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13.1 Retention Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13.2 Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13.3 Regulatory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE 14. LIMITATION ON PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14.1 Basic Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14.2 Reduction of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14.3 Overpayments and Underpayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14.4 Related Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE 15. WITHHOLDING TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15.2 Share Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 16. ASSIGNMENT OR TRANSFER OF AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 17. FUTURE OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17.1 Term of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17.2 Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 18. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 19. EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

-iii-
<PAGE> 5
NETWORK SOLUTIONS, INC.

1996 STOCK INCENTIVE PLAN

(Amended and Restated Effective July 7, 1997)

ARTICLE 1. INTRODUCTION.

The Plan was adopted by the Board on September 18, 1996, subject to
approval by the Company's stockholders. The Plan was most recently amended and
restated on July 7, 1997 to reflect the recapitalization of the common shares
of the Company.

The purpose of the Plan is to promote the long-term success of the
Company and the creation of stockholder value by (a) encouraging Key Employees
to focus on critical long-range objectives, (b) encouraging the attraction and
retention of Key Employees with exceptional qualifications and (c) linking Key
Employees directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights.

The Plan shall be governed by, and construed in accordance with, the
laws of the State of Delaware (except their choice-of-law provisions).

ARTICLE 2. ADMINISTRATION.

2.1 Committee Composition. The Plan shall be administered by the
Committee. Effective with the Company's initial public offering, the Committee
shall consist of two or more directors of the Company who shall satisfy the
requirements of Rule 16b-3 (or its successor) under the Exchange Act with
respect to the grant of Awards to persons who are officers or directors of the
Company under Section 16 of the Exchange Act or the Board itself.

The Board may also appoint one or more separate committees of the
Board, each composed of one or more directors of the Company who need not
qualify under Rule 16b-3, who may administer the Plan with respect to Key
Employees who are not considered officers or directors of the Company under
Section 16 of the Exchange Act, may grant Awards under the Plan to such Key
Employees and may determine all terms of such Awards.

2.2 Committee Responsibilities. The Committee shall:

(a) Select the Key Employees who are to receive Awards under the
Plan;

(b) Determine the type, number, vesting requirements and other
features and conditions of such Awards;

-1-
<PAGE> 6
(c) Interpret the Plan; and

(d) Make all other decisions relating to the operation of the Plan.

The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the
Plan shall be final and binding on all persons.

ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

3.1 Basic Limitation. Common Shares issued pursuant to the Plan may
be authorized but unissued shares or treasury shares. The aggregate number of
Common Shares initially reserved for award under the Plan shall be 2,306,250
shares. Effective January 1, 1997 and on each January 1 thereafter for the
remaining term of the Plan, the aggregate number of Common Shares which may be
issued under the Plan to individuals shall be increased by a number of Common
Shares equal to 2% of the total number of the Class A and Class B shares of
common stock of the Company outstanding at the end of the most recently
concluded calendar year. Any Common Shares that have been reserved but not
issued as Restricted Shares, Share Units, Options or SARs during any calendar
year shall remain available for grant during any subsequent calendar year.
Notwithstanding the foregoing, no more than 1,000,000 Common Shares shall be
available for the grant of ISOs for the remaining term of the Plan. The
limitation of this Section 3.1 shall be subject to adjustment pursuant to
Article 10.

3.2 Additional Shares. If Stock Units, Options or SARs are forfeited
or if Options or SARs terminate for any other reason before being exercised,
then the corresponding Common Shares shall again become available for Awards
under the Plan. If SARs are exercised, then only the number of Common Shares
(if any) actually issued in settlement of such SARs shall reduce the number
available under Section 3.1 and the balance shall again become available for
Awards under the Plan. If Restricted Shares are forfeited, then such Shares
shall again become available for Awards under the Plan.

3.3 Dividend Equivalents. Any dividend equivalents distributed under
the Plan shall not be applied against the number of Restricted Shares, Stock
Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.

ARTICLE 4. ELIGIBILITY.

4.1 General Rules. Only Key Employees (including, without
limitation, independent contractors who are not members of the Board) shall be
eligible for designation as Participants by the Committee. All Outside
Directors shall be eligible for making an election described in Article 12.

4.2 Incentive Stock Options. Only Key Employees who are common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, a Key Employee who owns more than ten percent
(10%) of the total combined voting

-2-
<PAGE> 7
power of all classes of outstanding stock of the Company or any of its Parents
or Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(5) of the Code are satisfied.

4.3 Limits on Awards. No Key Employee shall receive Options or SARs
to purchase Common Shares during any fiscal year covering in excess of
1,000,000 Common Shares; provided, however, a newly hired Key Employee may
receive Options or SARs to purchase up to 1,000,000 Common Shares during the
portion of the fiscal year remaining after his or her date of hire.

ARTICLE 5. OPTIONS.

5.1 Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms of the Plan and
may be subject to any other terms that are not inconsistent with the Plan,
including but not limited to rights of repurchase and rights of first refusal.
The Stock Option Agreement shall specify whether the Option is an ISO or an
NSO. The provisions of the various Stock Option Agreements entered into under
the Plan need not be identical. Options may be granted in consideration of a
cash payment or in consideration of a reduction in the Optionee's other
compensation. A Stock Option Agreement may provide that new Options will be
granted automatically to the Optionee when he or she exercises the prior
Options.

5.2 Number of Shares. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10.

5.3 Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price; provided that the Exercise Price of an ISO shall in no event be
less than one hundred percent (100%) of the Fair Market Value of a Common Share
on the date of grant. In the case of an NSO, a Stock Option Agreement may
specify an Exercise Price that varies in accordance with a predetermined
formula while the NSO is outstanding.

5.4 Exercisability and Term. Each Stock Option Agreement shall
specify the date when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an ISO shall in no event exceed ten (10)
years from the date of grant. A Stock Option Agreement may provide for
accelerated exercisability in the event of the Optionee's death, disability or
retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. Options
may be awarded in combination with SARs, and such an Award may provide that the
Options will not be exercisable unless the related SARs are forfeited. NSOs
may also be awarded in combination with Restricted Shares or Stock Units, and
such an Award may provide that the NSOs will not be exercisable unless the
related Restricted Shares or Stock Units are forfeited.

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<PAGE> 8
5.5 Effect of Change in Control. The Committee may determine, at the
time of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Common Shares subject to such Option in the event that a
Change in Control occurs with respect to the Company.

5.6 Modification or Assumption of Options. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

ARTICLE 6. PAYMENT FOR OPTION SHARES.

6.1 General Rule. The entire Exercise Price for the Common Shares
issued upon exercise of Options shall be payable in cash at the time when such
Common Shares are purchased, except as follows:

(a) In the case of an ISO granted under the Plan, payment
shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. The Stock Option Agreement may
specify that payment may be made in any form(s) described in this
Article 6.

(b) In the case of an NSO, the Committee may at any time
accept payment in any form(s) described in this Article 6.

6.2 Surrender of Stock. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which have already been owned by the Optionee for such duration
as shall be specified by the Committee. Such Common Shares shall be valued at
their Fair Market Value on the date when the new Common Shares are purchased
under the Plan.

6.3 Exercise/Sale. To the extent that this Section 6.3 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the
Company to sell Common Shares and to deliver all or part of the sales proceeds
to the Company in payment of all or part of the Exercise Price and any
withholding taxes.

6.4 Exercise/Pledge. To the extent that this Section 6.4 is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Common Shares to a securities
broker or lender approved by the Company, as security for a loan, and to
deliver all or part of the loan proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.

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<PAGE> 9
6.5 Promissory Note. To the extent that this Section 6.5 is
applicable, payment may be made with a full-recourse promissory note; provided
that to the extent required by applicable law, the par value of the Common
Shares shall be paid in cash.

6.6 Other Forms of Payment. To the extent that this Section 6.6 is
applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.

ARTICLE 7. STOCK APPRECIATION RIGHTS.

7.1 SAR Agreement. Each grant of a SAR under the Plan shall be
evidenced by a SAR Agreement between the Optionee and the Company. Such SAR
shall be subject to all applicable terms of the Plan and may be subject to any
other terms that are not inconsistent with the Plan. The provisions of the
various SAR Agreements entered into under the Plan need not be identical. SARs
may be granted in consideration of a reduction in the Optionee's other
compensation.

7.2 Number of Shares. Each SAR Agreement shall specify the number of
Common Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Article 10.

7.3 Exercise Price. Each SAR Agreement shall specify the Exercise
Price. A SAR Agreement may specify an Exercise Price that varies in accordance
with a predetermined formula while the SAR is outstanding.

7.4 Exercisability and Term. Each SAR Agreement shall specify the
date when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. A SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or retirement or other events and may provide for expiration prior to the end
of its term in the event of the termination of the Optionee's service. SARs
may also be awarded in combination with Options, Restricted Shares or Stock
Units, and such an Award may provide that the SARs will not be exercisable
unless the related Options, Restricted Shares or Stock Units are forfeited. A
SAR may be included in an ISO only at the time of grant but may be included in
an NSO at the time of grant or thereafter. A SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change in Control.

7.5 Effect of Change in Control. The Committee may determine, at the
time of granting a SAR or thereafter, that such SAR shall become fully
exercisable as to all Common Shares subject to such SAR in the event that a
Change in Control occurs with respect to the Company.

7.6 Exercise of SARs. If, on the date when a SAR expires, the
Exercise Price under such SAR is less than the Fair Market Value on such date
but any portion of such SAR has not been exercised or surrendered, then such
SAR shall automatically be deemed to be exercised as of such date with respect
to such portion. Upon exercise of a SAR, the Op-

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<PAGE> 10
tionee (or any person having the right to exercise the SAR after his or her
death) shall receive from the Company (a) Common Shares, (b) cash or (c) a
combination of Common Shares and cash, as the Committee shall determine. The
amount of cash and/or the Fair Market Value of Common Shares received upon
exercise of SARs shall, in the aggregate, be equal to the amount by which the
Fair Market Value (on the date of surrender) of the Common Shares subject to
the SARs exceeds the Exercise Price.

7.7 Modification or Assumption of SARs. Within the limitations of
the Plan, the Committee may modify, extend or assume outstanding SARs or may
accept the cancellation of outstanding SARs (whether granted by the Company or
by another issuer) in return for the grant of new SARs for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of a SAR shall, without the consent
of the Optionee, alter or impair his or her rights or obligations under such
SAR.

ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS.

8.1 Time, Amount and Form of Awards. Awards under the Plan may be
granted in the form of Restricted Shares, in the form of Stock Units, or in any
combination of both. Restricted Shares or Stock Units may also be awarded in
combination with NSOs or SARs, and such an Award may provide that the
Restricted Shares or Stock Units will be forfeited in the event that the
related NSOs or SARs are exercised.

8.2 Payment for Awards. To the extent that an Award is granted in
the form of newly issued Restricted Shares, the Award recipient, as a condition
to the grant of such Award, shall be required to pay the Company in cash an
amount equal to the par value of such Restricted Shares. To the extent that an
Award is granted in the form of Restricted Shares from the Company's treasury
or in the form of Stock Units, no cash consideration shall be required of the
Award recipients.

8.3 Vesting Conditions. Each Award of Restricted Shares or Stock
Units shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement which may include performance
conditions. A Stock Award Agreement may provide for accelerated vesting in the
event of the Participant's death, disability or retirement or other events.
The Committee may determine, at the time of making an Award or thereafter, that
such Award shall become fully vested in the event that a Change in Control
occurs with respect to the Company.

8.4 Form and Time of Settlement of Stock Units. Settlement of vested
Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any
combination of both. The actual number of Stock Units eligible for settlement
may be larger or smaller than the number included in the original Award, based
on predetermined performance factors. Methods of converting Stock Units into
cash may include (without limitation) a method based on the average Fair Market
Value of Common Shares over a series of trading days. Vested Stock Units may
be settled in a lump sum or in installments. The distribution may occur or
commence when all vesting conditions applicable to the Stock Units have been

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<PAGE> 11
satisfied or have lapsed, or it may be deferred to any later date. The amount
of a deferred distribution may be increased by an interest factor or by
dividend equivalents. Until an Award of Stock Units is settled, the number of
such Stock Units shall be subject to adjustment pursuant to Article 10.

8.5 Death of Recipient. Any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's beneficiary
or beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's
death. If no beneficiary was designated or if no designated beneficiary
survives the Award recipient, then any Stock Units Award that becomes payable
after the recipient's death shall be distributed to the recipient's estate.

8.6 Creditors' Rights. A holder of Stock Units shall have no rights
other than those of a general creditor of the Company. Stock Units represent
an unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Award Agreement.

ARTICLE 9. VOTING AND DIVIDEND RIGHTS.

9.1 Restricted Shares. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Stock Award Agreement, however, may require
that the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to
which the dividends were paid. Such additional Restricted Shares shall not
reduce the number of Common Shares available under Article 3.

9.2 Stock Units. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the
Plan may, at the Committee's discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount
equal to all cash dividends paid on one Common Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock
Units. Settlement of dividend equivalents may be made in the form of cash, in
the form of Common Shares, or in a combination of both. Prior to distribution,
any dividend equivalents which are not paid shall be subject to the same
conditions and restrictions as the Stock Units to which they attach.

ARTICLE 10. PROTECTION AGAINST DILUTION.

10.1 Adjustments. In the event of a subdivision of the outstanding
Common Shares, a declaration of a dividend payable in Common Shares, a
declaration of a dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, a recapitalization, a

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<PAGE> 12
spinoff or a similar occurrence, the Committee shall make such adjustments as
it, in its sole discretion, deems appropriate in one or more of:

(a) The number of Options, SARs, Restricted Shares and Stock
Units available for future Awards under Article 3;

(b) The number of Stock Units included in any prior Award
which has not yet been settled;

(d) The Exercise Price under each outstanding Option and SAR.

Except as provided in this Article 10, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock or other dividend or any other
increase or decrease in the number of shares of stock of any class.

10.2 Reorganizations. In the event that the Company is a party to a
merger or other reorganization, outstanding Options, SARs, Restricted Shares
and Stock Units shall be subject to the agreement of merger or reorganization.
Such agreement may provide, without limitation, for the assumption of
outstanding Awards by the surviving corporation or its parent, for their
continuation by the Company (if the Company is a surviving corporation), for
accelerated vesting and accelerated expiration, or for settlement in cash.

ARTICLE 11. AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs. Such
awards may be settled in the form of Common Shares issued under this Plan.
Such Common Shares shall be treated for all purposes under the Plan like Common
Shares issued in settlement of Stock Units and shall, when issued, reduce the
number of Common Shares available under Article 3.

ARTICLE 12. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.

12.1 Effective Date. No provision of this Article 12 shall be
effective unless and until the Board has determined to implement such
provision.

12.2 Elections to Receive NSOs or Stock Units. An Outside Director
may elect to receive his or her annual retainer payments and meeting fees from
the Company in the form of cash, NSOs, Stock Units, or a combination thereof.
Such NSOs and Stock Units shall be issued under the Plan. An election under
this Article 12 shall be filed with the Company on the prescribed form and
subject to such filing deadlines and election procedures as shall be
established by the Committee.

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<PAGE> 13
12.3 Number and Terms of NSOs. The number of NSOs to be granted to
Outside Directors in lieu of annual retainers and meeting fees that would
otherwise be paid in cash shall be calculated in a manner determined by the
Board. The terms of such NSOs shall also be determined by the Board.

12.4 Number and Terms of Stock Units. The number of Stock Units to
be granted to Outside Directors shall be calculated by dividing the amount of
the annual retainer or the meeting fee that would otherwise be paid in cash by
the arithmetic mean of the Fair Market Values of a Common Share on the ten (10)
consecutive trading days ending with the date when such retainer or fee is
payable. The terms of such Stock Units shall be determined by the Board.

ARTICLE 13. LIMITATION ON RIGHTS.

13.1 Retention Rights. Neither the Plan nor any Award granted under
the Plan shall be deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent or a Subsidiary. The Company
and its Parents and Subsidiaries reserve the right to terminate the service of
any employee, consultant or director at any time, and for any reason, subject
to applicable laws, the Company's certificate of incorporation and by-laws and
a written employment agreement (if any).

13.2 Stockholders' Rights. A Participant shall have no dividend
rights, voting rights or other rights as a stockholder with respect to any
Common Shares covered by his or her Award prior to the issuance of a stock
certificate for such Common Shares. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date when
such certificate is issued, except as expressly provided in Articles 8, 9 and
10.

13.3 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to
the issuance of such Common Shares, to their registration, qualification or
listing or to an exemption from registration, qualification or listing.

ARTICLE 14. LIMITATION ON PAYMENTS.

14.1 Basic Rule. Any provision of the Plan to the contrary
notwithstanding, in the event that the independent auditors most recently
selected by the Board (the "Auditors") determine that any payment or transfer
by the Company under the Plan to or for the benefit of a Participant (a
"Payment") would be nondeductible by the Company for federal income tax
purposes because of the provisions concerning "excess parachute payments" in
section 280G of the Code, then the aggregate present value of all Payments
shall be reduced (but not below zero) to the Reduced Amount; provided that the
Committee, at the time of making an Award under this Plan or at any time
thereafter, may specify in writing that such Award shall not be so reduced and
shall not be subject to this Article 14. For purposes of this Arti-

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<PAGE> 14
cle 14, the "Reduced Amount" shall be the amount, expressed as a present value,
which maximizes the aggregate present value of the Payments without causing any
Payment to be nondeductible by the Company because of section 280G of the Code.

14.2 Reduction of Payments. If the Auditors determine that any
Payment would be nondeductible by the Company because of section 280G of the
Code, then the Company shall promptly give the Participant notice to that
effect and a copy of the detailed calculation thereof and of the Reduced
Amount, and the Participant may then elect, in his or her sole discretion,
which and how much of the Payments shall be eliminated or reduced (as long as
after such election the aggregate present value of the Payments equals the
Reduced Amount) and shall advise the Company in writing of his or her election
within ten (10) days of receipt of notice. If no such election is made by the
Participant within such ten (10) day period, then the Company may elect which
and how much of the Payments shall be eliminated or reduced (as long as after
such election the aggregate present value of the Payments equals the Reduced
Amount) and shall notify the Participant promptly of such election. For
purposes of this Article 14, present value shall be determined in accordance
with section 280G(d)(4) of the Code. All determinations made by the Auditors
under this Article 14 shall be binding upon the Company and the Participant and
shall be made within sixty (60) days of the date when a Payment becomes payable
or transferable. As promptly as practicable following such determination and
the elections hereunder, the Company shall pay or transfer to or for the
benefit of the Participant such amounts as are then due to him or her under the
Plan and shall promptly pay or transfer to or for the benefit of the
Participant in the future such amounts as become due to him or her under the
Plan.

14.3 Overpayments and Underpayments. As a result of uncertainty in
the application of section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that Payments will have
been made by the Company which should not have been made (an "Overpayment") or
that additional Payments which will not have been made by the Company could
have been made (an "Underpayment"), consistent in each case with the
calculation of the Reduced Amount hereunder. In the event that the Auditors,
based upon the assertion of a deficiency by the Internal Revenue Service
against the Company or the Participant which the Auditors believe has a high
probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Participant
which he or she shall repay to the Company, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code; provided,
however, that no amount shall be payable by the Participant to the Company if
and to the extent that such payment would not reduce the amount which is
subject to taxation under section 4999 of the Code. In the event that the
Auditors determine that an Underpayment has occurred, such Underpayment shall
promptly be paid or transferred by the Company to or for the benefit of the
Participant, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code.

14.4 Related Corporations. For purposes of this Article 14, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.

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<PAGE> 15
ARTICLE 15. WITHHOLDING TAXES.

15.1 General. To the extent required by applicable federal, state,
local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan. The
Company shall not be required to issue any Common Shares or make any cash
payment under the Plan until such obligations are satisfied.

15.2 Share Withholding. A Participant may satisfy all or part of his
or her withholding or income tax obligations by having the Company withhold all
or a portion of any Common Shares that otherwise would be issued to him or her
or by surrendering all or a portion of any Common Shares that he or she
previously acquired. Such Common Shares shall be valued at their Fair Market
Value on the date when taxes otherwise would be withheld in cash. Any payment
of taxes by assigning Common Shares to the Company may be subject to
restrictions.

ARTICLE 16. ASSIGNMENT OR TRANSFER OF AWARDS.

16.1 General. Except as provided in Article 15 or the Award
agreement, an Award granted under the Plan shall not be anticipated, assigned,
attached, garnished, optioned, transferred or made subject to any creditor's
process, whether voluntarily, involuntarily or by operation of law. Except as
provided in the Award agreement, an Option or SAR may be exercised during the
lifetime of the Optionee only by him or her or by his or her guardian or legal
representative. This Article 16 shall not preclude a Participant from
designating a beneficiary who will receive any outstanding Awards in the event
of the Participant's death, nor shall it preclude a transfer of Awards by will
or by the laws of descent and distribution.

ARTICLE 17. FUTURE OF THE PLAN.

17.1 Term of the Plan. The Plan, as amended and restated, shall
become effective on July 7, 1997. The Plan shall remain in effect until it is
terminated under Section 17.2, except that no ISOs shall be granted after
September 17, 2006.

17.2 Amendment or Termination. The Board may, at any time and for
any reason, amend or terminate the Plan. An amendment of the Plan shall be
subject to the approval of the Company's stockholders only to the extent
required by applicable laws, regulations or rules. No Awards shall be granted
under the Plan after the termination thereof. The termination of the Plan, or
any amendment thereof, shall not affect any Award previously granted under the
Plan.

ARTICLE 18. DEFINITIONS.

18.1 "Award" means any award of an Option, an SAR, a Restricted Share
or a Stock Unit under the Plan.

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<PAGE> 16
18.2 "Board" means the Company's Board of Directors, as constituted
from time to time.

18.3 "Change in Control" shall be deemed to occur upon any "person"
(as defined in Section 13(d) of the Exchange Act), other than the Company, its
Parent or Subsidiary or employee benefit plan or trust maintained by the
Company, its Parent or Subsidiary, becoming the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of
the total combined voting power of the Class A and Class B common stock of the
Company outstanding at such time, without the prior approval of the Board.

18.4 "Code" means the Internal Revenue Code of 1986, as amended.

18.5 "Committee" means a committee of the Board, as described in
Article 2.

18.6 "Common Share" means one share of the Class A common stock of
the Company.

18.7 "Company" means Network Solutions, Inc., a Delaware corporation,
or its successor.

18.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

18.9 "Exercise Price," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.

18.10 "Fair Market Value" means the market price of Common Shares,
determined by the Committee as follows:

(a) If the Common Shares were traded over-the-counter on the
date in question but were not classified as a national market issue,
then the Fair Market Value shall be equal to the mean between the last
reported representative bid and asked prices quoted by the Nasdaq
system for such date;

(b) If the Common Shares were traded over-the-counter on the
date in question and were classified as a national market issue, then
the Fair Market Value shall be equal to the last-transaction price
quoted by the Nasdaq system for such date;

(c) If the Common Shares were traded on a stock exchange on
the date in question, then the Fair Market Value shall be equal to the
closing

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<PAGE> 17
price reported by the applicable composite transactions report for
such date; and

(d) If none of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by independent appraisals or
as otherwise determined by the Committee in good faith on such basis
as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Western Edition of The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.

18.11 "ISO" means an incentive stock option described in section
422(b) of the Code.

18.12 "Key Employee" means (a) a common-law employee of the Company,
a Parent or a Subsidiary, (b) an Outside Director and (c) a consultant or
adviser who provides services to the Company, a Parent or a Subsidiary as an
independent contractor.

18.13 "NSO" means a stock option not described in sections 422 or 423
of the Code.

18.14 "Option" means an ISO or NSO granted under the Plan and
entitling the holder to purchase one Common Share.

18.15 "Optionee" means an individual or estate who holds an Option or
SAR.

18.16 "Outside Director" shall mean a member of the Board who is not
a common-law employee of the Company, a Parent or a Subsidiary.

18.17 "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain. A corporation that attains the status of
a Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

18.18 "Participant" means an individual or estate who holds an Award.

18.19 "Plan" means the Network Solutions, Inc. 1996 Stock Incentive
Plan, as amended from time to time.

18.20 "Restricted Share" means a Common Share awarded under the Plan.

18.21 "SAR" means a stock appreciation right granted under the Plan.

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<PAGE> 18
18.22 "SAR Agreement" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to
his or her SAR.

18.23 "Stock Award Agreement" means the agreement between the Company
and the recipient of a Restricted Share or Stock Unit which contains the terms,
conditions and restrictions pertaining to such Restricted Share or Stock Unit.

18.24 "Stock Option Agreement" means the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.

18.25 "Stock Unit" means a bookkeeping entry representing the
equivalent of one Common Share, as awarded under the Plan.

18.26 "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

ARTICLE 19. EXECUTION.

To record the adoption of the amended and restated Plan by the Board,
the Company has caused its duly authorized officer to affix the corporate name
and seal hereto.

NETWORK SOLUTIONS, INC.

By
-----------------------------

Its
----------------------------

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<PAGE> 19

NETWORK SOLUTIONS, INC.
1996 STOCK INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

Network Solutions, Inc., a Delaware corporation (the "Company"),
hereby grants an Option to purchase shares of its Class A Common Stock to the
Optionee named below. The terms and conditions of the Option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Incentive
Plan (the "Plan"), as amended and restated effective July 7, 1997.

Date of Grant:
_________________________________________________________________

Name of Optionee:
______________________________________________________________

Optionee's Social Security Number:
_____________________________________________

Number of Common Shares Covered by Option:
_____________________________________

Exercise Price per Common Share: $______________________________________________

Vesting Start Date:
____________________________________________________________

BY SIGNING THIS COVER SHEET, YOU VOLUNTARILY AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A
COPY OF WHICH IS ALSO ATTACHED.

Optionee:
______________________________________________________________________
(Signature)

Company:
_______________________________________________________________________
(Signature)

Title:
________________________________________________________

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<PAGE> 20
NETWORK SOLUTIONS, INC.
1996 STOCK INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT

INCENTIVE STOCK OPTION This Option is intended to be
an incentive stock option
under section 422 of the
Internal Revenue Code and
will be interpreted
accordingly .

VESTING Your right to exercise this
Option vests annually over a
four year period beginning
one year after the Vesting
Start Date as shown on the
cover sheet. This Option
vests at a rate of 30%, 30%,
20% and 20%, respectively, of
the Common Shares covered by
the Option at the end of the
first, second, third and
fourth year, respectively,
after the Vesting Start Date.
The number of Common Shares
which may be purchased under
this Option by you at the
Exercise Price shall be
rounded to the nearest whole
number. No additional Common
Shares will vest after your
service has terminated for
any reason.

TERM Your Option will expire in
any event at the close of
business at Company
headquarters on the day
before the fifth anniversary
of the Date of Grant. (It
will expire earlier if your
service terminates, as
described below.)

REGULAR TERMINATION If your service terminates
for any reason except death
or Disability, your Option
will expire at the close of
business at Company
headquarters on the 30th day
after your termination date.
During that 30-day period,
you may exercise that portion
of your Option that was
vested on your termination
date.

DEATH If you die while in service
with the Company, your Option
will expire at the close of
business at Company
headquarters on the date 12
months after the date of
death. During that 12-month
period, your beneficiary,
estate or heirs may exercise
that portion of your Option
that was vested on your date
death.

-2-
<PAGE> 21
DISABILITY If your service terminates
because of your Disability,
your Option will expire at
the close of business at
Company headquarters on the
date 90 days after your
termination date. During
such 90-day period, you may
exercise that portion of your
Option that was vested on the
date of your Disability.

"Disability" means that
you are unable to engage in
any substantial gainful
activity by reason of any
medically determinable
physical or mental impairment
for an extended period of
time.

LEAVES OF ABSENCE For purposes of this Option,
your service does not
terminate when you go on a
bona fide leave of absence
that was approved by the
Company in writing, if the
terms of the leave provide
for continued service
crediting, or when continued
service crediting is required
by applicable law. However,
for purposes of this Option
being treated as an ISO, your
service will be treated as
terminating 90 days after you
went on leave, unless your
right to return to active
work is guaranteed by law or
by a contract. Your service
terminates in any event when
the approved leave ends
unless you immediately return
to active work. The
Committee determines which
leaves count for this
purpose, and when your
service terminates for all
purposes under the Plan and
this Agreement. The
Committee shall also
determine the extent to which
you may exercise the vested
portion of your Option during
a leave of absence.

NOTICE OF EXERCISE When you wish to exercise
this Option, you must notify
the Committee by filing the
proper "Notice of Exercise"
form at the address given on
the form. Your Notice must
specify how many Common
Shares you wish to purchase.
Your Notice must also specify
how your Common Shares should
be registered (in your name
only, in your and your
spouse's names as community
property or as joint tenants
with right of survivorship or
in a trust for your benefit).
The Notice will be effective
when it is received by the
Committee. If someone else
wants to exercise this Option
after your death, that person
must prove to the Committee's
satisfaction that he or she
is entitled to do so.

FORM OF PAYMENT When you submit your Notice
of Exercise, you must include
payment of the Exercise Price
for the Common Shares you are
purchasing. Payment may be
made in one (or a
combination) of the following
forms:

- Your personal check, a
cashier's check or a
money order.

-3-

<PAGE> 22

- Common Shares which have
already been owned by
you for more than six
months and which are
surrendered to the
Company. The value of
the Common Shares,
determined as of the
effective date of the
option exercise, will be
applied to the Exercise
Price.

- By delivery (on a form
prescribed by the
Committee) of an
irrevocable direction to
a securities broker to
sell Common Shares and to
deliver all or part of
the sale proceeds to the
Company in payment of the
aggregate Exercise Price.

WITHHOLDING TAXES You will not be allowed to
exercise this Option unless
you make acceptable
arrangements to pay any
withholding or other taxes
that may be due as a result
of the Option exercise or the
sale of Common Shares
acquired upon exercise of
this Option.

RESTRICTIONS ON
EXERCISE AND RESALE By signing this Agreement,
you agree not to sell any
Common Shares at a time
when applicable laws,
regulations or Company or
underwriter trading policies
prohibit a sale. For example,
prior to an initial public
offering, the Company may, in
its sole discretion, restrict
the transfer of shares for up
to 6 months from the date of
exercise. In connection with
any underwritten public
offering by the Company of
its equity securities
pursuant to an effective
registration statement filed
under the Securities Act,
including the Company's
initial public offering, you
agree not to sell, make any
short sale of, loan,
hypothecate, pledge, grant
any option for the purchase
of, or otherwise dispose or
transfer for value or agree
to engage in any of the
foregoing transactions with
respect to any shares without
the prior written consent of
the Company or its
underwriters, for such period
of time after the effective
date of such registration
statement as may be requested
by the Company or such
underwriters.

In order to enforce the
provisions of this paragraph,
the Company may impose
stop-transfer instructions
with respect to the shares.

You represent and agree
that the Common Shares to be
acquired upon exercising this
option will be acquired for
investment, and not with a
view to the sale or
distribution thereof.

In the event that the
sale of Common Shares under
the Plan is not registered
under the Securities Act but
an exemption is available
which requires an investment
representation or other
representation, you shall
represent and agree at the
time of exercise that the
Shares being acquired upon
exercising this option are
being acquired for
investment, and not with a
view to the sale or
distribution thereof, and
shall make such other
representations as

-4-
<PAGE> 23

are deemed necessary or
appropriate by the Company
and its counsel.

THE COMPANY'S RIGHT OF
FIRST REFUSAL In the event that you
propose to sell, pledge or
otherwise transfer to a
third party any Common Shares
acquired under this
Agreement, or any interest in
such Common Shares, the
Company shall have the "Right
of First Refusal" with
respect to all (and not less
than all) of such Common
Shares. If you desire to
transfer Common Shares
acquired under this
Agreement, you must give a
written "Transfer Notice" to
the Committee describing
fully the proposed transfer,
including the number of
Shares proposed to be
transferred, the proposed
transfer price and the name
and address of the proposed
transferee. The Transfer
Notice shall be signed both
by you and by the proposed
transferee and must
constitute a binding
commitment of both parties to
the transfer of the Common
Shares. The Company shall
have the right to purchase
all, and not less than all,
of the Common Shares on the
terms described in the
Transfer Notice (subject,
however, to any change in
such terms permitted in the
next paragraph) by delivery
of a Notice of Exercise of
the Right of First Refusal
within 30 days after the date
when the Transfer Notice was
received by the Committee.
The Company's rights under
this Subsection shall be
freely assignable, in whole
or in part.

If the Company fails to
exercise its Right of First
Refusal within 30 days after
the date when the Committee
received the Transfer Notice,
you may, not later than 90
days following receipt of the
Transfer Notice by the
Committee, conclude a
transfer of the Common Shares
subject to the Transfer
Notice on the terms and
conditions described in the
Transfer Notice. Any
proposed transfer on terms
and conditions different from
those described in the
Transfer Notice, as well as
any subsequent proposed
transfer by you, shall again
be subject to the Right of
First Refusal and shall
require compliance with the
procedure described in the
paragraph above. If the
Company exercises its Right
of First Refusal, the parties
shall consummate the sale of
the Shares on the terms set
forth in the Transfer Notice
within 60 days after the date
the Committee received the
Transfer Notice (or within
such longer period as may
have been specified in the
Transfer Notice); provided,
however, that in the event
the Transfer Notice provided
that payment for the Common
Shares was to be made in a
form other than lawful money
paid at the time of transfer,
the Company shall have the
option of paying for the
Common Shares with lawful
money equal to the present
value of the consideration
described in the Transfer
Notice.

-5-
<PAGE> 24

The Company's Right of
First Refusal shall inure to
the benefit of its successors
and assigns and shall be
binding upon any transferee
of the Common Shares.

The Company's Right of
First Refusal shall terminate
in the event that Common
Shares are listed or traded
on an established stock
exchange.

RIGHT OF REPURCHASE Following termination of your
service with the Company for
any reason, the Company shall
have the right to purchase
all of those Common Shares
that you have or will acquire
under this Option. If the
Company fails to provide you
with written notice of its
intention to purchase such
Common Shares before or
within 30 days of the date
the Company receives written
notice from you of your
termination of service, the
Company's right to purchase
such Common Shares shall
terminate. If the Company
exercises its right to
purchase such Common Shares,
the Company will consummate
the purchase of such Common
Shares within 60 days of the
date of its written notice to
you. The purchase price for
any Common Shares repurchased
shall be the Fair Market
Value of such Common Shares
on the date of purchase and
shall be paid in cash. The
Company's right of repurchase
shall terminate in the event
that Common Shares are listed
or traded on an established
stock exchange.

TRANSFER OF OPTION Prior to your death, only you
may exercise this Option.
You cannot transfer or assign
this Option. For instance,
you may not sell this Option
or use it as security for a
loan. If you attempt to do
any of these things, this
Option will immediately
become invalid. You may,
however, dispose of this
Option by beneficiary
designation or in your will.

Regardless of any
marital property settlement
agreement, the Company is not
obligated to honor a Notice
of Exercise from your spouse
or former spouse, nor is the
Company obligated to
recognize such individual's
interest in your Option in
any other way.

RETENTION RIGHTS This Agreement does not give
you the right to be retained
by the Company in any
capacity. The Company
reserves the right to
terminate your service at any
time and for any reason.

-6-
<PAGE> 25
STOCKHOLDER RIGHTS You, or your beneficiary,
estate or heirs, have no
rights as a stockholder of
the Company until a
certificate for the Common
Shares acquired upon exercise
of this Option has been
issued. No adjustments are
made for dividends or other
rights if the applicable
record date occurs before
your stock certificate is
issued, except as described
in the Plan.

ADJUSTMENTS In the event of a stock
split, a stock dividend or a
similar change in the Common
Shares, the number of Common
Shares covered by this Option
and the Exercise Price per
share may be adjusted
pursuant to the Plan. Your
Option shall be subject to
the terms of the agreement of
merger, liquidation or
reorganization in the event
the Company is subject to
such corporate activity.

LEGENDS All certificates representing
the Shares issued upon
exercise of this Option
shall, where applicable, have
endorsed thereon the
following legends:

THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER
AND OPTIONS TO PURCHASE
SUCH SHARES SET FORTH IN
AN AGREEMENT BETWEEN THE
COMPANY AND THE REGISTERED
HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A
COPY OF SUCH AGREEMENT IS
ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON
WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY
BY THE HOLDER OF RECORD OF
THE SHARES REPRESENTED BY
THIS CERTIFICATE.

APPLICABLE LAW This Agreement will be
interpreted and enforced
under the laws of the State
of Delaware (without regard
to their choice of law
provisions).

THE PLAN AND OTHER
AGREEMENTS The text of the Plan is
incorporated in this
Agreement by reference.
Certain capitalized terms
used in this Agreement are
defined in the Plan.

This Agreement and the
Plan constitute the entire
understanding between you and
the Company regarding this
Option. Any prior
agreements, commitments or
negotiations concerning this
Option are superseded.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

-7-
<PAGE> 26

NETWORK SOLUTIONS, INC.
1996 STOCK INCENTIVE PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

Network Solutions, Inc., a Delaware corporation (the "Company"),
hereby grants an Option to purchase shares of its Class A Common Stock to the
Optionee named below in. The terms and conditions of the Option are set forth
in this cover sheet, in the attachment and in the Company's 1996 Stock
Incentive Plan (the "Plan"), as amended and restated effective July 7, 1997.

