<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 26, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File No. 1-4850
COMPUTER SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 95-2043126
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2100 East Grand Avenue
El Segundo, California 90245
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (310) 615-0311
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
77,952,347 shares of Common Stock, $1.00 par value, were outstanding on
December 26, 1997.
<PAGE>
COMPUTER SCIENCES CORPORATION
Index to Form 10-Q
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income,
Third Quarter and Nine Months Ended
December 26, 1997 and December 27, 1996......................... 3
Consolidated Condensed Balance Sheets,
December 26, 1997 and March 28, 1997............................ 4
Consolidated Condensed Statements of Cash Flows,
Nine Months Ended December 26, 1997
and December 27, 1996........................................... 5
Notes to Consolidated Condensed Financial Statements............... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............. 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................. 13
2
<PAGE>
<TABLE>
PART I, ITEM 1. FINANCIAL STATEMENTS
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
---------------------- ----------------------
(In thousands except Dec. 26, Dec. 27, Dec. 26, Dec. 27,
per-share amounts) 1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,664,092 $1,421,638 $4,731,666 $4,080,785
---------- ---------- ---------- ----------
Costs of services 1,301,898 1,112,815 3,704,273 3,223,525
Selling, general and
administrative 145,435 122,593 432,317 355,352
Depreciation and
amortization 98,594 89,229 283,312 241,738
Interest expense 14,427 11,937 37,593 30,959
Interest income (2,894) (2,626) (5,595) (6,191)
Special charges (note A) 208,393 48,929
---------- ---------- ---------- ----------
Total costs and
expenses 1,557,460 1,333,948 4,660,293 3,894,312
---------- ---------- ---------- ----------
Income before taxes 106,632 87,690 71,373 186,473
Taxes on income (note A) 37,500 30,300 (108,900) 69,800
---------- ---------- ---------- ----------
Net income $ 69,132 $ 57,390 $ 180,273 $ 116,673
========== ========== ========== ==========
Earnings per share
(notes A and B):
Basic $ 0.89 $ 0.75 $ 2.33 $ 1.54
========== ========== ========== ==========
Diluted $ 0.87 $ 0.73 $ 2.28 $ 1.49
========== ========== ========== ==========
</TABLE>
[FN]
See accompanying notes.
3
<PAGE>
<TABLE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
Dec. 26, Mar. 28,
(In thousands) 1997 1997
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 94,008 $ 110,726
Receivables 1,526,299 1,294,003
Prepaid expenses and other current assets 244,615 207,698
----------- -----------
Total current assets 1,864,922 1,612,427
----------- -----------
EXCESS OF COST OF BUSINESSES ACQUIRED
OVER RELATED NET ASSETS, NET 543,303 561,670
OTHER ASSETS 661,741 518,692
PROPERTY AND EQUIPMENT, at cost 1,883,823 1,668,905
Less accumulated depreciation and amortization 951,163 780,836
----------- -----------
Property and equipment, net 932,660 888,069
----------- -----------
Total assets $4,002,626 $3,580,858
=========== ===========
CURRENT LIABILITIES:
Short-term debt and current
maturities of long-term debt $ 44,042 $ 29,933
Accounts payable 272,616 295,112
Accrued payroll and related costs 268,314 252,902
Other accrued expenses 431,884 311,283
Deferred revenue 86,405 112,888
Income taxes payable 60,769 84,995
----------- -----------
Total current liabilities 1,164,030 1,087,113
----------- -----------
LONG-TERM DEBT, NET 731,605 630,842
----------- -----------
OTHER LONG-TERM LIABILITIES 202,556 193,343
----------- -----------
STOCKHOLDERS' EQUITY (note C):
Common stock issued, par value $1.00 per share 78,296 76,925
Other stockholders' equity 1,826,139 1,592,635
----------- -----------
Total stockholders' equity 1,904,435 1,669,560
----------- -----------
Total liabilities and stockholders' equity $4,002,626 $3,580,858
=========== ===========
</TABLE>
[FN]
See accompanying notes.
4
<PAGE>
<TABLE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
<CAPTION>
Nine Months Ended
----------------------
(In thousands, increase (decrease) in Dec. 26, Dec. 27,
cash and cash equivalents) 1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 180,273 $ 116,673
Adjustments to reconcile net income to net
cash provided by operating activities:
Special items, net of income tax effects 7,057 13,574
Depreciation and amortization 283,312 241,738
Provision for losses on accounts receivable 3,588 13,281
Changes in assets and liabilities, net of
effects of acquisitions:
Increase in assets (307,223) (232,419)
Increase in liabilities 121,197 94,810
---------- ----------
Net cash provided by operating activities 288,204 247,657
---------- ----------
Investing activities:
Purchases of property, plant and equipment (236,397) (238,872)
Acquisitions, net of cash acquired (58,928) (127,799)
Outsourcing contracts (111,947) (50,871)
Purchased and internally developed software (48,421) (63,880)
Other investing cash flows (13,415) (4,383)
---------- ----------
Net cash used in investing activities (469,108) (485,805)
---------- ----------
Financing activities:
Borrowings under commercial paper, net 96,743 54,094
Borrowings (repayments) under lines of credit, net 15,072 (18,175)
Principal payments on long-term debt (6,928) (26,941)
Proceeds from term debt issuance 150,000
Proceeds from stock option transactions 47,753 43,420
Other financing cash flows 11,546 13,750
---------- ----------
Net cash provided by financing activities 164,186 216,148
---------- ----------
Net decrease in cash and cash equivalents (16,718) (22,000)
Cash and cash equivalents at beginning of year 110,726 113,873
---------- ----------
Cash and cash equivalents at end of period $ 94,008 $ 91,873
========== ==========
</TABLE>
[FN]
See accompanying notes.
5
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)
(A) CSC recognized a net special credit of $1.7 million, or 2 cents per
share (diluted), during the first quarter of fiscal 1998 as a result of
developments at CSC Enterprises, a general partnership of which CSC,
through one of its affiliates, is the managing general partner. This
net credit resulted from a tax benefit of $135 million and an after-tax
special charge of $133.3 million.
During the fiscal quarter ended June 27, 1997, certain partners withdrew
from CSC Enterprises. As a result of these withdrawals, CSC Enterprises
took actions that caused CSC to recognize an increase in the tax basis of
certain assets. As required by SFAS No. 109, this tax basis increase
resulted in a deferred tax asset of $135 million and a corresponding
reduction of CSC's provision for income taxes during the first fiscal
quarter.
In connection with these developments, CSC Enterprises reviewed its
operations, its market opportunities and the carrying value of its
assets. Based on this review, plans were initiated during the first
quarter to eliminate certain offerings and write down assets, primarily
within its telecommunications operations. As a result of these
plans, CSC recognized an after-tax special charge of $133.3 million
during the fiscal quarter ended June 27, 1997. This special charge
included goodwill of $35 million, contract termination costs of $33.8
million, deferred contract costs and other assets of $20.5 million,
telecommunications software and accruals of $22.3 million,
telecommunications property, equipment and intangible assets of
$11.7 million and other costs of $10 million.
CSC recognized a special charge in the second quarter of fiscal 1997
related to the August 1, 1996 acquisition of The Continuum Company, Inc.
The amount of the charge, net of income tax benefits on the tax
deductible portion, was $35.3 million or 45 cents per share (diluted).
The charge was comprised of $11 million for investment banking and other
merger expenses; $13.1 million related to the write-off of certain
capitalized software, other assets and intangibles; and $24.8 million
related to the elimination of duplicate data processing facilities,
employee severance costs and contract termination costs.
(B) CSC has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share," which requires presentation of both basic
and diluted EPS and restatement of prior period data presented.
This statement also requires that a reconciliation be provided of the
components used in the earnings per share calculation:
6
<PAGE>
<TABLE>
<CAPTION>
Third Quarter Ended
--------------------------------------------------------
Dec. 26, 1997 Dec. 27, 1996
--------------------------- ---------------------------
Per-share Per-share
Income Shares amount Income Shares amount
-------- ------ --------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $ 69,132 77,751 $ 0.89 $ 57,390 76,224 $ 0.75
======== ======= ======== =======
Effect of dilutive
stock options 1,546 2,270
------ ------
Diluted EPS $ 69,132 79,297 $ 0.87 $ 57,390 78,494 $ 0.73
======== ====== ======= ======== ====== =======
</TABLE>
Options to purchase 177,429 shares and 10,462 shares were outstanding
during the three months ended December 26, 1997 and December 27, 1996,
respectively, but were not included in the computation of diluted EPS
because the exercise price was greater than the average market price
of the common shares.
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------------------------------
Dec. 26, 1997 Dec. 27, 1996
--------------------------- ---------------------------
Per-share Per-share
Income Shares amount Income Shares amount
-------- ------ --------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $180,273 77,331 $ 2.33 $116,673 75,749 $ 1.54
======== ======= ======== =======
Effect of dilutive
stock options 1,647 2,365
------ ------
Diluted EPS $180,273 78,978 $ 2.28 $116,673 78,114 $ 1.49
======== ====== ======= ======== ====== =======
</TABLE>
Options to purchase 330,384 shares and 100,040 shares were outstanding
during the nine months ended December 26, 1997 and December 27, 1996,
respectively, but were not included in the computation of diluted EPS
because the exercise price was greater than the average market price
of the common shares.
7
<PAGE>
(C) No dividends were paid during the periods presented. There were
78,296,106 shares at December 26, 1997 and 76,924,836 shares at March
28, 1997 of $1.00 par value common stock issued with 343,759 and
332,220 shares, respectively, of treasury stock.
(D) Cash payments for interest on indebtedness were $43.9 million and
$30 million for the nine months ended December 26, 1997
and December 27, 1996, respectively. Cash payments for taxes on
income were $16 million and $42.5 million for the nine months ended
December 26, 1997, and December 27, 1996, respectively.
(E) The financial information reported, which is not necessarily indicative
of the results for a full year, is unaudited but includes all adjustments
which the Company considers necessary for a fair presentation. All such
adjustments are normal recurring adjustments except as described in
Note (A).
8
<PAGE>
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third Quarter and Nine Months of Fiscal 1998 versus
Third Quarter and Nine Months of Fiscal 1997
Revenues
The Company derived its revenues from the following market sectors for the
third quarter and nine months, respectively (dollars in millions):
<TABLE>
<CAPTION>
Third Quarter Nine Months
-------------- Pct. ---------------- Pct.
FY98 FY97 Change FY98 FY97 Change
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
U.S. Commercial $ 712 $ 540 32.0% $1,997 $1,539 29.8%
Europe 470 399 17.7 1,260 1,047 20.3
Other International 101 91 10.8 303 265 14.3
------ ------ ------ ------ ------ ------
Total Commercial 1,283 1,030 24.6 3,560 2,851 24.9
U.S. Federal Government 381 392 (2.8) 1,172 1,230 (4.7)
------ ------ ------ ------ ------ ------
Total $1,664 $1,422 17.1% $4,732 $4,081 15.9%
====== ====== ====== ====== ====== ======
</TABLE>
During the third quarter and nine months ended December 26, 1997, the
Company's total revenue increased 17.1%, or $242 million, and 15.9% or $651
million, respectively, over the same periods last year. Commercial revenues,
reflecting strong commercial expansion, grew 24.6%, or $253 million over the
same quarter of last year.
U.S. commercial revenues grew 32.0% or $172 million during the third quarter
of fiscal 1998 over the same period last year. Over half of the growth was
provided by information technology outsourcing contracts, including recent
contracts with DuPont, CNA and ING. The remainder was derived principally
from strong demand for consulting and systems integration services and growth
within the financial services sector.
Also during the third quarter, European revenues grew $71 million or 17.7%
over the same period last year. Growth was provided from increased UK
outsourcing business, the DuPont contract and continued demand at CSC Ploenzke
for enterprise-wide solutions such as SAP and BAAN.
The third quarter growth of 10.8% in other international revenues resulted
primarily from CSC's financial services expansion in Australia and Asia.
U.S. federal government revenue accounted for 22.9% of total revenue for the
quarter compared to 27.6% for the same quarter of last year. Federal revenue
decreased 2.8% or $11 million, principally due to the completion last year of
several contracts. During the third quarter of fiscal 1998, the Company
announced $474 million in new federal contracts.
9
<PAGE>
As a result of the trends described above, the Company's revenues by market
sector are as follows:
<TABLE>
<CAPTION>
Revenue by Market Sector, Third Quarter Nine Months
as a percentage of total FY98 FY97 FY98 FY97
- ---------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
U.S. Commercial 43% 38% 42% 38%
Europe 28 28 27 26
Other International 6 6 6 6
------ ------ ------ ------
Total Commercial 77 72 75 70
U.S. Federal Government 23 28 25 30
------ ------ ------ ------
Total Revenue 100% 100% 100% 100%
====== ====== ====== ======
</TABLE>
Costs and Expenses
The Company's costs and expenses as a percentage of revenue are as follows
(dollars in millions, before special items):
<TABLE>
<CAPTION>
Dollar Amount Percentage of Revenue
-------------- -------------------------------
Third Quarter Third Quarter Nine Months
-------------- -------------- --------------
FY98 FY97 FY98 FY97 FY98 FY97
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Costs of services $1,302 $1,113 78.2% 78.3% 78.3% 79.0%
Selling, general & admin. 145 123 8.7 8.6 9.1 8.7
Depreciation and amort. 99 89 6.0 6.3 6.0 5.9
Interest expense, net 11 9 0.7 0.6 0.7 0.6
------ ------ ------ ------ ------ ------
Total $1,557 $1,334 93.6% 93.8% 94.1% 94.2%
====== ====== ====== ====== ====== ======
</TABLE>
Compared with corresponding periods of the prior year, total costs and
expenses improved as a percentage of revenue for the third quarter and nine
months ended December 26, 1997. Costs of services as a percentage of revenue
decreased due to the continued shift in the Company's revenue mix toward
commercial expansion, and performance improvements within U.S. consulting and
systems integration and European operations.
Selling, general and administrative costs increased as a percentage of revenue
due to growth in commercial operations relative to U.S. federal business.
This increase was offset in part by improvement in the selling, general and
administrative percentage within the Company's U.S. outsourcing and consulting
and systems integration operations.
10
<PAGE>
Special Charges
As previously reported, the results of operations for the first quarter ended
June 27, 1997 included a net special credit of $1.7 million, or 2 cents per
share (diluted), resulting from developments at CSC Enterprises, a general
partnership which operates the Company's credit services operations and
carries out other business strategies through acquisition and investment. This
net credit resulted from a tax benefit of $135 million and a special charge of
$208.4 ($133.3 million after tax), as described in Note (A) of the
Consolidated Condensed Financial Statements (see Part I, Item I).
The results of operations for last year's second quarter (ended September 27,
1996) included a special charge related to the August 1, 1996 acquisition of
The Continuum Company, Inc. The amount of the charge, net of income tax
benefits on the tax deductible portion, was $35.3 million or 45 cents per
share (diluted). The non-recurring charge was comprised of $11 million for
investment banking and other merger expenses; $13.1 million related to the
write-off of certain capitalized software, other assets and intangibles; and
$24.8 million related to the elimination of duplicate data processing
facilities, employee severance costs and contract termination costs.
Income Before Taxes
Income before taxes increased to $106.6 million, up $18.9 million, or 21.6%
compared with the same quarter last year. The Company's profit margin before
taxes was 6.4% compared to 6.2% for last year's third quarter. Before the
special items, the profit margin was 5.9% for the first nine months of fiscal
1998 compared to 5.8% for the prior period.
Net Income
Net income was $69.1 million for the third quarter of fiscal 1998, up $11.7
million, or 20.5% over last year's earnings. This year's third quarter diluted
earnings per share of 87 cents increased 19.2% over last year's third quarter
diluted earnings per share of 73 cents. On a year to date basis, diluted
earnings per share before special items was $2.26 up 31 cents, or 15.9% over
the same periods for the prior year.
Cash Flows
Cash provided by operating activities was $288.2 million for the nine months
ended December 26, 1997, compared with $247.7 million during the same period
last year. An increase in earnings, non-cash depreciation and amortization
expenses, and favorable changes in working capital were the primary drivers of
the improvement.
The Company's cash expenditures for investing activities totaled $469.1
million for the most recent nine months versus $485.8 million during the same
period of last year. Significant current year activity includes investments
in outsourcing assets in connection with the DuPont contract.
Cash provided by financing activities was $164.2 million for the most recent
nine months versus $216.1 million for the same period last year.
11
<PAGE>
Financial Condition
During the first nine months of fiscal 1998, the Company's capital outlays
included $407.3 million of business investments in the form of fixed asset
purchases, acquisitions and new outsourcing contracts. These amounts were
funded from operating cash flows, additional borrowings and existing cash,
which decreased from $110.7 million to $94.0 million. As a result of the net
increase in borrowings, the Company's debt-to-total capitalization ratio
increased to 28.9% at December 26, 1997 versus 28.4% at fiscal 1997 year end.
It is management's opinion that the Company will be able to meet its liquidity
and cash needs for the foreseeable future through the combination of cash
flows from operating activities, cash balances, unused borrowing capacity and
other financing activities, including the issuance of debt and/or equity
securities.