Date of Grant:
_________________________________________________________________

Name of Optionee:
______________________________________________________________

Optionee's Social Security Number:
_____________________________________________

Number of Common Shares Covered by Option:
_____________________________________

Exercise Price per Common Share: $______________________________________________

Vesting Start Date: ____________________________________________________________

BY SIGNING THIS COVER SHEET, YOU VOLUNTARILY AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A
COPY OF WHICH IS ALSO ATTACHED.

Optionee:
______________________________________________________________________
(Signature)

Company:
_______________________________________________________________________
(Signature)

Title:
________________________________________________________

-1-
<PAGE> 27
NETWORK SOLUTIONS, INC.
1996 STOCK INCENTIVE PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

NONSTATUTORY STOCK OPTION This Option is not intended
to be an incentive stock
option under section 422 of
the Internal Revenue Code and
will be interpreted
accordingly.

REGULAR TERMINATION If your service terminates
for any reason except death
or Disability, your Option
will expire at the close of
business at Company
headquarters on the 30th day
after your termination date.
During such 30-day period,
you may exercise that portion
of your Option that was
vested on your termination
date.

DISABILITY If your service terminates
because of your Disability,
your Option will expire at
the close of business at
Company headquarters on the
date 90 days after your
termination date. During
such 90-day period, you may
exercise that portion of your
Option that was vested on
your date of Disability.

"Disability" means that
you are unable to engage in
any substantial gainful
activity by reason of any
medically determinable
physical or mental impairment
for an extended period of
time.

-2-
<PAGE> 28
LEAVES OF ABSENCE For purposes of this Option,
your service does not
terminate when you go on a
bona fide leave of absence
that was approved by the
Company in writing, if the
terms of the leave provide
for continued service
crediting, or when continued
service crediting is required
by applicable law. The
Committee determines which
leaves count for this
purpose, and when your
service terminates for all
purposes under the Plan and
this Agreement. The
Committee shall also
determine the extent to which
you may exercise the vested
portion of your Option during
a leave of absence.

- Your personal check, a
cashier's check or a
money order.

- Common Shares which
have already been owned
by you for more than six
months and which are
surrendered to the
Company. The value of
the Common Shares,
determined as of the
effective date of the
Option exercise, will be
applied to the Exercise
Price.

- By delivery (on
a form prescribed by the
Committee) of an
irrevocable direction to
a securities broker to
sell Common Shares and
to deliver all or part
of the sale proceeds to
the Company in payment
of the aggregate
Exercise Price.

WITHHOLDING TAXES You will not be allowed to
exercise this Option unless
you make acceptable
arrangements to pay any
withholding or other taxes
that may be due as a result
of the option exercise or the
sale of Common Shares
acquired upon exercise of
this Option.

RESTRICTIONS ON EXERCISE
AND RESALE By signing this Agreement,
you agree not to sell
any Common Shares at a time
when applicable laws,
regulations or Company or

-3-
<PAGE> 29

underwriter trading policies
prohibit a sale. For
example, prior to an initial
public offering, the Company
may, in its sole discretion,
restrict the transfer of
shares for up to 6 months
from the date of exercise.
In connection with any
underwritten public offering
by the Company of its equity
securities pursuant to an
effective registration
statement filed under the
Securities Act, including the
Company's initial public
offering, you agree not to
sell, make any short sale of,
loan, hypothecate, pledge,
grant any option for the
purchase of, or otherwise
dispose or transfer for value
or agree to engage in any of
the foregoing transactions
with respect to any shares
without the prior written
consent of the Company or its
underwriters, for such period
of time after the effective
date of such registration
statement as may be requested
by the Company or such
underwriters.

In order to enforce the
provisions of this paragraph,
the Company may impose
stop-transfer instructions
with respect to the shares.

You represent and agree
that the Common Shares to be
acquired upon exercising this
option will be acquired for
investment, and not with a
view to the sale or
distribution thereof.

THE COMPANY'S RIGHT OF
FIRST REFUSAL In the event that you propose
to sell, pledge or
otherwise transfer to a
third party any Common Shares
acquired under this
Agreement, or any interest in
such Common Shares, the
Company shall have the "Right
of First Refusal" with
respect to all (and not less
than all) of such Common
Shares. If you desire to
transfer Common Shares
acquired under this
Agreement, you must give a
written "Transfer Notice" to
the Committee describing
fully the proposed transfer,
including the number of
Common Shares proposed to be
transferred, the proposed
transfer price and the name
and address of the proposed
transferee. The Transfer
Notice shall be signed both
by you and by the proposed
transferee and must
constitute a binding
commitment of both parties to
the transfer of the Common
Shares. The Company shall
have the right to purchase
all, and not less than all,
of the Common Shares on the
terms described in the
Transfer Notice (subject,
however, to

-4-
<PAGE> 30

any change in such
terms permitted in the next
paragraph) by delivery of a
notice of exercise of the
Right of First Refusal within
30 days after the date when
the Transfer Notice was
received by the Committee.
The Company's rights under
this Subsection shall be
freely assignable, in whole
or in part.

If the Company fails to
exercise its Right of First
Refusal within 30 days after
the date when the Committee
received the Transfer Notice,
you may, not later than 90
days following receipt of the
Transfer Notice by the
Company, conclude a transfer
of the Common Shares subject
to the Transfer Notice on the
terms and conditions
described in the Transfer
Notice. Any proposed
transfer on terms and
conditions different from
those described in the
Transfer Notice, as well as
any subsequent proposed
transfer by you, shall again
be subject to the Right of
First Refusal and shall
require compliance with the
procedure described in the
paragraph above. If the
Company exercises its Right
of First Refusal, the parties
shall consummate the sale of
the Common Shares on the
terms set forth in the
Transfer Notice within 60
days after the date when the
Committee received the
Transfer Notice (or within
such longer period as may
have been specified in the
Transfer Notice); provided,
however, that in the event
the Transfer Notice provided
that payment for the Common
Shares was to be made in a
form other than lawful money
paid at the time of transfer,
the Company shall have the
option of paying for the
Common Shares with lawful
money equal to the present
value of the consideration
described in the Transfer
Notice.

The Company's Right of
First Refusal shall inure to
the benefit of its successors
and assigns and shall be
binding upon any transferee
of the Common Shares.

The Company's Right of
First Refusal shall terminate
in the event that Common
Shares are listed or traded
on an established stock
exchange.

RIGHT OF REPURCHASE Following termination of your
service for any reason, the
Company shall have the right
to purchase all of those
Common Shares that you have
or will acquire under this
Option. If the Company fails
to provide you with written
notice of its intention to
purchase such Common Shares
before or within 30 days of
the date the Company receives
written notice from you of
your termination of service,
the Company's right to
purchase such Common Shares
shall terminate. If the
Company exercises its right
to purchase such Common
Shares, the Company will
consummate the purchase of
such Common Shares within 60
days of the date of its
written notice to you. The
purchase price for any

-5-
<PAGE> 31

Common Shares
repurchased shall be the Fair
Market Value of such Common
Shares on the date of
purchase and shall be paid in
cash. The Company's right of
repurchase shall terminate in
the event that Common Shares
are issued or traded on an
established stock exchange.

RETENTION RIGHTS This Agreement does not give
you the right to be retained
by the Company in any
capacity. The Company
reserves the right to
terminate your service at any
time and for any reason.

STOCKHOLDERS RIGHTS You, or your estate or heirs,
have no rights as a
stockholder of the Company
until a certificate for the
Common Shares acquired upon
exercise of this Option has
been issued. No adjustments
are made for dividends or
other rights if the
applicable record date occurs
before your stock certificate
is issued, except as
described in the Plan.

LEGENDS All certificates representing
the Common Shares issued upon
exercise of this Option
shall, where applicable, have
endorsed thereon the
following legends:

-6-
<PAGE> 32
AGREEMENT IS
ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON
WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY
BY THE HOLDER OF RECORD OF
THE SHARES REPRESENTED BY
THIS CERTIFICATE.

APPLICABLE LAW This Agreement will be
interpreted and enforced
under the laws of the State
of Delaware (without regard
to their choice of law
provisions).

THE PLAN AND OTHER
AGREEMENTS The text of the Plan is
incorporated in this
Agreement by reference.
Certain capitalized terms
used in this Agreement are
defined in the Plan.

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

-7-

<PAGE> 1
EXHIBIT 10.5

CORPORATE SERVICES AGREEMENT

THIS CORPORATE SERVICES AGREEMENT is entered into as of _______________,
1997 between Science Applications International Corporation, a Delaware
corporation ("SAIC"), and Network Solutions, Inc., a Delaware corporation
("Subsidiary").

RECITALS

WHEREAS, Subsidiary is currently a wholly-owned subsidiary of SAIC and
obtains administrative and other services from SAIC;

WHEREAS, Subsidiary is currently considering an initial public offering of
_____ percent of its Common Stock;

WHEREAS, after such initial public offering, SAIC will own the remaining
_____% of the Common Stock of Subsidiary;

WHEREAS, after such initial public offering, Subsidiary desires to
continue to obtain administrative and other services from SAIC and SAIC is
willing to continue to furnish or make such services available to Subsidiary;
and

WHEREAS, by this Agreement, SAIC and Subsidiary desire to set forth the
basis for SAIC's providing services of the type referred to herein.

IT IS MUTUALLY agreed by the parties hereto as follows:

1. SERVICES

Beginning on the date of this Agreement, SAIC, through its corporate
staff, will provide or otherwise make available to Subsidiary certain general
corporate services, including, but not limited to, the following:

1.1 Control Group. SAIC shall provide to Subsidiary all services
and functions comprised of the "Control Group" as defined by SAIC in its
Corporate Home Office Disclosure Statement. The Control Group currently
includes the functions of the Chief Executive Officer's Office, Corporate
Administration, Internal Audit, Treasury, SAIC Board of Directors, Annual
Report, Controller, Chief Financial Officer, Quality Programs and Financial
Reporting.

1.2 Central Services. SAIC shall also provide to Subsidiary
certain services and functions within the "Central Services" as defined by SAIC
in its Corporate Home Office Disclosure Statement and agreed upon by the
Subsidiary. Such services and functions currently include the following:

(a) Records Retention. SAIC shall provide assistance in the
storage and
1
<PAGE> 2
retrieval of documentation and backup information.

(b) Financial Accounting. SAIC shall provide assistance with
internal and external financial reporting, management of general ledger
functions and fixed asset and real property accounting.

(d) Cost Accounting. SAIC shall provide assistance in
assigning project account and contract numbers, maintaining organization tables
and group receivable analysis.

(e) Corporate Development. SAIC shall provide assistance with
corporate planning, government relations and corporate quality assurance.

(f) Corporate Information Services. SAIC shall be responsible
for developing application software for the Corporate Management
Information System (MIS), writing program codes and distributing MIS reports.

(g) Tax. SAIC shall be responsible for the preparation and
filing of Federal, state and local tax returns in accordance with the Tax
Sharing Agreement of even date herewith between SAIC and Subsidiary. In
addition, SAIC shall provide tax research and planning and assistance on tax
audits (Federal, state and local). Subsidiary shall be responsible for the
preparation and filing of property, sales and use tax returns.

(h) Corporate Contracts. SAIC shall provide assistance on
general contracting issues and internal administration procedures and conflicts
of interest.

(i) Risk Management. Except for employee benefit programs
defined in Section 1.2(k) below, SAIC shall include Subsidiary and its
property and employees, where applicable, within insurance coverage obtained by
SAIC ("SAIC Insurance"), except for Directors and Officers Liability Insurance,
which shall be procured with the assistance of SAIC Risk Management at the sole
cost of Subsidiary, with coverage limits and terms acceptable to SAIC.
Subsidiary shall be responsible for coordinating with SAIC Risk Management for
any other insurance policy or coverage it desires and shall be responsible for
any expense or settlement which is (i) not within the scope of the SAIC
Insurance or (ii) a policy exclusion or limitation under the SAIC Insurance.
Any claim expense or settlement amounts that are within any deductible or
self-insured retention applicable to any policy shall be charged to Subsidiary.
Subsidiary shall not take any action which shall cause a default or limit
SAIC's ability to make any claim under any of the SAIC Insurance and Subsidiary
agrees to indemnify and hold harmless SAIC for any expenses that are the result
of Subsidiary's breach of policy provisions which results in denial of coverage
to SAIC. With respect to any claim made under the SAIC Insurance which is
applicable to or desired by Subsidiary, Subsidiary shall notify SAIC of such
claim, cooperate with SAIC in the presentation and prosecution of such claim,
and consult with SAIC on any dispute regarding such claim, provided, however
that as between SAIC and Subsidiary, SAIC shall have final decision-making
authority over such claim.

2
<PAGE> 3
(j) Legal. SAIC shall provide general legal advice,
review and guidance in the areas of contracts, intellectual property, labor and
corporate matters. SAIC shall provide assistance for SEC compliance,
acquisitions and strategic arrangements and will maintain Subsidiary's
corporate records, including minutes of meetings of the Boards of Directors and
Stockholders. Legal services provided by lawyers other than SAIC's in-house
counsel shall be coordinated with and approved by Subsidiary prior to obtaining
such services and the cost of such services shall be invoiced to and paid by
Subsidiary.

(k) Human Resources/Payroll. SAIC shall administer,
oversee and maintain SAIC programs and benefits in which Subsidiary
participates, provide support and assistance in employee relation matters,
interface with governmental agencies including EEOC and maintain and update
employee policies and procedures. SAIC, through a third party provider, shall
provide payroll and related services for Subsidiary's employees. Subsidiary
shall provide to SAIC all necessary information required for participation in
such plans by employees and for payroll and other related services.

(l) Stock Programs. SAIC shall administer the
participation of Subsidiary's employees in certain stock benefit programs and
plans maintained by SAIC such as stock options plans, bonus plans and stock
purchase plans.

(m) Retirement Programs. SAIC shall administer the
participation of Subsidiary's employees in the employee benefit plans sponsored
by SAIC such as the following: Employee Stock Ownership Plan, Profit Sharing
Plan, Cash or Deferred Arrangement and certain bonus and deferral plans.
Subsidiary shall provide to SAIC all necessary information required for
participation in such plans by its employees. SAIC shall be responsible for
filing all required reports under ERISA for employee benefit plans sponsored by
SAIC.

(n) Real Estate/Facilities. SAIC shall assist Subsidiary
in locating facilities and will provide assistance in the negotiation and
documentation of leases.

1.3 SAIC shall also provide services in addition to those
enumerated in Sections 1.1 and 1.2 above as reasonably requested by Subsidiary.

2. FEES.

2.1 Fixed Fee. For performing general services of the types
described above in Section 1, SAIC will charge Subsidiary an annual fixed fee
equal to 2.5% of the net revenues of Subsidiary for the fiscal year in which
such services are performed (such amount to be prorated on a daily basis for
any partial year), which fee is intended to compensate SAIC for Subsidiary's
pro rata share of the aggregate costs actually incurred by SAIC in connection
with the provision of such services to all recipients thereof. The fee set
forth in the preceding sentence may be adjusted on an annual basis by mutual
agreement of SAIC and Subsidiary.

2.2 Additional Costs. In addition to the foregoing services,
certain specific services will be made available to Subsidiary by SAIC on an
as-requested basis. These may include, but are not limited to, services
specifically requested by Subsidiary or services which, in SAIC's

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judgment, are not routine administrative services or create unusual burdens or
demands on SAIC's resources. In such event, SAIC shall notify Subsidiary of
the cost of such services and obtain Subsidiary's consent prior to performing
such services. SAIC will charge Subsidiary for the costs actually incurred
(including overhead and general administrative expenses) for such services that
are requested by Subsidiary and supplied by SAIC.

2.3 The charges for service pursuant to Sections 2.1 and 2.2.
above will be determined and payable at the end of each SAIC accounting period.
The charges will be due when billed and shall be paid no later than 15 days
from the date of billing. When services of the type described above in Section
1 are provided by outside providers to Subsidiary or, if in connection with the
provision of such services out-of-pocket costs are incurred such as travel, the
cost thereof will be paid by Subsidiary. To the extent that Subsidiary is
billed by the provider directly, Subsidiary shall pay the bill directly. If
SAIC is billed for such services, SAIC may pay the bill and charge Subsidiary
the amount of the bill or forward the bill to Subsidiary for payment by
Subsidiary.

3. SUBSIDIARY'S DIRECTORS AND OFFICERS. Nothing contained herein
will be construed to relieve the directors or officers of Subsidiary from the
performance of their respective duties or to limit the exercise of their powers
in accordance with the Certificate of Incorporation or Bylaws of Subsidiary or
in accordance with any applicable statute or regulation.

4. NO LIABILITY; NO THIRD PARTY BENEFICIARIES. In furnishing
Subsidiary with management advice and other services as herein provided,
neither SAIC nor any of its officers, directors, employees or agents shall be
liable to Subsidiary or its employees, creditors or shareholders for errors of
judgment or for anything except willful malfeasance, bad faith or gross
negligence in the performance of their duties or reckless disregard of their
obligations and duties under the terms of this Agreement. The provisions of
this Agreement are for the sole benefit of SAIC and Subsidiary and will not,
except to the extent otherwise expressly stated herein, inure to the benefit of
any third party.

5. TERM.

5.1 Term. The initial term of this Agreement shall begin on the
date of this Agreement and continue through the end of Subsidiary's current
fiscal year. This Agreement shall automatically renew at the end of the initial
term for successive one-year terms until terminated in accordance with Section
5.2 below.

5.2 Termination.

(a) Entire Agreement. After SAIC no longer owns more than 50% of
the issued and outstanding Common Stock of Subsidiary, this Agreement may be
terminated in its entirety by either party at any time on one hundred eighty
(180) days prior written notice to the other party.

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<PAGE> 5
(b) Central Services. Any or all of the services or functions
within the "Central Services" may be terminated by either party at any time on
one hundred eighty (180) days prior written notice to the other party.

5.3 Termination Fee. In the event of a termination of this
Agreement, Subsidiary shall pay to SAIC its pro rata fee through the date of
termination pursuant to Section 2.1 for the year in which the termination takes
effect.

6. INDEPENDENT CONTRACTORS. SAIC and Subsidiary each hereby
declares and represents that each is engaged in an independent business and
will perform its obligations under the Agreement as an independent contractor
and not as the agent or employee of the other, that each party shall and hereby
retains the right to exercise full control of and supervision over the
performance of its own obligations hereunder and shall retain full control over
the employment, direction, compensation, and discharge of all those of its
employees assisting in the performance of such obligations.

7. OTHER ACTIVITIES OF SAIC. Subsidiary recognizes that SAIC now
renders and may continue to render services to other companies that may or may
not have policies and conduct activities similar to those of Subsidiary. SAIC
shall be free to render such advice and other services, and Subsidiary hereby
consents thereto. SAIC shall not be required to devote full time and attention
to the performance of its duties under this Agreement, but shall devote only so
much of its time and attention as it deems reasonable or necessary to perform
the services required hereunder.

8. MISCELLANEOUS.

8.1 Notices. All notices, billings, requests, demands, approvals,
consents, and other communications which are required or may be given under
this Agreement shall be in writing and will be deemed to have been duly given
if delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth below:

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If to Subsidiary: If to SAIC:

Network Solutions, Inc. Science Applications
505 Huntmar Park Drive International Corporation
Herndon, VA 20170 10260 Campus Point Drive
Attention: Controller San Diego, CA 92121
Attention: Controller

8.2 No Assignment. This Agreement shall not be assignable except
with the prior written consent of the other party to this Agreement.

8.3 Applicable Law. This Agreement shall be governed by and
construed under the laws of the State of California applicable to contracts
made and to be performed therein.

8.4 Headings. The section headings used in this Agreement are for
convenience of reference only and will not be considered in the interpretation
or construction of any of the provisions thereof.

8.5 Amendments, Waivers. No amendment, waiver of compliance with
any provision or condition hereof, or consent pursuant to this Agreement, will
be effective unless evidenced by an instrument in writing signed by the
parties (which, in the case of NSI, shall require the approval of a majority of
its independent directors).

8.6 Severability. If any terms or provisions hereof or the
application thereof to any circumstances shall be found by any court having
jurisdiction to be invalid or unenforceable to any extent, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.

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

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument by their duly authorized officers as of the date first
above written.

SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION

By:
--------------------------

Title:
-----------------------

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SUBSIDIARY
NETWORK SOLUTIONS, INC.

By:
--------------------------

Title:
-----------------------

<PAGE> 1
EXHIBIT 10.7

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this ____ day of _______, 1997 by and between SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION, a Delaware corporation ("SAIC" or the
"Holder") and NETWORK SOLUTIONS, INC., a Delaware corporation (the "Company").

RECITALS

A. The Holder. SAIC is an existing corporation duly organized
and in good standing under the laws of the State of Delaware with its principal
executive offices located in San Diego, California.

B. The Company. The Company is an existing corporation, formed
under the laws of the State of Delaware, with its principal executive offices
located in Herndon, Virginia. All of the outstanding Common Stock of the
Company is currently owned by SAIC.

C. Corporate Approvals. Each of the parties to this Agreement
has obtained all necessary corporate approvals for the execution and delivery
of this Agreement.

D. Arm's Length Relationship. The parties to this Agreement
intend to conduct their relationships hereunder on an arm's length basis.

E. The Offering. SAIC currently owns 100% of the outstanding
common stock of the Company. The Company is contemplating the issuance of
shares of the Company's Class A common stock, $.001 par value per share (the
"Class A Common Stock"), in an initial public offering pursuant to a
Registration Statement on Form S-1 (Registration No. 333-30705) (the
"Offering") and following the Offering, SAIC will be the beneficial and record
owner of 12,500,000 shares of the Company's Class B common stock, $.001 par
value per share (the "Class B Common Stock"), convertible into 12,500,000
shares of the Class A Common Stock.

F. Registration Rights. In conjunction with the Offering, the
Holder and the Company desire to enter into this Agreement to provide the
Holder with certain registration rights as provided herein.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration had
and received, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1. Definitions. As used herein, the following terms shall have
the following respective meanings:

<PAGE> 2
"Affiliate" shall mean any Person that directly or
indirectly controls, is controlled by, or is under common control
with such Person. A Person shall be deemed to control another Person
if such Person owns 50% or more of any equity interest in the
"controlled" Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock or partnership
interests, by contract, agreement or understanding (whether oral or
written), or otherwise.

"Class A Common Stock" shall have the meaning set forth in
Recital E of this Agreement.

"Class B Common Stock" shall have the meaning set forth in
Recital E of this Agreement.

"Designated Transferee" shall have the meaning set forth in
Section 10 hereof.

"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

"Holders" shall mean SAIC, any Affiliate of SAIC (other than
the Company) and any Designated Transferees who are holders of record
of any Registrable Shares, and any combination of one or more such
Holders.

"NASD" shall mean the National Association of Securities
Dealers, Inc.

"Other Holders" shall mean Persons who are holders of record
of equity securities of the Company who subsequent to the date hereof
acquire more than 5% of the outstanding shares of Class A Common
Stock pursuant to a transaction with the Company and to whom the
Company grants registration rights pursuant to a written agreement in
connection with such transaction.

"Person" shall mean any individual, corporation,
association, partnership, group (as defined in Section 13(d)(3) of
the Exchange Act), limited liability company, joint venture, business
trust or unincorporated organization, or a government or any agency
or political subdivision thereof.

"Registrable Shares" shall mean (i) the 12,500,000 shares of
Class A Common Stock which would result upon the conversion of the
12,500,000 shares of Class B Common Stock owned by the Holder on the
date of this Agreement, and (ii) any shares of Class A Common Stock
acquired by a Holder directly or upon exercise of conversion of any
equity securities of the Company issued or distributed after the date
of this Agreement to a Holder in

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<PAGE> 3
respect of Registrable Shares by way of any stock dividend, stock
split or other distribution or any recapitalization or
reclassification. As to any particular Registrable Share, such
Registrable Share shall cease to be a Registrable Share when (w) it
shall have been sold, transferred or otherwise disposed of or
exchanged pursuant to a registration statement under the Securities
Act; (x) it shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act; (y)
it shall have been sold or transferred to a Person other than a
Designated Transferee in a private transaction effected other than
pursuant to a registration statement; or (z) it shall have been sold,
transferred or otherwise disposed of in violation of this Agreement.

"Registration Expenses" shall have the meaning set forth in
Section 7(a) hereof.

"SEC" shall mean the Securities and Exchange Commission or
any successor agency thereto.

"Securities Act" shall mean the Securities Act of 1933, as
amended.

2. Incidental Registrations

(a) Right to Include Registrable Shares. Each time the Company
shall determine to file a registration statement under the Securities Act in
connection with a proposed offer and sale for cash of any equity securities
(other than an offering of debt securities which are convertible into equity
securities or an offering of equity securities in an amount not in excess of 5%
of the number of shares of Class A Common Stock outstanding at such time)
either by it or by any holders of its outstanding equity securities, the
Company will give prompt written notice of its determination to each Holder and
of such Holder's rights under this Section 2, at least 60 days prior to the
anticipated filing date of such registration statement. Upon the written
request of each Holder made within 30 days after the receipt of any such notice
from the Company, (which request shall specify the Registrable Shares intended
to be disposed of by such Holder), the Company will use its best efforts to
effect the registration under the Securities Act of all Registrable Shares
which the Company has been so requested to register by the Holders thereof, to
the extent required to permit the disposition of the Registrable Shares so to
be registered; provided, however, that (i) if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to proceed with the proposed
registration of the securities to be sold by it, the Company may, at its
election, give written notice of such determination to each Holder of
Registrable Shares and thereupon shall be relieved of its obligation to
register any Registrable Shares in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection therewith),
and (ii) if such registration involves an underwritten offering, all Holders of
Registrable Shares requesting to be included in the Company's registration must
sell their Registrable Shares to the underwriters on the same terms and
conditions as apply to the Company, with such

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differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings. If a registration requested pursuant to this Section 2(a) involves
an underwritten public offering, any Holder of Registrable Shares requesting to
be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register such securities in connection with such registration. No
registration effected under this Section 2 shall relieve the Company of its
obligations to effect registrations upon request under Section 4 hereof.

(b) Priority in Incidental Registration. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter(s) in good faith advise(s) the Company in writing that, in its
opinion, the number of securities which the Company, the Holders and any other
Persons intend to include in such registration exceeds the largest number of
securities which can be sold in such offering without having an adverse effect
on such offering (including the price at which such securities can be sold),
then the Company will include in such registration (i) first, if the
registration pursuant to this Section 2 was initiated by Other Holders
exercising demand registration rights, 100% of the securities such Other
Holders propose to sell (except to the extent the terms of such Other Holders'
registration rights provide otherwise); (ii) second, 100% of the securities the
Company proposes to sell for its own account; (iii) third, to the extent that
the number of securities which such Other Holders exercising demand
registration rights and the Company propose to sell is less than the number of
securities which the Company has been advised can be sold in such offering
without having the adverse effect referred to above, such number of Registrable
Shares which the Holders have requested to be included in such registration
pursuant to Section 2(a) hereof and which, in the opinion of such managing
underwriter(s), can be sold without having the adverse effect referred to
above; and (iv) fourth, to the extent that the number of securities which are
to be included in such registration pursuant to clauses (i), (ii) and (iii) is,
in the aggregate, less than the number of securities which the Company has been
advised can be sold in such offering without having the adverse effect referred
to above, such number of other securities requested to be included in the
offering for the account of any Other Holders which, in the opinion of such
managing underwriter(s), can be sold without having the adverse effect referred
to above.

3. Holdback Agreements.

(a) If any registration of Registrable Shares shall be in
connection with an underwritten public offering, the Holders shall not effect
any public sale or distribution (except in connection with such public
offering), of any equity securities of the Company, or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (in each case, other than as part of such underwritten public
offering), during the 180-day period (or such lesser period as the managing
underwriter(s) beginning on the effective date of such registration, if, and to
the extent, the managing underwriter(s) of any such offering determine(s) such
action is necessary or desirable to effect such offering; provided, however,
that each Holder has received the written notice required by Section 2(a)
hereof; provided, however, that each Holder shall not be obligated to comply
with such

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restrictions arising as a result of an underwritten public offering subject to
Section 2 hereof more than once in any 12-month period.

(b) If any registration of Registrable Shares shall be in
connection with any underwritten public offering, the Company shall not effect
any public sale or distribution (except in connection with such public
offering) of any of its equity securities or of any security convertible into
or exchangeable or exercisable for any of its equity securities (in each case
other than as part of such underwritten public offering) during the 180-day
period (or such lesser period as the managing underwriter(s) may permit)
beginning on the effective date of such registration, and the Company shall use
its best efforts to cause each member of the management of the Company who
holds any equity security and each other holder of 5% or more of the
outstanding shares of any equity security, or of any security convertible into
or exchangeable or exercisable for any equity security, of the Company
purchased from the Company (at any time other than in a public offering) to so
agree.

4. Registration on Request.

(a) Request by Holders. Upon the written request of the Holders
of at least 10% of the Registrable Shares (calculated on the based on the
number in clause (i) of its definition) that the Company effect the
registration under the Securities Act of all or part of such Holders'
Registrable Shares, and specifying the amount (which shall not be less than 10%
of the Registrable Shares (calculated on the based on the number in clause (i)
of its definition) in the aggregate) and the intended method of disposition
thereof, the Company will promptly give notice of such requested registration
to all other Holders of Registrable Shares and, as expeditiously as possible,
use its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Shares which the Company has been so requested to register
by Holders of at least 10% of the Registrable Shares; and (ii) all other
Registrable Shares which the Company has been requested to register by any
other Holder thereof by written request received by the Company within 30 days
after the giving of such written notice by the Company (which request shall
specify the intended method of disposition of such Registrable Shares);
provided, however, that the Company shall not be required to effect more than
two registrations pursuant to this Section 4; provided, further, that the
Company shall not be obligated to file a registration statement relating to a
registration request under this Section 4 (x) if the registration request is
delivered after delivery of a notice by the Company of an intended registration
and prior to the effective date of the registration statement referred to in
such notice, or (y) within a period of 90 days after the effective date of any
other registration statement of the Company requested by a Holder pursuant to
this Section 4 or pursuant to which the Holders included Registrable Shares.
The Holders initially requesting a registration pursuant to this Section 4 may,
at any time prior to the effective date of the registration statement relating
to such registration, revoke such request by providing a written notice to the
Company revoking such request; provided, however, that, in the event the
Holders shall have made a written request for a demand registration (I) which
is subsequently withdrawn by the Holders after the Company has filed a
registration statement with the SEC in connection therewith but prior to such
demand registration being declared effective by the SEC or (II) which is not
declared effective solely as a result of the failure of Holders to take all
actions reasonably required in order to have

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<PAGE> 6
the registration and the related registration statement declared effective by
the SEC, then, in any such event, such demand registration shall be counted as
a demand registration for purposes of this Section 4(a). Promptly after the
expiration of the 30-day period referred to in clause (ii) above, the Company
will notify all the Holders to be included in the registration of the other
Holders and the number of shares of Registrable Shares requested to be included
therein.

(b) Registration Statement Form. If any registration requested
pursuant to this Section 4 which is proposed by the Company to be effected by
the filing of a registration statement on Form S-3 (or any successor or similar
short-form registration statement) shall be in connection with an underwritten
public offering, and if the managing underwriter(s) shall advise the Company in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.

(c) Effective Registration Statement. A registration requested
pursuant to this Section 4 will not be deemed to have been effected unless it
has become effective under the Securities Act and has remained effective for
270 days or such shorter period as all the Registrable Shares included in such
registration have actually been sold thereunder. In addition, if within 180
days after it has become effective, the offering of Registrable Shares pursuant
to such registration is interfered with by any stop order, injunction or other
order or requirement of the SEC or other governmental agency or court, such
registration will be deemed not to have been effected for purposes of this
Section 4.

(d) Priority in Requested Registrations. If a requested
registration pursuant to this Section 4 involves an underwritten offering and
the managing underwriter(s) in good faith advise(s) the Company in writing
that, in its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Shares) exceeds the largest number of securities which can be sold in such
offering without having an adverse effect on such offering (including the price
at which such securities can be sold), then the Company will include in such
registration (i) first, 100% of the Registrable Shares requested to be
registered pursuant to Section 4(a) hereof (provided that if the number of
Registrable Shares requested to be registered pursuant to Section 4(a) hereof
exceeds the number which the Company has been advised can be sold in such
offering without having the adverse effect referred to above, the number of
such Registrable Shares to be included in such registration by the Holders
shall be allocated pro rata among such Holders on the basis of the relative
number of Registrable Shares each such Holder has requested to be included in
such registration); (ii) second, to the extent that the number of Registrable
Shares requested to be registered pursuant to Section 4(a) hereof is less than
the number of securities which the Company has been advised can be sold in such
offering without having the adverse effect referred to above, such number of
shares of equity securities the Company requests to be included in such
registration, and (iii) third, to the extent that the number of Registrable
Shares requested to be included in such registration pursuant to Section 4(a)
hereof and the securities which the Company proposes to sell for its own
account are, in the aggregate, less than the number of equity securities which
the Company has been advised can be sold in such offering without having the
adverse effect

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<PAGE> 7
referred to above, such number of other securities proposed to be sold by any
Other Holder which, in the opinion of such managing underwriter(s), can be sold
without having the adverse effect referred to above (provided that if the
number of such securities of such Other Holder requested to be registered
exceeds the number which the Company has been advised can be sold in such
offering without having the adverse effect referred to above, the number of
such securities to be included in such registration pursuant to this Section
4(d) shall be allocated pro rata among all such Other Holders on the basis of
the relative number of securities each such Other Holder has requested to be
included in such registration).

(e) Additional Rights. If the Company at any time grants to any
other holders of equity securities of the Company any rights to request the
Company to effect the registration of any such shares of equity securities on
terms more favorable to such holders than the terms set forth in this Section 4
and in Section 5 hereof, the terms of this Section 4 and of Section 5 hereof
shall be deemed amended or supplemented to the extent necessary to provide the
Holders such more favorable rights and benefits. In no event shall the Company
grant to any person any rights to request the Company to effect the
registration of any shares of equity securities of the Company on terms which
are adverse to rights of the Holders set forth in Section 2 and this Section 4.

5. Registration Procedures.

(a) If and whenever the Company is required by the provisions of
Section 2 or 4 hereof to use its best efforts to effect or cause the
registration of Registrable Shares, the Company shall as expeditiously as
possible:

(i) prepare and, in any event within 60 days after the end
of the 30-day period within which a request for registration may be
given to the Company as specified in Sections 2(a) and 4(a) hereof,
file with the SEC a registration statement with respect to such
Registrable Shares and use its best efforts to cause such
registration statement to become effective;

(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period not in excess of 270 days and to
comply with the provisions of the Securities Act, the Exchange Act,
and the rules and regulations promulgated thereunder with respect to
the disposition of all the securities covered by such registration
statement during such period in accordance with the intended methods
of disposition by the Holders thereof set forth in such registration
statement; provided, however, that (A) before filing a registration
statement (including an initial filing) or prospectus, or any
amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority of the Registrable
Shares covered by such registration statement copies of all documents
proposed to be filed, which documents will be subject to the review
and comment of such counsel, and (B) the Company will notify each
Holder of Registrable Shares covered by such registration statement
of any

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stop order issued or threatened by the SEC, any other order
suspending the use of any preliminary prospectus or of the suspension
of the qualification of the registration statement for offering or
sale in any jurisdiction, and take all reasonable actions required to
prevent the entry of such stop order, other order or suspension or to
remove it if entered;

(iii) furnish to each Holder and each underwriter, if
applicable, of Registrable Shares covered by such registration
statement such number of copies of the registration statement and of
each amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and
summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as each Holder of
Registrable Shares covered by such registration statement may
reasonably request in order to facilitate the disposition of the
Registrable Shares by such Holder;

(iv) use its best efforts to register or qualify such
Registrable Shares covered by such registration statement under the
state securities or blue sky laws of such jurisdictions as each
Holder of Registrable Shares covered by such registration statement
and, if applicable, each underwriter, may reasonably request, and do
any and all other acts and things which may be reasonably necessary
to consummate the disposition in such jurisdictions of the
Registrable Shares owned by such Holder, except that the Company
shall not for any purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for
the requirements of this clause (iv), it would not be obligated to be
so qualified;

(v) use its best efforts to cause such Registrable Shares
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holders thereof to consummate the disposition
of such Registrable Shares;

(vi) if at any time when a prospectus relating to the
Registrable Shares is required to be delivered under the Securities
Act, any event shall have occurred as the result of which any such
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, immediately give written notice thereof to each Holder
and the managing underwriter or underwriters, if any, of such
Registrable Shares and prepare and furnish to each such Holder a
reasonable number of copies of an amended or supplemental prospectus
as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Shares, such prospectus shall not
include an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;

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(vii) use its best efforts to list any portion of such
Registrable Shares not already listed on any securities exchange on
which similar securities of the Company are then listed, and enter
into customary agreements including a listing application and
indemnification agreement in customary form, provided that the
applicable listing requirements are satisfied, and provide a transfer
agent and registrar for such Registrable Shares covered by such
registration statement not later than the effective date of such
registration statement;

(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
as each Holder of Registrable Shares being sold or the underwriter or
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares, including
customary indemnification and opinions;

(ix) use its best efforts to obtain a "cold comfort" letter
or letters from the Company's independent public accountants in
customary form and covering matters of the type customarily covered
by "cold comfort" letters as the Holders of the Registrable Shares
being sold or the underwriters retained by such Holders shall
reasonably request;

(x) make available for inspection by representatives of any
Holder of Registrable Shares covered by such registration statement,
by any underwriter participating in any disposition to be effected
pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such
underwriter, all financial and other records pertinent corporate
documents and properties of the Company and its subsidiaries'
officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by such Holders or any
such representative, underwriter, attorney, accountant or agent in
connection with such registration statement;

(xi) promptly prior to the filing of any document which is
to be incorporated by reference into the registration statement or
the prospectus (after initial filing of the registration statement),
provide copies of such document to counsel to the Holders of
Registrable Shares covered by such registration statement and to the
managing underwriter(s), if any, make the Company's representatives
available for discussion of such document and make such changes in
such document prior to the filing thereof as counsel for such Holders
or underwriter(s) may reasonably request;

(xii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable after the
effective date of the registration statement, an earning statement
which shall satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations promulgated thereunder;

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<PAGE> 10
(xiii) not later than the effective date of the applicable
registration statement, use its best efforts to provide a CUSIP
number for any portion of such Registrable Shares not already
included in a CUSIP number for similar securities of the Company, and
provide the applicable transfer agents with printed certificates for
the Registrable Shares which are in a form eligible for deposit with
the Depository Trust Company;

(xiv) notify counsel for the Holders of Registrable Shares
included in such registration statement and the managing underwriter
or underwriters, if any, immediately and confirm the notice in
writing, (A) when the registration statement, or any post-effective
amendment to the registration statement, shall have become effective,
or any supplement or amendment to the prospectus shall have been
filed, (B) of the receipt of any comments from the SEC and (C) of any
request of the SEC to amend the registration statement or amend or
supplement the prospectus or for additional information; and

(xv) cooperate with each seller of Registrable Shares and
each underwriter, if any, participating in the disposition of such
Registrable Shares and their respective counsel in connection with
any filings required to be made with the NASD.