Year 2000
Based on ascertained information, it is management's opinion that any costs or
consequences of potentially incomplete or untimely achievement of Year 2000
readiness will not have a material impact on future financial results. CSC
has experienced significant growth in Year 2000 engagements for the Company's
clients and expects that trend to continue.
Subsequent Events and Pending Transaction
The Company announced on February 2, 1998 a two-for-one stock split in the
form of a 100 percent stock dividend on the Company's common stock. The stock
dividend will be payable on March 23, 1998 to shareholders of record March 2,
1998. The accompanying financial statements have not been restated for the
stock split since the dividend will not be distributed until after the
financial statements have been published.
The Company announced December 29, 1997 that it sold TRIS, a cellular
telephone billing unit of CSC, to International Telecommunications Data
Systems, Inc. The sale was completed on January 2, 1998 and will be reflected
in the Company's fourth quarter results.
On November 25, 1997, the Company exercised its right to sell its collection
services business to Equifax Inc. pursuant to an August 1, 1988 agreement
entered into by the two companies. CSC expects that the sales price will be
approximately $38 million, and that the sale will be completed no later than
May 24, 1998. CSC's credit reporting business is not included in the
transaction.
The above subsequent events and pending transaction, and resolution of other
related matters are not expected to have a material impact on future financial
results.
12
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
a. Exhibits
<S> <C> <C>
2.1 Agreement and Plan of Merger dated as of April 28, 1996 by
and among the Registrant, The Continuum Company, Inc. and
Continental Acquisition, Inc. (k)
3.1 Restated Articles of Incorporation, effective
October 31, 1988 (c)
3.2 Amendment to Restated Articles of Incorporation, effective
August 10, 1992 (i)
3.3 Amendment to Restated Articles of Incorporation, effective
July 31, 1996 (l)
3.4 Certificate of Amendment of Certificate of Designations of
Series A Junior Participating Preferred Stock, effective
August 1, 1996 (n)
3.5 Bylaws, amended and restated effective November 3, 1997
10.1 Annual Management Incentive Plan, effective April 2, 1983* (a)
10.2 1978 Stock Option Plan, amended and restated effective
March 31, 1988* (m)
10.3 1980 Stock Option Plan, amended and restated effective
March 31, 1988* (m)
10.4 1984 Stock Option Plan, amended and restated effective
March 31, 1988* (m)
10.5 1987 Stock Incentive Plan* (b)
10.6 Schedule to the 1987 Stock Incentive Plan for United
Kingdom personnel* (b)
10.7 1990 Stock Incentive Plan* (g)
10.8 1992 Stock Incentive Plan, amended and restated effective
August 9, 1993* (m)
10.9 Schedule to the 1992 Stock Incentive Plan for United
Kingdom personnel* (p)
10.10 1995 Stock Incentive Plan* (j)
10.11 1997 Nonemployee Director Stock Incentive Plan (q)
10.12 Deferred Compensation Plan, amended and restated effective
February 2, 1998
10.13 Severance Plan for Senior Management and Key Employees,
effective February 2, 1998
10.14 Severance Agreement with Van B. Honeycutt effective
February 2, 1998
10.15 Supplemental Executive Retirement Plan, amended and
restated effective February 2, 1998
10.16 1990 Nonemployee Director Retirement Plan, amended and
restated effective February 2, 1998
10.17 Form of Indemnification Agreement for Directors (d)
10.18 Form of Indemnification Agreement for Officers (e)
10.19 Information Technology Services Agreements with General
Dynamics Corporation, dated as of November 4, 1991 (h)
10.20 $350 million Credit Agreement dated as of September 6, 1995 (j)
10.21 First Amendment to $350 Million Credit Agreement dated
September 23, 1996 (o)
10.22 Amended and Restated Rights Agreement, effective
August 1, 1996 (n)
13
<PAGE>
27 Financial Data Schedule
28 Revenues by Market Sector
99.1 Annual Report on Form 11-K for the Matched Asset Plan of the
Registrant for the fiscal year ended December 31, 1996 (f)
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of
CSC Outsourcing Inc. for the fiscal year ended
December 31, 1996 (f)
99.3 Annual Report on Form 11-K for the CUTW Hourly Savings Plan
of CSC Outsourcing, Inc. for the fiscal year ended
December 31, 1996 (f)
</TABLE>
14
<PAGE>
Notes to Exhibit Index:
*Management contract or compensatory plan or agreement
(a)-(f) These exhibits are incorporated herein by reference to the
Company's Annual Report on Form 10-K, as amended, for the fiscal
years ended on the respective dates indicated below:
(a) March 30, 1984 (d) April 3, 1992
(b) April 1, 1988 (e) March 31, 1995
(c) March 31, 1989 (f) March 28, 1997
(g) Incorporated herein by reference to the Registrant's Registration
Statement on Form S-8 filed on August 15, 1990.
(h) Incorporated herein by reference to the Registrant's Current
Report on Form 8-K dated November 4, 1991.
(i) Incorporated herein by reference to the Registrant's Proxy
Statement for its August 10, 1992 Annual Meeting of Stockholders.
(j) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on November 13, 1995.
(k) Incorporated herein by reference to the Registrant's Current
Report on Form 8-K dated April 28, 1996.
(l) Incorporated herein by reference to the Registrant's Proxy
Statement for its July 31, 1996 Annual Meeting of Stockholders
(m) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on August 12, 1996.
(n) Incorporated herein by reference to the Registrant's Current
Report on Form 8-K dated August 1, 1996
(o) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on November 12, 1996.
(p) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on February 10, 1997.
(q) Incorporated herein by reference to the Registrant's Proxy
Statement for its August 11, 1997 Annual Meeting of Stockholders.
b. Reports on Form 8-K:
There were no reports on Form 8-K filed during the third quarter of fiscal
1998.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMPUTER SCIENCES CORPORATION
Date: February 9, 1998 By: /s/ Scott M. Delanty
-----------------------------
Scott M. Delanty
Vice President and Controller
Chief Accounting Officer
16
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
10.12 Deferred Compensation Plan, amended and restated effective
February 2, 1998
10.13 Severance Plan for Senior Management and Key Employees,
effective February 2, 1998
10.14 Severance Agreement with Van B. Honeycutt
10.15 Supplemental Executive Retirement Plan, amended and
restated effective February 2, 1998
10.16 1990 Nonemployee Director Retirement Plan, amended and
restated effective February 2, 1998
27 Financial Data Schedule
28 Revenues by Market Sector
</TABLE>
17
EXHIBIT 10.12
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
<PAGE>
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS ................................................ 1
Section 1.1 - General ................................................ 1
Section 1.2 - Account ................................................ 1
Section 1.3 - Administrator .......................................... 1
Section 1.4 - Board .................................................. 2
Section 1.5 - Change in Control ...................................... 2
Section 1.6 - Chief Executive Officer ................................ 2
Section 1.7 - Code ................................................... 2
Section 1.8 - Committee .............................................. 2
Section 1.9 - Company ................................................ 2
Section 1.10- Deferred Compensation .................................. 2
Section 1.11- Election Form .......................................... 3
Section 1.12- Eligible Key Executive ................................. 3
Section 1.13- Employee ............................................... 3
Section 1.14- ERISA .................................................. 3
Section 1.15- Exchange Act ........................................... 3
Section 1.16- Hardship ............................................... 3
Section 1.17- Key Executive .......................................... 4
Section 1.18- Key Executive Plan ..................................... 4
Section 1.19- Nonemployee Director ................................... 4
Section 1.20- Nonemployee Director Plan .............................. 4
Section 1.21- Partial First Plan Year ................................ 4
Section 1.22- Participant ............................................ 5
Section 1.23- Plan ................................................... 5
Section 1.24- Plan Year .............................................. 5
Section 1.25- Predecessor Plan ....................................... 5
Section 1.26- Retirement ............................................. 5
Section 1.27- Separation from Service ................................ 5
Section 1.28- Qualified Compensation ................................. 5
ARTICLE II - ELIGIBILITY ............................................... 6
Section 2.1 - Requirements for Participation ......................... 6
Section 2.2 - Deferral Election Procedure ............................ 6
Section 2.3 - Content of Election Form ............................... 6
i
<PAGE>
ARTICLE III - PARTICIPANTS' DEFERRALS .................................. 7
Section 3.1 - Deferral of Qualified Compensation ..................... 7
Section 3.2 - Deferral for Partial First Plan Year ................... 7
ARTICLE IV - DEFERRED COMPENSATION ACCOUNTS ............................ 7
Section 4.1 - Deferred Compensation Accounts ......................... 7
Section 4.2 - Crediting of Deferred Compensation ..................... 7
Section 4.3 - Crediting of Earnings .................................. 8
Section 4.4 - Applicability of Account Values ........................ 8
Section 4.5 - Vesting of Deferred Compensation Accounts .............. 8
Section 4.6 - Assignments, Etc. Prohibited ........................... 8
ARTICLE V - DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS ............ 8
Section 5.1 - Distributions upon a Key Executive's Retirement and a
Nonemployee Director's Separation from Service .... 8
Section 5.2 - Distributions upon a Key Executive's Pre-Retirement
Separation from Service ........................... 9
Section 5.3 - Distributions upon a Participant's Death ............... 9
Section 5.4 - Optional Distributions ................................. 10
Section 5.5 - Applicable Taxes ....................................... 10
ARTICLE VI - WITHDRAWALS FROM DEFERRED COMPENSATION ACCOUNTS ........... 11
Section 6.1 - Hardship Withdrawals from Accounts ..................... 11
Section 6.2 - Withdrawals after a Change in Control .................. 11
Section 6.3 - Voluntary Withdrawals .................................. 11
Section 6.4 - Applicable Taxes ....................................... 12
ARTICLE VII - ADMINISTRATIVE PROVISIONS ................................ 12
Section 7.1 - Administrator's Duties and Powers ...................... 12
Section 7.2 - Limitations Upon Powers ................................ 12
Section 7.3 - Final Effect of Administrator Action ................... 13
Section 7.4 - Committee .............................................. 13
Section 7.5 - Indemnification by the Company; Liability Insurance .... 13
Section 7.6 - Recordkeeping .......................................... 13
Section 7.7 - Statement to Participants .............................. 14
Section 7.8 - Inspection of Records .................................. 14
Section 7.9 - Identification of Fiduciaries .......................... 14
Section 7.10- Procedure for Allocation of Fiduciary Responsibilities . 14
Section 7.11- Claims Procedure ....................................... 14
Section 7.12- Conflicting Claims ..................................... 16
Section 7.13- Service of Process ..................................... 16
ii
<PAGE>
ARTICLE VIII - MISCELLANEOUS PROVISIONS ................................ 16
Section 8.1 - Termination of the Plan ................................ 16
Section 8.2 - Limitation on Rights of Participants ................... 17
Section 8.3 - Consolidation or Merger; Adoption of Plan by
Other Companies ................................... 17
Section 8.4 - Errors and Misstatements ............................... 17
Section 8.5 - Payment on Behalf of Minor, Etc. ....................... 18
Section 8.6 - Amendment of Plan ...................................... 18
Section 8.7 - Funding ................................................ 18
Section 8.8 - Governing Law .......................................... 18
Section 8.9 - Pronouns and Plurality ................................. 18
Section 8.10- Titles ................................................. 18
Section 8.11- References ............................................. 19
iii
<PAGE>
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
as Amended and Restated Effective February 2, 1998
Computer Sciences Corporation, a Nevada corporation, by resolution of its
Board of Directors dated August 14, 1995, has adopted the Computer Sciences
Corporation Deferred Compensation Plan (the "Plan"), which constitutes a
complete amendment and restatement of the Computer Sciences Corporation
Nonqualified Deferred Compensation Plan (the "Predecessor Plan"), effective as
of September 30, 1995, for the benefit of its Nonemployee Directors, as
defined below, and certain of its Key Executives, as defined below.
The Plan shall constitute two separate plans, one for the benefit of
Nonemployee Directors and one for the benefit of Key Executives. The plan for
Key Executives is a nonqualified deferred compensation plan which is unfunded
and is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as defined
below. The plan for Nonemployee Directors is not subject to ERISA.
ARTICLE I
DEFINITIONS
Section 1.1 General
- --------------------
Whenever the following terms are used in the Plan with the first letter
capitalized, they shall have the meaning specified below unless the context
clearly indicates to the contrary.
Section 1.2 Account
- --------------------
"Account" of a Participant shall mean the Participant's individual
deferred compensation account established for his or her benefit under Article
IV hereof.
Section 1.3 Administrator
- --------------------------
"Administrator" shall mean Computer Sciences Corporation, acting through
its Chief Executive Officer or his or her delegate, except that if Computer
Sciences Corporation appoints a Committee under Section 7.4, the term
"Administrator" shall mean the Committee as to those duties, powers and
responsibilities specifically conferred upon the Committee.
<PAGE>
Section 1.4 Board
- ------------------
"Board" shall mean the Board of Directors of Computer Sciences
Corporation. The Board may delegate any power or duty otherwise allocated to
the Administrator to any other person or persons, including a Committee
appointed under Section 7.4.
Section 1.5 Change in Control
- ------------------------------
"Change in Control" means, after September 30, 1995, (a) the acquisition
by any person, entity or group (as defined in Section 13(d)3 of the Exchange
Act), as beneficial owner, directly or indirectly, of securities of Computer
Sciences Corporation representing twenty percent (20%) or more of the combined
voting power of the then outstanding securities of Computer Sciences
Corporation, (b) a change during any period of two (2) consecutive years of a
majority of the Board as constituted as of the beginning of such period,
unless the election of each director who was not a director at the beginning
of such period was approved by vote of at least two-thirds of the directors
then in office who were directors at the beginning of such period, (c) a sale
of substantially all of the property and assets of Computer Sciences
Corporation, (d) a merger, consolidation, reorganization or other business
combination to which Computer Sciences Corporation is a party and the
consummation of which results in the outstanding voting securities of Computer
Sciences Corporation being exchanged for or converted into cash, property
and/or securities not issued by Computer Sciences Corporation, (e) a merger,
consolidation, reorganization or other business combination to which the
Company is a party and the consummation of which does not result in the
outstanding voting securities of the Company being exchanged for or converted
into cash, property and/or securities not issued by the Company, provided that
the outstanding voting securities of the Company immediately prior to such
business combination (or, if applicable, the securities of the Company into
which such voting securities are converted as a result of such business
combination) represent less than 50% of the voting power of the Company
immediately following such business combination, or (f) any other event
constituting a change in control of Computer Sciences Corporation for purposes
of Schedule 14A of Regulation 14A under the Exchange Act.
Section 1.6 Chief Executive Officer
- ------------------------------------
"Chief Executive Officer" shall mean the Chief Executive Officer of
Computer Sciences Corporation.
Section 1.7 Code
- -----------------
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
2
<PAGE>
Section 1.8 Committee
- ----------------------
"Committee" shall mean the Committee, if any, appointed in accordance
with Section 7.4.
Section 1.9 Company
- --------------------
"Company" shall mean Computer Sciences Corporation and all of its
affiliates, and any entity which is a successor in interest to Computer
Sciences Corporation and which continues the Plan under Section 8.3(a).
Section 1.10 Deferred Compensation
- -----------------------------------
"Deferred Compensation" of a Participant shall mean the amounts deferred
by such Participant under Article III of the Plan.
Section 1.11 Election Form
- ---------------------------
"Election Form" shall mean the form of election provided by the
Administrator to each Eligible Executive and Nonemployee Director pursuant to
Section 3.1.
Section 1.12 Eligible Key Executive
- ------------------------------------
"Eligible Key Executive" shall mean any Key Executive who has been
designated as eligible to participate in the Plan with respect to any Plan
Year by the Chief Executive Officer.
Section 1.13 Employee
- ----------------------
"Employee" shall mean any person who renders services to the Company in
the status of an employee as that term is defined in Code Section 3121(d),
including officers but not including directors who serve solely in that
capacity.
Section 1.14 ERISA
- -------------------
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
Section 1.15 Exchange Act
- --------------------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
3
<PAGE>
Section 1.16 Hardship
- ----------------------
(a) "Hardship' of a Participant, shall mean an unforeseeable emergency
which constitutes a severe financial hardship resulting from any one or more
of the following:
(i) sudden and unexpected illness or accident of the Participant
or of a dependent (as defined in Code Section 152(a)) of the Participant;
(ii) loss of the Participant's property due to casualty; or
(iii) any other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the Participant's control.
(b) Notwithstanding subsection(a) above, a financial need shall not
constitute a Hardship unless it is for at least $1,000.00 (or the entire
principal amount of the Participant's Accounts, if less).
(c) Whether a Participant has incurred a Hardship shall be determined by
the Administrator in its discretion on the basis of all relevant facts and
circumstances and in accordance with nondiscriminatory and objective
standards, uniformly interpreted and consistently applied.
Section 1.17 Key Executive
- ---------------------------
"Key Executive" shall mean any Employee of the Company who is an officer
or other key executive of the Company and who qualifies as a "highly
compensated employee or management employee" within the meaning of Title I of
ERISA.
Section 1.18 Key Executive Plan
- --------------------------------
"Key Executive Plan" shall mean the portion of this Plan which is
maintained or the benefit of the Company's Key Executives.
Section 1.19 Nonemployee Director
- ----------------------------------
"Nonemployee Director" shall mean a member of the Board who is not an
Employee.
Section 1.20 Nonemployee Director Plan
- ---------------------------------------
"Nonemployee Director Plan" shall mean the portion of this Plan which is
maintained for the benefit of the Company's Nonemployee Directors.
4
<PAGE>
Section 1.21 Partial First Plan Year
- -------------------------------------
"Partial First Plan Year" shall mean that portion of the first Plan Year
of the Plan subject to its amendment and restatement effective as of September
30, 1995, which shall begin on September 30, 1995 and end on March 29, 1996.
Section 1.22 Participant
- -------------------------
"Participant" shall mean any person who elects to participate in the Plan
as provided in Article II and who defers Qualified Compensation under the
Plan.
Section 1.23 Plan
- ------------------
"Plan" shall mean the Computer Sciences Corporation Deferred Compensation
Plan.
Section 1.24 Plan Year
- -----------------------
"Plan Year" shall mean the fiscal year of the Company.
Section 1.25 Predecessor Plan
- ------------------------------
"Predecessor Plan" shall mean the Computer Sciences Corporation
Nonqualified Deferred Compensation Plan as in effect and maintained by the
Company for the benefit of its Nonemployee Directors prior to the amendment
and restatement of the Plan effective as of September 30, 1995.
Section 1.26 Retirement
- ------------------------
"Retirement" shall mean, with respect to a Key Executive, a Separation
from Service of such Key Executive (a) on or after attainment of age sixty-two
(62) or (b) prior to attainment of age sixty-two (62) if the Chief Executive
Officer shall designate such Separation from Service as Retirement for
purposes of the Plan.
Section 1.27 Separation from Service
- -------------------------------------
(a) "Separation from Service" of a Key Executive shall mean the
termination of his or her employment with the Company by reason of
resignation, discharge, death or retirement. A leave of absence or sick leave
authorized by the Company in accordance with established policies, a vacation
period or a military leave shall not constitute a Separation from Service;
provided, however, that failure to return to work upon expiration of any leave
of absence, sick leave, military leave or vacation shall be considered a
resignation effective as of the date of expiration of such leave of absence,
sick leave, military leave or vacation.
(b) "Separation from Service" of a Nonemployee Director shall mean the
Nonemployee Director's ceasing to serve as a member of the Board for any
reason.
5
<PAGE>
Section 1.28 Qualified Compensation
- ------------------------------------
(a) "Qualified Compensation" of a Key Executive shall mean the Key
Executive's annual bonus which may be payable to the Key Executive under the
Computer Sciences Corporation Annual Incentive Plan or such other bonus or
incentive compensation plan of the Company which may be designated from time
to time by the Administrator.
(b) "Qualified Compensation" of a Nonemployee Director shall mean the
retainer, consulting fees, committee fees and meeting fees which are payable
to the Nonemployee Director by the Company.
ARTICLE II
ELIGIBILITY
Section 2.1 Requirements for Participation
- -------------------------------------------
Any Eligible Key Executive and any Nonemployee Director shall be eligible
to be a Participant in the Plan.
Section 2.2 Deferral Election Procedure
- ----------------------------------------
For each Plan Year, the Administrator shall provide each Eligible Key
Executive and each Nonemployee Director with an Election Form on which such
person may elect to defer his or her Qualified Compensation under Article III.
Each such person who elects to defer Qualified Compensation under Article III
shall complete and sign the Election Form and return it to the Administrator.
Section 2.3 Content of Election Form
- -------------------------------------
Each Participant who elects to defer Qualified Compensation under the
Plan shall set forth on the Election Form specified by the Administrator:
(a) the amount of Qualified Compensation to be deferred under Article
III and the Participant's authorization to the Company to reduce his or her
Qualified Compensation by the amount of the deferred compensation,
(b) the length of time with respect to which the Participant elects to
defer the Deferred Compensation,
(c) the method under which the Participant's Deferred Compensation shall
be payable, and
(d) such other information, acknowledgments or agreements as may be
required by the Administrator.
6
<PAGE>
ARTICLE III
PARTICIPANTS' DEFERRALS
Section 3.1 Deferral of Qualified Compensation
- -----------------------------------------------
(a) Each Eligible Key Executive and Nonemployee Director may elect to
defer into his or her Account all or any portion of the Qualified Compensation
which would otherwise be payable to him or her for any Plan Year in which he
or she has not incurred a Separation from Service as of the first day of the
Plan Year in question. Such election shall be made by the Eligible Key
Executive or Nonemployee Director completing and delivering to the
Administrator his or her Election Form for such Plan Year no later than the
last day of the next preceding Plan Year, except (i) with respect to the
Partial First Plan Year, in which case such election shall be made not later
than September 29, 1995, and (ii) with respect to a person who first becomes
an Employee or Nonemployee Director during a Plan Year, which person may make
such election within 30 days after first becoming an Employee or Nonemployee
Director, respectively.
(b) Any such election made by a Participant to defer Qualified
Compensation shall be irrevocable and shall not be amendable by the
Participant, except:
(i) as set forth in Sections 6.2 and 6.3 hereof; or
(ii) in the event of a Hardship, a Participant may terminate the
Participant's deferral election for the Plan Year in which the Hardship occurs
with respect to all Qualified Compensation which has not yet been deferred.
Section 3.2 Deferral for Partial First Plan Year
- -------------------------------------------------
For the Partial First Plan Year, Participants may defer any or all of the
Qualified Compensation which is earned by them after September 29, 1995 and
before March 30, 1996. Deferral elections previously made by Nonemployee
Directors for the 1996 Plan Year shall only remain effective with respect to
Qualified Compensation earned prior to September 30, 1995.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
Section 4.1 Deferred Compensation Accounts
- -------------------------------------------
The Administrator shall establish and maintain for each Participant an
Account to which shall be credited the amounts allocated thereto under this
Article IV and from which shall be debited the Participant's distributions and
withdrawals under Articles V and VI.
7
<PAGE>
Section 4.2 Crediting of Deferred Compensation
- -----------------------------------------------
Each Participant's Account shall be credited with an amount which is
equal to the amount of the Participant's Qualified Compensation which such
Participant has elected to defer under Article III at the time such Qualified
Compensation would otherwise have been paid to the Participant.
Section 4.3 Crediting of Earnings
- ----------------------------------
Beginning on September 30, 1995 and subject to amendment by the Board,
for each Plan Year earnings shall be credited to each Participant's Account
(including the Accounts of Nonemployee Directors under the Predecessor Plan),
at a rate equal to 120% of the 120-month rolling average interest payable on
10-year United States Treasury Notes as of December 31 of the preceding Plan
Year, compounded annually. Earnings shall be credited on such valuation dates
as the Administrator shall determine.
Section 4.4 Applicability of Account Values
- --------------------------------------------
The value of each Participant's Account as determined as of a given date
under this Article, plus any amounts subsequently allocated thereto under this
Article and less any amounts distributed or withdrawn under Articles V or VI
shall remain the value thereof for all purposes of the Plan until the Account
is revalued hereunder.
Section 4.5 Vesting of Deferred Compensation Accounts
- ------------------------------------------------------
Subject to the possible reductions provided for in Section 6.2 and 6.3
with respect to certain Participant withdrawals, each Participant's interest
in his or her Account shall be 100% vested and non-forfeitable at all times.
Section 4.6 Assignments, Etc. Prohibited
- -----------------------------------------
No part of any Participant's Account shall be liable for the debts,
contracts or engagements of the Participant, or the Participant's
beneficiaries or successors in interest, or be taken in execution by levy,
attachment or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any rights to alienate, anticipate, commute,
pledge, encumber or assign any benefits or payments hereunder in any manner
whatsoever except to designate a beneficiary as provided in Section 5.3.
8
<PAGE>
ARTICLE V
DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS
Section 5.1 Distributions upon a Key Executive's Retirement and a
- -------------------------------------------------------------------
Nonemployee Director's Separation from Service
----------------------------------------------
(a) The Account of a Key Executive who incurs a Separation from Service
upon his or her Retirement, and the Account of a Nonemployee Director who
incurs a Separation from Service, in each case other than on account of death,
shall be paid to the Participant as specified in any election made by the
Participant pursuant to Section 5.4 hereof. Any remaining balance of the
Participant's Account shall be paid to the Participant, as specified by the
Participant in an election made pursuant to this Section 5.1, in a lump-sum
distribution or in approximately equal annual installments over 5, 10 or 15
years. Payment(s) shall commence within thirty (30) days following the date
of such Separation from Service.
(b) At the time a Participant first elects to defer Qualified
Compensation under the Plan, he or she shall make an election pursuant to this
Section 5.1. Such election shall remain in effect and shall apply to the
Participant's total Account, as the same may increase or decrease from time to
time. An election pursuant to this Section 5.1 may be superseded by a
subsequent election, which subsequent election shall then apply to the
Participant's total Account, as the same may increase or decrease from time to
time. Notwithstanding the foregoing, no subsequent election pursuant to this
Section 5.1 shall be effective unless it is made at least 13 months prior to
the Participant's Separation from Service.
Section 5.2 Distributions upon a Key Executive's Pre-Retirement Separation
- ----------------------------------------------------------------------------
from Service
------------
The Account of a Key Executive who incurs a Separation from Service prior
to his or her Retirement and other than on account of his or her death shall
be paid to the Participant in a lump-sum distribution within thirty (30) days
following the date of such Separation from Service, notwithstanding any
election to the contrary made by the Participant pursuant to Section 5.4
hereof.
Section 5.3 Distributions upon a Participant's Death
- -----------------------------------------------------
(a) Notwithstanding anything to the contrary in the Plan, the remaining
balance of the Account of a Participant who dies (i) shall be paid to the
persons and entities designated by the Participant as his or her beneficiaries
for such purpose and (ii) shall be paid in the manner set forth in this
Section 5.3. With respect to a Participant who does not incur a Separation
from Service prior to his or her death, such balance shall be paid, as
specified by the Participant in an election made pursuant to this Section 5.3,
in a lump-sum distribution or in approximately equal annual installments over
5, 10 or 15 years. With respect to a Participant who does incur a Separation
from Service prior to his or her death, such balance shall be paid, as
specified by the Participant in an election made pursuant to this Section 5.3,
9
<PAGE>
in a lump-sum distribution or in approximately equal annual installments over
the remaining term of the 5, 10 or 15-year payment period elected pursuant to
Section 5.1 hereof. Payment(s) shall commence within thirty (30) days
following the date of death.
(b) At the time a Participant first elects to defer Qualified
Compensation under the Plan, he or she shall make an election pursuant to this
Section 5.3. Such election shall remain in effect and shall apply to the
Participant's total Account, as the same may increase or decrease from time to
time. An election pursuant to this Section 5.3 may be superseded by a
subsequent election, which subsequent election shall then apply to the
Participant's total Account, as the same may increase or decrease from time to
time. Notwithstanding the foregoing, no subsequent election pursuant to this
Section 5.3 shall be effective unless it is made at least 13 months prior to
the Participant's Separation from Service.
Section 5.4 Optional Distributions
- -----------------------------------
(a) At the time a Participant elects to defer Qualified Compensation for
any Plan Year, he or she may also elect, pursuant to this Section 5.4, to
receive a special, lump-sum distribution of any or all of the amount deferred
for such Plan Year on a date specified by the Participant in such election,
which date must be at least 24 months after the date of such election. Any
such special distribution shall be made within five (5) business days after
the date therefor specified by the Participant, unless the Participant shall
have died on or prior to such date, in which case no such special distribution
shall be made.
(b) An election pursuant to this Section 5.4 may be superseded by one
subsequent election; provided, however, that such subsequent election shall
not be effective unless: (i) it is irrevocable; (ii) it is made at least 13
months prior to the Participant's Separation from Service and at least 24
months prior to the date upon which the special distribution will be made; and
(iii) the date of the special distribution specified in the subsequent
election is earlier than the date specified in the initial election.
(c) Notwithstanding the foregoing, an election pursuant to this Section
5.4 with respect to the Partial First Plan Year may be superseded by two
subsequent elections; provided, however, that: (i) the first such subsequent
election shall not be effective unless it is made prior to March 30, 1996 and
at least 13 months prior to the Participant's Separation from Service and at
least 24 months prior to the date upon which the special distribution will be
made; and (ii) the second such subsequent election satisfies all the
requirements set forth in paragraph (b)(i), (ii) and (iii) of this Section
5.4.
10
<PAGE>
Section 5.5 Applicable Taxes
- -----------------------------
All distributions under the Plan shall be subject to withholding for all
amounts which the Company is required to withhold under federal, state or
local tax law.
ARTICLE VI
WITHDRAWALS FROM DEFERRED COMPENSATION ACCOUNTS
Section 6.1 Hardship Withdrawals from Accounts
- -----------------------------------------------
A Participant may make a withdrawal from the Participant's Account on
account of the Participant's Hardship, only to the extent that the Hardship is
not otherwise relievable:
(a) through reimbursement or compensation by insurance or otherwise,
(b) by liquidation of the Participant's assets (to the extent that such
liquidation does not itself cause a Hardship), or
(c) by cessation of deferrals under the Plan.
Section 6.2 Withdrawals after a Change in Control
- --------------------------------------------------
At any time within three years after the occurrence of a Change in
Control, a Key Executive may elect to withdraw all or any part of the Key
Executive's Account by delivering a written election to such effect to the
Administrator, provided, however, that if a Key Executive makes such an
election, (i) the Key Executive shall forfeit, and the Key Executive's Account
shall be debited with, an amount equal to 5% of the amount of the withdrawal
distribution, (ii) the Key Executive's deferral election for the Plan Year in
which the withdrawal distribution occurs shall be terminated with respect to
any Qualified Compensation which has not yet been deferred and (iii) the Key
Executive shall not be permitted to defer Qualified Compensation under the
Plan for the two Plan Years immediately following the Plan Year of the
withdrawal distribution.
Section 6.3 Voluntary Withdrawals
- ----------------------------------
At any time, a Participant may elect to withdraw all or any part of the
Participant's Account by delivering a written election to such effect to the
Administrator, provided, however, that if a Participant makes such an
election, (i) the Participant shall forfeit, and the Participant's Account
shall be debited with, an amount equal to 10% of the amount of the withdrawal
distribution, (ii) the Participant's deferral election for the Plan Year in
which the withdrawal distribution occurs shall be terminated with respect to
any Qualified Compensation which has not yet been deferred and (iii) the
Participant shall not be permitted to defer Qualified Compensation under the
Plan for the two Plan Years immediately following the year of the withdrawal
distribution.
11
<PAGE>
Section 6.4 Applicable Taxes
- -----------------------------
All withdrawals under the Plan shall be subject to withholding for all
amounts which the Company is required to withhold under federal, state or
local tax law.
ARTICLE VII
ADMINISTRATIVE PROVISIONS
Section 7.1 Administrator's Duties and Powers
- ----------------------------------------------
The Administrator shall conduct the general administration of the Plan in
accordance with the Plan and shall have all the necessary power, authority and
discretion to carry out that function. Among its necessary powers and duties
are the following:
(a) To delegate all or part of its function as Administrator to others
and to revoke any such delegation.
(b) To determine questions of eligibility of Participants and their
entitlement to benefits, subject to the provisions of Section 7.11.
(c) To select and engage attorneys, accountants, actuaries, trustees,
appraisers, brokers, consultants, administrators, physicians, or other persons
to render service or advice with regard to any responsibility the
Administrator or the Board has under the Plan, or otherwise, to designate such
persons to carry out fiduciary responsibilities under the Plan, and (together
with the Committee, the Company, the Board and the officers and Employees of
the Company) to rely upon the advice, opinions or valuations of any such
persons, to the extent permitted by law, being fully protected in acting or
relying thereon in good faith.
(d) To interpret the Plan and any relevant facts for purpose of the
administration and application of the Plan, in a manner not inconsistent with
the Plan or applicable law and to amend or revoke any such interpretation.
(e) To conduct claims procedures as provided in Section 7.11.
Section 7.2 Limitations Upon Powers
- ------------------------------------
The Plan shall be uniformly and consistently administered, interpreted
and applied with regard to all Participants in similar circumstances. The
Plan shall be administered, interpreted and applied fairly and equitably and
in accordance with the specified purposes of the Plan.
12
<PAGE>
Section 7.3 Final Effect of Administrator Action
- -------------------------------------------------
Except as provided in Section 7.11, all actions taken and all
determinations made by the Administrator in good faith shall be final and
binding upon all Participants, the Company and any person interested in the
Plan.
Section 7.4 Committee
- ----------------------
(a) The Administrator may, but need not, appoint a Committee consisting
of two or more members to hold office during the pleasure of the
Administrator. The Committee shall have such powers and duties as are
delegated to it by the Administrator. Committee members shall not receive
payment for their services as such.
(b) Appointment of Committee members shall be effective upon filing of
written acceptance of appointment with the Administrator.
(c) A Committee member may resign at any time by delivering written
notice to the Administrator.
(d) Vacancies in the Committee shall be filled by the Administrator.