(b) Each Holder of Registrable Shares hereby agrees that, upon
receipt of any notice from the Company of the happening of any event of the
type described in Section 5(a)(vi) hereof, such Holder shall forthwith
discontinue disposition of such Registrable Shares covered by such registration
statement or related prospectus until such Holder's receipt of the copies of
the supplemental or amended prospectus contemplated by Section 5(a)(vi) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Shares at
the time of receipt of such notice. In the event the Company shall give any
such notice, the period mentioned in Section 5(a)(ii) hereof shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 5(a)(vi) hereof and including the
date when such Holder shall have received the copies of the supplemental or
amended prospectus contemplated by Section 5(a)(vi) hereof. If for any other
reason the effectiveness of any registration statement filed pursuant to
Section 4 hereof is suspended or interrupted prior to the expiration of the
time period regarding the maintenance of the effectiveness of such Registration
Statement required by Section 5(a)(ii) hereof so that Registrable Shares may
not be sold pursuant thereto, the applicable time period shall be extended by
the number of days equal to the number of days during the period beginning with
the date of such suspension or interruption to and ending with the date when
the sale of Registrable Shares pursuant to such registration statement may be
recommenced.

(c) Each Holder hereby agrees to provide the Company, upon
receipt of its request, with such information about such Holder to enable the
Company to comply with the requirements of the Securities Act and to execute
such certificates as the Company may

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<PAGE> 11
reasonably request in connection with such information and otherwise to satisfy
any requirements of law.

6. Underwritten Registrations. Subject to the provisions of
Sections 2, 3 and 4 hereof, any of the Registrable Shares covered by a
registration statement may be sold in an underwritten offering at the
discretion of the Holder thereof. In the case of an underwritten offering
pursuant to Section 2 hereof, the managing underwriter(s) that will administer
the offering shall be selected by the Company; provided, however, that such
managing underwriter(s) shall be reasonably satisfactory to the Holders of a
majority of the Registrable Shares to be registered. In the case of any
underwritten offering pursuant to Section 4 hereof, the managing underwriter(s)
that will administer the offering shall be selected by the Holders of a
majority of the Registrable Shares to be registered; provided, however, that
such underwriter(s) shall be reasonably satisfactory to the Company.

7. Expenses.

(a) Subject to Section 7(b), the Company shall pay all fees,
costs and expenses of all registrations pursuant to Section 2 hereof and the
first registration pursuant to Section 4 hereof, including all SEC and stock
exchange or NASD registration and filing fees and expenses, reasonable fees and
expenses of any "qualified independent underwriter" and its counsel as may be
required by the rules of the NASD, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters, if any, in connection with blue sky
qualifications of the Registrable Shares), rating agency fees, printing
expenses (including expenses of printing certificates for Registrable Shares
and prospectuses), messenger, telephone and delivery expenses, the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or national market system on which
similar securities issued by the Company are then listed, fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the expenses of any annual audit, special audit and
"cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursements of the underwriters customarily paid by
issuers or sellers of securities (including expenses relating to "road shows"
and other marketing activities), the reasonable fees and expenses of special
experts required to be retained by the Company in connection with such
registration, and the reasonable fees and expenses of other Persons required to
be retained by the Company (collectively, "Registration Expenses"); provided,
however, that Registration Expenses shall not include (i) any allocation of the
overhead of the Company, including any allocation of the compensation or
benefits of employees of the Company that assist in a registration, (ii) any
other expense to the extent it would have been incurred by the Company in the
absence of any sale of securities in connection with a registration pursuant to
this Agreement (including the cost of the Company's annual audit), or (iii) any
expenses for any registration proceeding begun pursuant to Section 4 hereof and
subsequently withdrawn by the Holder requesting such registration.

(b) The Holders shall pay the following: (i) all fees, costs and
expenses of all registrations except the first registration effected pursuant
to Section 4 hereof including all

11
<PAGE> 12
Registration Expenses, (ii) any underwriting discounts or commissions or
transfer taxes, if any, attributable to the sale of Registrable Shares by the
Holders pursuant to this Agreement, (iii) all fees, costs and expenses of
counsel to the Holders pursuant to this Agreement in connection with any
registration pursuant to this Agreement, and (iv) all fees, costs and expenses
for any registration proceeding begun pursuant to Section 4 hereto and
subsequently withdrawn by the Holders requesting such registration.

8. Indemnification.

(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to Section 2 or 4 hereof, the Company will, and it hereby does, indemnify and
hold harmless, to the extent permitted by law, each of the Holders of any
Registrable Shares covered by such registration statement, each Affiliate of
such Holder (other than the Company) and their respective directors and
officers, each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such
Holder or any such underwriter within the meaning of the Securities Act
(collectively, the "Indemnified Parties"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses (including any amounts
paid in any settlement effected with the Company's consent, which consent shall
not be unreasonably withheld) to which any Indemnified Party may become subject
under the Securities Act, state securities or blue sky laws, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof, whether or not such Indemnified Party is a
party thereto) or expenses arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereof, (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading or (iii) any violation by the
Company of any federal, state or common law rule or regulation applicable to
the Company and relating to action required of or inaction by the Company in
connection with any such registration, and the Company will reimburse such
Indemnified Party for any legal or any other expenses reasonably incurred by it
in connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the Company shall not be liable
to any Indemnified Party in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement
or amendment or supplement thereof or in any such preliminary, final or summary
prospectus in reliance upon and in conformity with written information with
respect to such Holder furnished to the Company by such Holder specifically for
use in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and shall survive the transfer of such securities by such
Holder.

(b) Indemnification by the Holders and the Underwriters. The
Company may require, as a condition to including any Registrable Shares in any
registration statement filed

12
<PAGE> 13
in accordance with Section 2 or 4 hereof, that the Company shall have received
an undertaking reasonably satisfactory to it from the Holders of such
Registrable Shares or any underwriter to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 8(a) hereof) the
Company with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information with respect to the
Holders of the Registrable Shares being registered or such underwriter
furnished to the Company by such Holders or such underwriter specifically for
use in the preparation of such registration statement, preliminary, final or
summary prospectus or amendment or supplement, or a document incorporated by
reference into any of the foregoing; provided, however, that no such Holder
shall be liable for any indemnity claims in excess of the amount of the net
proceeds received by such Holder from the sale of Registrable Shares. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the Holders, or any of their
respective Affiliates (other than the Company), directors, officers or
controlling Persons, and shall survive the transfer of such securities by such
Holder.

(c) Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, however, that the failure
of the indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Section 8, except to the
extent that the indemnifying party is actually materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the indemnified party shall have the right, at the sole cost and
expense of the indemnifying party, to employ counsel to represent the
indemnified party and its respective controlling persons, directors, officers,
employees or agents who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified party against such
indemnifying party under this Section 8 if (i) the employment of such counsel
shall have been authorized in writing by such indemnifying party in connection
with the defense of such action, (ii) the indemnifying party shall not have
promptly employed counsel reasonably satisfactory to the indemnified party to
assume the defense of such action or counsel, or (iii) any indemnified party
shall have reasonably concluded that there may be defenses available to such
indemnified party or its respective controlling persons, directors, officers,
employees or agents which are in conflict with or in addition to those
available to an indemnifying party; provided, further, that the indemnifying
party shall not be obligated to pay for more than the expenses of one firm of
separate

13
<PAGE> 14
counsel for the indemnified party (in addition to the reasonable fees and
expenses of one firm serving as local counsel). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.

(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to any indemnified party under Section 8(a) or
8(b) hereof or is insufficient to hold it harmless in respect of any loss,
claim, damage or liability, or any action in respect of any loss, claim, damage
or liability, or any action in respect thereof referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the indemnified party and
indemnifying party or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the indemnified party and indemnifying party with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. Notwithstanding any other provision of this Section
8(d), no Holder of Registrable Shares shall be required to contribute an amount
greater than the dollar amount of the proceeds received by such Holder with
respect to the sale of any such Registrable Shares. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

(e) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 8 (with appropriate
modifications) shall be given by the Company and each Holder of Registrable
Shares with respect of any required registration or other qualification of
securities under any federal or state law or regulation other than the
Securities Act.

(f) Non-Exclusivity. The obligations of the parties under this
Section 8 shall be in addition to any liability which any party may otherwise
have to any other party.

9. Rule 144. The Company covenants that it will file in a
timely manner the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder (or,
if the Company is not required to file such reports, it will, upon the request
of any Holder of Registrable Shares, make publicly available such information),
and it will take such further action as any Holder of Registrable Shares may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Shares without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder of Registrable Shares, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.

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<PAGE> 15
10. Assignability. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as provided herein, no party may
assign any of its rights or delegate any of its duties under this Agreement
without the express consent of the other parties hereto. In addition, and
whether or not any express assignment shall have been made, the provisions of
this Agreement which are for the benefit of the parties hereto other than the
Company shall also be for the benefit of and enforceable by any subsequent
Holder of any Registrable Shares, subject to the provisions contained herein.
Any Holder may assign any of its rights or delegate any of its duties under
this Agreement, in whole or in part, without any prior consent of the Company
only to a Person (a "Designated Transferee") (a) who is an Affiliate of SAIC or
(b) who is a transferee of Registrable Shares (whether through purchase, share
exchange, bequest or otherwise) and who agrees to be bound by the terms of this
Agreement. Any purported assignment in violation of this Section 10 shall be
void.

11. Limitation on Subsequent Registration Rights. From and
after the date hereof, the Company shall not, without the prior written consent
of the Holders owning not less than 50% of the Registrable Shares, enter into
any agreement with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder to include such
securities in any registration of the Company.

12. Notices. Any and all notices, designations, consents,
offers, acceptances or any other communications shall be given in writing by
either (a) personal delivery to and receipted for by the addressee or by (b)
telecopy or registered or certified mail which shall be addressed, in the case
of the Company, to: Network Solutions, Inc., 505 Huntmar Park Drive, Herndon,
Virginia 20170, attention: Chief Financial Officer; in the case of Holders, to
the address or addresses thereof appearing on the books of the Company or of
the transfer agent and registrar for its Class A Common Stock. All such
notices and communications shall be deemed to have been duly given and
effective: when delivered by hand, if personally delivered; two business days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is acknowledged, if telecopied.

13. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders in this Agreement.

14. Specific Performance. The Company acknowledges that the
rights granted to the Holders in this Agreement are of a special, unique and
extraordinary character, and that any breach of this Agreement by the Company
could not be compensated for by damages. Accordingly, if the Company breaches
its obligations under this Agreement, the Holders shall be entitled, in
addition to any other remedies that they may have, to enforcement of this
Agreement by a decree of specific performance requiring the Company to fulfill
its obligations under this Agreement.

15. Severability. If any provision of this Agreement or any
portion thereof is finally determined by a court of competent jurisdiction to
be unlawful or unenforceable, such provision or portion thereof shall in no way
affect any other provision of this Agreement,

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<PAGE> 16
the application of any such provision and any other circumstances, and any
portion of such invalidated provision that is not invalidated by such a
determination shall remain in full force and effect.

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

17. Defaults. A default by any party to this Agreement in such
party's compliance with any of the conditions or covenants hereof or
performance of any of the obligations of such party hereunder shall not
constitute a default by any other party.

18. Amendments, Waivers. This Agreement may not be amended,
modified or supplemented and no waivers of or consents to or departures from
the provisions hereof may be given unless consented to in writing by the
Company and the holders of a majority of the Registrable Shares; provided,
however, that no such amendment, supplement, modification or waiver shall
deprive any Holder of any rights under Section 2 or 4 hereof without the
consent of such Holder.

19. Construction. The captions contained in this Agreement are
for reference purposes only and shall not constitute a part of this Agreement.
Unless the context requires otherwise, the use of the masculine shall include
the feminine, and the use of the singular shall include the plural. The word
"including" shall mean "including, without limitation."

20. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.

21. Third Party Beneficiaries. Except as expressly provided in
this Agreement, the parties hereto intend that this Agreement shall not benefit
or create any right or cause of action in or on behalf of any person other than
the parties hereto.

22. Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions
contemplated herein and understandings among the parties relating to the
subject matter hereof. Any and all previous agreements and understandings
between or among the parties hereto regarding the subject matter hereof are,
whether written or oral, superseded by this Agreement.

23. Governing Law. This Agreement is made pursuant to and shall
be construed in accordance with the laws of the State of Delaware without
regard to that state's conflicts

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<PAGE> 17
of laws principles. The parties hereto submit to the non-exclusive
jurisdiction of the Courts of the State of Delaware in any action or proceeding
arising out of or relating to this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date first
written above.

NETWORK SOLUTIONS, INC.

By
-------------------------------------

Name:
---------------------------------

Title:
---------------------------------

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

By
-------------------------------------

Name:
---------------------------------

Title:
---------------------------------

<PAGE> 1
EXHIBIT 10.8

NONCOMPETITION AND CORPORATE OPPORTUNITIES
ALLOCATION AGREEMENT

THIS NONCOMPETITION AND CORPORATE OPPORTUNITIES ALLOCATION AGREEMENT
(this "Agreement") is made as of the ___ day of ________ 1997 between SCIENCE
APPLICATIONS INTERNATIONAL CORPORATION, a Delaware corporation ("SAIC") and
NETWORK SOLUTIONS, INC., a Delaware corporation ("NSI").

RECITALS

A. SAIC. SAIC is an existing corporation duly organized and in
good standing under the laws of the State of Delaware with its principal
executive offices located in San Diego, California.

B. NSI. NSI is an existing corporation duly organized and in
good standing under the laws of the State of Delaware with its principal
executive offices located in Herndon, Virginia. NSI is currently engaged in
the Commercial Domain Name Registration Business (as defined herein) on a
world-wide basis.

C. Corporate Approvals. Each of the parties to this Agreement
has obtained all necessary corporate approvals for the execution and delivery
of this Agreement.

D. SAIC/NSI Transactions. SAIC currently owns 100% of the
outstanding common stock of NSI. NSI is currently considering an initial
public offering of ________________ shares of its common stock, $.001 par value
per share.

E. Related Agreements. Concurrently with the execution and
delivery of this Agreement, SAIC and NSI have entered into (1) a Tax Sharing
Agreement of even date herewith (the "Tax Sharing Agreement") and (2) a
Corporate Services Agreement of even date herewith (the "Corporate Services
Agreement"). The Tax Sharing Agreement and the Corporate Services Agreement
are herein collectively referred to as the "Related Agreements."

F. Noncompetition. In anticipation that NSI will cease to be a
wholly-owned subsidiary of SAIC, but that SAIC will remain a stockholder of
NSI, and in anticipation that NSI and SAIC may engage in the same or similar
activities or lines of business and have an interest in the same areas of
corporate opportunities, SAIC and NSI are willing to enter into this
Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of their
mutual promises and obligations herein contained, intending to be legally
bound, the parties do hereby agree as follows:

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<PAGE> 2
ARTICLE 1 - DEFINITIONS

1.1 "Affiliate" means any entity as to which SAIC shall control
more than 50% of the outstanding voting power for the election of directors (or
similar officials) of any entity, other than NSI.

1.2 "Commercial Domain Name Registration Business" shall mean the
Internet registration of domain names within the .com, .org, .net, .gov and
.edu top level domains. The Commercial Domain Name Registration Business shall
specifically not include the Intranet Services Business, the Directory Services
Business or any Internet enabling services, and it shall specifically not
include the Internet registration of domain names within other top level
domains, whether currently existing or not, such as the .mil top level domain.

1.3 "Directory Services Business" shall mean services for
searching for, retrieving, sending, accessing and distributing information
through the use of the Internet.

1.4 "Intranet Services Business" shall mean consulting and systems
integration services, including IP re-engineering, network design, engineering
and integration, network and systems management and network and system
security.

1.5 "NSI" shall mean NSI and all corporations, partnerships, joint
ventures, associations and other entities in which NSI beneficially owns
(directly or indirectly) fifty percent or more of the outstanding voting stock,
voting power or similar voting interests.

1.6 "Related Entities" means one or more corporations,
partnerships, joint ventures, associations or other organizations in which one
or more of the directors of NSI have a direct or indirect financial interest.

1.7 "SAIC" shall mean SAIC and all corporations, partnerships,
joint ventures, associations and other entities (other than NSI) in which SAIC
beneficially owns (directly or indirectly) fifty percent or more of the
outstanding voting stock, voting power or similar voting interests.

ARTICLE 2 - COMPETITION AND CORPORATE OPPORTUNITIES

2.1 Noncompetition by SAIC. In anticipation that NSI will cease
to be a wholly-owned subsidiary of SAIC, but that SAIC will remain a
stockholder of NSI, SAIC agrees that neither SAIC nor any Affiliate will
directly or indirectly compete with NSI or otherwise engage in the Commercial
Domain Name Registration Business in any jurisdiction in any country worldwide.
The parties acknowledge and agree that the time and scope of the covenants set
forth in this Section 2.1 are reasonable in light of the nature and operation
of the Internet and the business, operations and prospects of the Commercial
Domain Name Registration Business.

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<PAGE> 3
2.2 SAIC Determination Binding. The good faith determination of
SAIC as to the scope of the Commercial Domain Name Registration Business shall
be conclusive and binding for all purposes.

2.3 Other Corporate Opportunities. As to any other corporate
opportunities outside the scope of the Commercial Domain Name Registration
Business, including, without limitation, the Intranet Services Business, which
may be presented to NSI, SAIC or any Affiliate, each party shall be entitled to
pursue such opportunity based upon its evaluation of the best interests of its
stockholders and shall have no obligation to offer such opportunity to the
other parties. Notwithstanding the foregoing, the parties recognize the
benefits derived from their prior cooperation in the Intranet Services Business
and other areas and nothing herein is intended to discourage or inhibit such
cooperation in the future.

ARTICLE 3 - TERM AND TERMINATION

3.1 Term. The term of this Agreement shall commence on the
Effective Date and shall continue for five years thereafter, unless terminated
earlier pursuant to Section 3.2 or extended by the mutual agreement of the
parties.

3.2 Termination. Either party shall have the right to terminate
this Agreement if SAIC ceases to beneficially own Common Stock representing at
least 20% of the number of outstanding shares of Common Stock of NSI.

ARTICLE 4 - RESOLUTION OF DISPUTES

4.1 Arbitration. Any controversy or claim between SAIC and NSI
arising out of or relating to this Agreement or any agreements or instruments
relating hereto or delivered in connection herewith, will, at the request of
any party seeking relief be determined by arbitration conducted in San Diego,
California.

(a) The arbitration shall be conducted in accordance with the
United States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice
of law provision in this Agreement, and under the Commercial Rules of the
American Arbitration Association. The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s). The
award rendered by the arbitrator(s) shall set forth findings of facts and
conclusions of law and shall be final, and the judgment may be entered in any
court having jurisdiction thereof. A failure by the arbitrator(s) to make
findings of fact and conclusions of law shall be grounds for overturning the
award. The institution and maintenance of an action for judicial relief or
pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.

-3-
<PAGE> 4
(b) In any arbitration proceeding, the arbitrator(s) is (are)
authorized to apportion costs and expenses, including investigation, legal and
other expenses, which will include, if applicable, a reasonable estimate of
allocated costs and expenses of in-house legal counsel and legal staff. Such
costs and expenses are to be awarded only after the conclusion of the
arbitration and will not be advanced during the course of such arbitration.

ARTICLE 5 - MISCELLANEOUS PROVISIONS

5.1 Remedies for Breach. Both parties recognize that any breach
of this Agreement hereof at any time could result in irreparable damage to NSI
in an amount difficult to ascertain. Accordingly, in addition to any other
relief to which NSI may be entitled, NSI shall be entitled, if it so elects to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain damages for such breach of this
Agreement, to enforce the specific performance of the terms and conditions of
this Agreement by SAIC or an Affiliate.

5.2 Severable Promises. The parties hereto intend that the
covenants set forth in Section 2.1 hereof shall be construed as a series of
separate promises, each promise for each jurisdiction to which this Agreement
may apply. Except for such geographic coverage, each such separate promise
shall be deemed identical in terms. It is the desire and intent of the parties
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If any particular provisions or portion of this
Agreement shall be adjudicated to be invalid or unenforceable by a court of
competent jurisdiction, this Agreement shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable,
such amendment to apply only with respect to the operation of this paragraph in
the particular jurisdiction in which such adjudication is made.

5.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware without regard to principles
of conflicts of laws.

5.4 Notices. Any notice permitted or required by this Agreement
shall be deemed given when sent by personal service, by certified or registered
mail return receipt requested, postage prepaid, by facsimile transmission or by
overnight delivery by a nationally recognized courier and addressed as follows:
if to NSI, to 505 Huntmar Park Drive, Herndon, Virginia 20170, attention: Chief
Financial Officer, fax: (703) 742-3386; and, if to SAIC, to 10260 Campus Point
Drive, San Diego, California 92121, attention: Douglas E. Scott, Esq., fax:
(619) 535-7992. Actual receipt of notice or other communication shall overcome
any deficiency in manner of delivery thereof.

5.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed by both parties to this Agreement,
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument.

-4-
<PAGE> 5
5.6 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter, superseding all
prior oral and written communications, proposals, negotiations,
representations, understandings, courses of dealing, agreements, contracts, and
the like between the parties.

5.7 Amendments. This Agreement may be changed, amended, modified,
or rescinded only by an instrument in writing signed by the party (which, in
the case of NSI, shall require the approval of a majority of the independent
directors) against which enforcement of such change, amendment, modification or
rescission is sought.

5.8 Waivers. The provisions of this Agreement may be waived only
by a written instrument executed by the party so waiving (which, in the case
of NSI, shall require the approval of a majority of the independent directors).
Except as expressly set forth the failure of any party at any time or times to
require performance of any provision of this Agreement shall in no manner
affect such party's right at a later time to enforce the same. No waiver by
any party of any condition, or breach of any provision of this Agreement, in
any one or more instances, shall be deemed to be or construed as a waiver of
any other condition or of the breach of any other provision of this Agreement.

5.9 Relationship. Nothing in this Agreement shall be deemed to
create a partnership, joint venture or agency relationship between the parties.
Both parties are independent contractors and neither party is to be considered
the agent or legal representative of the other for any purpose whatsoever.

5.10 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties and their respective successors and assigns,
except that no obligation under this Agreement may be delegated, nor may this
Agreement be assigned, without the prior written consent of SAIC. Any such
purported assignment of this Agreement without the prior written consent of
SAIC shall be void and without effect.

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

SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION

By:
---------------------------------

Its:
--------------------------------

NETWORK SOLUTIONS, INC.

By:
---------------------------------

Its:
--------------------------------

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<PAGE> 1
EXHIBIT 10.9

September 16, 1996

Mr. Gabriel Battista
12428 Bacall Lane
Potomac, MD 20854

Dear Gabe:

Based on your interview and discussions with SAIC and NSI staff members, it is
a pleasure to offer you a position as the Chief Executive Officer of Network
Solutions Inc. reporting directly to the NSI Board of Directors, in the 505
Huntmar Park Drive, Herndon, VA office of NSI. It is our hope that in this
capacity you will extend the professional capabilities of our organization, and
that you will personally find the association to be both challenging and
rewarding.

We would like you to begin your employment on or about October 21-28, 1996.
Your starting salary will be $6,730.77 per week, based on an anticipated work
week of 40 hours, which is equivalent to an annual salary of $350,000. You
will be eligible to receive a performance bonus of up to $150,000 based on
objectives to be established and mutually agreed upon. You will also receive a
pro-rated bonus based upon agreed performance objectives for the current NSI
fiscal year, in consideration of you joining NSI at this point in the fiscal
year.

You will receive options for 3% of Network Solutions Stock at the time of an
initial public offering. These will be 4 year vesting options with a vesting
schedule of 30%/30%/20%/20% at the end of years 1-4.

It is agreed and understood that you will work with the Board to establish a
stock option pool for existing and future senior staff members. This option
pool will be 15% of the stock at the time of an initial public offering, which
will include your 3%.

It is agreed that we will execute a separation agreement with you which
provides the following: if at any time during the first 2 years of your
employment, the NSI Board of Directors acts to remove you, for other than cause
or non-performance, you will receive in year 1, your first year's base salary
plus $150,000 in bonus; if removed in year 2, you will receive your first
year's base salary plus an amount equal to the bonus awarded to you in year 1.
If you resign during this two (2) year's period you will receive no separation
compensation. After the initial two (2)
<PAGE> 2
Mr. Gabriel Battista
September 16, 1996
Page 2 of 3

year period of employment, no separation agreement will be in force with you.

As an employee of NSI, you will be eligible to receive the fringe benefit
package described in the enclosed videotape and New Hire Guidebook. Please
view the videotape and complete the enclosed forms to the extent possible. We
will arrange an executive orientation briefing for you at your time of hire.

Enclosed in your package are the standard Science Application International
Corporation Inventions Agreement, the Education summary and Pre-employment
statement, the Standards of Business Ethics and Conduct Handbook and the SAIC
Employee Dispute Resolution Guide. Both the ethics handbook and the Employee
dispute Resolution Guide contain acknowledgement pages which need to be signed
by you. As a condition of employment, all employees of SAIC and NSI are
required to execute these four attached documents. You may do so at this time
or on your first day of employment should you decide to accept this offer. We
will assign one of our executive human resource senior managers to work with
you on completion of this information. As a further condition of employment,
all new employees are required to present documentation which confirms their
identity and eligibility for employment in the United States. The enclosed
Employment Eligibility Certification describes acceptable documentation and
should be presented to the company with the required documents on or before
your first day of employment. Additionally, you must have competed SAIC'S form
G/C 489, that inquires about any personal or substantial participation in the
conduct of a U.S. Government Agency procurement within the last two years.
Please be advised that this offer is contingent upon your ability to provide
proof of your legal eligibility for employment in the United States.

As discussed, NSI has a strong policy against employee use of illegal drug and
substance abuse. This is to foster a drug free work environment within the
company. All offers of employment, including yours, are contingent upon
successfully passing a medical laboratory screen for illegal drugs. You may
also be subject to such a screen as an employee in accordance with the
companies compliance with federal laws, regulations, executive orders or by the
terms of contracts entered into by NSI. Please refer to the enclosed sheets,
for details and instructions for
<PAGE> 3
Mr. Gabriel Battista
September 16, 1996
Page 3 of 3

making the necessary arrangements. Since a minimum of five business days is
needed for your test results to be received by SAIC, please schedule your
appointment sufficiently in advance of your start date. Although the use of
illegal drugs or substances can be cause for termination should you become
employed by NSI, it is understood that you or the Company may terminate this
employment relationship at any time with or without cause or notice.

If you have any questions, feel free to call Mr. Ivan Yopp at (703) 742-4823.
The terms of this offer letter are, of course, to be considered strictly
confidential and are not to be discussed with others without the express
permission of Science Applications International Corporation/Network Solutions,
Incorporated.

We are sincerely eager for you to join our staff and look forward to your early
acceptance of our offer and a mutually rewarding association. Your acceptance
can be acknowledged by signing the enclosed copies of this letter and returning
the original to my attention and a copy to the Human Resources Department in
the envelopes provided. Please keep a copy for your records.

Very truly yours,

NETWORK SOLUTIONS, INCORPORATED

/s/ Michael A. Daniels

Michael A. Daniels
Chairman of the Board

Enclosure: Drug Screening Instructions
Consent and Release Form
Standard of Business Ethics and Conduct Handbook
SAIC Employee Dispute Resolution Guide
New Hire Orientation Kit (Video, Guidebook, Forms) - Package 2

I accept~decline (please circle one) your offer of employment and expect to
report to work on or about November 1, 1996

/s/ Gabriel A. Battista 9/24/96
- ----------------------- ---------------------------
Signature Date

<PAGE> 4
ADDENDUM TO OFFER LETTER TO GABE BATTISTA
DATED SEPTEMBER 16, 1996

1. You will be issued options for 3% of Network Solutions, Inc. stock,
based upon SAIC shares owned plus the estimated number of shares sold
by NSI in the initial public offering. Our current schedule is to
have the options issued by October 15, 1996.

2. We are currently working with legal counsel, our accountants and our
investment bankers to determine the final option price. Our current
position that we are working toward is a discount off of the
anticipated middle of the stock offering price range. We will also
look at a variety of other factors in determining the fair market
value at the time of issuance. This will be finalized in
consultation with counsel, our accountants, our bankers and our
internal team, including yourself.

3. With respect to options, there will be both qualified (ISO's) and
non-qualified options. NSI's intent is to maximize the benefits to
optionee's while balancing the tax impact to the corporation. The
final determination will be made in conjunction with our internal
team, our advisors and you.

4. In regard to your separation agreement, non-performance specifically
refers to, a) illegal activities, and/or b) your materially not
meeting performance goals mutually set and agreed by the NSI Board of
Directors and you.

Network Solutions, Inc.

/s/ Michael A. Daniels

Michael A. Daniels
Chairman of the Board

September 23, 1996

<PAGE> 1
EXHIBIT 10.10

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

EMPLOYEE STOCK OWNERSHIP PLAN

ARTICLE I

NAME, EFFECTIVE DATE AND PURPOSES

1.1 NAME AND EFFECTIVE DATE. Effective February 1, 1973, Science
Applications, Inc. established the Science Applications, Inc. Stock Bonus
Retirement Plan ("Predecessor Plan"). In connection with the reorganization
between Science Applications, Inc. and Science Applications International
Corporation effected October 1, 1981, Science Applications International
Corporation adopted the Predecessor Plan and the name of Predecessor Plan was
changed to Science Applications International Corporation Stock Bonus
Retirement Plan. The Predecessor Plan was amended and restated in its entirety
effective as of January 1, 1985, and has been amended in several respects and
has undergone restatement subsequent to that date, the most recent restatement
being effective January 1, 1994. The plan established and adopted hereunder
shall be known as the Science Applications International Corporation Employee
Stock Ownership Plan ("Plan").

1.2 PLAN PURPOSES. This Plan is designed to constitute a tax-qualified
stock bonus plan within the meaning of Code section 401(a) as well as an
employee stock ownership plan within the meaning of Code section 4975(e)(7).

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<PAGE> 2
ARTICLE II

DEFINITIONS

2.1 ACCOUNTS. The term "Accounts" shall include the following
Accounts that are maintained pursuant to the terms of this Plan:

(a) The Plan Account opened and maintained for each
Participant pursuant to the provisions of Section 6.1;

(b) The TRASOP Account, if any, opened and maintained for
each affected Participant under Article VI for purposes of holding and
accounting for Company Stock and other assets held in the TRASOP Fund and
allocated to Participants whose TRASOP Accounts were transferred to this Plan
from the Science Applications International Corporation Cash or Deferred
Arrangement;

(c) The Alternate Payee account, if any, maintained for
each Alternate Payee who is awarded an interest in a Participant's benefits
under the Plan pursuant to the provisions of Sections 6.11 and 14.2;

(d) The CODA Account, if any, opened and maintained for
each affected Participant under Article VI for purposes of holding and
accounting for Company Stock and other assets transferred from the Deferred
Fund of the Science Applications International Corporation Cash or Deferred
Arrangement. Such CODA Account shall be 100% vested at all times; and

(e) The Profit Sharing Account, if any, opened and
maintained for each affected Participant under Article VI for purposes of
holding and accounting for Company Stock and other assets transferred from the
Science Applications International Corporation Profit Sharing Retirement Plan.

2.2 ADJUSTMENT FACTOR. Adjustment Factor" shall mean the cost of
living adjustment factor prescribed by the Secretary of the Treasury under Code
section 415(d) for years beginning after December 31, 1987, as applied to the
items and in the manner prescribed by the Secretary of the Treasury.

- 2 -
<PAGE> 3

2.3 AFFILIATED COMPANY. "Affiliated Company" shall mean:

(a) Any corporation that is included in a controlled group
of corporations, within the meaning of Code section 414(b), that includes the
Company;

(b) Any trade or business that is under common control
with the Company within the meaning of Code section 414(c);

(d) Any entity required to be included under Code section
414(o).

2.4 ALTERNATE PAYEE. "Alternate Payee" shall mean an individual
awarded a portion of a Participant's benefits under the Plan pursuant to a
qualified domestic relations order, as defined in Code section 414(p) and 14.2
of the Plan. Any limitation or condition imposed by the Plan upon a
Participant or his rights hereunder shall, unless expressly indicated
otherwise, also serve to limit or condition the rights of an Alternate Payee of
the Participant's Account(s).

2.5 ALTERNATE PAYEE ACCOUNT. "Alternate Payee Account" shall mean
the Account opened up and maintained to reflect the interest of an Alternate
Payee under the Plan.

2.6 ANNIVERSARY DATE. "Anniversary Date" shall mean the last day
of each Plan Year.

2.7 APPLICABLE VALUATION DATE. "Applicable Valuation Date" shall
mean the most recent date on which the Trust assets were valued in accordance
with the rules of Article VI.

2.8 ANNUAL ADDITION. "Annual Addition" shall mean "annual
addition" as defined in Code section 415(c)(2).

- 3 -
<PAGE> 4

2.9 BENEFICIARY. "Beneficiary" or "Beneficiaries" means the person
or persons designated in Section 8.9 to receive the interest of a deceased
Participant.

2.10 BOARD OF DIRECTORS. "Board of Directors" shall mean the Board of
Directors (or its delegate, to the extent the duties of the Board of Directors
are delegated to such person) of Science Applications international Corporation
as it may from time to time be constituted.

2.11 BREAK IN SERVICE. "Break in Service" shall mean, with respect to
an Employee, a computation period (as defined in Section 2.52(b)) in which the
Employee completes no more than 425 Hours of Service.

2.11A CODA ACCOUNT. "CODA Account" shall mean the Account published to
hold assets transferred to this Plan in February 1990 from the Science
Applications International Corporation Cash or Deferred Arrangement.

2.12 CODE. "Code" shall mean the Internal Revenue Code of 1986, as in
effect on the date of execution of this Plan document and as thereafter amended
from time to time.

2.13 COMMITTEE. "Committee" shall mean the Science Applications
International Corporation Retirement Plans Committee described in Article IX.

2.14 COMPANY. "Company" shall mean Science Applications International
Corporation, or any successor thereof, if its successor shall adopt this Plan.
In addition, unless the context indicates otherwise, as used in this Plan the
term Company shall also mean and include any Affiliated Company (or similar
entity) that has been granted permission by the Board of Directors to
participate in this Plan. This permission shall be granted upon such terms and
conditions as the Board of Directors deems appropriate.

2.15 COMPANY CONTRIBUTIONS. "Company Contributions" shall mean all
amounts (whether in cash or other property, including Company Stock) paid by
the Company into the Trust Fund established and maintained under the provisions
of this Plan for

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<PAGE> 5
the purpose of providing benefits for Participants and their Beneficiaries.

2.16 COMPANY STOCK. "Company Stock" shall mean Class A Common Stock
par value $.01 per share ("Class A Common Stock"), and to the extent accounted
for pursuant to Section 4.2 of the Plan and solely for such purpose, shall also
mean Class B Common Stock, par value $.05 per share ("Class B Common Stock"),
of the Company.