(e) The Committee shall act by a majority of its members in office;
provided, however, that the Committee may appoint one of its members or a
delegate to act on behalf of the Committee on matters arising in the ordinary
course of administration of the Plan or on specific matters.
Section 7.5 Indemnification by the Company; Liability Insurance
- ----------------------------------------------------------------
The Company shall pay or reimburse any of the Company's officers,
directors, Committee members or Employees who are fiduciaries with respect to
the Plan for all expenses incurred by such persons in, and shall indemnify and
hold them harmless from, all claims, liability and costs (including reasonable
attorneys' fees) arising out of the good faith performance of their duties
under the Plan. The Company may obtain and provide for any such person, at
the Company's expense, liability insurance against liabilities imposed on such
person by law.
Section 7.6 Recordkeeping
- --------------------------
(a) The Administrator shall maintain suitable records of each
Participant's Account which, among other things, shall show separately
deferrals and the earnings credited thereon, as well as distributions and
withdrawals therefrom and records of its deliberations and decisions.
(b) The Administrator shall appoint a secretary, and at its discretion,
an assistant secretary, to keep the record of proceedings, to transmit its
decisions, instructions, consents or directions to any interested party, to
execute and file, on behalf of the Administrator, such documents, reports or
other matters as may be necessary or appropriate under ERISA and to perform
ministerial acts.
13
<PAGE>
(c) The Administrator shall not be required to maintain any records or
accounts which duplicate any records or accounts maintained by the Company.
Section 7.7 Statement to Participants
- --------------------------------------
By March 15 of each year, the Administrator shall furnish to each
Participant a statement setting forth the value of the Participant's Account
as of the preceding December 31 and such other information as the
Administrator shall deem advisable to furnish.
Section 7.8 Inspection of Records
- ----------------------------------
Copies of the Plan and records of a Participant's Account shall be open
to inspection by the Participant or the Participant's duly authorized
representatives at the office of the Administrator at any reasonable business
hour.
Section 7.9 Identification of Fiduciaries
- ------------------------------------------
The Administrator shall be the named fiduciary of the Plan and, as
permitted or required by law, shall have exclusive authority and discretion to
operate and administer the Plan.
Section 7.10 Procedure for Allocation of Fiduciary Responsibilities
- --------------------------------------------------------------------
(a) Fiduciary responsibilities under the Plan are allocated as follows:
(i) The sole duties, responsibilities and powers allocated to the
Board, any Committee and any fiduciary shall be those expressly provided in
the relevant Sections of the Plan.
(ii) All fiduciary duties, responsibilities, and powers not
allocated to the Board, any Committee or any fiduciary, are hereby allocated
to the Administrator, subject to delegation.
(b) Fiduciary duties, responsibilities and powers under the Plan may be
reallocated among fiduciaries by amending the Plan in the manner prescribed in
Section 8.6, followed by the fiduciaries' acceptance of, or operation under,
such amended Plan.
Section 7.11 Claims Procedure
- ------------------------------
(a) No distributions under this Plan to a Participant, former
Participant or Participant's beneficiary shall be made except upon a claim
filed in writing with the Committee, if in existence, or otherwise to a claims
official designated by the Administrator.
14
<PAGE>
(b) If the Committee or claims official wholly or partially denies the
claim, it or he shall, within a reasonable period of time after receipt of the
claim, provide the claimant with written notice of such denial, setting forth,
in a manner calculated to be understood by the claimant:
(i) the specific reason or reasons for such denial;
(ii) specific reference to pertinent Plan provisions on which the
denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(iv) an explanation of the Plan's claims review procedure.
(c) The Administrator shall provide each claimant with a reasonable
opportunity to appeal a denial of a claim to the Chief Executive Officer or
his or her authorized delegate for a full and fair review. The claimant or
his or her duly authorized representative:
(i) may request a review upon written application to the Chief
Executive Officer or his authorized delegate (which shall be filed with the
Committee or claims official);
(ii) may review pertinent documents; and
(iii) may submit issues and comments in writing.
(d) The Chief Executive Officer or his authorized delegate may establish
such time limits within which a claimant may request review of a denied claim
as are reasonable in relation to the nature of the benefit which is the
subject of the claim and to other attendant circumstances but which shall be
not less than sixty days after receipt by the claimant of written notice of
denial of his or her claim.
(e) The decision by the Chief Executive Officer or his delegate upon
review of a claim shall be made not later than sixty days after receipt by the
Chief Executive Officer or his authorized delegate of the 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 days after receipt of such request for review.
(f) 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 references to the pertinent Plan
provisions on which the decision is based.
15
<PAGE>
(g) To the extent permitted by law, the decision of the Committee or
claims official, if no appeal is filed, or the decision of the Chief Executive
Officer or his delegate on review, when warranted on the record and reasonably
based on the law and the provisions of the Plan, shall be final and binding on
all parties.
Section 7.12 Conflicting Claims
- --------------------------------
If the Administrator is confronted with conflicting claims concerning a
Participant's Account, the Administrator may interplead the claimants in an
action at law, or in an arbitration conducted in accordance with the rules of
the American Arbitration Association, as the Administrator shall elect in its
sole discretion, and in either case, the attorneys' fees, expenses and costs
reasonably incurred by the Administrator in such proceeding shall be paid from
the Participant's Account.
Section 7.13 Service of Process
- --------------------------------
The Secretary of Computer Sciences Corporation is hereby designated as
agent of the Plan for the service of legal process.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Termination of the Plan
- ------------------------------------
(a) While the Plan is intended as a permanent program, the Board shall
have the right at any time to declare the Plan terminated completely as to the
Company or as to any group, division or other operational unit thereof or as
to any affiliate thereof.
(b) Discharge or layoff of any Employees without such a declaration
shall not result in a termination of the Plan.
(c) In the event of any termination, the Board, in its sole and absolute
discretion may elect to:
(i) maintain Participants' Accounts, payment of which shall be
made in accordance with Articles V and VI; or
(ii) liquidate the portion of the Plan attributable to each
Participant as to whom the Plan is terminated and distribute each such
Participant's Account in a lump sum or pursuant to any method which is at
least as rapid as the distribution method elected by the Participant under
Section 5.4.
Section 8.2 Limitation on Rights of Participants
- -------------------------------------------------
The Plan is strictly a voluntary undertaking on the part of the Company
and shall not constitute a contract between the Company and any Employee or
16
<PAGE>
any Nonemployee Director, or consideration for, or an inducement or condition
of, the employment of an Employee or service of a Nonemployee Director.
Nothing contained in the Plan shall give any Employee or Nonemployee Director
the right to be retained in the service of a Company or to interfere with or
restrict the right of the Company, which is hereby expressly reserved, to
discharge or retire any Employee or Nonemployee Director, except as otherwise
provided by a written employment agreement between the Company and the
Employee or Nonemployee Director, at any time without notice and with or
without cause. Inclusion under the Plan will not give any Employee or
Nonemployee Director any right or claim to any benefit hereunder except to the
extent such right has specifically become fixed under the terms of the Plan.
The doctrine of substantial performance shall have no application to
Employees, Nonemployee Directors, Participants or any other persons entitled
to payments under the Plan.
Section 8.3 Consolidation or Merger; Adoption of Plan by Other Companies
- -------------------------------------------------------------------------
(a) In the event of the consolidation or merger of the Company with or
into any other entity, or the sale by the Company of substantially all of its
assets, the resulting successor may continue the Plan by adopting it in a
resolution of its Board of Directors. If within 90 days from the effective
date of such consolidation, merger or sale of assets, such successor
corporation does not adopt the Plan, the Plan shall be terminated in
accordance with Section 8.1.
(b) There shall be no merger or consolidation with, or transfer of the
liabilities of the Plan to, any other plan unless each Participant in the Plan
would have, if the combined or successor plans were terminated immediately
after the merger, consolidation, or transfer, an account which is equal to or
greater than his or her corresponding Account under the Plan had the Plan been
terminated immediately before the merger, consolidation or transfer.
Section 8.4 Errors and Misstatements
- -------------------------------------
In the event of any misstatement or omission of fact by a Participant to
the Administrator or any clerical error resulting in payment of benefits in an
incorrect amount, the Administrator shall promptly cause the amount of future
payments to be corrected upon discovery of the facts and shall cause the
Company to pay the Participant or any other person entitled to payment under
the Plan any underpayment in cash in a lump sum, or to recoup any overpayment
from future payments to the Participant or any other person entitled to
payment under the Plan in such amounts as the Administrator shall direct, or
to proceed against the Participant or any other person entitled to payment
under the Plan for recovery of any such overpayment.
Section 8.5 Payment on Behalf of Minor, Etc.
- ---------------------------------------------
In the event any amount becomes payable under the Plan to a minor or a
person who, in the sole judgment of the Administrator, is considered by reason
of physical or mental condition to be unable to give a valid receipt therefor,
17
<PAGE>
the Administrator may direct that such payment be made to any person found by
the Administrator in its sole judgment, to have assumed the care of such minor
or other person. Any payment made pursuant to such determination shall
constitute a full release and discharge of the Company, the Board, the
Administrator, the Committee and their officers, directors and employees.
Section 8.6 Amendment of Plan
- ------------------------------
The Plan may be wholly or partially amended by the Board from time to
time, in its sole and absolute discretion, including prospective amendments
which apply to amounts held in a Participant's Account as of the effective
date of such amendment and including retroactive amendments necessary to
conform to the provisions and requirements of ERISA or the Code or regulations
pursuant thereto; provided, however, that no amendment shall decrease the
amount of any Participant's Account as of the effective date of such
amendment. Notwithstanding the foregoing, Section 8.7 shall not be amended in
any respect on or after a Change in Control.
Section 8.7 Funding
- --------------------
(a) Subject to Section 8.7(b), all benefits payable under the Plan will
be paid from the general assets of the Company and no Participant or
beneficiary shall have any claim against any specific assets of the Company.
(b) Not later than the occurrence of a Change in Control, the Company
shall cause to be transferred to a grantor trust described in Section 671 of
the Code, assets equal in value to all accrued obligations under the Plan as
of one day following a Change in Control, in respect of both active employees
of the Company and retirees as of that date. Such trust by its terms shall,
among other things, be irrevocable. The value of liabilities and assets
transferred to the trust shall be determined by one or more nationally
recognized firms qualified to provide actuarial services as described in
Section 4 of the Computer Sciences Corporation Severance Plan for Senior
Management and Key Employees. The establishment and funding of such trust
shall not affect the obligation of the Company to provide benefits payments
under the terms of the Plan to the extent such benefits are not paid from the
trust.
Section 8.8 Governing Law
- --------------------------
The Plan shall be construed, administered and governed in all respects
under and by the laws of the State of California, except to the extent such
laws may be preempted by ERISA.
Section 8.9 Pronouns and Plurality
- -----------------------------------
The masculine pronoun shall include the feminine pronoun, and the
singular the plural where the context so indicates.
18
<PAGE>
Section 8.10 Titles
- --------------------
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
Section 8.11 References
- ------------------------
Unless the context clearly indicates to the contrary, a reference to a
statute, regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed statute, regulation or document.
EXHIBIT 10.13
COMPUTER SCIENCES CORPORATION
SEVERANCE PLAN FOR SENIOR MANAGEMENT
AND KEY EMPLOYEES
This Severance Plan (the "Plan") shall become effective with respect to
any particular Designated Employee (as defined below) as of the date a Senior
Management and Key Employee Severance Agreement, incorporating all or any
portion of the terms hereof, is executed between such Designated Employee and
Computer Sciences Corporation (the "Company").
1. Purpose
-------
The principal purposes of the Plan are to (i) provide an incentive to the
Designated Employees to remain in the employ of the Company, notwithstanding
any uncertainty and job insecurity which may be created by an actual or
prospective Change of Control, (ii) encourage the Designated Employee's full
attention and dedication to the Company currently and in the event of any
actual or prospective Change of Control, and (iii) provide an incentive for
the Designated Employees to be objective concerning any potential Change of
Control and to fully support any Change of Control transaction approved by the
Board of Directors.
2. Definitions
-----------
Certain terms not otherwise defined in this Plan shall have the meanings
set forth in this Section 2.
(a) Compensation. "Compensation" shall mean the sum of:
------------
(i) the Designated Employee's annual base salary as in effect
immediately prior to the date the Notice of Termination provided for in
Section 3(c) of the Plan is given or in effect immediately prior to the date
of the Change of Control, whichever is greater, and
(ii) the average annual cash "short-term incentive compensation
bonus," as defined below, for the Designated Employee, whether pursuant to a
then existing plan of the Company or otherwise, (x) over the three most recent
fiscal years preceding the year in which the Date of Termination occurs for
which a "short-term incentive compensation bonus" was paid or deferred or for
which the amount of "short-term incentive compensation bonus," if any, was
finally determined; or (y) for a Designated Employee employed by the Company
for less than the three fiscal years to which reference is made in (i), over
the most recent complete fiscal year or years prior to the Date of Termination
during which such Designated Employee was employed and for which a "short-term
incentive compensation bonus" was paid or for which the amount of "short-term
<PAGE>
incentive compensation bonus," if any, was finally determined; or (z) for a
Designated Employee employed by the Company for less than a single complete
fiscal year prior to the year in which the Date of Termination occurs, the
average annual cash "short-term incentive compensation bonus" shall be based
on the target annual bonus for the fiscal year during which the Date of
Termination occurs.
(b) Short-Term Incentive Compensation Bonus.
---------------------------------------
For purposes of this Plan, a "short-term incentive compensation bonus" shall
mean a lump sum cash amount or other form of payment including payment in
kind, whether contingent or fixed, determined on an annual basis under the
Company's Annual Management Incentive Plan dated April 2, 1983 or such
successor plan or plans as shall be in effect for the whole or partial fiscal
year or years applicable under Section 2(a) of this Plan.
(c) Change of Control.
-----------------
The term "Change of Control" shall have the same meaning as provided in the
SERP (as defined in Section 4, below) as such definition may be amended or
modified from time to time; provided, however, that such amendment or
modification shall only be effective for purposes of this Plan if made prior
to the Change of Control to which such amended or modified definition is
sought to be applied.
(d) Designated Employees.
--------------------
"Designated Employees" shall refer to those employees of the Company and its
subsidiaries who are parties to agreements with the Company, substantially in
the form of Exhibit A attached hereto (with such changes as may be approved by
the Board of Directors or the Compensation Committee or other duly authorized
committee thereof), incorporating terms and provisions of this Plan. Each
such agreement shall indicate whether the particular Designated Employee is in
one or more of Group A, Group B or Group C or such other Group as may
hereafter be duly defined by amendment of this Plan.
(e) Good Reason.
-----------
A Designated Employee's termination of employment with the Company shall be
deemed for "Good Reason" if it occurs within six months of any of the
following without the Designated Employee's express written consent:
(i) A substantial change in the nature, or diminution in the
status, of the Designated Employee's duties or position from those in effect
immediately prior to the Change of Control;
(ii) A reduction by the Company in the Designated Employee's
annual base salary as in effect on the date of a Change of Control or as in
effect thereafter if such compensation has been increased and such increase
was approved prior to the Change of Control;
2
<PAGE>
(iii) A reduction by the Company in the overall value of benefits
provided to the Designated Employee, as in effect on the date of a Change of
Control or as in effect thereafter if such benefits have been increased and
such increase was approved prior to the Change of Control. As used herein,
"benefits" shall include all profit sharing, retirement, pension, health,
medical, dental, disability, insurance, automobile, and similar benefits;
(iv) A failure to continue in effect any stock option or other
equity-based or non-equity based incentive compensation plan in effect
immediately prior to the Change of Control, or a reduction in the Designated
Employee's participation in any such plan, unless the Designated Employee is
afforded the opportunity to participate in an alternative incentive
compensation plan of reasonably equivalent value;
(v) A failure to provide the Designated Employee the same number
of paid vacation days per year available to him or her prior to the Change of
Control, or any material reduction or the elimination of any material benefit
or perquisite enjoyed by the Designated Employee immediately prior to the
Change of Control;
(vi) Relocation of the Designated Employee's principal place of
employment to any place more than 35 miles from the Designated Employee's
previous principal place of employment;
(vii) Any material breach by the Company of any provision of the
Plan or of any agreement entered into pursuant to the Plan or any stock option
or restricted stock agreement;
(viii) Conduct by the Company, against the Designated Employee's
volition, that would cause the Designated Employee to commit fraudulent acts
or would expose the Designated Employee to criminal liability; or
(ix) Any failure by the Company to obtain the assumption of the
Plan or any agreement entered into pursuant to the Plan by any successor or
assign of the Company;
provided that for purposes of clauses (ii) through (v) above, "Good Reason"
- --------
shall not exist (A) if the aggregate value of all salary, benefits, incentive
compensation arrangements, perquisites and other compensation is reasonably
equivalent to the aggregate value of salary, benefits, incentive compensation
arrangements, perquisites and other compensation as in effect immediately
prior to the Change of Control, or as in effect thereafter if the aggregate
value of such items has been increased and such increase was approved prior to
the Change of Control, or (B) if the reduction in aggregate value is due to
reduced performance by the Company, the business unit of the Company for which
3
<PAGE>
the Designated Employee is responsible, or the Designated Employee, in each
case applying standards reasonably equivalent to those utilized by the Company
prior to the Change of Control.