2.17 COMPENSATION. "Compensation" shall mean:

(a) For purposes of determining the allocation of Company
Contributions pursuant to Section 6.5 and forfeitures pursuant to Section 6.7,
"Compensation" shall mean the amount of compensation paid by the Company during
a calendar year by reason of services performed by an Employee reflected as
"wages, tips, other compensation" on the Employee's Form(s) W-2 for such year;
plus

(i) Contributions or payments by the Company for,
or on account of, an Employee under the Company's FlexComp Plan (except for the
supplemental amount provided under such FlexComp Plan); plus

(ii) Any Compensation which, but for Code section
3401(a)(8)(A) (dealing with the section 911 exclusion and income subject to
foreign withholding) would be required to be reflected as "wages, tips, other
compensation" on the Employee's Form(s) W-2; less

(iii) Any Compensation paid by reason of services
performed during any period in which the Employee is not a Participant under
this Plan or is not an Eligible Employee; overtime pay (which shall be deemed
to include base pay and premium pay for time worked in excess of a normal day
or week); bonuses (including any supplemental amount provided under the
Company's FlexComp Plan which is included on Form(s) W-2); commission; and
amounts reflecting reimbursed expenses or fringe benefits (including any amount
relating to the grant or exercise of stock options or disposition of shares
through exercise of

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<PAGE> 6
options) which have been included as "wages, tips, compensation" on the
Employee's Form(s) W-2.

(b) For purposes of applying the limitation on Annual
Additions pursuant to Article XIII of the Plan and determining whether the Plan
is "top heavy" (within the meaning of Code section 416), "Compensation" shall
include all of the following:

(i) An Employee's wages, salaries, fees for
professional services and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually rendered in the
course of employment with the Company to the extent that the amounts are
includible in gross income [including, but not limited to, commissions paid
salespersons, compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan, as
described in Income Tax Regulations, section 1.62-2(c)];

(ii) In the case of an Employee who is an Employee
within the meaning of Code section 401(c)(1) and the regulations thereunder,
the Employee's earned income (as described in section 401(c)(2) and the
regulations thereunder);

(iii) Amounts described in Code sections 104(a)(3),
105(a) and 105(h), but only to the extent that these amounts are includible in
the gross income of the Employee;

(iv) Amounts paid or reimbursed by the Company for
moving expenses incurred by an Employee, but only to the extent that at the
time of payment it is reasonable to believe that these amounts are not
deductible by the Employee under Code section 217;

(v) The value of a nonqualified stock option
granted to an Employee by the Company, but only to the extent that the value of
the option is includible in the gross income of the Employee for the taxable
year in which granted; and

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<PAGE> 7

(vi) The amount includible in the gross income of
the Employee upon making the election described in Code section 83(b).

Subsections (i) and (ii) above shall include foreign earned income [as
defined in Code section 911(b)], whether or not excludible from gross income
under section 911. Compensation described in subsection (i) above is to be
determined without regard to the exclusions from gross income in Code sections
931 and 933. Similar principles will be applied with respect to income subject
to Code sections 931 and 933 in determining Compensation described in
subsection (ii) above.

For purposes of this subsection 2.17(b), "Compensation" shall not
include items such as:

(i) Company Contributions to a plan of deferred
compensation that are not includible in the Employee's gross income for the
taxable year in which contributed, or Company Contributions under a simplified
employee pension [within the meaning of Code section 408(k)] to the extent such
Contributions are excludible from gross income by the Employee, or any
distributions from a plan of deferred compensation; however, any amounts
received by an Employee pursuant to an unfunded nonqualified plan of deferred
compensation are permitted to be considered as Compensation for Code section
415 purposes in the year the amounts are includible in the gross income of the
Employee;

(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferrable or is no longer subject to a
substantial risk of forfeiture;

(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified or incentive stock
option; and

(iv) Other amounts that received special tax
benefits, such as premiums for group-term life insurance (but only to the
extent that the premiums are includible in the gross income of the Employee) or
Company Contributions (whether or not

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<PAGE> 8
under a salary reduction agreement) towards the purchase of an annuity
described in Code section 403(b) (whether or not the amounts are actually
excludible from the gross income of the Employee).

(c) For purposes of determining who is a Highly
Compensated Employee, "Compensation" shall be "Compensation" as defined in
subsection (b) above, but determined without regard to Code sections 125,
402(e)(3) and 402(h)(1)(B) and, in the case of Company Contributions made
pursuant to a salary reduction agreement, without regard to Code section
403(b). Thus, Compensation for purposes of this subsection 2.17(c) includes
elective or salary reduction Contributions to the Company's FlexComp Plan, the
Cash or Deferred Arrangement or any tax-sheltered annuity.

(d) Notwithstanding subsection (a) above, effective
January 1, 1993, for purposes of determining the allocation of Company
Contributions pursuant to Section 6.5 and forfeitures pursuant to Section 6.7
with respect to any Employee who is on assignment away from the normal work
location(s) and entitled to receive one or more taxable allowances or
adjustments to Compensation based on such assignment, "Compensation" shall mean
the amount of Compensation paid by the Company during a calendar year by reason
of services performed by such Employee which constitutes base salary (including
comprehensive leave, vacation and holiday pay) less any amounts deferred
pursuant to an Employee's election under Section 5.1 of the Science
Applications International Corporation Cash or Deferred Arrangement and
unadjusted for any taxable assignment allowances.

For Plan Years after 1988, the amount considered as Compensation for
any purpose hereunder shall be limited to $200,000, multiplied by the
Adjustment Factor. For purposes of applying the foregoing $200,000 (as
adjusted) limit, a Highly Compensated Employee and his family shall be treated
as a single Employee with a single amount of Compensation subject to the
$200,000 (as adjusted) limit, with the $200,000 (as adjusted) limit allocated
among the members of the family in proportion to each member's Compensation,
determined before application of the limit (except for purposes of determining
Compensation below the Plan's integration level, i.e., the Contribution and
benefit base

- 8 -
<PAGE> 9
under section 230 of the Social Security Act in effect at the beginning of the
Plan Year). For this purpose, "family" shall consist solely of the Highly
Compensated Employee, the spouse of such Highly Compensated Employee, and such
Highly Compensated Employee's lineal descendants who have not attained the age
of 19 before the close of the Plan Year. For purposes of applying the $200,000
(as adjusted) limit under this Section 2.17, Highly Compensated Employees shall
be limited to 5% Owners of the Company and the 10 Highly Compensated Employees
having the greatest Compensation during the Plan Year.

For Plan Years after 1993, "$150,000" shall be substituted for
"$200,000," and the adjustment in the $150,000 limit for the Adjustment Factor
in Plan Years after 1994 shall be determined as follows:

(i) The Adjustment Factor shall be determined
using as a base period the calendar quarter beginning October 1, 1993; and

(ii) The increase, if any, in the limit for a
particular Plan Year as compared with the next preceding Plan Year shall be
rounded to the next lowest multiple of $10,000.

2.18 DISABILITY. "Disability" or "Disabled" shall mean the status of
disability determined conclusively by the Committee based on certification of
disability by the Social Security Administration, effective upon receipt of
such certification by the Committee.

2.19 DISTRIBUTABLE BENEFIT. "Distributable Benefit" shall mean the
interest of a Participant in this Plan, represented by his Vested Interest in
his Plan Account and Profit Sharing Account, if any, and his entire interest in
his TRASOP Account, if any, and his CODA Account, if any, which is determined
and distributable to him upon termination of his employment in accordance with
the provisions of Article VIII. In the case of an Alternate Payee, the
Distributable Benefit shall mean the balance in the Alternate Payee Account.

2.19A DIVERSIFICATION AMOUNT. "Diversification Amount" shall mean 25%
(50% in the last Plan year of the Qualified

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<PAGE> 10
Election Period) of that portion of a Participant's Account balance
attributable to Company stock acquired by the Plan after December 31, 1986;
provided, however, that shares acquired by this Plan in a plan-to-plan transfer
from another qualified retirement plan maintained by the Company shall take the
acquisition date of the transferor plan and shall not be deemed acquired after
December 31, 1986 merely because the plan-to-plan transfer occurred after that
date.

2.20 EFFECTIVE DATE. The original effective date of this Plan was
February 1, 1973. The effective date of this amendment and restatement of the
Plan is January 1, 1988. The effective date of any prior or subsequent
amendments is the date specified therein or in any accompanying resolutions
adopting such amendment. The rights of an Employee who terminates employment
shall be governed by the terms of the Plan in effect at the time of such
termination, unless otherwise specified in any subsequent amendment.

2.21 ELIGIBLE EMPLOYEE. "Eligible Employee" shall include any
Employee except the following:

(a) Any Employee who is covered by a collective bargaining
agreement to which the Company or an Affiliated Company is a party if there is
evidence that retirement benefits were the subject of good faith bargaining
between the Company (or an Affiliated Company) and the collective bargaining
representative, unless the collective bargaining agreement provides for
coverage under this Plan.

(b) Any Employee who is an "Eligible Employee" as defined
in the Science Applications International Corporation Profit Sharing Retirement
Plan II.

(c) Any Employee of an Affiliated Company which has not
been granted permission by the Board of Directors to participate in this Plan.

(d) Any Employee within a group or classification within
the Company designated by the Chief Operating Officer, Chief Financial Officer,
Controller or Treasurer of the Company as ineligible for participation in this
Plan. The designation of

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<PAGE> 11
any such group or classification and the effective date of its ineligibility
shall be communicated in writing to the Committee.

(e) Any Employee who becomes an Employee on or after
January 1, 1988 and who is hired or becomes an Employee as part of a division,
operating unit, geographical location or other identified unit of the Company,
unless such new division, unit or location has been determined by the
President, Chief Operating Officer or Senior Vice President for Administration
of the Company to be eligible for participation in this Plan.

(f) Any Employee who is a nonresident alien and who
receives no earned income (within the meaning of Code section 911(d)(2)) from
the Company which constitutes income from sources within the United States
(within the meaning of Code section 861(a)(3)), unless the Employee is within a
group or classification of nonresident alien Employees designated as eligible
to participate in the Plan by the Board of Directors or its delegate.

(g) Any Employee who is a leased Employee within the
meaning of Code section 414(n)(2).

(h) Any individual who is not treated as an Employee on
the Company's payroll records during the applicable Plan Year or other
applicable computation or eligibility period, notwithstanding the fact that
such individual is subsequently classified as a common-law employee of the
Company.

2.22 EMPLOYEE. "Employee" shall mean each person currently employed
in any capacity by the Company or Affiliated Company any portion of whose
income is subject to withholding of income tax and/or for whom Social Security
contributions are made by the Company, as well as any other person qualifying
as a common-law employee of the Company or Affiliated Company. For services
performed after December 31, 1986 for purposes of determining the number or
identity of Highly Compensated Employees and for purposes of the requirements
of Code sections 414(n)(3)(A) and (B), the term "Employee" shall include any
person who is a leased employee within the meaning of Code section 414(n)(2)
unless (i) such leased employees constitute less than 20% of the Company's
nonhighly compensated workforce within the meaning of

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<PAGE> 12
Code section 414(n)(5)(C)(ii) and (ii) such person is covered by a plan meeting
the requirements of Code section 414(n)(5)(B).

2.23 EMPLOYMENT COMMENCEMENT DATE. "Employment Commencement Date"
shall mean each of the following:

(a) The date on which an Employee first performs an Hour
of Service in any capacity for the Company or an Affiliated Company with
respect to which the Employee is compensated or is entitled to compensation by
the Company or the Affiliated Company.

(b) In the case of an Employee whose employment is
terminated and who is subsequently reemployed by the Company or an Affiliated
Company, the term "Employment Commencement Date" shall also mean the first day
following the termination of employment on which the Employee performs an Hour
of Service for the Company or an Affiliated Company with respect to which he is
compensated or entitled to compensation by the Company or Affiliated Company.

Unless the Board of Directors or its delegate shall expressly determine
otherwise, and except as is expressly provided otherwise in this Plan, an
Employee shall not, for the purposes of determining his Employment Commencement
Date, be deemed to have commenced employment with an Affiliated Company prior
to the effective date on which the entity became an Affiliated Company.

2.23A ENTRY DATE. "Entry Date" shall mean January 1 and July 1 of
each Plan Year.

2.24 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.

2.25 RESERVED FOR PLAN MODIFICATIONS.

2.26 5% OWNER. "5% Owner" shall mean an individual who owns (or is
considered as owning, within the meaning of Code section 318) more than 5% of
the outstanding stock of the Company or stock possessing more than 5% of the
total combined voting power of all stock of the Company.

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<PAGE> 13

2.27 HIGHLY COMPENSATED EMPLOYEE. "Highly Compensated Employee" shall
mean any Employee who, during the Plan Year or the preceding Plan Year--

(a) Was at any time a 5% Owner;

(b) Received Compensation from the Company in excess of
$75,000 (adjusted by the Adjustment Factor);

(c) Received Compensation from the Company in excess of
$50,000 (adjusted by the Adjustment Factor) and was in the top-paid group of
Employees (i.e., group consisting of the top 20% of Employees when ranked on
the basis of Compensation paid during such Plan Year); or

(d) Was at any time an officer and received Compensation
greater than 50% of the amount in effect under Code section 415(b)(1)(A) for
such Plan Year.

For purposes of determining Highly Compensated Employees in the current
Plan Year, an Employee not described in subsection 2.27(b), (c) or (d) above
for the preceding Plan Year shall not be considered a Highly Compensated
Employee for the current Plan Year unless such Employee is a member of the
group consisting of the 100 Employees paid the greatest Compensation during the
current Plan Year.

If the Company makes the election specified in Code section 414(q)(12)
to apply the simplified method of determining Highly Compensated Employees,
then for any Plan Year governed by the election, in determining whether an
Employee is a Highly Compensated Employee for such Plan Year, (i) subsection
2.27(b) above shall be applied by substituting "$50,000" for "$75,000," and
(ii) subsection 2.27(c) shall not apply.

The election by the Company under Section 414(q)(12) shall not apply
for any Plan Year unless, at all times during the Plan Year, (i) the Company
maintained significant business activities (and employed Employees) in at least
two significantly separate geographic areas, and (ii) the Company satisfies
such other conditions as the Secretary of Treasury has prescribed.

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<PAGE> 14

For purposes of determining who is a Highly Compensated Employee and
(except as provided in applicable regulations) in determining the Compensation
of (or any Contributions or benefits on behalf of) an Employee for purposes of
any Code section with respect to which a Highly Compensated Employee is defined
by reference to Code section 414(q), an individual who is a member of the
family of a 5% Owner of the Company or in the group of 10 Highly Compensated
Employees having the greatest Compensation during the Plan Year, such
individual shall not be considered a separate Employee and any Compensation
paid to such individual (and any applicable Contribution or benefit on behalf
of such individual) shall be treated as if it were paid to (or on behalf of)
the 5% Owner or Highly Compensated Employee. For this purpose, and except as
provided in Section 2.17, the term "family" means, with respect to any
Employee, such Employee's spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.

2.28 HOUR OF SERVICE.

(a) "Hour of Service" of an Employee shall mean the
following:

(i) Each hour for which the Employee is paid by
the Company or an Affiliated Company or entitled to payment for the performance
of services as an Employee. An Employee will not be considered as being
entitled to payment, for purposes of determining the computation period to
which hours are to be credited, until the date the Company or Affiliated
Company, as applicable, would normally make payment to the Employee for such
hour based on normal payroll practices.

(ii) Each hour in or attributable to a period of
time during which the Employee performs no duties (irrespective of whether he
has terminated his Employment) due to a vacation, holiday, illness, incapacity
(including pregnancy or disability), layoff, jury duty, military duty or a
leave of absence, for which he is so paid or so entitled to payment, whether
direct or indirect. However, no such hours shall be credited to an Employee if
such Employee is directly or indirectly paid or entitled to payment for such
hours and if such payment or

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<PAGE> 15
entitlement is made or due under a plan maintained solely for the purpose of
complying with applicable workmen's compensation, unemployment compensation or
disability insurance laws or is a payment which solely reimburses the Employee
for medical or medically related expenses incurred by him.

(iii) Each hour for which an Employee is entitled to
back pay, irrespective of mitigation of damages, whether awarded or agreed to
by the Company or an Affiliated Company, provided that such Employee has not
previously been credited with an Hour of Service with respect to such hour
under paragraphs (i) or (ii) above.

(iv) The term "Hour of Service" shall also include
periods during which an Employee who was on an authorized noncompensated leave
of absence, as of December 31, 1987 continues on such noncompensated leave of
absence, provided the Employee returns to the employ of the Company or an
Affiliated Company immediately upon the termination of such leave of absence
and provided that, for purposes of Section 7.2 (relating to vesting) no hours
shall be credited pursuant to this paragraph (iv) until the Employee completes
850 Hours of Service (excluding any additional leaves of absence) in the
twelve-month period beginning with the Employee's Employment Commencement Date
immediately following such leave of absence.

(v) The term "Hour of Service" shall also include
(for those purposes designated by the applicable officer specified below) hours
credited to an Employee for service with a predecessor employer provided that
such service has been approved by the President, Chief Operating Officer or
Senior Vice President for Administration of the Company for recognition under
this Plan, which approval shall apply on a nondiscriminatory basis to all
Employees with service during the recognition period for such predecessor
employer.

(b) Hours of Service under subsections (a)(ii), (a)(iii),
and (a)(iv) shall be calculated in accordance with Department of Labor
Regulation 29 C.F.R. Section 2530.200b-2(b). Hours of Service shall be
credited to the appropriate computation period (under Section 2.52) according
to the Department of Labor Regulation 29 C.F.R. Section 2530.200b-2(c).

- 15 -
<PAGE> 16

(c) In the event that an Employee receives credit for
Hours of Service for a period during which no duties are performed (including
sick leave, vacations or an authorized leave of absence), the Employee shall be
deemed to have completed eight (8) Hours of Service for each day or portion
thereof during that period.

(d) To the extent not otherwise credited under this
Section 2.28, Hours of Service determined with respect to a Maternity or
Paternity Absence shall be credited as follows: the Employee shall be credited
(solely for purposes of Section 2.11) with those Hours of Service that
otherwise would normally have been credited to such Employee but for such
absence, except that (i) the total number of Hours of Service so credited shall
not exceed 426 and (ii) such Hours of Service shall be credited as Hours of
Service in the Plan Year in which the absence from work commences only if the
Employee would be prevented from incurring a Break in Service in such Plan Year
solely by virtue of such crediting, and shall otherwise be credited in the Plan
Year immediately following the Plan Year in which the absence from work
commences.

(e) All Hours of Service and Years of Service relating to
periods prior to January 1, 1990 shall be determined under the provisions of
this Plan as in effect prior to January 1, 1990.

2.29 INVESTMENT MANAGER. "Investment Manager" shall mean the one or
more Investment Managers, if any, that are appointed pursuant to Section 9.3.

2.30 LOAN. "Loan" means a loan described in Code section 4975(d)(3)
and which otherwise satisfies the requirements of Section 4.10 hereof.

2.31 LIMITATION YEAR. "Limitation Year" shall mean the calendar
year.

2.32 MATERNITY OR PATERNITY ABSENCE. "Maternity or Paternity
Absence" shall mean an absence from work for any period by reason of (a) an
Employee's pregnancy, (b) the birth of a child of such Employee, (c) the
placement of a child with the

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<PAGE> 17
Employee in connection with the adoption of such child by such Employee, or (d)
the caring for a natural or adopted child for a period beginning immediately
following such birth or placement.

2.33 NORMAL RETIREMENT. "Normal Retirement" shall mean a
Participant's termination of employment with the Company as a result of such
Participant attaining his Normal Retirement Date.

2.34 NORMAL RETIREMENT DATE. "Normal Retirement Date" shall be the
day on which a Participant attains age 59-1/2.

2.35 PARTICIPANT. "Participant" shall mean any Eligible Employee who
has satisfied the participation eligibility requirements set forth in Section
3.1 and has been enrolled in this Plan in accordance with the provisions of
Section 3.2.

2.36 PARTICIPATION COMMENCEMENT DATE. "Participation Commencement
Date" shall mean the day on which an Employee's participation in this Plan
commences in accordance with the provisions of Article III.

2.37 PLAN. "Plan" shall mean the Science Applications International
Corporation Employee Stock Ownership Plan herein set forth, and as it may be
amended from time to time.

2.38 PLAN ACCOUNT. "Plan Account" shall mean the Account opened and
maintained for each Participant pursuant to the provisions of Section 6.1.

2.39 PLAN ADMINISTRATOR. "Plan Administrator" shall mean the
administrator of the Plan, within the meaning of Section 3(16)(A) of ERISA.
The Plan Administrator shall be Science Applications International Corporation.

2.40 PLAN YEAR. "Plan Year" shall mean the calendar year.

2.40A PROFIT SHARING ACCOUNT. "Profit Sharing Account" shall mean the
Account established to hold the assets transferred to this Plan from the
Science Applications International Corporation Profit Sharing Retirement Plan
in February 1990.

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<PAGE> 18

2.40B QUALIFIED ELECTION PERIOD. "Qualified Election Period" shall
mean the six Plan Year period beginning with the later of (i) the first Plan
Year in which the individual first became a qualified Participant, or (ii) the
first Plan Year beginning after December 31, 1986.

2.41 QUALIFIED HOLDER. "Qualified Holder" shall mean:

(i) The Participant, Beneficiary or Alternate
Payee receiving a distribution of Company Stock under this Plan;

(ii) Any other party to whom the distributed
Company Stock is transferred by gift or by reason of death; and

(iii) Any trustee of an Individual Retirement
Account (as defined under Code section 408) to which all or any portion of the
distributed Company Stock is transferred pursuant to a tax-free "rollover"
transaction satisfying the requirements of Code section 402.

2.41A QUALIFIED PARTICIPANT. "Qualified Participant" shall mean a
Participant who has attained age 55 and who has completed at least 10 full
years of participation in the Plan.

2.41B READILY TRADEABLE STOCK. "Readily Tradeable Stock" shall mean
Company Stock that, at the time of reference:

(a) Is "publicly traded" as that term is defined under
Treasury Regulation Section 54.4975-7(b)(1)(iv) or any successor regulation
thereto; and

(b) Is not subject to a "trading limitation" as that term
is defined under Treasury Regulation Section 54.4975-(b)(10) or any successor
regulation thereto.

2.42 REQUIRED PAYMENT COMMENCEMENT DATE. "Required Payment
Commencement Date" in the case of a Participant other than a 5% Owner, shall be
the sixtieth day after the close of the latest Plan Year in which occurs:

(a) The Participant's Normal Retirement Date;

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<PAGE> 19

(b) the tenth anniversary of the date the Participant
commenced participation in the Plan; or

(c) the Participant's termination of employment with the
Company or an Affiliated Company, unless a Participant who retires on or after
his Normal Retirement Date elects, pursuant to Section 8.2(b) to defer
distribution for a period of up to five years following his Normal Retirement
Date; but in no event beyond April 1 following the calendar year in which the
Participant attains age 70-1/2.

In the case of a 5% Owner (and in all cases after December 31, 1988),
the Required Payment Commencement Date shall be the earlier of the date
specified in the preceding sentence and April 1 following the calendar year in
which the Participant attains age 70-1/2, whether or not the Participant has
retired. If a Participant becomes a 5% Owner after attaining age 70-1/2, the
Required Payment Commencement Date shall not be later than the last day of the
calendar year in which the Participant becomes a 5% Owner.

2.43 RESERVED FOR PLAN MODIFICATIONS.

2.44 RESERVED FOR PLAN MODIFICATIONS.

2.45 SUSPENDED PARTICIPANT. "Suspended Participant" shall mean any
Participant who remains an Employee but who ceases to be eligible to
participate in this Plan by virtue of ceasing to be an Eligible Employee.
Status as a Suspended Participant shall commence as of the date such
Participant ceases to be an Eligible Employee. A Suspended Participant shall
not be deemed a Participant except for those purposes specified in the Plan or
as required by law.

2.45A TRASOP ACCOUNT. "TRASOP Account" shall mean the "TRASOP Fund
Account" (as defined in the Science Applications International Corporation Cash
or Deferred Arrangement ("CODA") prior to February, 1990) transferred to this
Plan in February, 1990.

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<PAGE> 20

2.45B TRASOP FUND. "TRASOP Fund" shall mean the fund within the Trust
containing all of the assets allocated to TRASOP Accounts.

2.46 TRUST AND TRUST FUND. "Trust" or "Trust Fund" shall mean the
one or more trusts created for funding purposes under the Plan. The Trust Fund
may be commingled for investment purposes with the assets of other qualified
retirement plans maintained by the Company by investing through a master trust
fund operated pursuant to a master trust agreement between the Company and the
Trustee.

2.47 TRUSTEE. "Trustee" shall mean State Street Bank & Trust
Company, or any successor or other corporation acting as a trustee of the Trust
Fund.

2.48 VALUATION DATE. "Valuation Date" shall mean the date as of
which the Trustee shall determine the value of the assets in the Trust Fund for
purposes of determining the value of each Account, which shall be the last day
of each Plan Year and such other dates as may be determined in rules prescribed
by the Committee.

2.49 VESTED INTEREST. "Vested Interest" shall mean the interest of a
Participant in his Plan Account that has become vested in accordance with the
rules of Article VII. The Vested Interest of an Alternate Payee shall be
determined as set forth in Section 7.5.

2.50 RESERVED FOR PLAN MODIFICATIONS.

2.51 RESERVED FOR PLAN MODIFICATIONS.

2.52 YEAR OF SERVICE.

(a) "Year of Service" shall mean a computation period
during which the Employee completes 850 or more Hours of Service. In no
instance will an Employee receive more than one Year of Service with respect to
services performed in a single computation period.

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<PAGE> 21

(b) For purposes of determining eligibility to
participate, the relevant computation period shall be determined in accordance
with the following rules.

(i) An Employee's initial computation period
shall be the twelve consecutive month period beginning on the Employee's
Employment Commencement Date.

(ii) An Employee's second (and all subsequent)
computation periods shall be the calendar year that includes (or starts on the
same day as) the first anniversary of the Employee's Employment Commencement
Date.

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<PAGE> 22
ARTICLE III

ELIGIBILITY AND PARTICIPATION

3.1 ELIGIBILITY TO PARTICIPATE.

(a) Every Eligible Employee shall satisfy the eligibility
requirements to participate in the Plan upon the later of the date specified in
(i) or (ii) below provided that he is an Eligible Employee on such date:

(i) The Eligible Employee's twenty-first (21st)
birthday; or

(ii) The later of:

(A) The date that is twelve (12) months
after the Eligible Employee's Employment Commencement Date; or

(B) The date as of which the Eligible
Employee completes 850 or more Hours of Service within a single computation
period (determined under the rules of Section 2.52).

3.2 AUTOMATIC COMMENCEMENT OF PARTICIPATION.

(a) Each Eligible Employee shall be entitled to commence
participation in the Plan as of his applicable Participation Commencement Date,
which shall be the first Entry Date following his satisfaction of the
eligibility requirements of Section 3.1.

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<PAGE> 23
ARTICLE IV

TRUST FUND AND COMPANY CONTRIBUTIONS

4.1 TRUST FUND.

The Company has established the Trust pursuant to a Trust
agreement under which the Trustee has agreed to hold and administer in trust
all amounts previously accumulated under the Plan together with the additional
funds deposited with the Trustee pursuant to the terms of this Plan. The
Company shall have the authority to select the Trustee to act under the Trust
Agreement and to enter into new or amended Trust agreements as it deems
advisable.

4.2 PERMISSIBLE TYPES OF PLAN INVESTMENTS. The assets of the Plan
shall be invested primarily in Class A Common Stock, except to the extent that
the Participant has instructed the Trustee to make, and the Trustee has made, a
valid election to receive Class B Common Stock pursuant to the terms of the
Plan of Reorganization and Agreement of Merger (the "1984 Plan of
Reorganization") dated as of June 1, 1984 between the Company and the wholly
owned subsidiary, Science Applications, Inc., in which event the Committee or
its delegate shall keep records to reflect the number of shares of Class B
Common Stock allocated to each Participant's Plan Account. No further
allocation of Class B Common Stock shall be made by the Company to any such
Class B Common Stock Account after the number of shares acquired to be
allocated thereto pursuant to such election have been allocated in accordance
with the terms of the 1984 Plan of Reorganization. Subject to the foregoing,
the assets of the Plan may also be invested in the following types of assets as
determined by the Committee:

(a) Other "Qualifying Employer Securities" (as that term
is defined in ERISA Section 407(d)(5);

(b) "Qualifying Employer Real Property," as that term is
defined in ERISA Section 407(d)(4);

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<PAGE> 24

(d) Any other property that is a permissible plan
investment under applicable law.

4.3 COMPANY CONTRIBUTIONS.

(a) Subject to the requirements and restrictions of this
Section 4.3, and subject also to the right of the Company to amend or terminate
this Plan or to suspend or discontinue contributions to this Plan, as
hereinafter provided, for each Plan Year the Company shall contribute to the
Trust Fund an amount equal to the greater of (i) an amount to be determined by
the Board of Directors in its discretion, and/or (ii) such amount as may be
required to repay the principal amount of and interest on a Loan incurred for
the purpose of acquiring shares of Company Stock.

(b) If an error has been made in calculating the amount of
the required Company Contributions or because of any other error there was a
mistake which resulted in the Company contributing the incorrect amount of
contributions for a particular Plan Year or Plan Years, the Company may adjust
the amount of its contributions to the extent necessary to correct his mistake.
The Company may make these corrections prospectively or retrospectively, in its
discretion.

(c) The Company Contributions to the Trust Fund shall be
made no later than the due date for filing the federal income tax return
(including extensions) of the Company for its taxable year with respect to
which the Contribution is made.

4.4 FORM OF COMPANY CONTRIBUTIONS. The Company's contributions to
the Trust Fund shall be paid in cash, Company Stock, or such other property as
the Board of Directors may from time to time determine, provided, however, that
amounts contributed for the purpose of repaying a Loan shall be made in cash.

4.5 VALUATION OF COMPANY CONTRIBUTIONS IN THE FORM OF COMPANY
STOCK.

(a) Company Stock contributed by the Company to the Trust
Fund shall be valued as of the date of contribution using

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<PAGE> 25
the rules set forth in Section 6.6(b)(ii), treating the date of contribution as
the Valuation Date.

4.6 DIVERSIFICATION REQUIREMENT; INVESTMENT DIRECTION BY
PARTICIPANTS.

(a) Except as provided in this Section 4.6, a Participant
shall not be entitled to direct the investment of amounts allocated to his Plan
Account or TRASOP Account, even though the Participant may be 100% vested in
his Account balance.

(b) Unless the Committee has authorized distribution of
the Diversification Amount to the Participant, pursuant to Section 4.6(c), or
to another qualified plan of the Company, pursuant to Section 4.6(d), each
Qualified Participant shall be permitted to elect to direct the Plan as to the
investment (within three or more investment alternatives made available by the
Committee) of the Diversification Amount, reduced by any amount as to which a
prior election under this Section 4.6(b) has been made, within 90 days after
the last day of each Plan Year during the Participant's Qualified Election
Period.

(c) In lieu of the diversification election provided in
Section 4.6(b), the Committee may authorize distribution directly to the
Participant, at the Participant's election, of the amounts which would
otherwise be subject to the diversification election provided in Section
4.6(b).

(d) In lieu of the diversification election provided in
Section 4.6(b) or the distribution election provided in Section 4.6(c), the
Committee may authorize the Participant to elect to direct the Plan to transfer
amounts otherwise subject to the diversification election of Section 4.6(b) to
another qualified retirement plan maintained by the Company, provided that such
plan permits Employee-directed investment in at least three investment
alternatives and provided that the Participant is precluded from investing such
transferred funds in Company Stock in such transferee plan.

(e) The election provided to a Participant pursuant to
Section 4.6(b), (c) or (d), as applicable, shall be implemented (i.e.,
diversification, distribution or transfer completed) no

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<PAGE> 26
later than 90 days after the last day of the period during which such election
may be made.

(f) The Committee shall prescribe such procedures and
rules as may be required or desirable to implement the requirements of this
Section 4.6 consistent with the requirements of Code section 401(a)(28)(B).

4.7 IRREVOCABILITY. The Company shall have no right or title to,
nor interest in, the contributions made to the Trust Fund, and no part of the
Trust Fund shall revert to the Company except that on and after the Effective
Date funds may be returned to the Company as follows:

(a) In the case of a Company Contribution which is made by
a mistake of fact, that contribution may be returned to the Company within one
(1) year after it is made.

(b) All Company Contributions to the Plan are conditioned
upon the deductibility of those contributions under Code section 404. To the
extent a deduction is disallowed, the contribution may be returned to the
Company within one year after the disallowance.

4.8 COMPANY, COMMITTEE AND TRUSTEE NOT RESPONSIBLE FOR ADEQUACY OF
TRUST FUND.

(a) Neither the Company, Committee nor Trustee shall be
liable or responsible for the adequacy of the Trust Fund to meet and discharge
any or all payments and liabilities hereunder. All Plan benefits will be paid
only from the Trust assets, and neither the Company, the Committee nor the
Trustee shall have any duty or liability to furnish the Trust with any funds,
securities or other assets except as expressly provided in the Plan.

(b) Except as required under the Plan or Trust or under
Part 4 of Title I of ERISA, the Company shall not be responsible for any
decision, act or omission of the Trustee, the Committee, or the Investment
Manager (if applicable), and shall not be responsible for the application of
any moneys, securities, investments or other property paid or delivered to the
Trustee.

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<PAGE> 27

(c) The Company expressly disavows any contractual
obligation, implied or explicit, to make any contribution to the Plan or to
contribute any specified amount.

4.9 COMPANY STOCK TRANSACTIONS WITH DISQUALIFIED PERSONS.
Acquisition or sale by the Plan of Company stock or other qualifying employer
securities (as defined in Section 407(a)(5) of ERISA) from or to a
"disqualified person," as defined in Code section 4975(e)(2), shall be at a
price which represents "adequate consideration," as defined in Section 3(18) of
ERISA or, in the event such Company stock or other qualifying employer security
is a marketable obligation, as defined in Section 407(e) of ERISA, at a price
not less favorable to the Plan than the price determined under Section
407(e)(1) of ERISA. No commission shall be charged to the Plan in connection
with any such sale or acquisition. The determination as to whether or not such
a sale or acquisition satisfies the requirements of this Section 4.9 shall be
made by the Committee.

4.10 TRUSTEE MAY BORROW FUNDS. The Trustee is specifically
authorized to borrow funds (including a borrowing from the Company) to (i)
acquire Company Stock or (ii) repay a prior Loan incurred to acquire Company
Stock, subject to the following conditions:

(a) Any Loan to the Trust and acquisition of Company stock
with the proceeds thereof must be made pursuant to directions of the Committee;

(b) The interest rate on such Loan must not be in excess
of a reasonable rate of interest;

(c) Any collateral pledged to a lender by the Trust shall
consist only of the Company Stock purchased with the borrowed funds or the
Stock used as collateral on a prior Loan under this Section which is being
repaid with the proceeds of the current Loan;

(d) Under the terms of the Loan, a lender shall have no
recourse against the Trust except with respect to such collateral, Company
Contributions (other than contributions of

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<PAGE> 28
Company Stock), and earnings attributable to such collateral and the investment
of such Company Contributions;

(e) The Loan shall be repaid only from amounts loaned to
the Trust and the proceeds of such Loans, from amounts contributed in cash by
the Company to the Trust and earnings attributable thereto, from any collateral
given for the Loan and from dividends paid on the shares of Stock acquired with
the borrowed funds;

(f) Upon the payment of any portion of the balance due on
such Loan, a pro rata portion, as determined pursuant to Section 6.12(b) hereof
and regulations promulgated under ERISA and the Code, of the Company Stock
originally acquired with the proceeds of the Loan shall be released from
encumbrance; and

(g) In the event of default under the Loan, the value of
the assets of the Trust transferred in satisfaction of the Loan may not exceed
the amount of the default.

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<PAGE> 29
ARTICLE V

PARTICIPANT CONTRIBUTIONS

5.1 NO PARTICIPANT CONTRIBUTIONS. Participants may not make
contributions to the Plan.

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<PAGE> 30
ARTICLE VI

ACCOUNTING AND ALLOCATION PROCEDURES

6.1 PLAN ACCOUNTS. The Committee shall open and maintain a
separate Plan Account for each Participant in the Plan.

6.2 TRASOP ACCOUNT. The Committee shall maintain a TRASOP Account
for each Participant in the Plan who has an interest in the TRASOP Fund.

6.3 CODA ACCOUNT. The Committee shall maintain a CODA Account for
each Participant who had assets transferred to this Plan from the Science
Applications International Corporation Cash or Deferred Arrangement.

6.4 ALTERNATE PAYEE ACCOUNT. The Committee shall open and maintain
an Alternate Payee Account for each Alternate Payee awarded benefits under this
Plan pursuant to a qualified domestic relations order.

6.4A PROFIT SHARING ACCOUNT. The Committee shall maintain a Profit
Sharing Account for each Participant who had assets transferred to this Plan
from the Science Applications International Corporation Profit Sharing
Retirement Plan.

6.5 ALLOCATION OF COMPANY CONTRIBUTIONS.

(a) All Company Contributions to the Trust Fund shall be
held on an unallocated basis until allocated to Participants' Plan Accounts as
of an Anniversary Date as provided under this Plan or otherwise used or applied
in accordance with the provisions of this Plan. Pending such allocation,
Company Contributions shall be invested under rules prescribed by the
Committee. All gains and losses on such investments shall be allocated as
provided in Section 6.8 and may be used for the payment of Plan expenses.

(b) Except as provided in Section 6.6 (relating to Company
Stock dividends, splits, recapitalizations and other similar stock transitions
with respect to Company stock that previously has been allocated to
Participants' accounts), all

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<PAGE> 31
gains, losses, dividends and other property acquisitions and/or transfers that
occur shall be held, charged, credited, debited or otherwise accounted for on
an unallocated basis until allocated to Participants' Accounts as specified in
Section 6.8 or as otherwise used or applied in accordance with the provisions
of this Plan.

(c) Company Contributions for a particular Plan Year (as
well as shares of Company Stock released from the Suspense Account, as
described in Section 6.12 hereof, by reason of such Company Contributions),
unadjusted for income, gain or loss, which shall be allocated separately
pursuant to Section 6.8, shall be allocated to the Plan Accounts of those
Participants who completed 850 or more Hours of Service during the Plan Year
("Eligible Participants") as follows:

(i) The Company Contribution shall be allocated
to Eligible Participants, pro rata, according to each Eligible Participant's
Compensation for the relevant Plan Year.

(ii) Company Contributions in the form of Company
Stock shall be allocated in the same manner as cash Contributions in subsection
(i) above, based on the fair market dollar value of such contributed Company
Stock as determined under the provisions of Section 6.6(b)(ii), unless a
different valuation method shall be required under applicable Treasury
Regulations.

(iii) In no event shall amounts be allocated which
would cause the limitation on Annual Additions set forth in Article XIII to be
exceeded.

(iv) Allocations of Company Contributions for a
Plan Year shall be made on or before September 15 of the following Plan Year,
or on a more frequent basis, as may be determined by the Committee in its
discretion.

6.6 VALUATION OF ACCOUNTS.

(a) Within sixty days after each Anniversary Date, within
sixty days after the removal or resignation of the Trustee, and at such other
times as determined by the Committee, the Trustee shall value the assets of the
Trust on the basis of

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<PAGE> 32
fair market values. If the assets cannot be valued within the sixty day period
specified in the preceding sentence, the assets shall be valued as soon
thereafter as is practicable.

(b) As soon as is reasonably possible after receipt of
these valuations from the Trustee, the Committee shall value the Accounts of
each Participant, Suspended Participant and Alternate Payee as of the
applicable Valuation Date so as to reflect the current fair market value of
each Account as of such Valuation Date. The valuation provisions of this
Section 6.6 shall be applied and implemented in accordance with the following
rules:

(i) If separate subaccounts have been established
for separate investment alternatives pursuant to Section 4.6(b), each
subaccount shall be valued separately and the total value of a Participant's
Account(s) shall equal the total value of his interest in each of the
respective subaccounts in which his Account(s) have been invested.

(ii) Company stock allocated and credited to an
Account or subaccount, or to a separate fund within the Trust Fund in which
Participants' Accounts or subaccounts are invested as provided in Section 4.6,
as well as Company stock held on an unallocated basis in the Trust Fund, shall
be valued as of the applicable Valuation Date, according to the following
rules:

(A) Company stock acquired by the Trust
Fund with cash shall initially be valued at the purchase price paid for such
stock. On any subsequent Valuation Date, such Company stock, as well as all
other Company stock held in, or contributed to, the Trust Fund, shall be valued
in accordance with Section 6.6(b)(ii)(B), 6.6(b)(ii)(C) or 6.6(b)(ii)(D) below,
as applicable.

(B) If any Company Stock does not consist
of securities listed on a national securities exchange, or traded on a regular
basis, as determined by the Company, in the over-the-counter market, the fair
market value of such stock shall be determined using the Formula Price for such
stock, as described in the August 24, 1987 Prospectus for Science Applications
International Corporation (or the most recent prospectus that supersedes that
prospectus), on the applicable

- 32 -
<PAGE> 33
Valuation Date. The Committee may at any time, and from time to time, change
the method of determining the fair market value of Company Stock, provided that
the replacement method is consistent with applicable provisions of ERISA and
the Code. A Participant, Beneficiary or Alternate Payee shall have no right to
have a particular valuation method applied (or continue to be applied) to his
Account(s).

(C) If any Company Stock consists of
securities listed on a national securities exchange, fair market value of such
Company Stock shall be considered to be equal to the closing price of such
Company Stock (as reported in the consolidated transaction reporting system, or
if not so reported, as reported on the principal exchange market for such
Company Stock by such exchange or on any system sponsored by such exchange) on
the trading day immediately preceding the applicable Valuation Date. If any
Company Stock consists of securities traded on a regular basis, as determined
by the Company, in the over-the-counter market, the fair market value of such
Company Stock shall be considered to be equal to the average between the high
bid price and the low asked price quoted by the automatic quotation system of a
securities association registered under the federal securities laws for the
trading day immediately preceding the applicable Valuation Date.

(D) Notwithstanding the foregoing,
valuations of shares of Company Stock acquired by the Plan after December 31,
1986, which are not readily tradeable on an established securities market with
respect to activities carried on by the Plan shall be made by an independent
appraiser meeting requirements similar to those contained in Treasury
regulations under Code section 170(a)(1) in a manner consistent with Code
section 401(a)(28)(C).

(iii) The fair market value of any guaranteed
interest contract, trust or fund holding such a contract, or similar program
entered into between an insurance company and the Plan shall be determined
based on the principal amount of such contract or program, plus the amount of
the guaranteed interest or other increase in value which is paid or credited to
the Plan pursuant to such contract or program. The provisions of this
subparagraph (iii) shall apply to an investment alternative

- 33 -
<PAGE> 34
established under Section 4.6 which is invested in such a contract or program.

(iv) To the extent that a Participant's Account is
invested in a regulated investment company offered as an investment alternative
under the Trust, the value of that portion of the Account shall be valued,
pursuant to rules prescribed by the Committee, based on the unit or share value
of the regulated investment company on the applicable Valuation Date.

(c) The Company, the Committee and Trustee do not in any
manner or to any extent whatsoever warrant, guarantee or represent that the
value of a Participant's Account shall at any time equal or exceed the amount
previously contributed thereto, or that any valuation or accounting method or
practice will continue to be applied.

(d) Allocation of Company Stock Received Pursuant to Stock
Dividends, Splits, Recapitalizations, Etc. Any Company Stock received by the
Trustee as a stock split, dividend, or as a result of a reorganization or other
recapitalization of the Company shall be allocated as of the day on which the
stock is received by the Trustee in the same manner as the Company Stock to
which it is attributable is then allocated.

(e) Allocation of Stock Rights, Warrants or Options.

(i) In the event any rights, warrants or options
are issued on Company stock held in the Trust Fund, the Trustee shall exercise
them for the acquisition of additional Company Stock as directed by the
Committee and to the extent that cash is then available in the Trust Fund.

(ii) Any Company Stock acquired in this fashion
shall be treated as Company Stock purchased by the Trustee for the net price
paid and shall be allocated in the same manner as the funds used to purchase
the Company Stock were or would be allocated under the provisions of this Plan,
pursuant to directions of the Committee.

(iii) Any rights, warrants, or options on Company
Stock which cannot be exercised for lack of cash may, as directed

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<PAGE> 35
by the Committee, be sold by the Trustee and the proceeds allocated in
accordance with the source of the Company Stock with respect to which the
rights, warrants or options were issued.

(f) Allocation of Cash Dividends and Other Distributions
Received in the Trust Fund.

(i) All cash dividends paid to the Trustee with
respect to Company stock that has been allocated to an Account, if any, as of
the date the dividend is received by the Trustee shall be allocated to such
Account, except as provided in Section 6.13. If the Company stock in the Trust
Fund is held in a Company Stock fund within the Trust Fund, such that
Participants have an interest in such Company stock only indirectly through an
interest in such fund held in an Account or subaccount, the cash dividends
shall be allocated to such fund and shall thereafter be invested in accordance
with the investment practices of such fund, and shall not be allocated directly
to a Participant's Account or subaccount.

(ii) All cash dividends paid to the Trustee with
respect to unallocated Company Stock shall be allocated as provided in Section
6.8.

(iii) Other distributions received by the Trustee
with respect to investments of the Trust shall be allocated to the applicable
fund(s) established pursuant to Section 4.6, as prescribed by the Committee.

6.6A NOTICE OF VALUE. In the event that any Company Stock held by
the Trust is not Readily Tradeable Stock, the Company annually shall furnish to
the committee and to the Trustee a certificate of value setting forth the value
of the various classes or types of such Company Stock held by the Trust.
Pursuant to the provisions of Section 8.8, this annual certificate of value
shall be furnished to Qualified Holders of such Company Stock that as been
distributed to terminated Participants or their Beneficiaries.

6.7 ALLOCATION OF FORFEITURES. The treatment of all amounts that
are forfeited pursuant to Section 8.5(d) or 8.6(b) shall be governed by the
following rules:

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<PAGE> 36

(a) Forfeitures shall be allocated to the Plan Accounts of
those Participants who are entitled to receive an allocation of Company
Contributions for the Plan Year preceding the Plan Year in which the
forfeitures are allocated according to the rules of Section 6.5 in the
proportion that the Compensation of each such Participant bears to the total
Compensation of all Participants entitled to share in an allocation of those
forfeitures for the Plan Year ending immediately prior to the date on which the
forfeitures are allocated.

(b) No forfeitures shall be allocated to the Excess
Contributions Account, if any, or to any Alternate Payee Account.

(c) The forfeitures to be allocated shall be the amount of
forfeitures occurring since the next preceding allocation under this Section
6.7 and prior to the date prescribed by the Committee as the cutoff date for
such allocation, which shall be a date falling between Anniversary Date and the
actual date in which the allocations are made.

(d) Pending allocation, forfeitures shall be accounted for
in the same manner as unallocated Company Contributions and shall not be
adjusted for income, gain or loss on such forfeitures. Such income, gain or
loss shall be considered and accounted for in the same fashion as income, gain
or loss on unallocated Company Contributions.

(e) In the event that amounts are forfeited by reason of
the termination of employment of a Participant, shares of Class B Common Stock,
if any, which may be held in such Participant's Plan Account (or, indirectly,
through a Participant's interest in a Company Stock fund in which his Account
is invested) shall be sold by the Trustee to the Company for cash equal to its
fair market value, determined as of the date of such sale, and the cash
proceeds thereof shall be allocated with the other assets held in such
Participant's Plan Account pursuant to the provisions of this Section 6.7.
Alternatively, as determined by the Committee, such shares shall be retained in
the Trust and allocated pursuant to this Section 6.7. In determining whether
Common Stock to be forfeited

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<PAGE> 37
is Class A or Class B Common Stock, the first-in, first-out method shall be
applied.

(f) If a portion of a Participant's Plan Account is
forfeited, Company Stock acquired pursuant to Section 4.10 and allocated
pursuant to Treasury Regulations Section 54.4975-11(d)(2) and Section 6.12
shall be forfeited only after other assets.

6.8 ALLOCATION OF INCOME OR LOSS ON UNALLOCATED COMPANY
CONTRIBUTIONS AND FORFEITURES. At the time Company Contributions and
forfeitures are allocated to the Plan Accounts, the income, gain or loss on
unallocated Company Contributions and forfeitures, adjusted for any Plan
expenses paid since the next preceding allocation date under this Section 6.8
(which expenses shall first be applied against earnings on forfeitures), shall
be allocated to those Participants eligible to receive an allocation of Company
Contribution for such Plan Year, pro rata, according to each such Participant's
Compensation for the Plan Year ending on such Anniversary Date.

6.9 ACCOUNTING PROCEDURES. The Committee shall establish
accounting procedures for the purpose of making the allocations, valuations and
adjustments to Accounts provided for in this Article VI, as well as the
implementation of investment direction by Participants pursuant to Section 4.6
and transfers between or distributions from subaccounts established pursuant to
Section 4.6(b). From time to time the Committee may modify such accounting
procedures for the purpose of achieving equitable, nondiscriminatory, and
administratively feasible allocations among the Accounts in accordance with the
general concepts of the Plan and the provisions of this Article VI.

A Participant, Beneficiary or Alternate Payee shall have no contractual
or other right to have a particular accounting procedure or convention apply,
or continue to apply, and the Committee shall be free to alter any such
procedure or convention without obligation to any Participant, Beneficiary or
Alternate Payee, consistent with the requirements of Code section 411(d)(6).

- 37 -
<PAGE> 38

6.10 SUSPENDED PARTICIPANTS. The Plan Account of each Suspended
participant shall be held intact and shall be valued on each Valuation Date as
provided in Section 6.6, but shall not receive any allocation of Company
contributions or forfeitures; provided, however, that if the Participant
completes, during the Plan Year in which he becomes a Suspended Participant,
850 or more Hours of Service during such Plan Year, his Plan Account shall
participate in the allocation of company Contributions and forfeitures for such
Plan Year.

6.11 ACCOUNTING FOR INTEREST OF AN ALTERNATE PAYEE. In the event an
Alternate Payee is awarded an interest in the Plan benefits of a Participant
pursuant to a qualified domestic relations order, as defined in Section 14.2,
such interest shall be separated into one or more separate Accounts and
accounted for under rules prescribed by the Committee, pending distribution to
the Alternate Payee.

6.12 SUSPENSE ACCOUNT.

(a) Any Company Stock which is acquired with the proceeds
of a Loan shall be credited to a Suspense Account and shall not be allocated to
the Accounts of Participants until its release from such Suspense Account.

(b) Release of Company Stock from the Suspense Account
shall be effected as follows: Upon the payment of each installment of
principal and interest on a Loan, a number of shares of such Company Stock so
acquired shall be released from the Suspense Account. For each Plan Year
during the duration of the relevant Loan, the number of shares so acquired to
be released from the Suspense Account will equal the number of shares so
acquired and held immediately before release from the Suspense Account
multiplied by a fraction, the numerator of which is the amount of principal and
interest paid with respect to the relevant Loan for the year and the
denominator of which is the principal and interest to be paid in respect of the
relevant Loan for the current and all future years; provided, however, that the
number of future years under the relevant Loan must be definitely
ascertainable, determined without taking into account any possible extension or
renewal periods. Notwithstanding anything in this Section 6.12(b) to the
contrary, if the number of shares

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<PAGE> 39
of Company Stock to be released from the Suspense Account is to be determined
solely by reference to the amount of principal paid with respect to the
relevant Loan for the year, then the relevant Loan must provide for annual
payments of principal and interest at a cumulative rate that is no less rapid
at any time than level annual payments of such amounts for ten years. For
purposes of the preceding sentence, interest included in any payment shall be
disregarded to the extent that it would be determined to be interest under
standard loan amortization tables. Cash dividends on Company Stock held in the
Suspense Account which are received by the Trustee during a Plan Year shall be
used first to repay the interest and principal on any outstanding Loan.

6.13 DIVIDENDS ON ALLOCATED COMPANY STOCK. Notwithstanding anything
to the contrary contained in Section 6.6, cash dividends, if any, attributable
to shares of Company Stock allocated to the Accounts of Participants may be
immediately distributed to such Participants or, in the discretion of the
Committee, may be distributed to such Participants within 90 days of the end of
the Plan Year in which such dividends are payable.

6.14 ALLOCATION OF CERTAIN SHARES PROHIBITED.

(a) Notwithstanding anything to the contrary in this Article
VI, if the Plan purchases Company Stock in a sale with respect to which the
seller makes an election under Code section 1042(a), none of the Company Stock
so purchased shall be allocated, directly or indirectly,

(1) during the "nonallocation period,"

(A) to the seller;

(B) to any individual related (within the
meaning of Code section 267(b)) to the seller; or

(2) to any other person who owns (after application
of Code section 318(a) without regard to paragraph (2)(B)(i) thereof)
twenty-five percent (25%) of any class of Company Stock or of the total value
of any class of Company Stock.

- 39 -
<PAGE> 40

(b) The "nonallocation period" in subsection 6.14(a)(1) above
is the period beginning on the date of the sale of such Company Stock and
ending on the later of the date which is ten (10) years after the date of the
sale or the date on which the last of the purchased shares of Company Stock are
allocated.

(c) Subsection 6.14(a)(1)(B) above shall not apply to an
individual if the individual is a lineal descendant of the seller and the total
amount of Company Stock allocated to all such lineal descendants of the seller
does not exceed five percent (5%) of the Company Stock held by the Plan which
was purchased in a sale with respect to which the seller made a Section 1042
election.

(d) For purposes of subsection 6.14(a)(2) above a person
shall be treated as a twenty-five percent (25%) owner if he or she was such an
owner at any time during the one-year period ending on the date of the sale
described in subsection (a) or on the date as of which the Company Stock so
purchased is allocated.

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<PAGE> 41
ARTICLE VII

VESTING IN PLAN ACCOUNTS

7.1 NO VESTED RIGHTS EXCEPT AS HEREIN SPECIFIED. No Participant,
Beneficiary or Alternate Payee shall have any vested right or interest to, or
any right of payment of, any assets of the Trust Fund, except as provided in
this Plan. Neither the making of any allocations nor the crediting of any
amounts to the Account of a Participant, Beneficiary or Alternate Payee shall
vest in any Participant, Beneficiary or Alternate Payee any right, title, or
interest in or to any assets of the Trust Fund.

7.2 PARTICIPANT'S VESTED INTEREST--GENERAL RULE. Subject to the
provisions of Section 7.3, the Vested Interest of each Participant or Suspended
Participant in his Plan Account established pursuant to Section 6.1 shall be
determined by multiplying the balance in his Plan Account as of the applicable
date by the Vested Percentage determined in accordance with the rules of
Section 7.3 and the following schedule:

<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than three years 0
Three years but less than four years 25%
Four years but less than five years 50%
Five years but less than six years 75%
Six years or more 100%
</TABLE>

A Participant will always be 100% vested in his TRASOP Account and CODA
Account, if any. Vesting in a Participant's Profit Sharing Account, if any,
shall be governed by the provisions of the Science Applications International
Corporation Profit Sharing Retirement Plan in effect on February 1, 1990.

7.3 VESTED PERCENTAGE--SPECIAL RULES. The determination of a
Participant's or Suspended Participant's Vested Percentage in his Plan Account
shall be subject to the following special rules:

(a) During an Employee's period of employment with the
Company or an Affiliated Company (including periods while on an approved leave
of absence or a Maternity or Paternity Absence),

- 41 -
<PAGE> 42
in the event of his death, Disability, attainment of Normal Retirement Date, or
a judicial declaration of his mental incompetence, the Employee's Vested
Percentage shall become one hundred percent (100%), regardless of his number of
Years of Service.

(b) A former Employee who is reemployed by the Company or
an Affiliated Company prior to incurring five consecutive Breaks in Service
shall have his Vested Percentage determined as if he had not terminated
employment (subject to the provisions of Section 8.6). If a former Employee
incurs five consecutive Breaks in Service, amounts forfeited from his Plan
Account shall remain forfeited and shall not be restored, and his Years of
Service prior to such period of five consecutive Breaks in Service shall
(subject to subparagraph (c) below) count only towards his Vested Percentage
applicable to allocations to his Plan Account credited after such period of
five consecutive Breaks in Service.

(c) If an Employee whose Vested Percentage is zero upon
his initial Break in Service incurs five or more consecutive Breaks in Service,
his Years of Service accumulated before the commencement of any such period of
consecutive Breaks in Service shall not be taken into account for purposes of
determining the Vested Percentage in his Plan Account at any time or for any
purpose. An Employee's aggregate Years of Service shall not include any Years
of Service not required to be taken into account under this Section 7.3(c) by
reason of any prior Break in Service.

(d) No Employee shall be credited with any Years of
Service performed prior to February 1, 1976, if the period of service would
have been disregarded under the provisions of the Predecessor Plan in existence
on the relevant date relating to continuity and interruptions of service and
those rules requiring full time service as a condition for participation in the
Plan.

(e) No Employee shall be given credit for any Years of
Service performed before the computation period (as determined in accordance
with Section 2.52) during which the Employee attained the age of 18.

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<PAGE> 43
(f) No Employee shall be given credit for any period of
service performed prior to February 1, 1973 (the date the Plan was
established).

(g) An Employee's Vested Percentage as of January 1, 1988
shall be equal to his Vested Percentage as of December 31, 1987 under the terms
of the Amended and Restated Plan as in effect on December 31, 1987.

(h) In the event of a divestiture of an operating group or
division, the Operating Committee or the Operating Committee's designee may, in
their sole discretion, determine, with respect to Eligible Employees whose
employment with the Company terminates as a result of such divestiture and in
lieu of the otherwise applicable determination of Vested Percentage specified
in this Article VII, (1) treat the Eligible Employees' Vested Percentage as
100%, notwithstanding their Years of Service prior to termination; or (2) treat
such Eligible Employees as Suspended Participants but credit Years of Service
with the new employer to whom such group is divested for purposes of
determining such Eligible Employees' Vested Percentage. Any such determination
for a particular group or division shall not bind the Company in any way with
respect to any subsequent determination relating to a different group or
division. In the event of a subsequent divestiture from the new employer, the
Operating Committee or the Operating Committee designee may make a similar
determination regarding vesting acceleration.

(i) In the event the Plan is amended to change any vesting
schedule under the Plan, each Participant having no less than three Years of
Service shall be permitted to elect, within a reasonable period after the
adoption of such amendment, to have his vested percentage determined under the
Plan without regard to such amendment.

7.4 RESERVED FOR PLAN MODIFICATIONS.

7.5 ALTERNATE PAYEE ACCOUNTS. In the event that an Alternate Payee
is awarded an interest in the Plan Account of a Participant whose Vested
Percentage in such Account is less than 100%, the Vested Percentage at any time
of the Alternate Payee in that portion of the Alternate Payee Account
attributable to such

- 43 -
<PAGE> 44
awarded interest shall be the same percentage as the Participant's Vested
Percentage in his Plan Account at that time, determined in accordance with
Sections 7.1 through 7.3.

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<PAGE> 45
ARTICLE VIII

PAYMENT OF PLAN BENEFITS; DESIGNATION OF
BENEFICIARY; TRANSFER OF DISTRIBUTED COMPANY STOCK

8.1 RETIREMENT.

(a) A Participant may retire from the employment of the
Company on or after his Normal Retirement Date, consistent with Company
policies.

(b) If the Participant continues in the service of the
Company beyond his Normal Retirement Date with the consent of the Company
consistent with applicable legal requirements, he shall continue to participate
in the Plan in the same manner as Participants who have not reached their
Normal Retirement Dates. At the subsequent termination of the Participant's
employment, his Distributable Benefit shall be based upon the value of his Plan
Account as of the Applicable Valuation Date determined with reference to his
date of termination of employment as though that were his Normal Retirement
Date.

8.2 METHOD OF DISTRIBUTION UPON RETIREMENT.

(a) Upon retirement a Participant shall be entitled to a
lump-sum distribution of his entire Distributable Benefit.

(b) Payment of the lump-sum distribution shall be made
as soon as practicable following his Normal Retirement Date provided the
Participant consents to any distribution prior to the Participant attaining age
62. Failure to consent to any such distribution shall be deemed on election to
defer such distribution until the date the Participant attains age 62. A
Participant may elect to defer the distribution for a period of up to five
years following his Normal Retirement Date, provided payment is made on or
before the Required Payment Commencement Date determined under Section 2.42
(which shall take into account the election made under this Section 8.2(b)).

8.3 DEATH OR DISABILITY PRIOR TO TERMINATION OF EMPLOYMENT.

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<PAGE> 46

(a) Upon the death of a Participant during his
employment, or in the event that the Committee shall determine that a
Participant has suffered a permanent Disability while an Employee of the
Company, the Committee shall direct the Trustee to make a distribution of the
Participant's entire interest in the Trust Fund to the Participant's
Beneficiary determined under Section 8.9 (in the event of death) or to the
disabled Participant (in the event of Disability).

(b) The form of the Distributable Benefit shall be a
lump-sum distribution, payable within one hundred twenty (120) days after the
close of the Plan Year in which the death of the Participant occurs, or in
which he is determined to be Disabled, as the case may be, subject to proof of
death or Disability satisfactory to the Committee.

8.4 DEATH AFTER TERMINATION OF EMPLOYMENT. Upon the death of a
former Participant after his retirement, Disability or other termination of
employment, but prior to the distribution of his Distributable Benefit to which
he is entitled, the Committee shall direct the Trustee to make a distribution
of the balance to which the deceased Participant was entitled, to the
Participant's Beneficiary determined under Section 8.9, such payment to be made
within one hundred twenty (120) days after the close of the Plan Year in which
the death of the Participant occurs, notwithstanding any elections previously
made by the Participant.

8.5 TERMINATION OF EMPLOYMENT PRIOR TO NORMAL RETIREMENT
DATE--DEFERRED DISTRIBUTION. Except as otherwise provided in Section 8.3 or
8.6, the following rules of this Section 8.5 shall apply in the case of a
Participant whose employment with the Company terminates prior to his Normal
Retirement Date:

(a) The Participant's Plan Account and TRASOP Account,
CODA Account and Profit Sharing Account, as applicable, shall continue to be
credited with the interest or other net income earned thereon, but no further
allocations of Company Contributions pursuant to the provisions of Article VI
shall be made to such Plan Account, except for an allocation for the Plan Year
in which the Participant terminated employment if he completed 850 or more
Hours of Service in such Plan Year.

- 46 -
<PAGE> 47

(b) The Participant's Distributable Benefit shall be
distributed to him in a lump sum not later than one hundred twenty (120) days
after the close of the Plan Year in which occurs his fifth consecutive Break in
Service, except as provided in Sections 8.5(c), 8.5(e), 8.5(f) or 8.6.

(c) A Participant who so requests, may elect to have his
Distributable Benefit distributed to him as a deferred Company Stock
Distributable Benefit calculated under the provisions of Section 8.7(c). In
such event, distribution shall be made within 120 days of such Participant's
Normal Retirement Date; provided, however, that with respect to any portion of
the Participant's Account attributable to Company Stock acquired by the Plan
after December 31, 1986 (as determined under Section 2.19A and applicable
Treasury Regulations), unless the Participant otherwise elects to have payment
made as indicated above (following Normal Retirement Date), such portion shall
be distributed in substantially equal annual payments over a period of five
years, with the first such annual payment made not later than one year after
the close of the Plan Year which is the fifth Plan Year following the Plan Year
in which the Participant separated from service with the Company. For purposes
of the preceding sentence requiring distribution of a Participant's Company
Stock Distributable Benefit, such Benefit shall not be deemed to include any
Company Stock acquired with the proceeds of a Loan until the close of the Plan
Year in which the Loan is repaid in full. Notwithstanding the foregoing, a
Participant who elects such a Company Stock Distributable Benefit may, at any
time prior to his Normal Retirement Date, request that the Committee pay him
the Vested Interest in his Plan Account in a cash lump sum and, in such event,
the distribution shall be made not later than one hundred twenty (120) days
after the close of the Plan Year in which such request is made.

(d) In the case of a distribution described in Section
8.5(b) or (c), the nonvested portion of the Participant's Plan Account and
Profit Sharing Account, if applicable, shall be forfeited as of the time of
distribution.

(e) If the Participant is reemployed by the Company or
an Affiliated Company on (or before) the Anniversary Date of the Plan Year in
which his fifth consecutive Break in Service

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<PAGE> 48
occurs, and does not incur five consecutive Breaks in Service, no distribution
and no forfeiture shall occur.

(f) Distribution of benefits under Section 8.5(b) to a
Participant whose Distributable Benefit exceeds (or at the time of any prior
distribution exceeded) $3,500 may be made only with the consent of the
Participant. Failure to consent shall be deemed an election to defer
distribution of the Distributable Benefit until the date the Participant
attains age 62, in which case the investment of the Participant's Distributable
Benefit in the Trust Fund shall be pursuant to rules prescribed by the
Committee. Such subsequent distribution of the benefit shall be made in a lump
sum not later than one hundred and twenty (120) days after the close of the
Plan Year in which the Participant attains age 62.

8.6 TERMINATION OF EMPLOYMENT PRIOR TO NORMAL RETIREMENT
DATE--IMMEDIATE DISTRIBUTION.

(a) A Participant whose employment with the Company
terminates prior to his Normal Retirement Date shall have his Distributable
Benefit, if any, paid to him within twelve months of the date of his
termination of employment if:

(i) His Distributable Interest, if any, is
$3,500 or less, or

(ii) He consents to such distribution (pursuant
to rules prescribed by the Committee). Failure to consent shall be deemed an
election to defer distribution of the Distributable Benefit until the date the
Participant attains age 62, unless distribution is made pursuant to Section
8.5(b).

(b) In the above-described cases, the following rules
shall apply:

(i) The nonvested portion of his Plan Account
and Profit Sharing Account, if applicable, shall be forfeited as of the date
that his Vested Interest is distributed to him. In the case of a Participant
with no Vested Interest in his Plan Account or Profit Sharing Account, if
applicable, the forfeiture shall occur within the period commencing on the date
of his

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<PAGE> 49
termination of employment and ending ninety (90) days following the end of the
Plan Year in which his termination of employment occurs.

(ii) If the Participant is reemployed by the
Company or an Affiliated Company prior to his incurring his fifth consecutive
Break in Service or on (or before) the Anniversary Date of the Plan Year in
which his fifth consecutive Break in Service occurs, the Participant shall be
entitled to have the entire portion of his Plan Account and Profit Sharing
Account, if applicable, (including the nonvested portion of such Accounts)
reinstated by repaying the total amount distributed to him from such Accounts.
Such reinstatement shall be made from current forfeitures and, if necessary,
from Company Contributions, and shall not be treated as an Annual Addition.
However, this repayment must be made prior to the earlier of (i) five years
from the date of reemployment or (ii) five consecutive Breaks in Service after
the distribution of the Vested Interest in his Account(s) following such
termination of employment, provided he is an Eligible Employee during that
period. If such repayment is not made, then the previously forfeited amounts
shall not be restored to the Participant's Account(s).

(iii) In the case of a repayment made pursuant to
the rules of Section 8.6(b)(ii) above,

(A) The Participant shall not be
required to pay any interest charge upon the amounts repaid by him, and

(B) The nonvested portion of his
Account(s) (which was not distributed to him) shall not be adjusted for gains
or losses during the period between the forfeiture and the repayment of the
distributed amount.

(iv) In the case of a Participant with no Vested
Interest in his Plan Account or Profit Sharing Account, if applicable, who is
reemployed prior to incurring five consecutive Breaks in Service, his entire
nonvested interest in such Account(s) (unadjusted for gains or losses during
the period between the date of his forfeiture and the date of his reemployment)
shall be reinstated upon his reemployment, without regard to the repayment
requirement of subsection (iii) above.

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<PAGE> 50

8.7 DISTRIBUTABLE BENEFIT.

(a) Subject to the Participant's right under Section
8.5(c) or Section 8.7(b) to elect to receive a Company Stock distribution
calculated under the provisions of Section 8.7(c), a Participant's
Distributable Benefit shall be distributed in cash or, if elected in accordance
with Section 8.15, by trustee-to-trustee transfer.

(b) The Committee shall notify the Participant in
advance of making the distribution of his right to elect distribution in the
form of Company stock. Upon being so notified the Participant shall have a
reasonable period of time (at least fourteen days) in which to elect to receive
his Distributable Benefit in the form of Company Stock distribution as
calculated under Section 8.7(c). This election by the Participant shall be
made in writing, shall be irrevocable when made unless the Committee shall
approve a revocation thereof, and shall operate to require the Committee to
cause the Participant's Distributable Benefit to be made in the form of a
Company Stock distribution as calculated under Section 8.7(c). The election to
receive a Company stock distribution with respect to shares of Company stock
acquired with the proceeds of a Loan shall not be terminable should the Loan be
repaid or should the Plan cease to be an employee stock ownership plan within
the meaning of Code section 4975(e)(7).

(i) The amount of such a distribution shall be
the number of whole shares of Company Stock that can be purchased with the
dollar value of the Participant's Account(s) (determined as of the Applicable
Valuation Date), with the remainder of the value of the Participant's
Account(s) distributable in the form of cash.

(ii) If more than one class of Company Stock is
available for distribution to a Participant, the Participant must receive
substantially the same proportion of each such class of stock ("Pro Rata
Distribution"). The rule in the preceding

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<PAGE> 51
sentence shall not apply to the extent that the Participant elects, pursuant to
rules to be prescribed by the Committee, to receive the distribution in a form
other than the Pro Rata Distribution. The rules of this Section 8.7(c)(ii)
shall be applied by the Committee in a manner not inconsistent with the
provisions of Code section 409(h).

(d) The amount of a Participant's Distributable Benefit
shall be based on the value of his Accounts determined in accordance with the
rules prescribed by the Committee. However, the value of the Participant's
Account shall be increased or decreased (as appropriate) by any contributions,
forfeitures, or distributions properly allocable under the terms of this Plan
to his Account that occurred on or after the Applicable Valuation Date or for
any other reason were not otherwise properly reflected in the valuation of his
Account on the Applicable Valuation Date.

(e) Neither the Committee, the Company, nor the Trustee
shall have any responsibility for any increase or decrease in the value of a
Participant's Account as a result of any valuation made under the terms of this
Plan after the date of his termination of employment and before the date of the
distribution of his Account to him or his Beneficiary. Also, neither the
Committee, the Company, nor the Trustee shall have any responsibility for
failing to make any interim valuation of a Participant's Account between the
date of distribution to the Participant of his Account and the immediately
preceding Valuation Date, even though the Plan Assets may have been revalued in
that interim for a purpose other than to revalue the Accounts under this Plan.

8.8 LIMITED PUT OPTION TO SELL COMPANY STOCK. Solely in the event
that a Participant receives a distribution from the Plan consisting in whole or
in part of Company Stock that at the time of distribution thereof is not
Readily Tradeable Stock, the distributed Company Stock shall be made subject to
a put option in the hands of a Qualified Holder. This put option shall be
subject to the following provisions:

(a) (i) During the sixty-day period following any
distribution of such Company Stock, a Qualified Holder shall have

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<PAGE> 52
the right to require the Company to purchase all or a portion of the
distributed Company Stock held by the Qualified Holder. A Qualified Holder
shall exercise this right by giving written notice to the Company within the
previously mentioned sixty-day period of the number of shares of distributed
Company Stock that the Qualified Holder intends to sell to the Company.

(ii) The purchase price to be paid for any such
Company Stock shall be its fair market value determined as of the Applicable
Valuation Date determined in accordance with the valuation rules specified in
Section 4.5. However, in the case of a transfer between a Qualified Holder
who is a "disqualified person" (within the meaning of Code section 4975(e)(2))
and the Plan, the value of the stock shall be determined as of the date the
Qualified Holder gives written notice to the Company of his exercise of the put
option under this Section 8.8.

(b) (i) If a Qualified Holder shall fail to exercise
his put option right under this Section 8.8(b), the option right shall
temporarily lapse upon the expiration of the sixty day period.

(ii) Pursuant to the rules of Section 6.6A, as
soon as is reasonably practicable following the Anniversary Date of the Plan
Year in which the sixty-day option period expires, the Company shall notify the
non-electing Qualified Holder (if he is then a shareholder of record) of the
valuation of the Company Stock as of that Anniversary Date. During the
sixty-day period following receipt of such valuation notice, the Qualified
Holder shall have the right to require the Company to purchase all or any
portion of the distributed Company Stock.

(iii) The purchase price to be paid therefor shall
be based on the Anniversary Date valuation of the Company Stock. However, in
the case of a transfer between a Qualified Holder who is a "disqualified
person" (within the meaning of Code section 4975(e)(2)) and the Plan, the value
of the stock shall be determined as of the date the Qualified Holder gives
written notice to the Company of his exercise of the put option under this
Section 8.8.

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<PAGE> 53

(iv) If a Qualified Holder fails to exercise his
option right under this Section 8.8(b) with respect to any portion of the
distributed Company Stock, no further options shall be applicable under this
Plan and the Company shall have no further purchase obligations hereunder.

(c) In the event that a Qualified Holder shall exercise
a put option under this Section 8.8, then the Company shall have the option of
paying the purchase price of the Company Stock which is subject to the put
option ("Option Stock") under either of the following methods:

(i) A lump-sum payment of the purchase price
within ninety days after the date upon which the put option is exercised
("Exercise Date") or

(ii) A series of six equal installment payments,
with the first payment to be made within thirty days following the Exercise
Date and the five remaining payments to be made on the five anniversary dates
of the Exercise Date, so that the full amount shall be paid as of the fifth
anniversary of such Exercise Date. If the Company elects to pay the purchase
price of the Option Stock under the installment method provided in this
subparagraph (ii), then the Company shall, within thirty days after the
Exercise Date, give the Qualified Holder who is exercising the put option the
Company's promissory note for the full unpaid balance of the option price.
This note shall, at a minimum, provide adequate security, state a rate of
interest reasonable under the circumstances but at least equal to the imputed
compound rate in effect as of the Exercise Date pursuant to the Treasury
Regulations promulgated under Code section 483, and provide that the full
amount of the note shall accelerate and become due immediately in the event
that the Company defaults in the payment of a scheduled installment payment.