(f) Cause. For purposes of this Plan and any agreements entered into
pursuant to the Plan only, Cause shall mean:
(i) fraud, misappropriation, embezzlement or other act of
material misconduct against the Company or any of its affiliates;
(ii) conviction of a felony involving a crime of moral turpitude;
(iii) willful and knowing violation of any rules or regulations of
any governmental or regulatory body material to the business of the Company;
or
(iv) substantial and willful failure to render services in
accordance with the terms of this Agreement (other than as a result of
illness, accident or other physical or mental incapacity), provided that (A) a
demand for performance of services has been delivered to the Designated
Employee in writing by or on behalf of the Board of Directors of the Company
at least 60 days prior to termination identifying the manner in which such
Board of Directors believes that the Designated Employee has failed to perform
and (B) the Designated Employee has thereafter failed to remedy such failure
to perform.
3. Termination Following Change of Control
---------------------------------------
(a) Termination of Employment.
-------------------------
In the event the Designated Employee, following the date of a Change of
Control, either (1) has a voluntary employment termination for Good Reason
within twenty-four (24) full calendar months following such Change of Control,
or (2) has a voluntary termination of employment with or without Good Reason
more than twelve (12) full calendar months after, but within thirteen (13)
full calendar months following, such Change of Control, or (3) has an
involuntary employment termination for any reason other than for Cause within
thirty-six full calendar months following such Change of Control, such
Designated Employee shall be entitled to receive immediately upon such
employment termination such payments and benefits hereunder as such
Designated Employee shall be entitled to receive upon such employment
termination in accordance with Sections 2(d) and 5 of this Plan.
Notwithstanding any other provision of this Plan, no payments shall be made
under or measured by this Plan in the event that the Designated Employee's
employment is terminated by his Disability or by his death or for Cause.
4
<PAGE>
(b) Disability.
----------
If, as a result of the Designated Employee's incapacity due to physical or
mental illness, accident or other incapacity (as determined by the Board in
good faith, after consideration of such medical opinion and advice as may be
available to the Board from medical doctors selected by the Designated
Employee or by the Board or both separately or jointly), the Designated
Employee shall have been absent from his duties with the Company on a full-
time basis for six consecutive months and, within 30 days after written Notice
of Termination thereafter given by the Company, the Designated Employee shall
not have returned to the full-time performance of the Designated Employee's
duties, the Company may terminate the Designated Employee's employment for
"Disability".
(c) Notice of Termination.
---------------------
Any purported termination of the Designated Employee's employment by the
Company or the Designated Employee hereunder shall be communicated by a Notice
of Termination to the other party in accordance with the terms of the
agreement entered into pursuant to the Plan. For purposes of the Plan and any
agreement entered into pursuant hereto, a "Notice of Termination" shall mean a
written notice which shall indicate those specific termination provisions in
the Plan applicable to the termination and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for application
of the provisions so indicated.
(d) Date of Termination.
-------------------
"Date of Termination" shall mean (i) if the Designated Employee is terminated
by the Company for Disability, thirty (30) days after Notice of Termination is
given to the Designated Employee (provided that the Designated Employee shall
not have returned to the performance of the Designated Employee's duties on a
full-time basis during such thirty (30) day period) or (ii) if the Designated
Employee's employment is terminated by the Company for any other reason or by
the Designated Employee, the date on which a Notice of Termination is given.
4. Funding of SERP Obligations Upon Change Of Control
--------------------------------------------------
Upon the occurrence of a Change of Control, the Company shall fund that
portion, if any, of the obligations of the Company to the Designated Employee,
under any supplemental executive retirement plan ("SERP") that may then cover
the Designated Employee, that is not then irrevocably funded by establishing
and irrevocably funding a trust for the benefit of the Designated Employee.
Such trust shall be a grantor trust described in Internal Revenue Code Section
671. The trust shall provide for distribution of amounts to Designated
Employee in order to pay taxes, if any, that become due prior to payment of
supplemental pension benefit amounts pursuant to the trust. The amount of
such fund shall equal the then present value of the supplemental pension
obligation due as determined by a nationally recognized firm qualified to
provide actuarial services which has not rendered services to the Company
5
<PAGE>
during the two years preceding such determination. The actuary shall be
selected by the Company, subject to approval by the Designated Employee (which
approval shall not unreasonably be withheld), and paid by the Company. The
establishment and funding of such trust shall not affect the obligation of the
Company to provide supplemental pension payments under the terms of the
applicable SERP.
5. Severance Compensation upon Termination of Employment
-----------------------------------------------------
If the Designated Employee's employment with the Company shall be
terminated following a Change of Control as set forth in Section 3 of the
Plan, then the Company shall pay and provide as follows to such Designated
Employee:
(a) For a Designated Employee in Groups A or B, upon voluntary
termination for Good Reason within twenty-four (24) full calendar months
following such Change of Control, or upon involuntary employment termination
for any reason other than for Cause within thirty-six (36) full calendar
months following such Change of Control:
(i) Pay to the Designated Employee as severance pay in a lump
sum, in cash, on or before the tenth business day following the Date of
Termination, an amount equal to the multiple specified on Exhibit B and made
applicable to such Designated Employee by this Plan and such Designated
Employee's agreement hereunder, multiplied by the Designated Employee's
Compensation; and
(ii) Provide the Designated Employee, for the number of years
calculated for such Designated Employee pursuant to Section 5(a)(i) of this
Plan (or such shorter period as the Designated Employee may elect) with
disability, health, life and accidental death and dismemberment benefits
substantially similar to those benefits which the Designated Employee is
receiving immediately prior to the Change of Control or, if greater,
immediately prior to the Notice of Termination (followed by the period of
COBRA continuation if COBRA benefits are elected by the Designated Employee at
such Designated Employee's expense). Benefits otherwise receivable by the
Designated Employee pursuant to this Section 5(a)(ii)) shall be reduced to the
extent comparable benefits are actually received by the Designated Employee
during such period as the result of his or her employment with another person.
(b) For a Designated Employee in Group C:
A Designated Employee in Group C shall receive severance pay under
Section 5(a)(i) and the benefits under Section 5(a)(ii) as shown on Exhibit B
in the circumstance of voluntary termination with or without Good Reason more
6
<PAGE>
than twelve (12) full calendar months after, but within thirteen (13) full
calendar months following, such Change of Control, as such Designated
Employee's exclusive entitlement to payment and benefits in such circumstance
under this Plan.
6. Certain Further Payments By the Company
---------------------------------------
(a) Tax Reimbursement Payment.
-------------------------
In the event that any amount or benefit that may be paid, distributed or
otherwise provided to the Designated Employee by the Company or any
affiliated company, whether pursuant to this Plan or otherwise (collectively,
the "Covered Payments"), is or may become subject to the tax imposed under
Section 4999 of the Code (the "Excise Tax") or any similar tax that may
hereafter be imposed, the Company shall either pay to the Designated Employee
or irrevocably contribute for the benefit of the Designated Employee to a
trust conforming with the requirements of Section 4 above (and may be part of
that trust) established by the Company prior to the Change of Control giving
rise to the Excise Tax, at the time specified in Section 6(e) below, the Tax
Reimbursement Payment (as defined below). The Tax Reimbursement Payment is
defined as an amount, which when reduced by any Excise Tax on the Covered
Payments and any Federal, state and local income taxes, employment and excise
taxes (including the Excise Tax) on the Tax Reimbursement Payment (but without
reduction for any Federal, state or local income or employment taxes on such
Covered Payments), shall be equal to the product of any deductions disallowed
for Federal, state or local income tax purposes because of the inclusion of
the Tax Reimbursement Payment in Designated Employee's adjusted gross income
and the highest applicable marginal rate of Federal, state and local income
taxation, respectively, for the calendar year in which the Tax Reimbursement
Payment is to be made.
(b) Determining Excise Tax.
----------------------
For purposes of determining whether any of the Covered Payments shall be
subject to the Excise Tax and the amount of such Excise Tax:
(i) such Covered Payments shall be treated as "parachute
payments" within the meaning of Section 280G of the Code, and all "parachute
payments" in excess of the "base amount" (as defined under Section 280G(b)(3)
of the Code) shall be treated as subject to the Excise Tax, unless, and except
to the extent that, in the opinion of the "Accountants" (as defined below),
such Covered Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4) of the Code) in
excess of the "base amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
7
<PAGE>
(ii) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance with the
principles of Section 280G of the Code.
For the purposes of this Section 6 the "Accountants" shall mean the Company's
independent certified public accountants serving immediately prior to the
Change of Control. In the event that such Accountants decline to serve as the
Accountants for purposes of this Section 6 or are serving as accountant or
auditor for the individual, entity or group effecting the Change of Control,
the Designated Employee shall appoint another nationally recognized public
accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accountants hereunder). All
fees and expenses of the Accountants in connection with matters relating to
this Section 6 shall be paid by the Company.
(c) Applicable Tax Rates and Deductions.
-----------------------------------
For purposes of determining the amount of the Tax Reimbursement Payment, the
Designated Employee shall be deemed:
(i) to pay Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar year in which the
Tax Reimbursement Payment is to be made; and
(ii) to pay any applicable state and local income taxes at the
highest applicable marginal rate of taxation for the calendar year in which
the Tax Reimbursement Payment is to be made, net of the maximum reduction in
Federal income taxes which could be obtained from the deduction of such state
or local taxes if paid in such year (determined without regard to limitations
on deductions based upon the amount of the Designated Employee's adjusted
gross income.)
(d) Subsequent Events.
-----------------
(i) In the event that the Excise Tax is subsequently determined
by the Accountants to be less than the amount taken into account hereunder in
calculating the Tax Reimbursement Payment made, the Designated Employee shall
repay to the Company, at the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of such prior Tax Reimbursement
Payment that has been paid to the Designated Employee or to Federal, state or
local tax authorities on the Designated Employee's behalf and that would not
have been paid if such Excise Tax had been applied in initially calculating
such Tax Reimbursement Payment, plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding
the foregoing, in the event any portion of the Tax Reimbursement Payment to be
8
<PAGE>
refunded to the Company has been paid to any Federal, state or local tax
authority, repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Designated Employee, and interest
payable to the Company shall not exceed interest received or credited to the
Designated Employee by such tax authority for the period it held such portion.
(ii) In the event that the Excise Tax is later determined by the
Accountants to exceed the amount taken into account hereunder at the time the
Tax Reimbursement Payment is made (including, but not limited to, by reason of
any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess which Tax Reimbursement
Payment shall include any interest or penalty (any such payment in respect of
interest or penalty to be subject to the gross-up principles set forth in this
Section 6) payable with respect to such excess, at the time that the amount of
such excess is finally determined. For purposes of this Section 6(d)(ii), if
a final determination as to the Excise Tax applicable to a Covered Payment is
made by the Internal Revenue Service, or a court with jurisdiction, such
determination shall be deemed to be determined by the Accountants.
(iii) In the event it is later determined by the Accountants that
Designated Employee owes additional Federal, state or local income or
employment taxes with respect to any Tax Reimbursement Payment, the Company
shall promptly pay him the difference between (A) the Tax Reimbursement
Payment determined based on the Federal, state and local income and employment
taxes due in respect of the Tax Reimbursement Payment as so determined by the
Accountants and (B) the Tax Reimbursement Payment that had been previously
paid to him or for his benefit. For purposes of this Section 6(d)(iii),
determination by the Accountants shall include a final determination by the
Internal Revenue Service, a state or local government or tax agency or a court
with jurisdiction.
(e) Date of Payment.
---------------
The portion of the Tax Reimbursement Payment attributable to a Covered Payment
shall be paid to the Designated Employee or remitted to the appropriate tax
authority or irrevocably contributed for the benefit of the Designated
Employee to a trust as described in Section 4 above within ten (10) business
days following the payment, distribution or other provision of the Covered
Payment. If the amount of such Tax Reimbursement Payment (or portion thereof)
cannot be finally determined on or before the date on which payment,
distribution or provision is due, the Company shall either pay to the
Designated Employee or contribute for the benefit of the Designated Employee
to the trust described in the preceding sentence, an amount estimated in good
9
<PAGE>
faith by the Accountants to be the minimum amount of such Tax Reimbursement
Payment and shall pay the remainder of such Tax Reimbursement Payment (which
Tax Reimbursement Payment shall include interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than forty-five (45) calendar days after
payment, distribution or other provision of the related Covered Payment. In
the event that the amount of the estimated Tax Reimbursement Payment exceeds
the amount subsequently determined to have been due, such excess shall be
repaid or refunded pursuant to the provisions of Section 6(d)(i) above.
(f) The establishment and funding of the trust described in Section 4
above shall not affect the obligations of the Company to provide the benefits
subject to this Section 6.
7. Dispute Resolution; Claims Procedure; Arbitration
---------------------------------------------------
(a) Claims Procedure.
----------------
(i) Benefits will be provided to each Designated Employee as
specified in this Plan. If a Designated Employee believes that he has not
been provided with benefits due under the Plan, then the Designated Employee
may file a request for review under this procedure with the Company's Vice
President of Human Resources or Chief Financial Officer, as the Designated
Employee may elect, within ninety (90) days after the date he should have
received such benefits. Alternatively, such Designated Employee may elect the
arbitration procedure in Section 7(b) of this Plan. If such Designated
Employee elects to proceed under this Section 7(a) and files such a request
for a benefit under the Plan with the Company's Vice President of Human
Resources or Chief Financial Officer and that claim is denied, in whole or in
part, then within thirty (30) calendar days after making that request, the
Company's Officer with whom the Designated Employee shall have filed a request
for review under this Section 7(a)(i) shall notify the Designated Employee of
the specific reasons for the denial with specific references to pertinent Plan
provisions on which the denial is based. At that time the Designated Employee
will be advised of his right to appeal that determination and given a
description of any additional material or information necessary for the
Designated Employee to perfect an appeal, an explanation of why such material
or information is necessary, and an explanation of the Plan's review and
appeal procedure.
(ii) A Designated Employee may appeal from a determination or
denial under Section 7(a)(1) by submitting to the Plan Appeal Committee within
sixty-five (65) calendar days after receiving the notice of determination or
denial a written statement:
10
<PAGE>
(x) requesting a review by the Plan Appeal Committee of the
claim;
(y) setting forth all of the grounds upon which the request
for review is based and any facts in support thereof; and
(z) setting forth any issues or comments which the Designated
Employee deems relevant to the claim.
(iii) The Plan Appeal Committee shall be the Board of Directors of
the Company or its Compensation Committee or any other duly authorized
committee thereof, or any committee appointed by any such committee.
(iv) The Plan Appeal Committee shall act upon the appeal within
ninety (90) days or one hundred eighty (180) days in unusual circumstances, if
the Plan Appeal Committee in its reasonable discretion finds that such unusual
circumstances exist, after the later of its receipt of the appeal or its
receipt of all additional materials reasonably requested by the Plan Appeal
Committee. The Plan Appeal Committee shall review the claim and all written
materials submitted by the Designated Employee, and may require him to submit,
within ten (10) days of its written notice, such additional facts, documents,
or other evidence as the Plan Appeal Committee in its sole discretion deems
necessary or advisable in making such a review. On the basis of its review,
the Plan Appeal Committee shall make an independent good faith determination
with respect to the Designated Employee's claim.
(v) If the Plan Appeal Committee denies a claim in whole or in
part, the Committee shall give the Designated Employee written notice of its
decision setting forth the specific reasons for the denial and specific
references to the pertinent Plan provisions on which its decision was based.
The Designated Employee may then either pursue his claim in a judicial forum
or invoke the arbitration provisions of Section 7(b) of this Plan.
(b) Arbitration
-----------
(i) In the event of any dispute between the parties concerning
the validity, interpretation, enforcement or breach of this Agreement or in
any way related to the Designated Employee's employment or any termination of
such employment (including any claims involving any officers, managers,
directors, employees, shareholders or agents of the Company) excepting only
any rights the parties may have to seek injunctive relief, the dispute shall
be resolved by final and binding arbitration administered by JAMS/Endispute in
Los Angeles, California in accordance with the then existing JAMS/Endispute
Arbitration Rules and Procedures for Employment Disputes. Resolution by
arbitration, either in lieu of or after exhausting the procedures of Section
7(a) of this Plan, shall be at the election of the Designated Employee with
respect to any claim to which Section 7(a) shall apply. In the event of such
11
<PAGE>
an arbitration proceeding, the parties shall select a mutually acceptable
neutral arbitrator from among the JAMS/Endispute panel of arbitrators. In the
event the parties cannot agree on an arbitrator, the Administrator of
JAMS/Endispute shall appoint an arbitrator. Neither party nor the arbitrator
shall disclose the existence, content, or results of any arbitration hereunder
without the prior written consent of all parties, except as may be compelled
by court order. Except as provided herein, the Federal Arbitration Act shall
govern the interpretation and enforcement of such arbitration and all
proceedings. The arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of the state of California, or Federal law, or both,
as applicable and the arbitrator is without jurisdiction to apply any
different substantive law. The arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any
party and shall apply the standards governing such motions under the Federal
Rules of Civil Procedure. The arbitrator shall render an award and a written,
reasoned opinion in support thereof. Judgment upon the award may be entered
in any court having jurisdiction thereof. The parties intend this arbitration
provision to be valid, enforceable, irrevocable and construed as broadly as
possible. Pending the resolution of any dispute between the parties, the
Company shall continue prompt payment of all amounts due the Designated
Employee under this Agreement and prompt provision of all benefits to which
the Designated Employee is otherwise entitled.