(d) The foregoing put options under Sections 8.8(a) and
(b) shall be effective solely against the Company and shall not obligate the
Plan in any manner. However, the Plan may elect to purchase any Company Stock
that otherwise must be purchased by the Company pursuant to a Qualified
Holder's exercise of any such option. Should both the Plan and the Company
elect to purchase he stock, the Plan's election shall take precedence.

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<PAGE> 54

(e) In the event that a Qualified Holder is unable to
exercise the put option provided hereunder because the Company or other entity
bound by the put option is prohibited from honoring it by reason of any
applicable Federal or State law, then the sixty-day option periods during
which the put option is exercisable under Sections 8.8(a) and (b) shall not
include any such time during which the put option may not be exercised due to
this reason.

(f) Except as is expressly provided above with respect
to any distributed Company Stock that is not Readily Tradeable Stock (as
defined in Section 2.41B), no Participant shall have any put option rights with
respect to Company Stock distributed under this Plan, and neither the Company
nor this Plan shall have any obligation whatsoever to purchase any distributed
Company Stock from any Participant or other Qualified Holder.

(g) At the time of distribution of Company Stock that is
not Readily Tradeable Stock to a Participant or Beneficiary, the Company shall
furnish to the Participant or Beneficiary the most recent annual certificate of
value prepared by the Company with respect to such Stock in accordance with the
provisions of Section 6.6A. In addition, the Company shall furnish to the
Participant or Beneficiary a copy of each subsequent annual certificate of
value until the put options provided for in this Section 8.8 with respect to
the distributed Company Stock shall expire.

(h) The put option provided under this Section 8.8 shall
not be terminable with respect to shares of Company Stock acquired with the
proceeds of a Loan should the Loan be repaid or should the Plan cease to be an
employee stock ownership plan within the meaning of Code section 4975(e)(7).

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<PAGE> 55

8.9 DESIGNATION OF BENEFICIARY.

(a) Subject to the provisions of Section 8.9(e), each
Participant shall have the right to designate a Beneficiary or Beneficiaries to
receive his Distributable Benefit in the Trust Fund in the event of his death
before receipt of his entire interest in the Trust Fund. This designation is
to be made on the form prescribed by and delivered to the Committee.

(b) Subject to the provisions of Section 8.9(e), a
Participant shall have the right to change or revoke any such designation by
filing a new designation or notice of revocation with the Committee. Subject
to the provisions of Section 8.9(e), no notice to any Beneficiary nor consent
by any Beneficiary shall be required to effect any such change or revocation.

(c) If a deceased Participant shall have failed to
designate a Beneficiary, if the Committee shall be unable to locate a
designated Beneficiary after reasonable efforts have been made, if for any
reason the designation shall be legally ineffective, or if the Beneficiary
shall have predeceased the Participant (and no legally effective Contingent
Beneficiary shall have been named), any distribution required to be made under
the provisions of this Plan shall be payable to the Participant's estate
(except as provided in Section 8.9(e)), and the estate shall be considered the
Beneficiary under this Plan.

(d) In the event that the deceased Participant was not a
resident of California at the date of his death, the Committee, in its
discretion, may require the establishment of ancillary administration in
California. In the event that a Participant shall predecease his Beneficiary
and on the subsequent death of the Beneficiary a remaining distribution is
payable under the applicable provisions of this Plan, the distribution shall be
payable to the Beneficiary's estate.

(e) If a Participant shall be married at the time of his
death, the designation by the Participant under Section 8.9 of a person other
than the current Spouse as his Beneficiary shall not take effect (and the
entire Distributable Benefit shall be paid to such Spouse) (i) unless the
Spouse of the Participant consents in writing to such designation, and the
Spouse's consent

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<PAGE> 56
acknowledges the effect of such designation and is witnessed by a Member of the
Committee (or its delegate), a notary, or (ii) unless it is established to the
satisfaction of the Committee that such consent is not required because there
is no Spouse, because the Spouse cannot be located, or because of such other
circumstances as the Secretary of the Treasury may by regulations prescribe. A
spouse's consent to a designation of a particular Beneficiary shall be valid
only as to that Beneficiary and as to the form of payment prescribed by the
Plan in Section 8.3(b) or 8.4, as applicable.

(f) The Company, the Committee and the Trustee shall
have no duty to determine whether a Beneficiary designation or spousal consent
made pursuant to this Section 8.9 was an informed designation or consent or was
freely given, and shall be entitled to rely upon the Beneficiary form filed
with the Committee, as well as such other documents as may be required pursuant
to Section 8.12, and shall be under no duty or obligation to protect the rights
of a spouse or former spouse of a Participant, except as may be required by
law.

A spouse's consent to a designation of a particular Beneficiary shall
be valid only as to that Beneficiary and as to the form of payment prescribed
by the Plan in Section 8.3(b) or 8.4, as applicable.

8.10 FACILITY OF PAYMENT. If any payee under the Plan is a minor or
if the Committee reasonably believes that any payee is legally incapable of
giving a valid receipt and discharge for any payment due him, the Committee may
have the payment, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or supporting the payee,
unless it has received due notice of claim therefor from a duly appointed
guardian or committee of the payee. Any payment shall be a payment from the
Account of the payee and shall, to the extent thereof, be a complete discharge
of any liability under the Plan to the payee.

8.11 DISTRIBUTION TO ALTERNATE PAYEES. If an Alternate Payee is
entitled to a distribution of benefits from this Plan pursuant to a qualified
domestic relations order, as defined in Section 14.2, the benefits payable to
such Alternate Payee shall

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<PAGE> 57
be distributed pursuant to such qualified domestic relations order under rules
or procedures described by the Committee. If permitted by applicable law and
regulations, the Committee may require or permit immediate distribution of such
benefits to an Alternate Payee at any time following the determination by the
Committee that such an order is a qualified domestic relations order. In the
event that an Alternate Payee dies prior to receipt of the amounts due him from
an Alternate Payee Account, such amounts shall be distributed to the estate of
the Alternate Payee as soon as practicable following the date such amounts
would have been distributed to such Alternate Payee.

8.12 ADDITIONAL DOCUMENTS.

(a) The Committee or Trustee, or both, may require (and
rely upon) the execution and delivery of such documents, papers and receipts as
the Committee or Trustee may determine necessary or appropriate in order to
establish the fact of death of the deceased Participant and of the right and
identity of any Beneficiary or other person or persons claiming any benefits
under this Article VIII.

(b) The Committee or the Trustee, or both, may, as a
condition precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the committee or Trustee, or
both, may deem appropriate as protection against possible liability for state
or federal death taxes attributable to any death benefits.

8.13 RIGHT OF FIRST REFUSAL FOR THE COMPANY AND THE PLAN.

(a) Any Company stock distributed from the Plan which is
Class B Common stock shall be subject to a right of first refusal by the
Company. The terms and conditions of the right of first refusal shall be those
applied to Class A Common Stock by the Company's Certificate of Incorporation,
as in effect from time to time.

(b) Any Company stock (whether Class A or Class B)
distributed from the Plan, in addition to the right of first

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<PAGE> 58
refusal imposed by the Company's Certificate of Incorporation or by Section
8.13(a), shall also be subject to a right of first refusal in favor of the
Plan, subordinate to that of the Company, the terms and conditions of which
(except for the right being in favor of the Plan) shall be the same as the
Company's right of first refusal, modified as necessary to comply with
applicable Treasury regulations.

(c) Any Company stock held by or distributed from the
Plan (whether Class A Common Stock or Class B Common Stock) which was acquired
by the Plan with the proceeds of a Loan, shall not be subject to a put, call,
other option or buy-sell or similar arrangement, within the meaning of Treasury
Regulations, Section 54.4975-7(b)(4), whether or not this Plan is then an ESOP,
except for the put option provided in Section 8.8 and except for the rights of
first refusal provided in this Section 8.13 or by the Company's Certificate of
Incorporation. Further, in administering the rights of first refusal with
respect to such Company Stock acquired with the proceeds of a Loan, the rights
shall be modified, as necessary, to comply with applicable Treasury
regulations.

8.14 RESTRICTION ON DISTRIBUTION OF TRASOP ACCOUNT BALANCE.
Notwithstanding any other provision of this Plan, no Company Stock allocated to
a Participant's TRASOP Account may be distributed from such Account before the
end of the eighty-fourth (84th) month beginning after the month in which the
Company Stock is allocated to that Account. However, such Company Stock may be
distributed on an earlier date pursuant to the provisions of this Plan in the
event of:

(a) The Participant's death, Disability or other
termination of employment;

(b) The Participant's transfer to the employment of an
acquiring employer, other than the Company, in the case of:

(i) A sale to the acquiring employer of
substantially all of the assets used by the Company in a trade or business
conducted by the Company, or

(ii) The sale of substantially all of the stock
of a subsidiary of the Company to the employer, or

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<PAGE> 59

(c) With respect to the stock of the Company, a
disposition of the Company's interest in a subsidiary when the Participant
continues employment with the subsidiary.

8.15 DIRECT ROLLOVERS.

(a) This applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this Section 8.15, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution made
payable directly to an eligible retirement plan specified by the distributee in
a direct rollover.

(i) Eligible Rollover Distribution. An eligible
rollover distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated Beneficiary,
or for a specified period of 10 years or more; any distribution to the extent
such distribution is required under Code section 401(a)(9); and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).

(ii) Eligible Retirement Plan. An eligible
retirement plan is a retirement plan that accepts the distributee's eligible
rollover distribution and is an individual retirement account described in Code
section 408(a), an individual retirement annuity described in Code section
408(b), an annuity plan described in Code section 403(a), or a qualified trust
described in Code section 401(a). However in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.

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<PAGE> 60

(iii) Distributee. A distributee includes an
employee or former employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's spouse or former
spouse who is the alternative payee under a qualified domestic relations order,
as defined in Code section, are distributees with regard to the interest of the
spouse or former spouse.

(iv) Direct rollover. A direct rollover is a
payment by the Plan to the eligible retirement plan specified by the
distributee.

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<PAGE> 61
ARTICLE IX

OPERATION AND ADMINISTRATION OF THE PLAN;
VOTING AND OTHER RIGHTS OF COMPANY STOCK

9.1 PLAN ADMINISTRATION.

(a) Authority to control and manage the operation and
administration of the Plan is hereby allocated to the Committee.

(b) The members of the Committee shall be appointed by
the Board of Directors and shall hold office until resignation, death or
removal by the Board of Directors.

(c) For purposes of ERISA Section 402(a), the Committee,
the Trustee and any Investment Manager appointed pursuant to Section 9.3 shall
be Named Fiduciaries of this Plan.

(d) The Secretary of the Committee shall cause to be
maintained in the office of the Committee for the purpose of inspection an
accurate schedule listing the names of all persons from time to time serving as
members of the Committee and all Named Fiduciaries of the Plan.

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

(a) To allocate fiduciary responsibilities (other than
trustee responsibilities) among the Named Fiduciaries and to designate one or
more other persons to carry out fiduciary responsibilities (other than trustee
responsibilities). However, no allocation or delegation under this Section
9.2(a) shall be effective until the person or persons to whom the
responsibilities have been allocated or delegated agree to assume the
responsibilities. The term "trustee responsibilities" as used herein shall
have the meaning set forth in Section 405(c) of ERISA. The preceding
provisions of this Section 9.2(a) shall not

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<PAGE> 62
limit the authority of the Committee to appoint one or more Investment Managers
in accordance with Section 9.3.

(b) To designate agents to carry out responsibilities
relating to the Plan, other than fiduciary responsibilities.

(c) To employ such legal, actuarial, medical, accounting,
clerical, administrative and ministerial and other assistance as it may deem
appropriate in carrying out the provisions of this Plan, including one or more
persons to render advice with regard to any responsibility any Named Fiduciary
or any other fiduciary may have under the Plan.

(d) To establish rules and regulations from time to time
for the conduct of the Committee's business and the administration and
effectuation of this Plan.

(e) To administer, interpret, construe and apply this Plan
and the Plan's claims procedure and to decide all questions which may arise or
which may be raised under this Plan by any employee, Participant, former
Participant, Beneficiary, Alternate Payee or other person whatsoever, including
but not limited to all questions relating to eligibility to participate in the
Plan, the amount of service of any Participant, and the amount of benefits to
which any Participant or his Beneficiary may be entitled on or after the
Effective Date hereof.

(f) To determine the manner in which the assets of this
Plan, or any part thereof, shall be distributed.

(g) To direct the Trustee, in writing, from time to time,
to invest and reinvest the Trust Fund, or any part thereof, or to purchase,
exchange, or lease any property, real or personal, which the Committee may
designate. This shall include the right to direct the investment of all or any
part of the Trust in any one security or any one type of securities permitted
hereunder. Among the securities which the Committee may direct the Trustee to
purchase are "employer securities" as defined in Code section 409(1) or any
successor statute thereto.

(h) To select alternative investment options from which
Participants may select from in determining investment of

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<PAGE> 63
their Accounts pursuant to Section 4.6(b), and to establish rules and
procedures regarding such investment options.

(i) To satisfy accounting, auditing, record keeping,
insurance, bonding and reporting and disclosure requirements.

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

Any action taken in good faith by the Committee in the exercise of
authority conferred upon it by this Plan shall be conclusive and binding upon
the Participants and their Beneficiaries and any Alternate Payees. All
discretionary powers conferred upon the Committee shall be absolute, but shall
be exercised in a uniform and nondiscriminatory manner.

9.3 INVESTMENT MANAGER.

(a) The Committee, by action reflected in the minutes
thereof, may appoint one or more Investment Managers, as defined in Section
3(38) of ERISA, to manage all or a portion of the assets of the Plan.

(b) An Investment Manager shall discharge its duties in
accordance with applicable law and in particular in accordance with Section
404(a)(1) of ERISA.

(c) An Investment Manager, when appointed, shall have full
power to manage the assets of the Plan for which it has responsibility, and
neither the Company nor the Committee shall thereafter have any responsibility
for the management of those assets, except to the extent such power or
responsibility shall have been reserved to the Company or Committee in the
documents governing the relationship between or among the Plan, the Company and
the Investment Manager.

9.4 PERIODIC REVIEW.

(a) At periodic intervals, not less frequently than
annually, the Committee shall review the long-run and short-run financial needs
of the Plan and shall determine a funding policy

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<PAGE> 64
for the Plan consistent with the objectives of the Plan and the minimum funding
standards of ERISA, if applicable. In determining the funding policy the
Committee shall take into account, at a minimum, not only the long-term
investment objectives of the Trust Fund consistent with the prudent management
of the assets thereof, but also the short-run needs of the Plan to pay
benefits.

(b) All actions taken by the Committee with respect to the
funding policy of the Plan, including the reasons therefor, shall be fully
reflected in the minutes of the Committee.

9.5 COMMITTEE PROCEDURE.

(a) A majority of the members of the Committee as
constituted at any time shall constitute a quorum, and any action by a majority
of the members present at any meeting, or authorized by a majority of the
members in writing without a meeting, shall constitute the action of the
Committee.

(b) The Committee may designate certain of its members as
authorized to execute any document or documents on behalf of the Committee, in
which event the Committee shall notify the Trustee of this action and the name
or names of the designated members. The Trustee, Company, Participants,
Beneficiaries, and any other party dealing with the Committee may accept and
rely upon any document executed by the designated members as representing
action by the Committee until the Committee shall file with the Trustee a
written revocation of the authorization of the designated members.

9.6 COMPENSATION OF COMMITTEE.

(a) Members of the Committee shall serve without
compensation unless the Board of Directors shall otherwise determine. However,
in no event shall any member of the Committee who is an Employee receive
compensation from the Plan for his services as a member of the Committee.

(b) All members shall be reimbursed for any necessary or
appropriate expenditures incurred in the discharge of duties as members of the
Committee.

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<PAGE> 65

(c) The compensation or fees, as the case may be, of all
officers, agents, counsel, the Trustee, or other persons retained or employed
by the Committee shall be fixed by the Committee.

9.7 RESIGNATION AND REMOVAL OF MEMBERS. Any member of the
Committee may resign at any time by giving written notice to the other members
and to the Board of Directors effective as therein stated. Any member of the
Committee may, at any time, be removed by the Board of Directors.

9.8 APPOINTMENT OF SUCCESSORS.

(a) Upon the death, resignation, or removal of any
Committee member, the Board of Directors may appoint a successor.

(b) Notice of appointment of a successor member shall be
given by the Secretary of the Company in writing to the Trustee and to the
members of the Committee.

(c) Upon termination, for any reason, of a Committee
member's status as a member of the Committee, the member's status as a Named
Fiduciary shall concurrently be terminated, and upon the appointment of a
successor Committee member the successor shall assume the status of a Named
Fiduciary as provided in Section 9.1.

9.9 RECORDS. The Committee shall keep a record of all its
proceedings and shall keep, or cause to be kept, all such books, accounts,
records or other data as may be necessary or advisable in its judgment for the
administration of the Plan and to properly reflect the affairs thereof.

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<PAGE> 66

9.10 RELIANCE UPON DOCUMENTS AND OPINIONS.

(a) The members of the Committee, the Board of Directors,
the Company and any Employee of the Company delegated under the provisions
hereof to carry out any fiduciary responsible under the Plan ("Delegated
Fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any consultant,
or firm or corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee. The
members of the Committee, the Board of Directors, the Company and any Delegated
Fiduciary shall not be liable in any manner whatsoever for anything done or
action taken or suffered in reliance from any such consultant or firm or
corporation which employs one or more consultants, trustee, or counsel.

(b) Any and all such things done or actions taken or
suffered by the Committee, the Board of Directors, the Company and any
Delegated Fiduciary shall be conclusive and binding on all Employees,
Participants, Beneficiaries, Alternate Payees and any other persons whomsoever,
except as otherwise provided by law.

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

9.11 REQUIREMENT OF PROOF. The Committee or the Company may, in
its (or their) sole discretion, require satisfactory proof of any matter under
this Plan from or with respect to any Employee, Participant, Beneficiary or
Alternate Payee, and no benefits under this Plan need be paid until the
required proof shall be furnished.

9.12 RESERVED FOR PLAN NOTIFICATIONS.

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9.13 MULTIPLE FIDUCIARY CAPACITY. Any person or group of persons
may serve in more than one fiduciary capacity with respect to the Plan.

9.14 LIMITATION ON LIABILITY.

(a) Except as provided in Part 4 of Title I of ERISA,
neither the Company, the Board of Directors (or any member thereof), nor the
Committee (or any member thereof) shall be subject to any liability with
respect to his duties under the Plan unless he or it acts fraudulently or in
bad faith.

(b) Neither the Company, the Board of Directors (or any
member thereof) nor the Committee (or any member thereof) shall be liable for
any breach of fiduciary responsibility resulting from the act or omission of
any other fiduciary or any person to whom fiduciary responsibilities have been
allocated or delegated, except as provided in Part 4 of Title I of ERISA.

(c) Neither the Company, the Board of Directors (or any
member thereof), the Committee (or any member thereof), nor the Trustee or any
Investment Manager shall be liable to the extent relief from liability is
provided pursuant to Section 404(c) of ERISA.

(d) The Company in this Plan document does not intend to
create additional fiduciary liability, or to characterize actions or
responsibilities as fiduciary in nature, beyond that required by ERISA or other
applicable law.

9.15 INDEMNIFICATION.

(a) To the extent permitted by law, the Company hereby
indemnifies each member of the Board of Directors and the Committee, and any
other Employee of the Company with duties under the Plan, against expenses
(including any amount paid in settlement) reasonably incurred by him in
connection with any claims against him by reason of his conduct in the
performance of his duties under the Plan, except in relation to matters as to
which he acted fraudulently or in bad faith in the performance of such duties.
The preceding right of indemnification shall pass to the estate of such a
person.

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(b) The preceding right of indemnification shall be in
addition to any other right to which the Board of Directors or Committee member
or other person may be entitled as a matter of law or otherwise.

9.16 ALLOCATION OF FIDUCIARY RESPONSIBILITY.

(a) Section 405(c) of ERISA permits the division,
allocation and delegation among Plan fiduciaries of the fiduciary
responsibilities owed to the Plan Participants and Beneficiaries. Under this
concept, each fiduciary, including a Named Fiduciary, is accountable only for
its own functions, except to the extent of his co-fiduciary liability under
Section 405 of ERISA. It is the intent of the Company in establishing this
Plan to comply with Section 405(c) and to have the limitation on liability set
forth in Section 405(c)(2) of ERISA apply to the maximum extent allowed by law.

(b) Pursuant to Section 405(c) of ERISA, the authority to
control and manage the operation and administration of the Plan is allocated to
the Committee. Except to the extent expressly provided to the contrary in this
Plan document, and the Trust Agreement, the responsibilities allocated to the
Committee include:

(i) responsibilities identified as Committee
authority and powers in Section 9.2(a) - (j); and

(ii) responsibilities identified elsewhere in this
Plan document as applicable to the Committee.

(c) The Board of Directors is allocated the following
responsibilities, acting with the advice and assistance of the Committee:

(i) Appointing the Trustee;

(ii) Adopting Plan amendments;

(iii) Determining the amount of Company
Contributions;

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(iv) Determining whether to terminate the Plan or
suspend contributions thereto;

(v) Determining which Affiliated Companies shall
participate in the Plan, and the conditions on which any such Affiliated
Company shall participate;

(vi) Appointing members of the Committee;

(vii) Determining the form of Company
Contributions; and

(viii) Performing those duties specifically
allocated to it elsewhere in this Plan document.

(d) The Trustee shall have only those responsibilities
which have been specifically allocated to it under this Plan document and
related Trust Agreement, plus any "trustee responsibilities", under Section
405(c) of ERISA, which may not legally be allocated to another person or
fiduciary. Any Investment Manager appointed pursuant to Section 9.3 may be
granted exclusive authority and discretion to manage and control all or any
portion of the assets of the Plan, subject to such limitations as may be
provided in the documents governing the relationship between or among the Plan,
the Company (if applicable) and the Trustee or Investment Manager.

9.17 PROHIBITION AGAINST CERTAIN ACTIONS.

(a) To the extent prohibited by law, in administering this
Plan the Committee shall not discriminate in favor of any class of employees
and particularly it shall not discriminate in favor of Highly Compensated
Employees.

(b) The Committee shall not cause the Plan to engage in
any transaction that constitutes a nonexempt Prohibited Transaction under Code
section 4975(c) or Section 406(a) of ERISA.

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discharge their fiduciary duties in accordance with applicable law, and in
particular, in accordance with the standards of conduct contained in Section
404 of ERISA.

9.18 BONDING AND INSURANCE.

(a) Except as provided in Section 412 of ERISA, as may be
required under any other applicable law, or as may be required by the Committee
in its sole discretion, no bond or other security shall be required by any
member of the Committee, or any other fiduciary under this Plan.

(b) For purposes of satisfying its indemnity obligations
under Section 9.15, the Company may (but need not) purchase and pay premiums
for one or more policies of insurance. However, this insurance shall not
release the Company of its liability under the indemnification provisions.

9.19 VOTING AND OTHER RIGHTS OF COMPANY STOCK.

(a) All voting rights of Company Stock held in the Trust
Fund shall be exercised in accordance with the following provisions:

(i) Each Participant (which term shall include,
for purposes of this Section 9.19, Beneficiaries and Alternate Payees having an
interest in an Account or fund holding Company Stock) shall be given the
opportunity to instruct the Trustee confidentially on a form prescribed and
provided by the Company as to how to vote those shares (including fractional
shares) of Company Stock allocated to his Account(s) under the Plan (directly
or indirectly through an interest in a Company Stock fund) on the date
immediately preceding the record date for the meeting of shareholders of the
Company. The Trustee shall not divulge to the Company the instructions of any
Participant. The Company may require verification of the Trustee's compliance
with such confidential voting instructions by an independent auditor elected by
the Company. The voting rights procedures set forth in this Section 9.19 shall
be construed and implemented in accordance with the provisions of Code section
409(e).

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<PAGE> 71

(ii) All Participants entitled to direct such
voting shall be notified by the Committee (or the Company, pursuant to its
normal communications with shareholders) of each occasion for the exercise of
these voting rights within a reasonable time (but not less than the time period
that may be required by any applicable state of federal law) before these
rights are to be exercised. The notification shall include all information
distributed by the Company to other shareholders regarding the exercise of such
rights.

(iii) The Participants shall be so entitled to
direct the voting of fractional shares (or fractional rights to shares).
However, the Committee may, to the extent possible, direct the Trustee to vote
the combined fractional shares (or fractional rights to shares) so as to
reflect the aggregate direction of all Participants giving directions with
respect to fractional shares (or fractional rights to shares).

(iv) In the event that a Participant shall fail to
direct the Trustee, in whole or in part, as to the exercise of voting rights
arising under any Company Stock allocated to his Account, then these voting
rights, together with voting rights as to shares of Company Stock which have
not been allocated, shall be exercised by the Trustee in the same proportion as
the number of Shares of Company Stock for which the Trustee has received
direction in such matter (e.g., to vote for, against or abstain from voting on
a proposal, or to grant or withhold authority to vote for a director or
directors), and the Trustee shall have no discretion in such matter; provided,
however, that any shares allocated to Participants' TRASOP Accounts as to
which Participants fail to direct the Trustee shall not be voted, and the
Trustee shall have no discretion in such matter.

(v) Except as provided in paragraph (b) below,
all rights (other than voting rights) of Company Stock held in the Trust Fund
shall be exercised in the same manner and to the same extent as provided above
with respect to the voting rights of the Company Stock, subject to the rules
prescribed by the Committee, which rules, among other matters, may prescribe
that no action shall be taken with respect to shares as to which no direction
is received from Participants. The Trustee shall have no discretion with
respect to the exercise of any such rights.

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<PAGE> 72

(vi) Neither the Committee nor the Trustee shall
make any recommendation to any Participant regarding the exercise of the
Participant's voting rights or any other rights under the provisions of this
Section 9.19, nor shall the Committee or Trustee make any recommendation as to
whether any such rights should or should not be exercised by the Participant.

(b) All responses to tender and exchange for Company Stock
offers shall be made in accordance with the following provisions:

(i) Each Participant shall be given the
opportunity, to the extent that shares of Company Stock are allocated to his
Account, to direct the Trustee in writing as to the manner in which to respond
to a tender or exchange offer with respect to Company Stock, and the Trustee
shall respond in accordance with the instructions so received. The Trustee
shall not divulge to the Company the instructions of any Participant. The
Committee shall utilize its best efforts to timely distribute or cause to be
distributed to each Participant such information as will be distributed to
shareholders of the Company in connection with any such tender or exchange
offer, together with a form addressed to the Trustee requesting confidential
instructions on whether or not such shares will be tendered or exchanged. If
the Trustee shall not receive timely direction from a Participant as to the
manner in which to respond to such a tender or exchange offer, the Trustee
shall not tender or exchange any shares of Company Stock with respect to which
such Participant has the right of direction, and the Trustee shall have no
discretion in such matter.

(ii) Unallocated shares of Company Stock and
shares of Company Stock held by the Trustee pending allocation to Participants'
Accounts shall be tendered or exchanged (or not tendered or exchanged) by the
Trustee in the same proportion as shares with respect to which Participants
have been given the opportunity to direct the Trustee pursuant to paragraph (i)
above are tendered or exchanged, and the Trustee shall have no discretion in
such matter.

9.20 PLAN EXPENSES.

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<PAGE> 73

(a) Except as provided in Section 9.20(b), all expenses
incurred in the establishment, administration and operation of the Plan,
including but not limited to the expenses incurred by the members of the
Committee in exercising their duties, to the extent these expenses are not paid
by the Company, shall be charged to the Trust Fund and accounted for pursuant
to the provisions of Article VI.

(b) Costs or expenses which are particular to a specific
asset or group of assets in the Trust Fund, such as interest and brokerage
charges which are included in the cost of securities purchased by the Trustee
(or charged to proceeds in the case of sales), as determined by the Committee,
shall be charged or allocated in a fair and equitable manner to the Accounts,
subaccounts or funds to which those assets are allocated pursuant to rules
prescribed by the Committee.

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ARTICLE X

MERGER OF COMPANY: MERGER OF PLAN

10.1 EFFECT OF REORGANIZATION OR TRANSFER OF ASSETS. In the event
of a consolidation, merger, sale, liquidation, or other transfer of the
operating assets of the Company to any other company, the ultimate successor or
successors to the business of the Company shall automatically be deemed to have
elected to continue this Plan in full force and effect, in the same manner as
if the Plan had been adopted by resolution of its board of directors, unless
the successor(s), by resolution of its board of directors, shall elect not to
so continue this Plan in effect, in which case the Plan shall automatically be
deemed terminated as of the applicable effective date set forth in the board
resolution.

10.2 MERGER RESTRICTION. Notwithstanding any other provision in this
Article, this Plan shall not in whole or in part merge or consolidate with, or
transfer its assets or liabilities to any other plan unless each affected
Participant in this Plan would receive a benefit immediately after the merger,
consolidation, or transfer (if the Plan then terminated) which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation, or transfer (if the Plan had then
terminated). Subject to the foregoing, merger of this Plan and its related
Trust with, transfer of some or all of the assets of this Plan to, or receipt
by this Plan or Trust of assets from another qualified plan or trust, including
another plan or trust maintained by the Company or an Affiliated Company, is
expressly authorized.

10.3 ACCOUNTING FOR ASSETS TRANSFERRED FROM OTHER PLANS. In the
event that assets are transferred to this Plan from another qualified plan in a
plan-to-plan transfer, such assets will be accounted for separately to the
extent required to preserve optional forms of benefits or other attributes of
the transferor plan as may be required by law or as may be determined by the
Committee to be desirable.

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ARTICLE XI

PLAN TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS

11.1 PLAN TERMINATION.

(a) Subject to the following provisions of this Section
11.1, the Company may terminate the Plan and the Trust Agreements at any time
by an instrument in writing executed in the name of the Company by an officer
or officers duly authorized to execute such an instrument, and delivered to the
Trustee. The Company expressly disavows any contractual obligation, implied or
otherwise, to continue this Plan.

(b) The Plan and Trust Agreements may terminate if the
Company merges into any other corporation, if as the result of the merger the
entity of the Company ceases, and the Plan is terminated pursuant to the rules
of Section 10.1.

(c) Upon and after the effective date of the termination,
the Company shall not make any further contributions under the Plan and no
contributions need be made by the Company applicable to the Plan Year in which
the termination occurs, except as may otherwise be required by law.

(d) The Vested Percentage of all affected Participants in
the balances in their Accounts accrued to the date of termination of the Plan,
to the extent funded as of the date of termination, shall automatically become
one hundred percent (100%) as of that date.

11.2 DISCONTINUANCE OF CONTRIBUTIONS.

(a) The Company by resolution of its Board of Directors
may discontinue contributions to the Plan at any time and for any reason in the
Board's sole discretion. Upon and after the effective date of this
discontinuance, the Company shall make no further Company contributions under
the Plan and no Company contributions need be made by the Company with respect
to the Plan Year in which the discontinuance occurs, except as may otherwise be
required by law.

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(b) The discontinuance of Company contributions on the
part of the Company shall not terminate the Plan as to the funds and assets
then held by the Trustee, or operate to accelerate any payments of
distributions to or for the benefit of Participants, Beneficiaries or Alternate
Payees, and the Trustee shall continue to administer the Trust Fund in
accordance with the provisions of the Plan until all of the obligations under
the Plan shall have been discharged and satisfied.

(c) However, if this discontinuance of Company
contributions shall cause the Plan to lose its status as a qualified plan under
Code section 401(a), the Plan shall be terminated in accordance with the
provisions of this Article XI.

(d) On and after the effective date of a complete
discontinuance of Company contributions, as defined in Treasury Regulation
Section 1.411(d), the Vested Percentage of all affected Participants in the
balances in their Accounts accrued to that date, to the extent funded as of
that date, shall automatically become one hundred percent (100%) as of that
date.

11.3 RIGHTS OF PARTICIPANTS. In the event of the termination of the
Plan, for any cause whatsoever, all assets of the Plan, after payment of
expenses, shall be used for the exclusive benefit of Participants and their
Beneficiaries and no part thereof shall be returned to the Company, except as
provided in Section 4.7 of this Plan or as otherwise permitted by law.

11.4 TRUSTEE'S DUTIES ON TERMINATION.

(a) Upon termination of the Plan, the Committee shall
determine whether to continue the Trust, to distribute the assets of the Trust
to Participants, Beneficiaries and Alternate Payees to transfer the assets in
the Trust to another qualified plan maintained by the Company, or to take other
action consistent with applicable law.

(b) If so directed by the Committee upon termination of
this Plan, the Trustee shall proceed as soon as possible to reduce all of the
assets of the Trust Fund to cash and/or common stock and other securities in
such proportions as the Committee

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shall determine (after approval by the Internal Revenue Service, if necessary
or desirable, with respect to any portion of the assets of the Trust Fund held
in common stock or securities of the Company). After first deducting the
estimated expenses for liquidation and distribution chargeable to the Trust
Fund, and after setting aside a reasonable reserve for expenses and liabilities
(absolute or contingent) of the Trust, the Committee shall make the allocations
required under Article VI, where applicable, with the same effect as though the
date of completion of liquidation were an Anniversary Date of the Plan.
Following these allocations, the Trustee shall promptly, after receipt of
appropriate instructions from the Committee, distribute in accordance with such
instructions to each former Participant, or Beneficiary or Alternate Payee, a
benefit equal to the amount credited to his Accounts as of the date of
completion of the liquidation.

(c) The Trustee and the Committee shall continue to
function as such for such period of time as may be necessary for the winding up
of this Plan and for the making of distributions in accordance with the
provisions of this Plan.

11.5 PARTIAL TERMINATION.

(a) In the event of a partial termination of the Plan
within the meaning of Code section 411(d)(3), the Vested Percentage of
affected Participants in the balances in their Accounts, as of the date of the
partial termination, shall become one hundred percent (100%) as of that date.

(b) That portion of the assets of the Plan affected by the
partial termination shall be used exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part thereof shall otherwise be
applied.

(c) With respect to Plan assets and Participants affected
by a partial termination, the Committee and the Trustee shall follow the same
procedures and take the same actions prescribed in this Article XI in the case
of a total termination of the Plan.

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11.6 FAILURE TO CONTRIBUTE. The failure of the Company to
contribute to the Trust in any year, if contributions are not required under
the Plan for that year, shall not constitute a complete discontinuance of
contributions to the Plan.

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ARTICLE XII

APPLICATION FOR BENEFITS

12.1 APPLICATION FOR BENEFITS; CLAIMS PROCEDURE. The Committee may
require any person claiming benefits under the Plan to submit an application
therefor, together with such documents and information as the Committee may
require. In the case of any person suffering from a disability which prevents
the claimant from making personal application for benefits, the Committee may,
in its discretion, permit another person acting on his behalf to submit the
application.

12.2 ACTION ON APPLICATION.

(a) Within ninety (90) days following receipt of an
application and all necessary documents and information, the Committee's
authorized delegate reviewing the claim shall furnish the claimant with written
notice of the decision rendered with respect to the application.

(b) In the case of a denial of the claimant's application,
the written notice shall set forth:

(i) The specific reasons for the denial, with
reference to the Plan provisions upon which the denial is based;

(ii) A description of any additional information
or material necessary for perfection of the application (together with an
explanation why the material or information is necessary); and

(iii) An explanation of the Plan's claim review
procedure.

(c) A claimant who wishes to contest the denial of his
application for benefits or to contest the amount of benefits payable to him
shall follow the procedures for an appeal of benefits as set forth in Section
12.3 below, and shall exhaust such administrative procedures prior to seeking
any other form of relief.

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12.3 APPEALS.

(a) (i) A claimant who does not agree with the
decision rendered with respect to his application may appeal the decision to
the Committee.

(ii) The appeal shall be made, in writing, within
sixty-five (65) days after the date of notice of the decision with respect to
the application.

(iii) If the application has neither been approved
nor denied within the ninety (90) day period provided in Section 12.2 above,
then the appeal shall be made within sixty- five (65) days after the expiration
of the ninety (90) day period.

(b) The claimant may request that his application be given
full and fair review by the Committee. The claimant may review all pertinent
documents and submit issues and comments in writing in connection with the
appeal.

(c) The decision of the Committee shall be made promptly,
and not later than sixty (60) days after the Committee's receipt of a request
for review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as possible, but
not later than one hundred twenty (120) days after receipt of a request for
review.

(d) 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 the pertinent Plan
provisions upon which the decision is based.

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ARTICLE XIII

LIMITATIONS ON ANNUAL ADDITIONS

13.1 MAXIMUM ANNUAL ADDITIONS. The Annual Additions of a Participant
shall not exceed the maximum permissible amount specified in Code section
415(c)(1).

13.2 EFFECT OF PARTICIPATION IN OTHER COMPANY PLANS.

(a) If a Participant in this Plan is also a Participant in
another defined contribution plan maintained by the Company, the aggregate
Annual Additions of the Participant under this Plan and such other plan(s)
shall not exceed the maximum permissible amount specified in Code section
415(c)(1). In order to avoid having the aggregate Annual Additions exceed the
limit, the Participant's Elective Deferrals under the Science Applications
International Corporation Cash or Deferred Arrangement ("CODA") shall be
limited. If limitation (down to zero) of such Elective Deferrals does not
sufficiently reduce the Annual Additions to come within the limit, allocations
of the Company Contributions to the Participant under Company retirement plans
shall be reduced in the following order:

(i) Additional Company Contributions under the
CODA;

(ii) Forfeitures under the Company's Employee
Stock Ownership Plan ("ESOP");

(iii) Company Contributions under the ESOP;

(iv) Forfeitures under the Company's Profit
Sharing Retirement Plan (Profit Sharing Plan);

(v) Company Contributions under the Profit
Sharing Plan;

(vi) Forfeitures under the Company's Profit
Sharing Retirement Plan II (Profit Sharing Plan II); and

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(vii) Company Contributions under the Profit
Sharing Retirement Plan II.

To the extent allocations to a Participant are reduced under
subsections (i)-(vii) above, such reduced amounts shall be allocated and
reallocated to other Participants in the applicable Plan.

If as a result of (i) forfeitures, (ii) a reasonable error in
estimating a Participant's Annual Compensation, (iii) a reasonable error in
determining the amount of Elective Deferrals [within the meaning of Code
section 402(g)(3)] that may be made with respect to any individual under the
limits of Code section 415, or (iv) under other limited facts and circumstances
that the Commissioner of Internal Revenue finds justify the rules set forth in
this subsection 13.2(a), the Annual Additions under the terms of this Plan and
other retirement plans of the Company would cause the limitations of Code
section 415 applicable to that Participant to be exceeded, the excess amounts
shall not be deemed Annual Additions if Elective Deferrals within the meaning
of Code section 402(g)(3) are distributed to the Participant under the terms of
the CODA. Such distributed amounts shall be disregarded for purposes of Code
section 402(g) and the average deferral percentage test of Code section
401(k)(3).

(b) If a Participant in this Plan is also a Participant in
a defined benefit plan maintained by the Company, the sum of the Defined
Contribution Plan Fraction (as defined in Code section 415(e)(3)) and the
Defined Benefit Plan Fraction (as defined in Code section 415(e)(2)) shall not
exceed 1.0. The Participant's benefit under such defined plan shall be
reduced, as necessary to satisfy the requirement of the preceding sentence.

13.3 INCORPORATION BY REFERENCE OF CODE SECTION 415. In order to
ensure compliance with Code section 415, the Plan hereby incorporates said
Section by reference as though it were set out as part of this Plan. In
applying Section 415 to this Plan, the Plan shall include each grandfather or
transition rule provided by such Section or any law amending such Section, in
order to allow the largest benefit otherwise payable hereunder, or under other
plans maintained by the Company, to be paid.

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13.4 NO CONTRACTUAL RIGHT TO EXCESS CONTRIBUTIONS. If, in order to
comply with the limitations of this Article XIII, it becomes necessary to
reduce a Participant's Account, to reduce or reallocate amounts previously
allocated to such Account, or otherwise, such action(s) may be taken by the
Committee and Trustee free of any contractual obligation to the Participant (or
Beneficiary) affected based on prior Account balances or allocations.

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ARTICLE XIV

RESTRICTION ON ALIENATION; PARTICIPANT LOANS

14.1 GENERAL RESTRICTIONS AGAINST ALIENATION. Except as otherwise
provided by law and as otherwise provided by Section 14.2:

(a) The interest of any Participant, Beneficiary or
Alternate Payee in the income, benefits, payments, claims or rights hereunder,
or in the Trust Fund shall not in any event be subject to sale, assignment,
hypothecation, or transfer. Each Participant, Beneficiary or Alternate Payee
is prohibited from anticipating, encumbering, assigning, or in any manner
alienating his or her interest under the Trust Fund, and is without power to do
so, except as may otherwise be provided for in the Trust Agreement. The
interest of any Participant, Beneficiary or Alternate Payee shall not be liable
or subject to his debts, liabilities, or obligations, now contracted, or which
may be subsequently contracted. The interest of any Participant, Beneficiary
or Alternate Payee shall be free from all claims, liabilities, bankruptcy
proceedings, or other legal process now or hereafter incurred or arising; and
the interest or any part hereof, shall not be subject to any judgment rendered
against the Participant, Beneficiary or Alternate Payee.

(b) In the event any person attempts to take any action
contrary to this Article XIV, that action shall be void and the Company, the
Committee, the Trustees and all Participants, their Beneficiaries and Alternate
Payees, may disregard that action and are not in any manner bound thereby, and
they, and each of them separately, shall suffer no liability for any disregard
of that action, and shall be reimbursed on demand out of the Trust Fund for the
amount of any loss, cost or expense incurred as a result of disregarding or of
acting in disregard of that action.

(c) The preceding provisions of this Section 14.1 shall be
interpreted and applied by the Committee in accordance with the requirements of
Code section 401(a)(13) as construed and interpreted by authoritative judicial
and administrative rulings and regulations.

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14.2 NONCONFORMING DISTRIBUTIONS UNDER COURT ORDER. Benefits may be
paid to an Alternate Payee pursuant to a qualified domestic relations order, as
defined in Code sections 401(a)(13) and 414(p).

In the event that the Plan receives a domestic relations order, the
Committee or its delegate shall promptly notify the Participant and any
Alternate Payee (i.e., spouse, former spouse, child or other dependent of a
Participant who is recognized by a domestic relations order as having a right
to receive all, or a portion of, the benefits payable under the Plan with
respect to such participant) of the receipt of such order and the Plan's
procedures for determining the qualified status of such orders, and within a
reasonable period of time after receipt of such order, the Committee shall
determine whether such order is a qualified domestic relations order and notify
the Participant and each Alternate Payee of such determination. In determining
the qualified status of a domestic relations order and in administering
distributions under such qualified orders, the committee shall follow the
following procedures:

(a) When the Plan receives a domestic relations order
affecting Plan benefits, the Secretary of the Committee shall promptly notify
each person specified in the order as entitled to benefits under the Plan
(using the address(es) included in the domestic relations order) of the Plan
procedure as set forth herein (and as supplemented, if necessary, by Committee
procedures).

(b) The Plan shall permit an alternate payee to designate
a representative for receipt of copies of notices that are sent to the
Alternate Payee with respect to a domestic relations order.

(c) The Committee shall review any domestic relations
order to determine if it satisfies the requirements of being a qualified
domestic relations order. In making such determination, the Committee may seek
the advice of legal counsel to the Plan and may rely upon the legal opinion of
such counsel in determining the qualified status of domestic relations orders
and appropriate measures to resist or implement such orders. The

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Committee may, but need not, enter an appearance on behalf of the Plan in the
domestic relations lawsuit, if any, and may pursue such legal remedies as may
be desirable for resisting unqualified orders or in modifying proposed orders.

(d) During any period in which the issue of whether a
domestic relations order is a qualified domestic relations order is being
determined by the Committee, by a court of competent jurisdiction, or
otherwise, the Committee shall segregate in a separate account in the Plan or
in an escrow account the amounts, if any, which would have been payable to the
alternate payee during such period if the order had been determined to be a
qualified domestic relations order. If, within eighteen (18) months it is
determined that the order is not a qualified domestic relations order or the
issue as to whether such order is a qualified domestic relations order is not
resolved, then the Committee shall pay the segregated amounts (plus any
interest thereon) to the person or persons who would have been entitled to such
amounts if there had been no order. Any determination that an order is a
qualified domestic relations order which is made after the close of the
aforementioned eighteen (18) month period shall be applied prospectively only,
should there be any undistributed benefits of the Participant to which the
order related.

(e) If the Committee or other fiduciary of the Plan acts
in accordance with the foregoing procedures in treating a domestic relations
order as being (or not being) a qualified domestic relations order or taking
action to segregate an account and ultimately make payment thereof in
accordance with subparagraph (d) above, then the Plan's obligations to the
Participant and each alternate payee shall be discharged to the extent of any
payment made pursuant to such act.

14.3 AUTHORIZED PARTICIPANT LOANS. The Committee may authorize a
loan from the Trust Fund to Participants (including, for this purpose, Suspended
Participants) pursuant to rules prescribed by the Committee. These rules shall
be designed to ensure that these Participant loans satisfy the requirements of
Code sections 4975(d)(1), 72(p), and any other provision of law that is, or may
become applicable. These rules shall provide that:

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<PAGE> 87

(a) The loans are available to all Participants on a
reasonably equivalent basis.

(b) The loans are not made available to Highly Compensated
Employees in amounts greater than the amounts made available for other
Employees. For this purpose, the rules prescribed by the Committee may
restrict the amount of the loan to a percentage of the Participant's Vested
Interest or to use different percentages depending upon the amount of the loan,
provided the percentages are applicable to all Participants. The Committee may
also prescribe rules pursuant to which an individual's Vested Interest that is
invested in Company Stock (or a fund within the Trust to which Company Stock is
allocated) may (or may not) be taken into account in determining the maximum
loan he may obtain.

(d) The loans are adequately secured. For this purpose,
the amount of the security must be at least equal to the amount of the loan.
The rules to be prescribed by the Committee may permit a Participant to use up
to fifty percent (50%) of his Vested Interest under the Plan or other qualified
employer plans (as such term is defined in Code section 72(p)(3)) as security
for the loan.

(e) If the loan, or a loan from another qualified
retirement plan maintained by the Company, is to be secured by a portion of the
Participant's Vested Interest under the Plan, the Participant and his spouse,
if any, must consent to the loan and the possible reduction in the Vested
Interest in the event of a setoff of the loan against the Vested interest as a
result of nonpayment of the loan. Such consent must be given in writing within
a ninety-day period before the Committee makes the loan. In the event the
Participant defaults on the loan and Participant's Vested Interest is security
for the loan, the Vested Interest will not be used to satisfy the loan
obligation prior to the earlier of the Participant's termination of employment
with the Company or an event resulting in a permissible distribution of his
Vested Interest under the Plan. In the event of default, the Company shall
offset the amount owed

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<PAGE> 88
by the Participant against any amounts owed by the Company to the Participant.

(f) The loan must state the date upon which the loan must
be repaid, which may not exceed five (5) years (except in the case of loans
used to acquire a dwelling unit which, within a reasonable time after the loan
is made, is to be used as the principal residence of the Participant), and the
loan must be repayable in substantially level payments, with payments not less
frequently than quarterly.

(g) In connection with the making of any loan to a
Participant pursuant to the provisions of this Section 14.3, the Participant
receiving such a loan may be required to execute such documents as may be
required by the Committee and/or Trustee.

(h) The amount of the loan may not exceed the lesser of:

(i) $50,000 (reduced by the excess of the highest
outstanding balance of loans from the Plan during the one-year period ending on
the date preceding the date on which such loan is made); or

(ii) One-half of the present value of the
Participant's Vested Interest in his Accounts. For purposes of this Section
14.3(h), the Participant's Vested Interest and outstanding loan balances in all
qualified employer plans (as such term is defined in Code section 72(p)(3)) of
the Company shall be aggregated to determine whether a loan shall be
permissible hereunder and the maximum permissible amount thereof.

The decision as to whether or not any Participant Loans shall be made under
this Section 14.3 shall be made in the sole discretion of the Committee, and
the Participant shall not have a contractual right to obtain a loan hereunder.

(i) In the event the Participant dies prior to
distribution of his Distributable Benefit, the amount payable to his
Beneficiary or spouse, as applicable, shall be reduced by the amount of the
security interest in the Participant's Vested

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<PAGE> 89
Interest held by the Plan by reason of a loan outstanding to such Participant.

(j) In addition to the foregoing, the loan rules
promulgated by the Committee shall include the following:

(i) The identify of the person or positions
authorized to administer the Participant loan program;

(ii) The procedures for applying for a loan;

(iii) The basis on which loans will be approved or
denied;

(iv) Limitations on the types and amounts of loans
offered;

(v) The procedure for determining a reasonable
rate of interest;

(iv) The types of collateral which may secure a
Participant loan; and

(vii) The events constituting default and the steps
that will be taken to preserve Plan assets in the event of such default.

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<PAGE> 90
ARTICLE XV

PLAN AMENDMENTS

15.1 AMENDMENTS. The Board of Directors may at any time, and from
time to time, amend the Plan by an instrument in writing executed in the name
of the Company by an officer or officers duly authorized to execute such
instrument, and delivered to the applicable Trustee. However, no amendment
shall be made at any time, the effect of which would be:

(a) To cause any assets of the Trust Fund to be used for
or diverted to purposes other than providing benefits to the Participants and
their Beneficiaries, and defraying reasonable expenses of administering the
Plan, except as provided in Section 4.7 or as otherwise permitted by law;

(b) To have any retroactive effect so as to deprive any
Participant or Beneficiary of any benefit to which he would be entitled under
this Plan if his employment were terminated immediately before the amendment;
or

15.2 RETROACTIVE AMENDMENTS. Notwithstanding any provisions of this
Article XV to the contrary, the Plan may be amended prospectively or
retroactively (as provided in Code section 401(b)) to make the Plan conform to
any provision of ERISA, any code provisions dealing with tax-qualified
employees' trusts, or any regulation under either.

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<PAGE> 91
ARTICLE XVI

TOP-HEAVY PROVISIONS

16.1 APPLICATION. If the Plan is or becomes top heavy in any Plan
Year, the provisions of this Article XVI will supersede any conflicting
provisions in the Plan.

16.2 CRITERIA. The Plan shall be top heavy for any Plan Year if any
of the following conditions exist:

(a) The Top-Heavy Ratio for the Plan exceeds 60% and this
Plan is not part of any Required Aggregation Group or Permissive Aggregation
Group of Plans.

(b) This Plan is part of a Required Aggregation Group of
plans, but not part of a Permissive Aggregation Group, and the Top-Heavy Ratio
for the group of plans exceeds 60%.

(c) This Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60%.

16.3 DEFINITIONS. For purposes of this Article XVI, the following
terms shall have the following meanings:

(a) Determination Date: With respect to any Plan Year,
(i) the Determination Date shall be the last day of the preceding Plan Year, or
(ii) in the case of the first Plan year of the Plan, the last day of such Plan
Year.

(b) Key Employee: Any Employee or former Employee (and
the Beneficiaries of such Employees) who, pursuant to the rules of Code section
416(i) and the Regulations thereunder, is or was:

(i) An officer of the Company having an annual
Compensation greater than 150% of the dollar limitation under Code section
415(c)(1)(A);

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<PAGE> 92

(ii) One of the ten Employees having annual
Compensation from the Company of more than the dollar limitation under Code
section 415(c)(1)(A), and owning (or considered as owning) under Code section
318 the largest interest in the Company;

(iii) A 5% Owner of the Company;

(iv) A 1% Owner of the company having Annual
Compensation from the Company of more than $150,000.

The determination period is the Plan Year containing the Determination Date and
the four preceding Plan Years.

(c) Permissive Aggregate Group: The Required Aggregation
Group of plans plus any other plan or plans of the Company that, when
considered as a group with the Required Aggregation Group, would continue to
satisfy the requirements of Code sections 401(a)(4) and 410, and which are
designated by the Company to constitute a Permissive Aggregate Group.

(d) Required Aggregation Group: (1) Each plan of the
Company in which a Key Employee is a Participant or was a Participant at any
time during the determination period (regardless of whether the Plan has
terminated) and (2) any other qualified plan of the Company that enables a plan
described in (1) to meet the requirements of Code sections 401(a)(4) or 410.

(e) Top-Heavy Ratio:

(i) If the Company maintains one or more defined
contribution plans (including any Simplified Employee Pension) and the Company
has not maintained any defined benefit plan that during the five-year period
ending on the Determination Date has or has had accrued benefits, the Top-Heavy
Ratio for this Plan alone or for the Required Aggregation Group or Permissive
Aggregation Group, as appropriate, is a fraction, the numerator of which is the
sum of the account balances of Key Employees as of the Determination Date
(including any part of any account balance distributed in the five-year period
ending on the Determination Date), and the denominator of which is the sum of
all account balances (including any part of any account balance

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<PAGE> 93
distributed in the five-year period ending on the Determination Date), both
computed in accordance with Code section 416 and regulations thereunder. Both
the numerator and denominator of the Top-Heavy Ratio are adjusted to reflect
any contributions not actually made as of the Determination Date, but which is
to be taken into account on that date under Code section 416 and regulations
thereunder.

(ii) If the Company maintains one or more defined
contribution plans (including any Simplified Employee Pension) and the Company
maintains or has maintained one or more defined benefit plans that during the
five-year period ending on the Determination Date has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum of account
balances under the aggregated defined contribution plan or plans for all Key
Employees determined in accordance with (1) above and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Determination Date, and the denominator of which is the sum
of the account balances under the aggregated defined contribution plan or plans
for all Participants determined in accordance with (1) above, and the present
value of accrued benefits under the defined benefit plan or plans for all
Participants as of the Determination Date, all determined in accordance with
Code section 416 and the regulations thereunder. The accrued benefits under a
defined benefit plan in both the numerator and denominator of the Top-Heavy
Ratio are adjusted for any distribution of an accrued benefit made in the
five-year period ending on the Determination Date. Solely for the purpose of
determining if the Plan, or any other plan included in a Required Aggregation
Group is top-heavy (within the meaning of Code section 416(g)), the accrued
benefit of an Employee other than a Key Employee shall be determined under (i)
the method, if any, that uniformly applies for accrual purposes under all plans
maintained by the Company and any Affiliated Companies or (ii) if there is no
such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rate of Code section
411(b)(1)(C).

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<PAGE> 94

(iii) For purposes of (1) and (2) above, the value
of account balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within or ends with
the twelve-month period ending on the Determination Date, except as provided in
Code section 416 and regulations thereunder for the first and second Plan Years
of a defined benefit plan. The account balances and accrued benefits of a
Participant (A) who is not a Key Employee but who was a Key Employee in a prior
year or (B) who has not been credited with at least one Hour of Service with
any Company maintaining the Plan at any time during the five-year period ending
on the Determination Date will be disregarded. The calculation of the
Top-Heavy Ratio, and the extent to which distributions, rollovers and transfers
are taken into account, will be made in accordance with Code section 416 and
regulations thereunder. Voluntary deductible contributions will not be taken
into account in computing the Top-Heavy Ratio. When aggregating plans, the
value of account balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same calendar year.

(iv) For purposes of establishing the present
value in order to compute the Top-Heavy Ratio any benefit shall be discounted
only for mortality and interest based on the interest rate that would be used
as of the date of distribution by the Pension Benefit Guaranty Corporation to
determine the present value of a lump-sum distribution on plan termination.

(f) Valuation Date: The date described in Section 16.2 as
of which Account balances or accrued benefits are valued for purposes of
calculating the Top-Heavy Ratio.

16.4 ADJUSTMENT TO FRACTIONS. In any Plan Year in which the Plan is
Top-Heavy, in applying the limitations of Code section 415, the denominator of
the Defined Benefit Fraction shall be computed using 100% of the dollar
limitation instead of 125%, and the maximum aggregate amount used with respect
to the denominator of the Defined Contribution Fraction shall be computed by
using 100% of the dollar limitation instead of 125%.

16.5 VESTING REQUIREMENTS. If the Plan is determined to be a
Top-Heavy Plan in any Plan Year, then a Participant's right to

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<PAGE> 95
his Accounts derived from Company Contributions, determined as of the end of
such Plan Year, shall vest in accordance with the following schedule, unless a
more rapid vesting schedule is then in effect under the terms of the Plan:

<TABLE>
<CAPTION>
Years of Vesting Service Vesting Percentage
------------------------ ------------------
<S> <C>
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>

If the Plan ceases to be a Top-Heavy Plan in any Plan Year, then the vesting
schedule set forth in Article VII shall apply for such Plan Year with respect
to any portion of a Participant's Accounts that is forfeitable as of the
beginning of such Plan Year; provided, however, that a Participant with five or
more years of vesting service shall be given the option of remaining under the
vesting schedule set forth above.

16.6 MINIMUM CONTRIBUTION. If this Plan is a Top-Heavy Plan in any
Plan Year, the Company Contributions for such year for each "participant" (as
defined for the purpose of providing mandatory minimum contributions under
regulations) who is not a Key Employee shall not be less than three percent
(3%) of such participant's compensation. If, however, the Plan does not enable
a defined benefit plan to meet the requirements of Section 401(a)(4) or 410,
the Company Contributions shall not exceed that percentage of each
participant's compensation which is equal to the highest percentage of
compensation at which Company Contributions are made for the Plan Year for any
Key Employee (a) under the Plan or (b) if the Plan is part of an Aggregation
Group, under any defined contribution plan in such Group. The percentage of
compensation at which Company Contributions are made for a Key Employee shall
be computed without regard to compensation in excess of the ceiling on
includible compensation set forth in Section 16.7 of this Article XVI. For
Plan Years beginning before January 1, 1989, for purposes of this Section 16.6,
Company Contributions attributable to a salary reduction or similar arrangement
and contributions made pursuant to Chapter 21 of Title II of the Social
Security Act shall be disregarded. For

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<PAGE> 96
Plan Years beginning after December 31, 1988, Company Contributions
attributable to a salary reduction or similar arrangement made by Key Employees
shall be taken into account and those made by Employees other than Key
Employees shall be disregarded under this Section 16.6.

16.7 CEILING ON INCLUDIBLE COMPENSATION. If this Plan is determined
to be a Top-Heavy Plan in any Plan Year, then only the first $200,000 of a
Participant's Compensation shall be taken into account in determining the
allocation to the Accounts of such Participant for the Plan Year. The $200,000
limit shall automatically be adjusted for such Plan Years and to such extent as
is permitted by the Secretary of the Treasury.

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<PAGE> 97
ARTICLE XVII

MISCELLANEOUS

17.1 NO ENLARGEMENT OF EMPLOYEE RIGHTS.

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

(b) Nothing contained in this Plan or the Trust shall be
deemed to give any Employee the right to be retained in the employ of the
Company or to interfere with the right of the Company to discharge or retire
any Employee at any time.

(c) No Employee, or any other person, shall have any right
to or interest in any portion of the Trust Fund other than as specifically
provided in this Plan, and no Employee or any other person shall be entitled to
rely upon any representations, whether oral or in writing, including
representations made in the summary plan description, any prospectus or other
document, which is inconsistent with this Plan document.

17.2 MAILING OF PAYMENTS; LAPSED BENEFITS.

(a) All payments under the Plan shall be delivered in
person or mailed to the last address of the Participant or Beneficiary
furnished pursuant to Section 17.3 below.

(b) In the event that a benefit is payable under this Plan
to a Participant or Beneficiary and after reasonable efforts such individual
cannot be located for the purpose of paying the benefit during a period of
three consecutive years following the date payment would otherwise have been
made, the benefit shall be forfeited and treated like other forfeitures
pursuant to the provisions of Section 6.7. If the Participant or Participant's
beneficiary later makes a claim for the benefit, the Committee may decide, in
its sole discretion, whether and how to pay such claim.

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<PAGE> 98

(c) For purposes of this Section 17.2, the term
"Beneficiary" shall include any person entitled under Section 8.9 to receive
the interest of a deceased Participant or deceased designated Beneficiary and
shall also include an Alternate Payee.

(d) The Account of a Participant shall continue to be
maintained until the amounts in the Account are paid to the participant or his
Beneficiary. Notwithstanding the foregoing, in the event that the Plan is
terminated, the following rules shall apply:

(i) All Participants and Beneficiaries (including
Participants and Beneficiaries who have not previously claimed their benefits
under the Plan) shall be notified of their right to receive a distribution of
their interests in the Plan;

(ii) All Participants and Beneficiaries shall be
given a reasonable length of time, which shall be specified in the notice, in
which to claim their benefits;

(iii) All Participants (and their Beneficiaries)
who do not claim their benefits within the designated time period shall be
presumed to be dead. The Accounts of such Participants shall be forfeited at
such time. These forfeitures shall be disposed of according to rules
prescribed by the Committee, which rules shall be consistent with applicable
law. Alternatively the Committee may, but shall not be required to, deposit
such funds in an applicable state unclaimed property or similar fund, pursuant
to applicable state law.

(iv) The Committee shall prescribe such rules as
it may deem necessary or appropriate with respect to the notice deposit or
forfeiture rules stated above.

(e) Should it be determined that the preceding rules
relating to forfeiture of benefits upon Plan termination are inconsistent with
any of the provisions of the Code and/or ERISA, these provisions shall become
inoperative without the need for a Plan amendment and the Committee shall
prescribe rules that are consistent with the applicable provisions of the Code
and/or ERISA.

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<PAGE> 99

17.3 ADDRESSES. Each Participant shall be responsible for furnishing
the Committee with his correct current address and the correct current name and
address of his Beneficiary or beneficiaries.

17.4 NOTICES AND COMMUNICATIONS.

(a) All applications, notices, designations, elections,
and other communications from Participants shall be in writing, on forms
prescribed by the Committee and shall be mailed or delivered to the office
designated by the Committee, and shall be deemed to have been given when
received by that office.

(b) Each notice, report, remittance, statement and other
communication directed to a Participant, Beneficiary or Alternate Payee shall
be in writing and may be delivered in person or by mail. An item shall be
deemed to have been delivered and received by the Participant, Beneficiary or
Alternate Payee when it is deposited in the United States Mail with postage
prepaid, addressed to the Participant, Beneficiary or Alternate Payee at his
last address of record with the Committee.

17.5 REPORTING AND DISCLOSURE. The Plan Administrator shall be
responsible for the reporting and disclosure of information required to be
reported or disclosed by the Plan Administrator pursuant to ERISA or any other
applicable law.

17.6 GOVERNING LAW. All legal questions pertaining to the plan shall
be determined in accordance with the provisions of ERISA and the laws of the
State of California. All contributions made hereunder shall be deemed to have
been made in California.

17.7 INTERPRETATION.

(a) Article and 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. Unless the context clearly indicates otherwise, masculine gender
shall include the feminine, and the singular shall include the plural and the
plural the singular.

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<PAGE> 100

(b) The provisions of this Plan shall in all cases be
interpreted in a manner that is consistent with this Plan satisfying the
requirements of Code section 401(a).

17.8 WITHHOLDING FOR TAXES. Any payments out of the Trust Fund may
be subject to withholding for taxes as may be required by any applicable federal
or state law.

17.9 LIMITATION ON COMPANY, COMMITTEE AND TRUSTEE LIABILITY. Any
benefits payable under this Plan shall be paid or provided for solely from the
Trust Fund and neither the Company, the Committee nor the Trustee assume any
responsibility for the sufficiency of the assets of the Trust to provide the
benefits payable hereunder.

17.10 SUCCESSORS AND ASSIGNS. This Plan and the Trust established
hereunder shall inure to the benefit of, and be binding upon, the parties
hereto and their successors and assigns.

17.11 COUNTERPARTS. This Plan document may be executed in any number
of identical counterparts, each of which shall be deemed a complete original in
itself and may be introduced in evidence or used for any other purpose without
the production of any other counterparts.

17.12 NO IMPLIED RIGHTS OR OBLIGATIONS. The Company, in establishing
and maintaining this Plan as a voluntary and unilateral undertaking, expressly
disavows the creation of any rights in Employees, Beneficiaries or Alternate
Payees or any obligations on the part of the Company or the Committee, except
as expressly provided herein.

IN WITNESS WHEREOF, in order to record the adoption of this document,
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION has caused this instrument to be
executed by its duly authorized officer this ______ day of_____________, 19__.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
a Delaware Corporation

- 100 -
<PAGE> 101

By:
------------------------------------------
J. Dennis Heipt
Senior Vice President for Administration

- 101 -
<PAGE> 102

Amendments to Employee Stock Ownership Plan,
as approved by the SAIC Operating Committee
of the Board of Directors on:

November 3, 1994

1. Section 2.21 is hereby amended by deleting subsection
(b) thereof and relettering subsections (c) - (h) as (b) - (g), respectively.

2. Section 6.5 is hereby amended by deleting subsection
(c) thereof and substituting therefor the following:

"(c) Company contributions for a particular
Plan Year (as well as shares of Company Stock
released from the Suspense Account, as described in
Section 6.12 hereof, by reason of such Company
contributions), unadjusted for income, gain or loss,
which shall be allocated separately pursuant to
Section 6.8, shall be allocated to the Plan Accounts
of those Participants who (A) complete 850 or more
Hours of Service during the Plan Year; and (B)
either are employed by the Company on the last day of
the Plan Year or whose employment terminated during
the Plan Year as a result of death, retirement on or
after the Normal Retirement Date, Disability or
involuntary lay-off (other than for cause, as
determined by the Committee in its sole discretion)
("Eligible Participants") as follows:

(i) The Company in making
each Company Contribution shall indicate to which
Fringe Rate Group the Contribution is to be
allocated. The Company Contribution for each Fringe
Rate Group shall be allocated to Eligible
Participants in that Fringe Rate Group, pro rata,
according to each such Eligible Participant's
Compensation for the relevant Plan Year.

(ii) Company Contributions in
the form of Company Stock shall be allocated in the
same manner as cash Contributions in subsection (i)
above, based on the fair market dollar value of such
contributed Company Stock as determined under the
provisions of Section 6.6(b)(ii), unless a different
valuation method shall be required under applicable
Treasury Regulations.

(iii) In no event shall
amounts be allocated which would cause the limitation
on Annual Additions set forth in Article XIII to be
executed.

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<PAGE> 103
(iv) Allocations of Company
Contributions for a Plan Year shall be made on or
before September 15 of the following Plan Year, or on
a more frequent basis, as may be determined by the
Committee in its discretion.

(v) The determination of
which Fringe Rate Group a particular Employee or
group of Employees is in shall be based on a
designation made by the Chief Operating Officer,
Chief Financial Officer, Controller or Treasurer of
the Company. Such designation of any such Employee
or group, and the effective date of such designation
shall be communicated in writing to the Committee."

3. Section 6.7 is amended by deleting subsection (a)
thereof and substituting therefor the following:

"(a) Forfeitures shall be allocated
to the Plan Accounts of all Eligible Participants (as
defined in Section 6.5) for the Plan Year preceding
the Plan Year in which the forfeitures are allocated
in the proportion that the Compensation of each such
Eligible Participant (regardless of Fringe Rate
Group) bears to the total Compensation of all such
Eligible Participants for the Plan Year ending
immediately prior to the date on which the
forfeitures are allocated."

4. Section 8.5 is amended by adding the following phrase
at the end of subsection (a) thereof:

"and is an Eligible Participant (as defined in
Section 6.5 (c))."

5. A new Section 8.16 is added to read as follows:

"8.16 In-Service Withdrawal. A Participant may,
under rules established by the Committee, withdraw
all or a part of his Distributable Benefit after
attaining age sixty-two (62), subject to the
following conditions:

(a) Only one such withdrawal
(whether a partial or complete withdrawal) shall be
permitted.

(b) The Participant may receive the
withdrawal in cash or as a Company Stock distribution
(as described in Section 8.7(c)), as elected by the
Participant."

6. Section 13.2 is hereby amended by deleting
subsections (a)(vi) and (a)(vii).

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<PAGE> 104
July 3, 1996

1. Section 9.19(a)(iv) is amended in its entirety to read as
follows:

(iv) In the event that a Participant shall fail to
direct the Trustee, in whole or in part, as to the exercise of
voting rights arising under any Company Stock allocated to his
Account, then these voting rights, together with voting rights
as to shares of Company Stock which have not been allocated,
shall be exercised by the Trustee in the same proportion as
the number of Shares of Company Stock for which the Trustee
has received direction in such matter (e.g., to vote for,
against or abstain from voting on a proposal, or to grant or
withhold authority to vote for a director or directors), and
the Trustee shall have no discretion in such matter, except as
may be required by applicable law.

2. Section 9.19(a)(v) is amended by deleting the last sentence
thereof and substituting therefor the following:

"The Trustee shall have no discretion with respect to the
exercise of any such rights, except as may be required by
applicable law."

3. Sections 9.19(b)(I) and 9.19(b)(ii) are amended by
substituting a comma for a period at the end of each such section and adding
the following phrase at the end of each such section:

"except as may be required by applicable law."

October 2, 1996

1. Section 1.1 is amended by deleting the
phrase "Science Applications International Corporation
Employee Stock Ownership Plan" and substituting therefor the
phrase "Science Applications International Corporation
Employee Stock Retirement Plan."

2. Section 1.2 is amended in its entirety
to read as follows:

"Plan Purpose. This Plan is designed to constitute a
tax-qualified stock bonus plan within the meaning of
Code section 401(a)."

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<PAGE> 105
3. Section 2.16 is amended in its entirety
to read as follows:

"Company Stock. "Company Stock" shall mean Class A
Common Stock, par value $.01 per share ("Class A
Common Stock"), Class B Common Stock, par value $.05
per share ("Class B Common Stock"), and, unless the
context provides otherwise, other classes of stock
issued by the Company which constitute "qualifying
employer securities" (as that term is defined in
ERISA section 407(d)(5))."

4. Section 2.30 is amended by deleting the
first sentence thereof and substituting therefor the
following: "Reserved for Future Modifications."

5. Section 4.2 is amended by deleting the
first sentence thereof and substituting therefor the
following:

"The assets of the Plan shall be invested primarily
in (a) Class A Common Stock, except to the extent
that the Participant has instructed the Trustee to
make, and the Trustee has made, a valid election to
receive Class B Common Stock pursuant to the terms of
the Plan of Reorganization and Agreement of Merger
(the "1984 Plan of Reorganization") dated as of June
1, 1984, between the Company and the wholly-owned
subsidiary, Science Applications, Inc., in which
event the Committee or its delegate shall keep
records to reflect the number of shares of Class B
Common Stock allocated to each Participant's Plan
Account, and/or (b) other class(es) of Company
Stock."

6. Section 4.3(a) is amended in its
entirety to read as follows:

"Subject to the requirements and restrictions of this
Section 4.3, and subject also to the right of the
Company to amend or terminate this Plan or to suspend
or discontinue contributions to this Plan, as
hereinafter provided, for each Plan Year the Company
shall contribute to the Trust Fund an amount to be
determined by the Board of Directors in its
discretion."

7. Section 4.4 is amended in its entirety
to read as follows:

"The Company's contribution to the Trust Fund shall
be paid in cash, Company Stock, or such other
property as the Board of Directors may from time to
time determine."

4
<PAGE> 106
8. Section 4.9 is amended by deleting the
first sentence thereof and substituting therefor the
following:

"Acquisition or sale by the Plan of Company Stock or
other qualifying employer securities (as defined in
ERISA section 407(d)(5)) from or to a "disqualified
person," as defined in Code section 4975(e)(2), shall
be at a price which represents "adequate
consideration," as defined in ERISA section 3(18) or,
in the event such Company Stock or other qualifying
employer security is a marketable obligation, as
defined in ERISA section 407(e), at a price not less
favorable to the Plan than the price determined under
ERISA section 407(e)(1)."

9. Section 4.10 is deleted in its entirety.

10. Section 6.5(c) is amended by deleting
the parenthetical in the first sentence thereof.

11. Section 6.6(b)(ii)(B) is amended by
deleting the first sentence thereof and substituting therefor
the following:

"(B) If any Company Stock does not consist of
securities listed on a national securities exchange,
or traded on a regular basis, as determined by the
Company, in the over-the-counter market, the fair
market value of such stock shall be determined using
the Formula Price for such stock, if applicable, as
set forth in the Company's Certificate of
Incorporation (or, if no such Formula Price is
applicable, by a method established by the Company
consistent with applicable law) on the applicable
Valuation Date."

12. Section 6.6(b)(ii)(D) is deleted.

13. Section 6.7(b) is amended in its
entirety to read as follows:

"No forfeitures shall be allocated to any Alternate
Payee Account."

14. Section 6.7(f) is deleted.

15. Sections 6.12, 6.13, and 6.14 are
deleted.

16. Section 8.5(c) is amended by deleting
the third sentence thereof.

17. Section 8.7(b) is amended by deleting
the last sentence thereof.

18. Section 8.8(h) is deleted.

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<PAGE> 107
19. Section 8.13(c) is amended by deleting
the entire provision.

20. Section 13.2 is amended by deleting
subsections (a)(ii) and (a)(iii) and substituting therefor the
following:

"(ii) Forfeitures under the Company's Stock
Bonus Retirement Plan.

(iii) Company Contributions under the
Company's Stock Bonus Retirement Plan."

April 22, 1997

1. Section 6.7(b) is hereby amended in its entirety to
read as follows:

(b) No forfeitures shall be allocated to any
Alternate Payee Account.

2. Section 8.15(a)(iii) is hereby amended by
substituting the phrase "Code section 414(p)" for the phrase "Code section" in
the second sentence thereof.