(ii) Costs of arbitration, including reasonable attorney fees and
costs and the reasonable fees and costs of any experts incurred by the
Designated Employee, shall be borne and paid by the Company if the Designated
Employee prevails on any portion of his claims. Such fees and costs shall be
paid by the Company in advance of the final disposition of such claims, as
such fees are incurred, upon receipt of an undertaking by the Designated
Employee to repay such amounts if it is ultimately determined that he did not
prevail on any portion of his claims. Not later than the occurrence of a
Change of Control, the Company shall deposit not less than $5 million in a
grantor trust, as described in Internal Revenue Code Section 671, which shall
provide for distribution of amounts to Designated Employees in fulfillment of
the Company's obligations to pay their fees and costs as provided in the
preceding sentence. The funding of such trust shall be maintained at not less
than $5 million by further deposits by the Company as such payments of fees
and costs are made by the trustee or trustees of the trust. The arbitrator
shall make such interim awards respecting the funding of the trust and payment
of the fees and costs as shall be necessary and appropriate to assure the
prompt, regular interim payment of fees and costs as provided in this Section
7(b)(ii). Judgments upon any such interim awards may be entered in any court
having jurisdiction thereof. Such trust by its terms shall be irrevocable but
shall terminate upon the later of (x) the expiration of three years following
a Change of Control or (y) the disposition of all then pending claims under
the Plan by final arbitration award and final judgment, all time for appeals
12
<PAGE>
having expired, in any judicial proceedings respecting any such claims.
Immediately after termination of the trust, any funds remaining in the trust
and accumulated interest thereon shall revert to the Company.
(iii) Notwithstanding the foregoing provisions of this Section 7,
the Designated Employee and the Company agree that the Designated Employee or
the Company may seek and obtain otherwise available injunctive relief in Court
for any violation of obligations concerning confidential information or trade
secrets that cannot adequately be remedied at law or in arbitration.
8. Mitigation of Damages; Effect of Plan
-------------------------------------
(a) The Designated Employee shall not be required to mitigate damages or
the amount of any payment provided for under the Plan by seeking other
employment or otherwise, nor shall the amount of any payment provided for
under the Plan, including without limitation Section 5 of the Plan, be reduced
by any compensation earned by the Designated Employee as a result of
employment by another employer or by retirement benefits after the Date of
Termination, or otherwise except as expressly provided herein.
(b) Except as provided in Section 10, the provisions of the Plan, and
any payment provided for hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish the Designated Employee's existing rights, or
rights which would accrue solely as a result of the passage of time, under any
benefit plan, employment agreement or other contract, plan or arrangement.
9. Term; Amendments; No Effect On Employment Prior To Change Of Control
--------------------------------------------------------------------
(a) The Plan shall have an initial term of two years, which shall be
automatically extended by one year beginning on the first anniversary of the
date of adoption of the Plan and on each anniversary thereafter. The Plan
with respect to all Designated Employees or any particular Designated Employee
may be terminated or amended by the Board of Directors of the Company or by
its Compensation Committee or any other duly authorized Committee thereof;
provided that a termination or any amendment that reduces the benefits to the
Designated Employee provided hereunder or otherwise adversely affects the
rights of the Designated Employee, without the Designated Employee's prior
written consent: (i) may only be approved after the completion of the initial
two year term and prior to a Change of Control, and (ii) may not be effected
prior to the provision of' 24 months' advance notice thereof to the Designated
Employee. Termination or amendment of the Plan shall not affect any
obligation of the Company under the Plan which has accrued and is unpaid as of
the effective date of the termination or amendment. Notwithstanding the
13
<PAGE>
foregoing, the Company may change the definition of "Change of Control" as
provided in Section 2(c), above, subject to the limitations therein stated.
(b) Nothing in the Plan or any agreement entered into pursuant to the
Plan shall confer upon the Designated Employee any right to continue in the
employ of the Company prior to (or, subject to the terms of the Plan,
following) a Change of Control of the Company or shall interfere with or
restrict in any way the rights of the Company, which are hereby expressly
reserved except as may otherwise be provided under any other written agreement
between the Designated Employee and the Company,, to discharge the Designated
Employee at any time prior to (or, subject to the terms of the Plan,
following) the date of a Change of Control of the Company for any reason
whatsoever, with or without cause. The Designated Employee and the Company
acknowledge that, except as may otherwise be provided under any other written
agreement between the Designated Employee and the Company, the employment of
the Designated Employee by the Company is "at will," and if, prior to a Change
Of Control, the Designated Employee's employment with the Company terminates
for any reason or for no reason, then the Designated Employee shall have no
further rights under this Plan.
(c) The Company may withhold from any amounts payable under this Plan
such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(d) The Designated Employee's or the Company's failure to insist upon
strict compliance with any provision hereof or the failure to assert any right
the Designated Employee or the Company may have hereunder, including, without
limitation, the right of the Designated Employee to terminate employment for
Good Reason, as defined herein, shall not be deemed to be a waiver of such
provision or right or any other provision or right under this Plan.
10. Effect Of Other Agreements
--------------------------
Notwithstanding anything to the contrary provided in the Plan, (i) any
amounts payable to a Designated Employee pursuant to Section 5(a) of the Plan
shall be reduced by any amounts actually paid to such Designated Employee
following a termination of employment either pursuant to applicable law or
under any contract between the Designated Employee and the Company, in either
case that provides for or requires the payment of compensation or severance
benefits following a termination of employment and (ii) any benefits that may
be provided to a Designated Employee for three years or other period following
a termination of employment pursuant to Section 5(a)(ii) of the Plan shall be
reduced to the extent that substantially identical benefits are actually
received by the Designated Employee during such three year or other period
14
<PAGE>
under an existing severance agreement or requirement. It is expressly
understood, however, that no amounts payable hereunder shall be reduced by
amounts payable under the Company's pension or deferred compensation plans or
the SERP (as defined in Section 4, above) or by amounts payable as accrued
vacation or because of the acceleration of the benefits under the Company's
stock option and restricted stock plans.
15
<PAGE>
EXHIBIT A
COMPUTER SCIENCES CORPORATION
SENIOR MANAGEMENT AND KEY EMPLOYEE
SEVERANCE AGREEMENT
This SENIOR MANAGEMENT AND KEY EMPLOYEE SEVERANCE AGREEMENT (this
"Agreement"), dated as of _______________ is made and entered into by and.
between Computer Sciences Corporation, a Nevada corporation (the "Company"),
and _____________________ (the "Executive").
R E C I T A L S
- - - - - - - -
This Agreement is being entered into in accordance with the Severance
Plan attached hereto as Annex 1 (the "Plan") in order to set forth the
specific severance compensation which the Company agrees that it will pay to
the Executive if the Executive employment with the Company terminates under
certain circumstances described in the Plan.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the continued service of the
Executive as an employee of the Company, the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto agree as
follows:
1. Agreement to Provide Plan Benefits.
----------------------------------
The Plan (as it may hereafter be amended or modified in accordance with the
terms thereof) is hereby incorporated into this Agreement in full and made a
part hereof as though set forth in full in this Agreement. The Executive is
hereby designated a member of Group(s) ___________ under the Plan and shall be
entitled to all of the rights and benefits applicable to employees of the
Company in such Group(s) under the Plan. The Company agrees to be bound by
the Plan and to provide to the Executive all of the benefits provided to
employees of the Company who are members of Group(s) __________ under the Plan
subject to the terms and conditions of the Plan. Terms not otherwise defined
in this Agreement shall have the meanings set forth in the Plan.
2. Heirs and Successors.
--------------------
(a) Successors of the Company.
-------------------------
The Company will require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession transaction shall be a breach of this
<PAGE>
Agreement and shall entitle the Executive to terminate his or her employment
with the Company within six months thereafter for Good Reason and to receive
the benefits provided under the Plan in the event of termination for Good
Reason following a Change of Control. As used in this Agreement, "Company"
shall mean the Company as defined above and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 2 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(b) Heirs of the Executive.
----------------------
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Executive
should die after the conditions to payment of benefits set forth in Section 5
of the Plan have been met and any amounts are still payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's beneficiary,
successor, devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate. Until a contrary designation is made to
the Company, the Executive hereby designates as his beneficiary under this
Agreement the person whose name appears below his signature on page 3 of this
Agreement.
3. Notice.
------
For purposes of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, as follows: if to the Company -- Computer
Sciences Corporation, 2100 East Grand Avenue, El Segundo, California 90245
Attention: Vice President, General Counsel and Secretary; and if to the
Designated Employee at the address specified at the end of this Agreement.
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices
of change of address shall be effective only upon receipt.
4. Miscellaneous.
-------------
No provisions of this Agreement or the Plan may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Designated Employee and the Company, except as provided
in Section 9(a) of the Plan. No waiver by any party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
5. Validity.
--------
The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
2
<PAGE>
6. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute
one and the same instrument.
7. Gender.
------
In this Agreement (unless the context requires otherwise), use of' any
masculine term shall include the feminine.
8. Rescission.
----------
The Company agrees that this Agreement and the right to receive payments
pursuant to the Plan and this Agreement may be rescinded at any time by the
Executive giving written notice to such effect to the Company in accordance
with Section 3 above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPUTER SCIENCES
CORPORATION EXECUTIVE
By:_________________________ ____________________________
(Signature)
____________________________
(Name)
____________________________
____________________________
(Address for Notice)
____________________________
(Designated Beneficiary)
____________________________
____________________________
(Address for Beneficiary)
3
<PAGE>
EXHIBIT B
<TABLE>
Group
-----
<CAPTION>
A B C
--- --- ---
<S> <C> <C> <C>
Multiple of compensation
under Sections 3 and 5(a)(i) 3 2 3
</TABLE>
<PAGE>
SPECIAL EXHIBIT TO
COMPUTER SCIENCES CORPORATION SEVERANCE PLAN FOR
SENIOR MANAGEMENT AND KEY EMPLOYEES
February 2, 1998
The following executives are Designated Employees under the Computer Sciences
Corporation Severance Plan For Senior Management and Key Employees, with
reference to the Groups identified at Exhibit B and in the text of the Plan:
Groups A and C:
- --------------
Van B. Honeycutt Chairman, President and Chief Executive Officer
Group B:
- -------
Edward P. Boykin Vice President
Milton E. Cooper Vice President and President, Systems Group
Gerard E. Dube President, Integrated Business Services
Hayward D. Fisk Vice President, General Counsel and Secretary
J. Douglas Gray Chief Executive Officer, CSC Index
Leon J. Level Vice President, Chief Financial Officer and
Treasurer
Ronald W. Mackintosh Vice President and President, European Group
Thomas R. Madison Jr. Vice President and President, Financial
Services Group
C. Bruce Plowman Vice President, Corporate and Marketing
Communications
Thomas C. Robinson President, Technology Management Group
James P. Saviano President, Consulting Group
Arthur H. Spiegel III President, Healthcare Group
Carl D. Thorne Vice President, Finance and Administration,
Technology Management Group
Paul T. Tucker Vice President, Corporate Development
W. Brinson Weeks Vice President, Office of the Chairman,
President and Chief Executive Officer
Thomas Williams Vice President and President, Chemical, Oil
and Gas Group
EXHIBIT 10.14
COMPUTER SCIENCES CORPORATION
SENIOR MANAGEMENT AND KEY EMPLOYEE
SEVERANCE AGREEMENT
This SENIOR MANAGEMENT AND KEY EMPLOYEE SEVERANCE AGREEMENT (this
"Agreement"), dated as of February 2, 1998 is made and entered into by and.
between Computer Sciences Corporation, a Nevada corporation (the "Company"),
and Van B. Honeycutt (the "Executive").
R E C I T A L S
- - - - - - - -
This Agreement is being entered into in accordance with the Severance
Plan attached hereto as Annex 1 (the "Plan") in order to set forth the
specific severance compensation which the Company agrees that it will pay to
the Executive if the Executive employment with the Company terminates under
certain circumstances described in the Plan.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the continued service of the
Executive as an employee of the Company, the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto agree as
follows:
1. Agreement to Provide Plan Benefits.
----------------------------------
The Plan (as it may hereafter be amended or modified in accordance with the
terms thereof) is hereby incorporated into this Agreement in full and made a
part hereof as though set forth in full in this Agreement. The Executive is
hereby designated a member of Groups A and C under the Plan and shall be
entitled to all of the rights and benefits applicable to employees of the
Company in such Groups under the Plan. The Company agrees to be bound by the
Plan and to provide to the Executive all of the benefits provided to employees
of the Company who are members of Groups A and C under the Plan subject to the
terms and conditions of the Plan. Terms not otherwise defined in this
Agreement shall have the meanings set forth in the Plan. For purposes of this
Agreement, Good Reason for the Executive's termination of employment with the
Company under Section 2(e)(i) of the Plan shall be deemed to include, without
limitation, a change in the reporting structure so that the Executive reports
to some person or entity other than the Board of Directors of the Company or
is subject to the direct or indirect authority or control of a person or
entity other than the Board.
2. Heirs and Successors.
--------------------
(a) Successors of the Company.
-------------------------
The Company will require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
<PAGE>
would be required to perform it if no such succession or assignment had taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession transaction shall be a breach of this
Agreement and shall entitle the Executive to terminate his or her employment
with the Company within six months thereafter for Good Reason and to receive
the benefits provided under the Plan in the event of termination for Good
Reason following a Change of Control. As used in this Agreement, "Company"
shall mean the Company as defined above and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the agreement
provided for in this Section 2 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
(b) Heirs of the Executive.
----------------------
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Executive
should die after the conditions to payment of benefits set forth in Section 5
of the Plan have been met and any amounts are still payable to him hereunder,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's beneficiary,
successor, devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate. Until a contrary designation is made to
the Company, the Executive hereby designates as his beneficiary under this
Agreement the person whose name appears below his signature on page 3 of this
Agreement.
3. Notice.
------
For purposes of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, as follows: if to the Company -- Computer
Sciences Corporation, 2100 East Grand Avenue, El Segundo, California 90245
Attention: Vice President, General Counsel and Secretary; and if to the
Designated Employee at the address specified at the end of this Agreement.
Notice may also be given at such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices
of change of address shall be effective only upon receipt.
4. Miscellaneous.
-------------
No provisions of this Agreement or the Plan may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Designated Employee and the Company, except as provided
in Section 9(a) of the Plan. No waiver by any party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
2
<PAGE>
5. Validity.
--------
The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
6. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute
one and the same instrument.
7. Gender.
------
In this Agreement (unless the context requires otherwise), use of' any
masculine term shall include the feminine.
8. Rescission.
----------
The Company agrees that this Agreement and the right to receive payments
pursuant to the Plan and this Agreement may be rescinded at any time by the
Executive giving written notice to such effect to the Company in accordance
with Section 3 above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPUTER SCIENCES
CORPORATION EXECUTIVE
By: /s/Leon J. Level /s/Van B. Honeycutt
______________________ ___________________________
(Signature)
Van B. Honeycutt
___________________________
(Name)
___________________________
___________________________
(Address for Notice)
___________________________
(Designated Beneficiary)
___________________________
___________________________
(Address for Beneficiary)
3
EXHIBIT 10.15
COMPUTER SCIENCES CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
Purpose
-------
The purpose of this Supplemental Executive Retirement Plan ("Supplemental
Plan") is to provide retirement benefits to designated officers and key
executives of Computer Sciences Corporation (the "Company") in addition to
retirement benefits that may be payable under the Computer Sciences
Corporation Employee Pension Plan, and in addition to any other retirement
plan (other than the social security system to the extent provided herein)
under which benefits may be payable with respect to such person.
It is intended that this Supplemental Plan be a plan "for a select group
of management or highly compensated employees" as set forth in Section 201(2)
of the Employee Retirement Income Security Act of 1974.
Subject to Article X hereof, benefits under this Supplemental Plan shall
be payable solely from the general assets of the Company and no Participant or
other person shall be entitled to look to any source for payment of such
benefits other than the general assets of the Company.
ARTICLE II
Effective Date/Restatement Date
-------------------------------
The Supplemental Plan was effective as of September 1, 1985. It is hereby
amended and restated effective February 2, 1998.
ARTICLE III
Participants
------------
No person shall be a Participant in this Supplemental Plan unless (a)
such individual is specifically designated as such in a written instrument
executed by the Chief Executive Officer of the Company (the "Chief Executive
Officer"), and (b) such individual has consented to be governed by the terms
of this Supplemental Plan by execution of a written instrument in form
satisfactory to the Company.
A person shall cease to be a Participant in this Supplemental Plan in the
event of (a) a Plan amendment having such effect, or (b) the occurrence of an
event described in this Supplemental Plan which terminates such participation,
or (c) prior to a Change in Control (as hereinafter defined), the Chief
<PAGE>
Executive Officer notifies such person, in writing, of the discontinuance of
such person's participation pursuant to Article XVIII of this Supplemental
Plan. In determining whether any person shall commence or cease to be a
Participant herein, the Chief Executive Officer, acting in such capacity,
shall have complete and unfettered discretion.