<PAGE> 1
EXHIBIT 10.11

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

1995 STOCK OPTION PLAN

1. PURPOSE

Science Applications International Corporation (the "Company")
hereby establishes the Science Applications International Corporation 1995
Stock Option Plan (the "Plan"). The purpose of the Plan is to advance the
interests of the Company and its stockholders by providing a means by which the
Company and its Subsidiaries can attract and retain qualified key employees,
directors and consultants and provide such personnel with an opportunity to
participate in the increased value of the Company which their effort,
initiative and skill have helped produce.

2. DEFINITIONS

(a) "Board" shall mean the Board of Directors of the
Company.

(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.

(d) "Committee" shall mean the Company's Stock Option
Committee responsible for administering the Plan.

(e) "Employee/Optionee" shall mean an Optionee who is an
employee of the Company or any Subsidiary.

(f) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.

(g) "Exercise Price" shall mean the price per share at
which an Option may be exercised, as determined by the Committee and as
specified in the Optionee's option agreement.

(h) "Formula Price" shall mean the price per share of
Common Stock as established by the Board from time to time.

(i) "Option" shall mean an option to purchase Common
Stock granted pursuant to the Plan.

(j) "Optionee" shall mean any person who holds an Option
pursuant to the Plan.

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<PAGE> 2
(k) "Plan" shall mean this Science Applications
International Corporation 1995 Stock Option Plan, as it may be amended from
time to time.

(l) "Purchase Price" shall mean at any particular time
the Exercise Price times the number of shares for which an Option is being
exercised.

(m) "Subsidiary" as used in the Plan means any
corporation (other than the Company) 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.

3. ADMINISTRATION

(a) The Committee. The Plan shall be administered by the
Committee which shall consist of not less than two directors appointed by the
Board, each of whom shall satisfy the requirements of Rule 16b-3, as amended,
of the Exchange Act. No member of the Committee shall be liable for any action
or determination in respect thereto, if made in good faith. The Committee may
appoint a separate committee with respect to Optionees who are not subject to
Section 16 of the Exchange Act.

(b) Powers of the Committee. Subject to the provisions
of the Plan, the Committee shall have the authority, in its discretion and on
behalf of the Company:

(i) to grant Options;

(ii) to determine whether the Options granted are
intended to be incentive stock options or non-qualified stock
options;

(iii) to determine the Exercise Price per share of
Options to be granted;

(iv) to determine the individuals to whom, and the
time or times at which, Options shall be granted and the
number of shares for which an Option will be exercisable;

(v) to interpret the Plan;

(vi) to prescribe, amend, and rescind rules and
regulations relating to the Plan;

(vii) to determine the terms and provisions of each
Option granted and, with the consent of the Optionee, to
modify or amend each Option;

(viii) to accelerate or defer, with the consent of
the Optionee, the exercise date of any Option;

2
<PAGE> 3
(ix) with the consent of the Optionee, to reprice,
cancel and regrant, or otherwise adjust the Exercise Price of
an Option previously granted by the Committee; and

(x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.

(c) Committee Discretion. In exercising its authority,
the Committee shall have the broadest possible discretion and the Committee's
determinations under the Plan made in good faith shall be binding and
conclusive on Optionees and other persons claiming entitlements under the Plan.
In no event shall a Committee determination with respect to a particular
Optionee or provision of the Plan be binding with respect to any other Optionee
(even if similarly situated) nor with respect to any future determinations
regarding the same or other provisions of the Plan.

4. ELIGIBILITY

(a) General. The individuals who shall be eligible to
participate in the Plan and to receive Options hereunder shall be such key
employees, directors and consultants of the Company and its Subsidiaries as the
Committee shall from time to time determine. The Committee may designate one
or more directors who are not eligible for participation in the Plan for a
specified period of time. No Option shall be granted to any person who, at the
time the Option is granted, owns (including stock owned by application of the
constructive ownership rules of Section 425(d) of the Code) stock possessing
more than 10% of the total combined voting power or value of all classes of
stock of the Company or any Subsidiary.

(b) Incentive Stock Options. No Option which is
designated as an incentive stock option shall be granted to any person who, at
the time the Option is granted, is not an employee of the Company or a
Subsidiary. The aggregate fair market value (determined as of the time the
Option is granted) of the Common Stock with respect to which Options designated
as incentive stock options are exercisable for the first time by an employee
shall not exceed $100,000 during any calendar year (under all plans of the
Company or any Subsidiary which provide for the granting of an incentive stock
option).

5. STOCK SUBJECT TO THE PLAN

Options may be granted permitting the purchase of the
aggregate of not more than 12,000,000 shares of the Company's Common Stock,
subject to adjustment pursuant to Section 10 hereof. These shares may consist
either in whole or in part of shares of the Company's authorized but unissued
Common Stock or shares of the Company's authorized and issued Common Stock
reacquired by the Company and held in its treasury. If an Option granted under
this Plan is surrendered, expires or for any other reason ceases to be
exercisable in whole or in part, the shares which were subject to any such
Option but as to which the Option ceases to be exercisable shall be available
for Options to be granted under the Plan.

3
<PAGE> 4
6. STOCK OPTIONS

(a) Options. The Options granted pursuant to the Plan
may be "incentive stock options" within the meaning of Section 422 of the Code
or non-qualified stock options. Options designated to be incentive stock
options shall be designated as such in the option agreements evidencing such
Options.

(b) Option Agreements. Options shall be evidenced by
written option agreements between the Optionee and the Company in such form as
the Committee shall from time to time determine. No Option or purported Option
shall be a valid and binding obligation of the Company unless previously
granted by the Committee and evidenced in writing by such an option agreement.
If an option agreement is not executed by the Optionee and returned to the
Company within the time prescribed in the option agreement, the Option
evidenced thereby will be forfeited and the option agreement will be null and
void. Appropriate officers of the Company are hereby authorized to execute and
deliver option agreements in the name of the Company, as directed from time to
time by the Committee.

(c) Exercise Price. The Exercise Price at which Options
may be granted under the Plan shall be not less than one hundred percent (100%)
of the fair market value of the Common Stock on the day the Option is granted,
but may be less than the Exercise Price or Prices of previously granted
Options, whether in effect, canceled or expired. As long as the Company's
Common Stock is not listed on any national securities exchange or traded on a
regular basis (as determined by the Company's Board or a Committee of the Board
to which the Board has delegated the authority to make such determination) on
the over-the-counter market, fair market value may be taken as the Formula
Price as in effect at the date of grant.

(d) Date of Grant. The Committee shall, after it
approves the granting of an Option to a participant, cause the participant to
be notified of such action. The date on which the Committee approves the
granting of an Option shall be considered the date on which such Option is
granted.

(e) Terms of Exercise. The right to purchase shares
covered by any Option or Options under the Plan shall be exercisable only in
accordance with the terms and conditions of the grant to such Optionee. The
Committee may, in its discretion, provide that such Option or Options may be
exercised in whole or in part, in installments, cumulative or otherwise, for
any period or periods of time specified by the Committee of not more than ten
years from the date of the grant of the Option. Subject to the provisions of
Paragraph 9, that portion of an Option which is exercisable on an installment
basis may not be exercised prior to the expiration of the applicable
installment period.

(f) Non-Transferability. An Option granted under the
Plan may not be transferred except by will or the laws of descent and
distribution and, during the lifetime of the Optionee to whom granted, may be
exercised only by such Optionee or his conservator or other legal
representative.

4
<PAGE> 5
(g) Limit on Option Grants. In no event may any single
Optionee receive Option grants for more than 500,000 shares of Common Stock in
the aggregate.

7. EXPIRATION AND TERMINATION

(a) Expiration of Option. Each Option and all rights and
obligations thereunder shall, subject to the provisions of Paragraph 9, expire
on a date to be determined by the Committee, such date, however, in no event to
be later than ten (10) years from the date an Option is granted.

(b) Termination of Employment or Affiliation. Subject to
the provisions of Paragraph 9, that portion of an Option which is exercisable
on an installment basis may not be exercised unless the Optionee shall continue
in the employ or affiliation of the Company or any of its Subsidiaries during
the entire period to which such installment relates. Except as set forth below
in Paragraphs 7(c) through (e) or otherwise set forth in an option agreement,
all Options granted to an Optionee under this Plan shall terminate and no
longer be exercisable as of the date such Optionee ceases to be employed or
affiliated with the Company or any Subsidiary; provided, however, the Committee
in its discretion may extend the period of time that such Optionee may exercise
such Optionee's Options, but in no event may the Committee extend such period
of time beyond the expiration date of the Options or beyond ten (10) years from
the date of grant of such Options.

(c) Termination Due to Retirement or Permanent Total
Disability. In the event an Employee/Optionee's employment with the Company or
any Subsidiary shall terminate as the result of normal retirement, permanent
total disability or early retirement under the terms of a retirement or pension
plan maintained by the Company and in which such Employee/Optionee is a
participant, such Employee/Optionee may, at any time within ninety (90) days
after such termination of employment, exercise such Employee/Optionee's Options
to the extent that the Employee/Optionee was entitled to exercise them on the
date of such termination of employment, unless such Options would expire
pursuant to their terms at an earlier date, in which case such Options shall
remain exercisable only until the earlier expiration date.

(d) Death. If an Optionee dies while in the employ or
affiliation of the Company or of a Subsidiary without having fully exercised
such Optionee's Options, such Options may, within one (1) year of the
Optionee's death (or within such shorter period as may be specified in the
Option by the Committee), be exercised by the beneficiary designated pursuant
to Paragraph 8(c), or if there is no such surviving beneficiary, by the person
or persons to whom the Optionee's rights under the Option shall pass by will or
by the applicable laws of descent and distribution to the extent that such
deceased Optionee was entitled to exercise the Options on the date of death,
unless such Options would expire pursuant to their terms at an earlier date, in
which case such Options shall remain exercisable only until the earlier
expiration date.

(e) Leaves of Absence. An Employee/Optionee who is on a
leave of absence pursuant to the terms of the Company's Administrative Policy
No. B-11 "Unpaid Personal Leave of Absence" or any amended or replacement
policy thereof, shall not, during the period of any such absence be

5
<PAGE> 6
deemed, by virtue of such absence alone, to have terminated such
Employee/Optionee's employment with the Company or any Subsidiary except as the
Committee may otherwise expressly provide. Except as otherwise determined by
the Committee, or unless otherwise required by applicable law, unless such
Employee/Optionee is on a Medical Leave (as hereinafter defined), all rights
which such Employee/Optionee would have had to exercise Options granted
hereunder will be suspended during the period of such leave of absence. Upon
such Employee/Optionee's return to the Company or any Subsidiary, all rights to
exercise Options shall be restored to the extent such Options are exercisable
at that time. The Committee in its discretion may permit the exercise, while
on a leave of absence, of Options which would otherwise expire or may defer the
expiration date of such Options, but not beyond ten (10) years from their date
of grant. An Employee/Optionee who is on a Medical Leave shall have all rights
to exercise such Employee/Optionee's Options that such Employee/Optionee would
have had if such Employee/Optionee were not on a Medical Leave. For purposes
of this Paragraph 7(e), "Medical Leave" shall be defined as a leave of absence
for medical reasons which shall begin after ninety-one (91) consecutive
calendar days of total disability leave and shall remain in effect until the
earlier of a release by the attending physician for the Employee/Optionee to
return to work or until the termination of employment. In the case of
incentive stock options which would otherwise cease to be incentive stock
options during a leave of absence by virtue of the operation of Treasury
Regulations Section 1.421(7)(h)(2), the Committee, in its sole discretion, may
permit exercise of the incentive stock option while on such a leave of absence
or may permit conversion of such incentive stock option to a non-qualified
stock option with otherwise identical terms.

8. EXERCISE OF OPTIONS

(a) The Purchase Price shall be paid in full when the
Option is exercised. The Purchase Price may be paid in whole or in part in (i)
cash or (ii) whole shares of Common Stock of the Company evidenced by
negotiable certificates, valued at the Formula Price in effect on the date of
exercise; provided, however, that unless an exception is granted by the
Secretary of this Corporation, shares of Common Stock of the Company acquired
through the exercise of a stock option must have been owned by the Optionee
for at least six months before such shares of Common Stock may be used to pay
the Purchase Price. The Company or any Subsidiary shall be entitled to deduct
from other compensation payable to each Optionee any sums required by federal,
state or local tax law to be withheld with respect to the exercise of an Option
but, in the alternative, may require the Optionee or other person exercising
the Option to pay, or the Optionee or such other persons may pay, such sums to
the employer corporation at the time of such exercise. The Committee shall have
the authority in its discretion to allow withholding on exercise of an Option
to be satisfied by withholding from the shares to be issued upon the exercise
of the Option a number of shares, valued at the Formula Price in effect on the
date of exercise of the Option, equal in value to the withholding requirement.

(b) An Optionee shall have no rights as a shareholder of
the Company with respect to any shares for which his or her Option is
exercisable until the date of exercise of such Option and the issuance of a
stock certificate for such shares. No adjustment shall be made for dividends,
ordinary

6
<PAGE> 7
or extraordinary or whether in currency, securities or other property,
distributions, or other rights for which the record date is prior to the date
such stock certificate is issued.

(c) Each Optionee may name a beneficiary or beneficiaries
(who may be named contingently or successively) to whom the right to exercise
Options following the Optionee's death (as provided in Paragraph 7(d)) shall
pass. Each designation will revoke any prior designations by the same
Optionee, shall be on a form prescribed by the Committee, and shall be
effective only when filed by the Optionee in writing with the Committee during
the lifetime of the Optionee. In the absence of any such designation, the
right to exercise any unexercised Options following the death of the Optionee
shall pass to the person or persons to whom the Optionee's rights under the
Option pass by will or by the applicable laws of descent and distribution.

9. CHANGE IN CONTROL

Notwithstanding any provision of Paragraph 7 above to the
contrary but subject to the provisions of Paragraph 4(b) above, any Option
granted pursuant to the Plan shall, in the case of a Change In Control (as
hereinafter defined) of the Company, become fully exercisable as to all shares
of Common Stock to which it relates from and after the date of such Change In
Control. For purposes of this Paragraph 9, the term "Change in Control" shall
be deemed to occur upon any "person" (as defined in Section 13(d) of the
Exchange Act), other than the Company or any Subsidiary or employee benefit
plan or trust maintained by the Company or any Subsidiary, becoming the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 25% of the Common Stock of the Company outstanding
at such time, without the prior approval of the Board. If the provisions of
this Paragraph 9 are limited by the $100,000 limit of Paragraph 4(b) above, the
acceleration of exercisability provided under this Paragraph 9 shall be first
applied to those incentive stock options having the lowest Exercise Price. Any
remaining Options which would have become exercisable but for the $100,000
limit shall become exercisable on the first date on which they may become
exercisable without exceeding the $100,000 limit.

10. LOANS

The Company may, but shall not be obligated to, provide to any
Optionee a loan or guarantee on behalf of any Optionee a loan to facilitate the
exercise of Options on such terms and conditions as agreed to by the Committee.

11. CAPITAL ADJUSTMENTS

The aggregate number of shares of the Company's Common Stock
subject to this Plan, the maximum number of shares as to which Options may be
granted to any one Optionee hereunder, and the number of shares and the
Exercise Price shall be appropriately adjusted, as determined by the Committee
in its discretion, for any increase or decrease in the number of shares of
Common Stock which the Company has issued resulting from any stock split, stock
dividend, combination of shares

7
<PAGE> 8
or any other change, or any exchange for other securities or any
reclassification, reorganization, redesignation, recapitalization, or
otherwise.

12. NO EMPLOYMENT OBLIGATION

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

13. GOVERNMENT AND STOCK EXCHANGE REGULATIONS

The Company shall not be required to issue any shares upon the
exercise of any Option unless and until the Company has fully complied with any
then applicable requirements by the Securities and Exchange Commission, the
California Corporations Commissioner, or other regulatory agencies having
jurisdiction, and of any exchanges upon which Common Stock of the Company may
be listed.

Upon the exercise of an Option at a time when there is not in
effect a registration statement under the Securities Act of 1933 or a similar
statute (the "Act") relating to the stock issuable upon exercise thereof and
available for delivery a prospectus meeting the requirements of Section
10(a)(3) of said Act, or if the rules or interpretations of the Securities and
Exchange Commission so require, the stock may be issued only if the holder
represents and warrants in writing to the Company that the shares purchased are
being acquired for investment and not with a view to distribution thereof.

14. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN

The Board or the Operating Committee of the Board may at any
time suspend or terminate the Plan and may amend it from time to time in such
respects as the Board or the Operating Committee may deem advisable in order
that Options granted thereunder shall conform to any change in the law, or in
any other respect which the Board or the Operating Committee may deem to be in
the best interests of the Company; provided, however, that no such amendment
shall, without the approval of a majority of the voting power of the capital
stock of the Company present or represented and entitled to vote at a duly
constituted meeting of the stockholders, (i) increase the maximum number of
shares for which Options may be granted under the Plan, except as specified in
Paragraph 11, (ii) change the provisions of Paragraph 6(c) relating to the
establishment of the Exercise Price other than to change the manner of
determination the fair market value of the Company's Common Stock to conform
with any then applicable provisions of the Code or regulations issued
thereunder, or (iii) permit the granting of Options to members of the
Committee. No Option may be granted during any suspension, or after
termination of the Plan.

8
<PAGE> 9

15. NO IMPLIED RIGHTS OR OBLIGATIONS

The Company, in establishing and maintaining this Plan as a
voluntary and unilateral undertaking, expressly disavows the creation of any
rights in Optionees or others claiming entitlements under the Plan or any
obligations on the part of the Company, any Subsidiary or the Committee, except
as expressly provided herein.

16. EMPLOYEES BASED OUTSIDE OF THE UNITED STATES

Notwithstanding any provision of the Plan to the contrary, in
order to foster and promote achievement of the purposes of the Plan or to
comply with provisions of laws or regulations in other countries in which the
Company and its subsidiaries operate or have employees, the Committee, in its
sole discretion, shall have the power and authority to (i) determine which
employees employed outside the United States are eligible to participate in the
Plan, (ii) modify the terms and conditions of any Options granted to employees
who are employed outside the United States and (iii) establish subplans,
modified option exercise procedures and other terms and procedures to the
extent such actions may be necessary or advisable.

17. EFFECTIVE DATE

The effective date of the Plan shall be July 14, 1995.

18. TERMINATION DATE

Unless the Plan shall have been previously terminated by the
Board or the Operating Committee of the Board, the Plan shall terminate on July
31, 1998, except as to Options theretofore granted and outstanding under the
Plan at that date, and no Option shall be granted after that date.

19. GOVERNING LAW

The Plan and all option agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.

<PAGE> 1
EXHIBIT 10.12

Letter dated September 13, 1995 regarding Amendment No. 4 to the Cooperative
Agreement

- --------------------------------------------------------------------------------

134-DMG-95

September 13, 1995

Mr. Donald R. Mitchell
National Science Foundation
Division of Networking and Communications
Research, Room 1175
4201 Wilson Boulevard
Arlington, VA 22230

SUBJBCT: Imposition of Fees for Second Level Domain Name Registrations

REFERENCE: Cooperative Agreement No. NCR-9218742

Dear Mr. Mitchell:

Network Solutions Incorporated request National Science Foundation approval to
begin charging a $50 per year fee for the registration and maintenance of
second level domain names in the "COM", "ORG", "NET", "EDU", and "GOV" domains
currently funded through the referenced Cooperative Agreement. As described in
the enclosed policy statement, registration charges for new domain names will
apply to domain name applications received on and after 12:01 A.M., Thursday,
September 14, 1995. Renewal charges will apply to all registered domain names
as described in the enclosed Fee for Registration of Domain Name policy
statement.

If approved, effective 12:01 A.M., September 14, 1994, and subject to the terms
and conditions of both letter and the Cooperative Agreement, as modified,
Network Solutions will accept all responsibility for the management and
administration of Registration Services/Information Services. Network
Solutions' responsibilities include:

- Provide the necessary staffing to continue, and improve, Registration
Services
- Provide the necessary staffing to provide Information Services to the
academic and R&E communities
- Provide the necessary staffing to collect and process the fees associated
with Registrations and Renewals
- Provide all required facilities, hardware, software, training, and other
support required of the Registration Services staff
- Fully fund the Scout Headquarters through a subcontract with the University
of Wisconsin
<PAGE> 2
- Fund the support services of Gleason Sackman through a subcontract directly
with him
- Fund the services of Jon Postel, as the IANA. Support for Jon Postel will
require modifications to his current subcontract with Network Solutions,
and to his financial relationship with ARPA.
- Fund the continued development and refinement of RWhois

If approved, effective 12:01 AM., September 14, 1994, Network Solutions
proposes that the cost-plus-fixed-fee financial relationship between Network
Solutions and the Foundation will end. From that date forward, Network
Solutions will support, with the fees collected, the services described in this
letter and the elements of the Third Year Plan previously approved, and will
not seek additional financial support from the Foundation, except for payment
of the "EDU" and "GOV" domain names as described in the enclosed policy, so
long as fee collecting continues.

Network Solutions understands that all funds collected constitute "program
income" under the terms of the Cooperative Agreement. Of the funds collected,
Network Solutions will retain 70 percent as consideration for the services
provided. The remaining 30 percent will be available as an Internet Support
Fund.

The Internet Support Fund will be used to offset the costs which the Foundation
and other agencies are incurring for the intellectual infrastructure which
underlies the operation of the Internet. Because the requirements for program
income expenditures will probably be dynamic and, in some cases unpredictable,
those expenditures will be subject to the direction of an advisory panel
consisting of representatives of the Internet community.

As stated in the enclosed policy statement, Network Solutions understands any
changes to the fee structure will require the Foundation's approval.

In recognition of, and consideration for, the long term investments required in
connection with this proposal, Network Solutions Incorporated request the
Foundation's approval of registration fees and application of 30% of collected
revenue toward support of the intellectual infrastructure underpinning the
Internet to be effective for the balance of the Cooperative Agreement period of
performance, or March 31 1998, whichever is longer.

If you have any questions of a technical nature, please contact Mark Kosters at
(703) 742-4795 (Internet: [email protected]). For matters related to the
Cooperative Agreement, please contact David Graves at (703) 742-4884 (Internet:
[email protected]).

Sincerely,

David M. Graves
Contracts Administrator
cc: Albert Wilson (w/one copy of enclosure)
Encl: Fee for Registration of Domain Names

Return to the table of contents.

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<PAGE> 3

FEE FOR REGISTRATION OF DOMAIN NAMES

- --------------------------------------------------------------------------------

1. INTRODUCTION

1.1 SUMMARY

Since March 1, 1993, the National Science Foundation has funded the
administration of the "COM", "ORG", "NET", "EDU", and "GOV" and root
domains through a Cooperative Agreement with Network Solutions, the
InterNIC Registrar. Beginning not later than September 13, 1995, the
Registrar will require direct payment from domain name applicants and
holders for registration and maintenance of the domain names at the
second level of the five listed top-level domains. The funds received
from those fees will replace the funding provided by the National Science
Foundation, and will provide "program income" which will offset costs
related to the intellectual infrastructure of the Internet.

1.2 BACKGROUND

Originally, the Internet began as a research experiment and network known
as the ARPANET, which supported the exchange of files and data among
government contractors and researchers. As the TCP/IP suite was
developed in the early 1980s, the Domain Name System (DNS) emerged as the
replacement system to the original ARPANET hosts.txt mechanism. The
high-level structure of names used by DNS eventually evolved into five
world-wide generic domains ("COM", "ORG", "NET", "EDU", and "INT"), two
U.S. only generic domains ("MIL" and "GOV"), and country code domains
(e.g., "US" for the United States, "AU" for Australia, etc.)

The exponential growth of the Internet, due mostly to the connecting of
commercial organizations to the Internet over the past couple years, has
had a directly proportional affect on the registration activity of the
Registrar. The increased activity, with the corresponding growth of
operating costs, have resulted in funding requirements exceeding the
National Science Foundation's budget. In addition, it is appropriate
that Internet users, instead of the U.S. Federal Government, pay the
costs of domain name registration services. Accordingly, the Registrar
will begin charging a fee for the registration and maintenance of domain
names in the "COM", "ORG", "NET", "EDU", and "GOV" domains.

1.3 GUIDELINES, PROCEDURES, AND POLICIES

The guidelines, procedures, and policies that are currently
operative with regard
to the Domain Name System will not change (RFCs 1031 through 1035, RFC
1480, and RFC 1591).

2. DEFINITIONS

<PAGE> 4
Applicant
The party or organization, such as a company or service provider, that is
applying for a new domain name.

Domain
Any root-level domain (i.e. . within the "COM", "ORG", "NET", "EDU", and
"GOV" root domains. (Note: This does not include domains "COM", "ORG",
"NET", "EDU", and "GOV" which exist under a country domain. For example,
"COM.AU" is the commercial subdomain in Australia)

Contact
The person responsible for a particular domain or aspect of a particular
domain. There are four types of contacts: administrative, technical,
zone, and billing contacts. These contacts are listed in the InterNIC's
WHOIS database. Communication with contacts is via the email address that
is listed in this database.

Domain Name
The operational name used by TCP/IP applications that identifies an
organization connected to the Internet.

DNS
The Domain Name System handles mapping from hostnames to Internet
addresses. Configuration information from the InterNIC Registration
Services database is released into DNS three times a week (Monday,
Wednesday, and Friday at 5 p.m. EST)

WHOIS
A database utility that allows queries of domain records which include
company, contact, and operational information from the InterNIC
Registration Services database.

New Domain Name
Names that have not yet been entered into the InterNIC Registration
Services database, or names that have expired and have been removed from
the InterNIC database and made available for reissue to an applicant at a
later time.

Existing Domain Name
Names that are registered within the InterNIC Registration Services
database and accessible through WHOIS.

Internet Service Provider
Commercial companies that provide connectivity between the domain name
holder and the Internet, and that assist with domain name registrations.

3. CHARGES

The Registrar will apply two types of charges with respect to domain names.
The first is a "Registration Fee" (or initial fee) for new domain names; the
other is a "Maintenance Fee" (or recurring fee) for existing domain names that
are already registered. These initial and recurring fees for each domain name
cover the costs for an unlimited number of update requests, including changes

<PAGE> 5
in domain name, for each domain name. The Registrar requires that all
applications continue to be sent electronically, and that the payments are made
by any of the methods outlined below. Payment must be in U.S. dollars.
(Please note that "IN-ADDR.ARPA" domains are not subject to Registration Fees.)
The Registrar will announce any future price changes, which are subject to
National Science Foundation approval, by notice on "[email protected]."

3.1 NEW DOMAIN NAMES

3.1.1 REGISTRATION FEE

The Registration Fee for a new domain name is $100.00. New
domain names are valid for two years from the date that the
Registrar activates the domain name. The Registrar will remove
domain names from the database upon the request of the domain
name holder; however, the Registration Fee is non-refundable.
Domain Names deleted from the database will be available for
reuse as described in Section 3.3.

3.1.2 PAYMENT OF FEE

The Registrar will activate domain names upon request, on a
first-come, first-serve basis. Payment of the Registration Fee
is due by 12:00 PM (Eastern Time) on the 30th day after the
activation date, or on the last work day preceding the due date
if the 30th day falls on a weekend or holiday. The Registrar
will delete the domain name from the database on the day after
the due date if payment is not received. Domain Names deleted
from the database will be available for reuse as described in
Section 3.3.

3.2 EXISTING DOMAINS

3.2.1 MAINTENANCE FEE

For all registered domain names, there will be an Maintenance
Fee of $50.00 per year per domain name, due upon the anniversary
date of the domain name activation. This annual fee will keep
the domain name valid for one year. Payment must be made in
advance on an annual basis. The payment is non-refundable

3.2.2 PAYMENT OF FEE

Payment of the Maintenance Fee is due by 12:00 PM (Eastern Time)
on the anniversary of the activation date, or the last workday
preceding the anniversary date if the anniversary date falls on
a weekend or holiday. The Registrar will delete the domain name
from the database on the day after the due date if payment is
not received. Domain Names deleted from the database will be
available for reuse as described in Section 3.3.

3.2.3 NOTIFICATION OF MAINTENANCE FEE DUE

The Registrar will provide 60 days advance notice, by email, to
the domain name billing contact (or administrative contact, in
the absence of a separately identified billing contact), with a
copy to the administrative, technical, and zone contacts, that
the Maintenance Fee is due on the anniversary of the activation
date. In addition, email notification will also be sent to the
address that is advertised via DNS within the Start of
<PAGE> 6
Authority (SOA) record.

The Registrar will send reminder notices 30 days and 15 days
prior to the activation anniversary date, unless it receives
payment. If the Registrar does not receive payment by the due
date, it will remove the name from the DNS and notify the
contacts that such action is being taken. Domain Names deleted
from the database will be available for reuse as described in
Section 3.3.

The Registrar will not attempt to notify the contacts by any
means other than email. It is the responsibility of the
administrative, billing, technical, and zone contacts to keep
their records up to date in the InterNIC Registration Services'
database.

3.3 DOMAIN NAME DELETIONS

Domain names deleted from the database will become available for reuse
after a 60 day "hold" period. The purpose of the 60 day period is to
minimize the probability the next holder of that domain name will
receive messages intended for the previous holder.

3.4 SPECIAL INITIAL GRACE PERIOD

To allow domain name applicants and holders time to prepare for the new
billing procedures, the Registrar will grant an initial grace period of
90 days on all domain name registration transactions. All new
applications during the three calendar months following the
implementation of fees will have 90 days to pay for their domain names.
All domain names with annual maintenance fees due during the three
calendar months following implementation of fees will have 90 days to
pay for their domain names. All new domain name applications received
before the implementation date will be exempt from the initial domain
name Registration Fee; however, they will be charged the Maintenance
Fee on each activation anniversary date.

4. INVOICING AND PAYMENT

The Registrar requires that all applications be submitted electronically to
[email protected], and that the payment be made by any of the methods
described in this section. All fees are to be paid in U.S. currency.
Facsimile numbers and U.S. postal addresses are:

FAX:
(703) 742-4811 (InterNIC Registration Services)

U. S. Mail:
InterNIC Registration Services
P.O. Box 1656
Herndon, VA 22070
USA

4.1 SPECIAL PAYMENTS

4.1.1 "EDU" AND "GOV" DOMAINS
<PAGE> 7
The National Science Foundation will pay the fees associated
with domain name registrations and maintenance for the academic
institutions registered in the "EDU" domain. The National
Science Foundation will pay the fees, on an interim basis,
associated with domain name registrations and maintenance for
the U. S. Federal Government agencies registered in the "GOV"
domain..

4.1.2 INTERNET SERVICE PROVIDERS

As an alternative to domain name by domain name billing, the
Registrar will allow Internet Service Providers to establish
and maintain special accounts against which each registration
and maintenance action will be debited. The Registrar will
require each Internet Service Provider using this optional
payment method to maintain a positive balance in their account.
The Registrar will not process domain name applications and
renewals if there is an insufficient balance in the respective
account.

4.2 INVOICES

Except as set forth in Section 4.1, the Registrar will batch process
and electronically send invoices each night. The invoices will include
domain names registered the preceding day.

4.3. CHECKS AND MONEY ORDERS

All checks and money orders should be made out to "InterNIC
Registration Services." For single domain registrations, the applicant
must list the domain name on the check. For multiple domain
registrations, except in the special cases described in Section 4.1
above, the applicant must list on the payment template the domain names
for which payment is being made.

Insufficient payments or failure to indicate the domain name(s)
associated with the payment will result in a returned check. Returned
checks will not change the due date for payment. Failure to resubmit
proper payment by the due date will result in the loss of the domain
name.

4.4 CREDIT CARDS

Except in the special cases described in Section 4.1 above,
organizations may pay the Registration and Maintenance Fees by American
Express, MasterCard, or VISA. The Card Number, Expiration Date, and
Name, as it appears on the card, must be supplied with each charge on
the hardcopy InterNIC Registration Services payment form which will be
attached to the electronic domain name application acknowledgment. The
payment form is also available from the InterNIC Registration Services
Help Desk, or electronically at
ftp://rs.internic.net/templates/pmt-template.txt. For security reasons,
InterNIC will not accept credit card information submitted by email.
For single domain registrations, the applicant must list the domain name
on the form. For multiple domain registrations, except in the special
cases described in Section 4.1 above, the applicant must indicate on the
payment template the domain names for which payment is being made.

The Registrar can not process payments unless the domain names are
identified, and will not process payments which are insufficient to pay
for the cost of domain name registration or renewal. The Registrar
will return improperly submitted payments to the domain name holder.

<PAGE> 8
Payments returned because of improper submission will not change the
due date for payment. Failure to resubmit proper payment by the due
date will result in the loss of the domain name. Credit card payments
for domain name applications and renewals may be faxed to the number
listed above.

4.5 SUBMISSION BY U.S. POSTAL MAIL

Checks, money orders, and credit card information may be sent to
InterNIC Registration Services by U.S. Postal Mail to the address
listed in Section 4 above.

4.6 FUTURE METHODS OF PAYMENT

The Registrar is considering other payment methods, such as submission
by electronic means. Of particular concern is the security associated
with electronic traffic over the Internet. The Registrar plans to
phase electronic payment implementation after security analyses are
complete.

4.7 FORM OF PAYMENT NOT ACCEPTED

The Registrar will not accept currency, coin, purchase orders, or
stamps as payment. The Registrar will not accept credit card
information over the telephone or sent by email.

4.8 TAXES

Because the InterNIC is selling a service from the Commonwealth of
Virginia, Registration Fees and Maintenance Fees are exempt from sales
tax.

5. DOMAIN NAME REGISTRATION FUNDS

All funds collected as the result of charging a fee for domain name
registration are "program income." The Registrar will use 70 percent of the
income to offset the costs of providing InterNIC Registration Services.

The Registrar will dedicate 30 percent of the funds to offset the costs which
are associated with the intellectual infrastructure which underlies the
operation of the Internet. Areas of the infrastructure to be supported will be
discussed in the InterNIC Registrar's Annual Report and Project Plan to the
National Science Foundation, and will be subject to oversight by an advisory
panel. The panel will consist of representatives from the Internet community.
A public accounting will be made of the expenditures toward the Internet
infrastructure.

6. SUGGESTIONS AND COMPLAINTS

Billing questions should be sent to [email protected]. Comments should be
addressed to [email protected].

<PAGE> 1
Exhibit 11.1

Network Solutions, Inc.
Computation of Net Income Per Common and Common Equivalent Share

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1996 1997
------------------ ------------------ ------------------
<S> <C> <C> <C>
Weighted average common shares outstanding 12,500,000 12,500,000 12,500,000
------------------ ------------------ ------------------

Common stock options, as if converted(1) 187,000 187,000 187,000
Dividend to SAIC (2) 662,000 662,000 662,000
------------------ ------------------ ------------------
Total common equivalent shares 849,000 849,000 849,000
------------------ ------------------ ------------------

Pro forma common and common
equivalent shares 13,349,000 13,349,000 13,349,000
================== ================== ==================

Pro forma Net income $ (1,625,000) $ (1,458,000) $ 1,256,000
================== ================== ==================

Pro forma Net income per common and common
equivalent share $ (0.12) $ (0.11) $ 0.09
================== ================== ==================
</TABLE>

(1) Common stock options, as if converted issued at prices below the public
offering price during the 12 months immediately preceding the filing of
this intitial Registration Statement and through the effective date of such
Registration Statement have been calculated using the treasury stock method
based upon the estimated initial public offering price and have been
included in all years regardless of whether they are dilutive.

(2) Dividend to SAIC has been calculated as the number of shares the proceeds
from the sale of which will effectively be calculated as used to pay this
dividend in excess of the prior 12 months' net income.

<PAGE> 1
EXHIBIT 24.2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that John E. Glancy, a
Director of Network Solutions, Inc., whose signature appears below, constitutes
and appoints Gabriel A. Battista and Robert J. Korzeniewski, and each of them,
his true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments, including
post-effective amendments, to the Registration Statement on Form S-1, No.
333-30705, filed by Network Solutions, Inc. and any registration statement
relating to the offering covered by such Registration Statement and filed
pursuant to Rule 462(b) under the Securities Act of 1933 and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each of said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

/s/ John E. Glancy
---------------------
John E. Glancy

8/20/97
---------------------
Date

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1996 FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 JUN-30-1997
<CASH> 15,540 25,967
<SECURITIES> 0 3,625
<RECEIVABLES> 32,430 20,421
<ALLOWANCES> (15,439) (11,871)
<INVENTORY> 0 0
<CURRENT-ASSETS> 56,603 80,644
<PP&E> 5,146 8,000
<DEPRECIATION> (2,880) (3,539)
<TOTAL-ASSETS> 66,118 92,250
<CURRENT-LIABILITIES> 55,241 74,364
<BONDS> 0 0
0 0
0 0
<COMMON> 12 12
<OTHER-SE> 1,425 2,681
<TOTAL-LIABILITY-AND-EQUITY> 66,118 92,250
<SALES> 0 0
<TOTAL-REVENUES> 18,862 18,724
<CGS> 0 0
<TOTAL-COSTS> 14,666 11,435
<OTHER-EXPENSES> 6,464 5,022
<LOSS-PROVISION> 3,597 3,818
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (2,268) 2,267
<INCOME-TAX> (643) 1,011
<INCOME-CONTINUING> (1,625) 1,256
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,625) 1,256
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

</TABLE>