ARTICLE IV
Retirement Benefits
-------------------
The amount of retirement benefit payable to each Participant upon
Separation from Service (as defined in paragraph (d) below) shall be as
determined in this Article IV.
(a) A Participant who is entitled to receive a benefit under the
Computer Sciences Corporation Employee Pension Plan ("Pension Plan"), shall be
entitled to receive his Excess Benefit under this Supplemental Plan. The
Excess Benefit is the additional monthly amount which the Participant would
otherwise be entitled to receive under the Pension Plan as if the Participant
had elected the normal form of life annuity payment option under the Pension
Plan except for the limitations imposed by Sections 401(a)(17) and 415 of the
Internal Revenue Code, as amended. In addition to the benefit described in
this paragraph (a), a benefit as described in paragraph (b) following shall be
payable to the Participant.
(b) Each Participant, upon Separation from Service on or after
attainment of age sixty-two (62) (the "Retirement Date"), shall receive an
amount as determined under this paragraph (b) which is payable monthly in the
form of a life annuity. The amount payable shall be equal to one-twelfth
(1/12) of fifty percent (50%) of the Participant's Average Base Salary Rate
(as defined in paragraph (d) below) reduced by the amount determined under
paragraph (c) below and, as applicable, paragraph (e) below.
(c) The amount determined under this paragraph (c) shall generally be
equal to the primary social security benefit paid or payable to the
Participant at the time benefits commence under this Supplemental Plan,
whether or not the Participant is denied social security benefits because of
other income or voluntarily forgoes social security income. However, where a
Participant commences to receive benefits under this Supplemental Plan prior
to attaining the minimum age (the "Minimum Social Security Age") at which he
will be entitled to commence receiving social security benefits (currently age
sixty-five (65)), his benefits under this Plan shall be reduced by the amount
of social security benefits it is estimated he would be entitled to receive
monthly. The estimated social security benefit will be calculated based on the
Participant's compensation through his Separation from Service date as though
he were the Minimum Social Security Age on such date, and in accordance with
social security rules in effect at the time of his Separation from Service.
2
<PAGE>
(d) The term "Base Salary Rate" means the annual salary rate of a
Participant exclusive of overtime, bonus, incentive or any other type of
special compensation. The term "Average Base Salary Rate" means the average of
the highest three (3) of the last five (5) Base Salary Rates of a Participant
which are the Base Salary Rates in effect on his Retirement Date and on the
same day and month for each of the four (4) years (or the period of Continuous
Service if fewer than four (4) years) immediately preceding the Retirement
Date.
Unless otherwise determined in writing with respect to a Participant by
the Chief Executive Officer, the term "Continuous Service" means the period of
service without interruption of a person commencing as of the date of hire of
such person by the Company or an Affiliate and ending on the date of
separation from service for any reason from the Company and all Affiliates
("Separation from Service"). The term "Affiliate" means a corporation or other
entity of which fifty-one percent (51%) or more of the capital stock or
capital or profits interest (in the case of a noncorporate entity) is directly
or indirectly owned by the Company. A medical leave of absence not exceeding
twelve (12) months authorized by a Company written policy or any other leave
of absence authorized by a Company written policy or approved in writing by
the Chief Executive Officer shall not be deemed an interruption in Continuous
Service or a Separation from Service.
In the event the Company acquires a corporation or other entity
("Acquisition"), and any employee of the Acquisition, by written determination
of the Chief Executive Officer of the Company, becomes a Participant in the
Supplemental Plan, such Participant's period of Continuous Service shall
commence no sooner than the date the Acquisition becomes an Affiliate of the
Company unless the Company's Chief Executive Officer otherwise determines and
so confirms in writing.
(e) If upon Separation from Service on or after attaining age sixty-two
(62), or upon the granting of a special early separation benefit pursuant to
paragraph (b) of Article V, a Participant has fewer than twelve (12) years of
Continuous Service, the benefit otherwise payable under this Supplemental Plan
shall be proportionately reduced, except for the benefit payable under
paragraph (a) of this Article IV which shall not be reduced. By way of
example, if a Participant otherwise entitled to benefits hereunder commencing
at age sixty-two (62) has completed only ten (10) years of Continuous Service
upon attainment of age sixty-two (62), such Participant's benefit shall be
10/12, or 83.33%, of the benefit otherwise payable hereunder.
Unless expressly determined to the contrary in writing by the Chief
Executive Officer, no period of service completed by a person after attainment
of age sixty-five (65) and no adjustment to any person's Base Salary Rate
which occurs after attainment of age sixty-five (65) shall be taken into
account in computing benefits hereunder.
3
<PAGE>
ARTICLE V
Eligibility for Benefits
------------------------
(a) Participants shall become eligible to commence receiving retirement
benefits under this Supplemental Plan after Separation from Service on or
after attaining age sixty-two (62) and such benefits shall be calculated in
accordance with the provisions of Article IV. Except as otherwise provided in
paragraph (a) of Article IV and in Articles VII, IX and X, no Participant in
this Supplemental Plan shall have any vested interest in or right to receive a
benefit hereunder until attainment of the age of sixty-two (62). Unless
otherwise determined in writing by the Chief Executive Officer, any
interruption in the Continuous Service of a Participant herein prior to the
attainment of age sixty-two (62) shall terminate the participation in this
Supplemental Plan of such Participant, and no benefit shall be payable to or
with respect to such Participant.
(b) In the sole and unfettered discretion of the Chief Executive
Officer, a Participant whose Separation from Service occurs prior to
attainment of age sixty-two (62) may qualify for a special early separation
benefit, payable monthly as calculated in accordance with the provisions of
Article IV, except as follows:
(i) For purposes of determining the Participant's Base Salary
Rate, the Average Base Salary Rate and the number of years of Continuous
Service completed by the Participant, the Participant's date of Separation
from Service shall apply instead of the date of the Participant's attainment
of age sixty-two (62); and
(ii) For each twelve (12) month period by which the date of
commencement of the Participant's benefit precedes the Participant's sixty-
second (62nd) birthday, the benefit otherwise payable shall be reduced by five
percent (5%), except for the benefit payable under paragraph (a) of Article IV
which shall not be reduced. Proportionate fractional reduction shall be used
for periods of fewer than twelve (12) months.
ARTICLE VI
Form of Benefit Payments
------------------------
(a) Except as provided in Article VII, benefits payable based on the
calculations in Article IV of this Supplemental Plan shall be paid monthly for
the life-time of the Participant (unless an optional form is selected under
paragraphs (b) or (c) of this Article VI). Upon the death of the Participant,
benefits shall continue to be paid to the Participant's spouse for the
lifetime of such spouse at the rate of fifty percent (50%) of Participant's
benefit, provided certain conditions are met. The conditions of such Spousal
Benefit are (1) that the spouse shall be married to the Participant as of the
4
<PAGE>
date of the Participant's Separation from Service and (2) the spouse shall be
no more than five years younger than the Participant. In the event the spouse
is more than five years younger than the Participant, the Participant may
elect to receive benefit payments in the form of a joint and survivor option
as described in paragraph (c) following.
(b) Any Participant, who before September 1, 1993 has commenced to
receive benefits and has not made a written election to receive an annuity
pursuant to paragraph (a) preceding or paragraph (c) following, shall be
entitled to one hundred twenty (120) monthly benefit payments in the amount
specified in paragraph (b) of Article IV preceding and a life annuity of the
Excess Benefit as defined in paragraph (a) of Article IV preceding. If a
Participant, who before September 1, 1993, has commenced to receive benefits
and has not made a written election to receive an annuity pursuant to
paragraph (a) preceding or paragraph (c) following, dies after Separation from
Service and before receiving one hundred and twenty (120) monthly benefit
payments, the remainder of the one hundred and twenty (120) monthly benefit
payments shall be made to the Participant's designated beneficiary or, if no
such beneficiary is then living or no such beneficiary can be located, to the
Participant's estate. In the event a Participant has made a written election,
prior to September 1, 1993, to receive an annuity pursuant to paragraph (a)
preceding or paragraph (c) following, no benefit shall be payable under this
paragraph (b), except that any Excess Benefit under the Pension Plan, as
provided in paragraph (a) of Article IV, shall be payable at the rate of fifty
percent (50%) thereof to the Participant's spouse.
(c) In the event that the Participant's spouse is more than five years
younger than Participant, at any time prior to the later of September 1, 1993
or the commencement of benefits under this Supplemental Plan, a Participant
may, in lieu of receiving benefits in the form described in paragraph (a) of
this Article VI, elect to receive benefit payments under this Supplemental
Plan in the form of a joint and survivor option providing monthly benefits for
the lifetime of the Participant with a stipulated percentage of such amount
continued after the Participant's death to the spouse to whom the Participant
is married as of the date of the Participant's Separation from Service, for
the lifetime of such spouse. The amount of monthly payments available under
this option shall be determined by reference to factors such as the
Participant's life expectancy, the life expectancy of the Participant's
spouse, prior benefits received under the Supplemental Plan, and the
percentage of the Participant's monthly benefit which is continued after the
Participant's death to the Participant's spouse, so that the value of the
joint and survivor option is the actuarial equivalent of the benefits
otherwise payable under paragraph (a) (or paragraph (b) if the Participant has
elected coverage under paragraph (b) preceding) of this Article VI inclusive
of the Participant and the spousal fifty percent (50%) survivor benefits,
which shall be calculated assuming the Participant's spouse was exactly five
years younger than Participant. In determining the monthly amount payable
under the joint and survivor option with respect to any Participant, the
5
<PAGE>
Company may rely upon such information as it, in its sole discretion, deems
reliable, including but not limited to, the opinion of an enrolled actuary or
annuity purchase rates quoted by an insurance company licensed to conduct an
insurance business in the State of California. The election of a joint and
survivor option is irrevocable after benefit payments have commenced, and the
monthly amount payable during the lifetime of the Participant shall in no
event be adjusted by reason of the death of the Participant's spouse prior to
the death of the Participant, or by reason of the dissolution of the marriage
between the Participant and such spouse, or for any other reason.
ARTICLE VII
Pre-retirement Death Benefits
-----------------------------
In the event of the death of a Participant hereunder during a period of
Continuous Service and participation in this Supplemental Plan, the
beneficiary or the spouse of the Participant shall be entitled to benefits as
provided below in paragraphs (a) and (b):
(a) Participant's spouse shall be entitled to a fifty percent (50%) or
the actuarial equivalent spousal benefit (as determined pursuant to Article
VI, paragraphs (a) or (c), as applicable), attributable to Participant's
Excess Benefit under the Pension Plan provided the Participant is entitled to
receive a benefit under the Pension Plan.
(b) At the written election of the Participant, either a benefit under
paragraph (i) below or a benefit under paragraph (ii) below shall be paid by
the Company. Such election shall be signed by the Participant and notarized
and, if the Participant is married at the time of election, the election must
also be signed by the Participant's spouse and notarized. The latest election
on file in the Company's records shall be controlling.
(i) A lump sum death benefit shall be payable by the Company to
the Participant's designated beneficiary or, if no such beneficiary is then
living or no such beneficiary can be located, to the Participant's estate. The
amount of such death benefit shall be two (2) times the Participant's Base
Salary Rate in effect on the date of the Participant's death. On the written
request of a beneficiary but subject to the approval in writing of the Chief
Executive Officer, the amount payable under this paragraph (b)(i) may be paid
to a beneficiary in monthly or other installments over a period not exceeding
one hundred and twenty (120) months.
(ii) Participant's spouse shall receive a spousal fifty percent
(50%) or the actuarial equivalent spousal benefit (as determined pursuant to
Article Vl, paragraphs (a) or (c), as applicable), as provided for in
6
<PAGE>
paragraph (a) preceding and in Article IV and Article VI. In the event a
Participant is not married at the time of Participant's death and the
Participant has elected the fifty percent (50%) spousal benefit, a lump sum
death benefit shall be payable in accordance with paragraph (b)(i) preceding.
No benefits shall be payable under this Article VII if the Participant's
death occurs as a result of an act of suicide within twenty-five (25) months
after commencement of participation in this Supplemental Plan.
ARTICLE VIII
No Disability Benefits
----------------------
No disability benefit is payable under this Supplemental Plan.
ARTICLE IX
Right to Amend, Modify, Suspend or Terminate Plan
-------------------------------------------------
By action of the Company's Board of Directors, the Company may amend,
modify, suspend or terminate this Supplemental Plan without further liability
to any employee or former employee or any other person. Notwithstanding the
preceding sentence:
(a) this Supplemental Plan may not be amended, modified, suspended or
terminated as to a Participant whose Separation from Service has occurred and
who is entitled to receive or has commenced to receive benefits under this
Supplemental Plan, without the express written consent of such Participant or,
if deceased, such Participant's designated beneficiary or, if no beneficiary
is then living or if no beneficiary can be located, such Participant's legal
representative; and
(b) following a Change in Control (as defined in Article X), this
Supplemental Plan may not be amended, modified, suspended or terminated as to
any Participant who was a Participant prior to such Change in Control, without
the express written consent of such Participant.
7
<PAGE>
ARTICLE X
Change in Control
-----------------
The term "Change in Control" means, after the effective date of this
Supplemental Plan, (a) the acquisition by any person, entity or group (as
defined in Section 13(d)3 of the Securities Exchange Act of 1934, as amended)
as beneficial owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
then outstanding securities of the Company, (b) a change during any period of
two (2) consecutive years of a majority of the Board of Directors as
constituted as of the beginning of such period, unless the election of each
director who was not a director at the beginning of such period was approved
by vote of at least two-thirds of the directors then in office who were
directors at the beginning of such period, (c) a sale of substantially all of
the property and assets of the Company, (d) a merger, consolidation,
reorganization or other business combination to which the Company is a party
and the consummation of which results in the outstanding voting securities of
the Company being exchanged for or converted into cash, property and/or
securities not issued by the Company, (e) a merger, consolidation,
reorganization or other business combination to which the Company is a party
and the consummation of which does not result in the outstanding voting
securities of the Company being exchanged for or converted into cash, property
and/or securities not issued by the Company, provided that the outstanding
voting securities of the Company immediately prior to such business
combination (or, if applicable, the securities of the Company into which such
voting securities are converted as a result of such business combination)
represent less than 50% of the voting power of the Company immediately
following such business combination, or (f) any other event constituting a
change in control of the Company for purposes of Schedule 14A of Regulation
14A under the Securities Exchange Act of 1934.
In the event a Participant who was a Participant as of the date of a
Change in Control either (a) has an involuntary Separation from Service for
any reason (which, for purposes of this Article X, shall include a voluntary
Separation from Service for Good Reason, as hereinafter defined) within
thirty-six full calendar months following such Change in Control, or (b) has a
voluntary Separation from Service for any reason other than Good Reason
(including the death of the Participant) more than twelve (12) full calendar
months after, but within thirty-six (36) full calendar months following, such
Change in Control, such Participant shall be entitled to receive immediately
upon such Separation from Service benefits hereunder in accordance with
Articles IV, Vl and Vll, as applicable, without regard to approval by the
Chief Executive Officer or any other person(s). Such benefits shall be
calculated as if, on the date of such Separation from Service, the Participant
(i) had completed a number of years of Continuous Service equal to the greater
of twelve (12) or the actual number of years of his or her Continuous Service,
and (ii) had attained an age equal to the greater of sixty-two (62) or his or
her actual age.
8
<PAGE>
For purposes of this Supplemental Plan, a Participant's voluntary
Separation from Service shall be deemed to be for "Good Reason" if it occurs
within six months of any of the following without the Participant's express
written consent:
(a) a substantial change in the nature, or diminution in the status, of
the Participant's duties or position from those in effect immediately prior to
the Change in Control;
(b) a reduction by the Company in the Participant's annual base salary
as in effect on the date of a Change in Control or as in effect thereafter if
such compensation has been increased and such increase was approved prior to
the Change in Control;
(c) a reduction by the Company in the overall value of benefits provided
to the Participant, as in effect on the date of a Change in Control or as in
effect thereafter if such benefits have been increased and such increase was
approved prior to the Change in Control (as used herein, "benefits" shall
include all profit sharing, retirement, pension, health, medical, dental,
disability, insurance, automobile, and similar benefits);
(d) a failure to continue in effect any stock option or other equity-
based or non-equity based incentive compensation plan in effect immediately
prior to the Change in Control, or a reduction in the Participant's
participation in any such plan, unless the Participant is afforded the
opportunity to participate in an alternative incentive compensation plan of
reasonably equivalent value;
(e) a failure to provide the Participant the same number of paid
vacation days per year available to him prior to the Change in Control, or any
material reduction or the elimination of any material benefit or perquisite
enjoyed by the Participant immediately prior to the Change in Control;
(f) relocation of the Participant's principal place of employment to any
place more than 35 miles from the Participant's previous principal place of
employment;
(g) any material breach by the Company of any stock option or restricted
stock agreement; or
(h) conduct by the Company, against the Participant's volition, that
would cause the Participant to commit fraudulent acts or would expose the
Participant to criminal liability;
9
provided that for purposes of clauses (b) through (e) above, "Good Reason"
- --------
shall not exist (A) if the aggregate value of all salary, benefits, incentive
compensation arrangements, perquisites and other compensation is reasonably
equivalent to the aggregate value of salary, benefits, incentive compensation
arrangements, perquisites and other compensation as in effect immediately
prior to the Change in Control, or as in effect thereafter if the aggregate
value of such items has been increased and such increase was approved prior to
the Change in Control, or (B) if the reduction in aggregate value is due to
reduced performance by the Company, the business unit of the Company for which
the Participant is responsible, or the Participant, in each case applying
standards reasonably equivalent to those utilized by the Company prior to the
Change in Control.
Not later than the occurrence of a Change in Control, the Company shall
cause to be transferred to a grantor trust described in Section 671 of the
Internal Revenue Code, assets equal in value to all accrued obligations under
this Supplemental Plan as of one day following a Change in Control, in respect
of both active employees of the Company and retirees as of that date. Such
trust by its terms shall, among other things, be irrevocable. The value of
liabilities and assets transferred to the trust shall be determined by one or
more nationally recognized firms qualified to provide actuarial services as
described in Section 4 of the Computer Sciences Corporation Severance Plan for
Senior Management and Key Employees. The establishment and funding of such
trust shall not affect the obligation of the Company to provide supplemental
pension payments under the terms of this Supplemental Plan to the extent such
benefits are not paid from the trust.
ARTICLE XI
No Assignment
-------------
Benefits under this Supplemental Plan may not be assigned or alienated
and shall not be subject to the claims of any creditor.
ARTICLE XII
Administration
--------------
This Supplemental Plan shall be administered by the Chief Executive
Officer or by such other person or persons to whom the Chief Executive Officer
may delegate functions hereunder. With respect to all matters pertaining to
this Supplemental Plan, the determination of the Chief Executive Officer or
his designated delegate shall be conclusive and binding. The Chief Executive
Officer shall be eligible to participate in this Supplemental Plan in the same
manner as any other employee; provided, however, that the designation of the
Chief Executive Officer as a Participant and any other action provided herein
10
<PAGE>
with respect to the Chief Executive Officer's participation shall be taken by
the Compensation Committee of the Board of Directors of the Company.
ARTICLE XIII
Release
-------
In connection with any benefit or benefit payment under this Supplemental
Plan, or the designation of any beneficiary or any election or other action
taken or to be taken under the Supplemental Plan by any Participant or any
other person, the Company, acting through its Chief Executive Officer or his
delegate, may require such consents or releases as are reasonable under the
circumstances, and further may require any such designation, election or other
action to be in writing and in form reasonably satisfactory to the Chief
Executive Officer or his delegate.
ARTICLE XIV
No Waiver
---------
The failure of the Company, the Chief Executive Officer or any other
person acting on behalf thereof to demand a Participant or other person
claiming rights with respect to a Participant to perform any act which such
person is or may be required to perform hereunder shall not constitute a
waiver of such requirement or a waiver of the right to require such act. The
exercise of or failure to exercise any discretion reserved to the Company, its
Chief Executive Officer or his delegate, to grant or deny any benefit to any
Participant or other person under this Supplemental Plan shall in no way
require the Company, its Chief Executive Officer or his delegate to similarly
exercise or fail to exercise such discretion with respect to any other
Participant.
ARTICLE XV
No Contract
-----------
This Supplemental Plan is strictly a voluntary undertaking on the part of
the Company and, except with respect to the obligations of the Company upon
and following a Change in Control, which shall be absolute and unconditional,
shall not be deemed to constitute a contract or part of a contract between the
Company (or an Affiliate) and any employee or other person, nor shall it be
deemed to give any employee the right to be retained for any specified period
of time in the employ of the Company (or an Affiliate) or to interfere with
the right of the Company (or an Affiliate) to discharge or retire any employee
at any time, nor shall this Supplemental Plan interfere with the right of the
Company (or an Affiliate) to establish the terms and conditions of employment
of any employee.
11
<PAGE>
ARTICLE XVI
Indemnification
---------------
The Company shall defend, indemnify and hold harmless the Officers and
Directors of the Company acting in their capacity as such (and not as
Participants herein) from any and all claims, expenses and liabilities arising
out of their actions or failure to act hereunder, excluding fraud or willful
misconduct.
ARTICLE XVII
Claim Review Procedure
----------------------
Benefits will be provided to each Participant or beneficiary as specified
in this Supplemental Plan. If such person (a "Claimant") believes that he has
not been provided with benefits due under this Supplemental Plan, then he may
file a request for review under this procedure with the Company's Vice
President of Human Resources or Chief Financial Officer, as the Claimant may
elect, within ninety (90) days after the date he should have received such
benefits. If the Claimant files such a request with the Company's Vice
President of Human Resources or Chief Financial Officer and that claim is
denied, in whole or in part, then, within thirty (30) calendar days after
making that request, the Company's officer with whom the Claimant shall have
filed a request for review shall notify the Claimant of the specific reasons
for the denial with specific references to pertinent Supplemental Plan
provisions on which the denial is based. At that time the Claimant will be
advised of his right to appeal that determination and given a description of
any additional material or information necessary for the Claimant to perfect
an appeal, an explanation of why such material or information is necessary,
and an explanation of the Supplemental Plan's review and appeal procedure.
A Claimant may appeal from a denial by submitting a written statement to
the Plan Appeal Committee within sixty-five (65) calendar days after receiving
the notice of denial:
(a) requesting a review by the Plan Appeal Committee of the claim;
(b) setting forth all of the grounds upon which the request for review
is based and any facts in support thereof; and
(c) setting forth any issues or comments which the Claimant deems
relevant to the claim.
12
The Plan Appeal Committee shall be the Board of Directors of the Company
or its Compensation Committee or any other duly authorized committee thereof,
or any committee appointed by any such committee.
The Plan Appeal Committee shall act upon an appeal within ninety (90)
days or one hundred eighty (180) days in unusual circumstances, if the Plan
Appeal Committee in its reasonable discretion finds that such unusual
circumstances exist, after the later of its receipt of the appeal or its
receipt of all additional material reasonably requested by the Plan Appeal
Committee. The Plan Appeal Committee shall review the claim and all written
materials submitted by the Claimant, and may require him to submit, within
(10) days of its written notice, such additional facts, documents, or other
evidence as the Plan Appeal Committee in its sole discretion deems necessary
or advisable in making such a review. On the basis of its review, the Plan
Appeal Committee shall make an independent good faith determination with
respect to the Claimant's claim.
If the Plan Appeal Committee denies a claim in whole or in part, the
Committee shall give the Claimant written notice of its decision setting forth
the specific reasons for the denial and specific references to the pertinent
Supplemental Plan provisions on which its decision was based.
ARTICLE XVIII
Termination of Benefits and Participation
-----------------------------------------
Prior, but only prior to a Change in Control, the retirement benefits
payable to any Participant under this Supplemental Plan, and the participation
of such Participant in this Supplemental Plan, may be terminated if in the
judgment of the Chief Executive Officer, upon the advice of counsel, such
Participant, directly or indirectly:
(a) breaches any obligation to the Company under any agreement relating
to assignment of inventions, disclosure of information or data, or similar
matters; or
(b) competes with the Company, or renders competitive services (as a
director, officer, employee, consultant or otherwise) to, or owns more than a
5% interest in, any person or entity that competes with the Company; or
(c) solicits, diverts or takes away any person who is an employee of the
Company or advises or induces any employee to terminate his or her employment
with the Company; or
(d) solicits, diverts or takes away any person or entity that is a
customer of the Company, or advises or induces any customer or potential
customer not to do business with the Company; or
13
<PAGE>
(e) discloses to any person or entity other than the Company, or makes
any use of, any information relating to the technology, know-how, products,
business or data of the Company or its subsidiaries, suppliers, licensors or
customers, including but not limited to the names, addresses and special
requirements of the customers of the Company.
14
EXHIBIT 10.16
COMPUTER SCIENCES CORPORATION
1990 NONEMPLOYEE DIRECTOR RETIREMENT PLAN
As amended February 2, 1998
Section 1: PURPOSE OF PLAN
The purpose of this 1990 Nonemployee Director Retirement Plan ("Plan") of
Computer Sciences Corporation, a Nevada corporation (the "Company"), is to
enable the Company to attract and retain nonemployee directors of the highest
quality by furnishing certain retirement benefits to such persons.
Section 2: PARTICIPATION
Each person who satisfies all of the following conditions (a
"Participant") shall participate in this Plan:
(a) such person has served as a director of the Company after the
effective date of this Plan and prior to December 6, 1996;
(b) such person has served as a director of the Company for at least
five years;
(c) such person is not, and has never been, an employee of the Company;
and
(d) such person has attained age 70 prior to December 6, 1996.
Section 3: BENEFITS
(a) Each month during a Participant's Benefit Period (as hereinafter
defined), the Company shall pay to such Participant an amount equal to one-
twelfth of his or her Annual Retirement Benefit (as hereinafter defined).
(b) The "Annual Retirement Benefit," with respect to any Participant,
shall mean the sum of: (i) an amount equal to the annualized base retainer for
service as a director of the Company, excluding any retainer for service as a
member of a committee of the Board of Directors, in effect as of the last date
upon which such Participant served as a director of the Company; plus (ii) an
amount equal to the fee for attending a regularly scheduled meeting of the
full Board of Directors in effect as of such date, multiplied by the number of
regularly scheduled meetings of the full Board of Directors held during the
calendar year ending on such date.
<PAGE>
(c) The "Benefit Period," with respect to any Participant, shall mean
that period of time commencing on the later of (i) the date upon which such
Participant shall cease to be a director of the Company for any reason
whatsoever, or (ii) the date upon which such Participant shall attain age 65,
and continuing for that number of years equal to the number of complete years
such Participant served as a director of the Company; provided, however, that
if such Participant shall have served as a director of the Company for at
least 10 years, then the Benefit Period shall continue for 10 years or until
such later date upon which such Participant shall die.
(d) In the event that a Participant shall die while a director of the
Company or prior to the expiration of his or her Benefit Period, the balance
of the benefits payable to such Participant pursuant to this Section 3 shall
instead be payable to the person or entity designated in writing by such
Participant for such purpose (the "Designated Beneficiary").
(e) Notwithstanding the foregoing, the benefits otherwise payable with
respect to a Participant pursuant to this Section 3 shall be denied or
discontinued if a majority of the disinterested directors of the Company shall
determine that:
(i) such Participant has willfully failed to perform his or her
duties as a director of the Company (other than any such failure resulting
from such Participant's incapacity due to physical or mental illness);
(ii) such Participant has failed to make himself or herself
available to the Board of Directors, and to provide such advice and counsel as
may be reasonably requested by the Board of Directors, after such Participant
has ceased to be a director of the Company; or
(iii) such Participant or, after the death of such Participant, the
Designated Beneficiary of such Participant, has willfully engaged in conduct
that is in competition with the business of the Company or is materially
injurious to the Company, monetarily or otherwise.
For purposes of this Section 3(e), an act or failure to act shall be
considered willful if not in good faith and with the reasonable belief that
such act or failure to act was in the best interests of the Company.
Section 4: SOURCE OF PAYMENTS
(a) Subject to Section 4(b):
(i) all benefits payable under this Plan shall be paid in cash
from the general funds of the Company, and no trust account, escrow, fiduciary
relationship or other security arrangement shall be established to assure
payment;
2
<PAGE>
(ii) no Participant shall have any right, title or interest in or
to any investment that the Company may make in anticipation of the potential
payment obligations hereunder;
(iii) nothing contained in this Plan and no action taken pursuant hereto
shall create or be construed to create a trust of any kind or a fiduciary
relationship between the Company and any Participant or any other person or
entity; and
(iv) to the extent that any person or entity acquires a right to
receive benefits from the Company under this Plan, such right shall be no
greater than, nor different from, the right of any unsecured general creditor
of the Company.
(b) Not later than the occurrence of a Change in Control (as defined in
the Company's Supplemental Executive Retirement Plan), the Company shall cause
to be transferred to a grantor trust described in Section 671 of the Internal
Revenue Code, assets equal in value to all accrued obligations under this Plan
as of one day following a Change in Control, in respect of both active and
retired Participants as of that date. Such trust by its terms shall, among
other things, be irrevocable. The value of liabilities and assets transferred
to the trust shall be determined by one or more nationally recognized firms
qualified to provide actuarial services as described in Section 4 of the
Company's Severance Plan for Senior Management and Key Employees. The
establishment and funding of such trust shall not affect the obligation of the
Company to provide benefits payments under the terms of this Plan to the
extent such benefits are not paid from the trust.
Section 5: ADMINISTRATION OF PLAN
This Plan shall be administered by the Chief Executive Officer of the
Company, or such other officer of the Company as shall be designated by the
Board of Directors (the "Administrator"). Subject to the provisions of this
Plan, the Administrator shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of this Plan,
including, without limitation, the following:
(a) adopt, amend and rescind rules and regulations relating to this
Plan;
(b) determine which directors of the Company meet the requirements of
Section 2 hereof for participation in this Plan; and
(c) interpret and construe the terms and provisions of this Plan.
3
<PAGE>
All such rules, regulations, determinations, interpretations and other
actions of the Administrator shall be final and binding upon all persons and
entities interested in this Plan.
Section 6: EFFECTIVE DATE AND DURATION OF PLAN
This Plan is effective as of December 10, 1990, the date upon which it
was adopted by the Board of Directors. This Plan shall continue in effect
until terminated by the Board of Directors pursuant to Section 7 hereof.
Section 7: AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may amend or terminate this Plan at any time and
in any manner; provided however, that no such amendment or termination shall
reduce retroactively the benefits to which any Participant would have been
entitled under this Plan in the event that he or she had ceased to be a
director of the Company on the day immediately preceding the date of such
amendment or termination. Notwithstanding the foregoing, Section 4 shall not
be amended in any respect on or after a Change in Control (as defined in the
Company's Supplemental Executive Retirement Plan).
Section 8: NOTICES
Any notice, request, demand and other communication hereunder shall be in
writing and shall be delivered by hand or sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to the Company: Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, California 90245
Attention: Chief Executive Officer
If to a Participant or To the most recent address of such
Designated Beneficiary: person or entity as shown in the
Company's records
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
Section 9: GOVERNING LAW
This Plan shall be governed by and construed in accordance with the laws
of the State of Nevada.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> Apr-03-1998
<PERIOD-START> Mar-29-1997
<PERIOD-END> Dec-26-1997
<PERIOD-TYPE> 9-MOS
<CASH> 94,008
<SECURITIES> 0
<RECEIVABLES> 1,560,863
<ALLOWANCES> 34,564
<INVENTORY> 0
<CURRENT-ASSETS> 1,864,922
<PP&E> 1,883,823
<DEPRECIATION> 951,163
<TOTAL-ASSETS> 4,002,626
<CURRENT-LIABILITIES> 1,164,030
<BONDS> 731,605
<COMMON> 78,296
0
0
<OTHER-SE> 1,826,139
<TOTAL-LIABILITY-AND-EQUITY> 4,002,626
<SALES> 0
<TOTAL-REVENUES> 4,731,666
<CGS> 0
<TOTAL-COSTS> 3,700,903
<OTHER-EXPENSES> 715,629
<LOSS-PROVISION> 3,370
<INTEREST-EXPENSE> 37,593
<INCOME-PRETAX> 71,373
<INCOME-TAX> (108,900)
<INCOME-CONTINUING> 180,273
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180,273
<EPS-PRIMARY> 2.33
<EPS-DILUTED> 2.28
</TABLE>
<TABLE>
EXHIBIT 28
COMPUTER SCIENCES CORPORATION
REVENUES BY MARKET SECTOR
(In millions)
<CAPTION>
Fiscal Period Ended % of Total
--------------------- --------------------
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
1997 1996 1997 1996
-------- --------- -------- --------
<S> <C> <C> <C> <C>
THIRD QUARTER
Global commercial:
U.S. commercial $ 712.3 $ 539.7 43% 38%
Europe 470.4 399.5 28 28
International 100.6 90.8 6 6
-------- -------- -------- --------
Total 1,283.3 1,030.0 77 72
U.S. federal government:
Department of Defense 251.1 256.2 15 18
NASA 68.0 72.7 4 5
Civil agencies 61.7 62.7 4 5
-------- -------- -------- --------
Total 380.8 391.6 23 28
-------- -------- -------- --------
Total revenues $1,664.1 $1,421.6 100% 100%
--------- -------- -------- --------
NINE MONTHS
Global commercial:
U.S. commercial $1,996.9 $1,539.2 42% 38%
Europe 1,260.0 1,047.2 27 26
International 303.1 264.9 6 6
-------- -------- -------- --------
Total 3,560.0 2,851.3 75 70
U.S. federal government:
Department of Defense 772.1 806.6 16 20
NASA 224.6 223.4 5 5
Civil agencies 175.0 199.5 4 5
-------- -------- -------- --------
Total 1,171.7 1,229.5 25 30
-------- -------- -------- --------
Total revenues $4,731.7 $4,080.8 100% 100%
======== ======== ======== ========
</TABLE>
</PAGE>
