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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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COMPUTER SCIENCES CORPORATION
(NAME OF SUBJECT COMPANY)
COMPUTER SCIENCES CORPORATION
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, PAR VALUE $1.00 PER SHARE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
(TITLE OF CLASS OF SECURITIES)
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20536310-4
(CUSIP NUMBER OF CLASS OF SECURITIES)
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HAYWARD D. FISK, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
COMPUTER SCIENCES CORPORATION
2100 EAST GRAND AVENUE
EL SEGUNDO, CALIFORNIA 90245
(310) 615-0311
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING THIS STATEMENT)
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Copies to:
RONALD S. BEARD, ESQ.
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CA 90071-3197
(213) 229-7000
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") relates to an offer by CAI Computer Services Corp., a Delaware
corporation ("Purchaser") and a wholly owned subsidiary of Computer Associates
International, Inc., a Delaware corporation ("Parent"), to purchase all of the
issued and outstanding Shares (as hereinafter defined) of Computer Sciences
Corporation, a Nevada corporation (the "Company").
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Computer Sciences Corporation. The
address of the principal executive office of the Company is 2100 East Grand
Avenue, El Segundo, California 90245. The title of the class of equity
securities to which this Schedule 14D-9 relates is the Company's common stock,
par value $1.00 per share, including associated Series A Junior Participating
Preferred Stock Purchase Rights (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Schedule 14D-9 relates to the tender offer disclosed in the Schedule
14D-1, dated February 17, 1998, filed with the Securities and Exchange
Commission (the "Commission") by Purchaser (as amended, the "Schedule 14D-1"),
relating to an offer by Purchaser to purchase all of the issued and outstanding
Shares for an amount equal to $108.00 per Share, net to the seller in cash,
without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated February 17, 1998, and the
related Letter of Transmittal (which, together with the Offer to Purchase, as
amended or supplemented from time to time, constitute the "Offer"). As set forth
in the Schedule 14D-1, the principal executive office of Purchaser and Parent is
located at One Computer Associates Plaza, Islandia, NY 11788.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this Schedule 14D-9, are set forth in Item 1 of this Schedule 14D-9.
(b) Reference is made to the information contained under the captions
"Election of Directors -- Compensation of Directors," "Proposed 1997 Nonemployee
Director Stock Incentive Plan" and "Executive Compensation" in, and in Appendix
A to, the Company's proxy statement dated July 2, 1997 relating to the Company's
1997 Annual Meeting of Stockholders (the "1997 Proxy Statement"), the relevant
portions of which are filed as Exhibit (c)(1) hereto and are incorporated herein
by reference. Except as described herein or incorporated herein by reference,
there are no material contracts, agreements, arrangements or understandings or
any actual or potential conflicts of interest between the Company or its
affiliates and (i) any of the Company's executive officers, directors or
affiliates or (ii) Purchaser and its executive officers, directors or
affiliates.
Supplemental Executive Retirement Plan.
Effective as of February 2, 1998, the Company amended and restated its
Supplemental Executive Retirement Plan (the "SERP"), which was described in the
Company's 1997 Proxy Statement. Effective as of February 27, 1998, the Company
amended the definition of "Average Base Salary Rate" and again restated the
SERP. The following summary of the material provisions of the SERP is qualified
in its entirety by reference to the full text of the SERP, as amended and
restated, a copy of which is filed as Exhibit (c)(2) to this Schedule 14D-9 and
is incorporated herein by reference.
Retirement Benefits. The SERP provides retirement benefits to certain
designated officers and key executives of the Company who satisfy its minimum
service requirements. It provides two types of benefits: (i) an excess benefit
restoration, which restores the shortfall of benefits under the Company's
Pension Plan resulting from Internal Revenue Code limits on the base salary used
to compute those benefits ($160,000 in
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calendar year 1997), is provided for SERP participants who also participate in
the Pension Plan, and (ii) an additional benefit, as described below, is
provided for all SERP participants.
The additional benefit is equal to 50% of the participant's Average Base
Salary Rate, with a deduction of 100% of the amount of primary Social Security
benefits payable at the time of determination. Upon the death of the
participant, a spousal benefit of 50% of the participant's benefit is generally
payable for the spouse's lifetime.
The "Average Base Salary Rate" used to calculate the additional benefit is
equal to the average of the highest three of the annual base salary rates in
effect on the participant's retirement date and on the same day and month of
each of the preceding four years. On February 27, 1998, the SERP was amended to
clarify that the Average Base Salary Rate of a participant who has been employed
by the Company for less than (a) two years is equal to the average of the annual
base salary rate in effect on the participant's retirement date and the same day
and month of the preceding year, (b) one year is equal to the Annual Base Salary
Rate in effect on the participant's retirement date.
Retirement benefits are payable under the SERP (i) upon normal retirement
from the Company at age 62 or older, or (ii) in the sole discretion of the Chief
Executive Officer of the Company, upon early retirement from the Company at age
61 or younger. Except as set forth under "Change in Control Provisions" below,
the additional benefit otherwise payable will be reduced by 5% for each year by
which the participant's age at retirement is less than 62, and by 1/12 for each
year by which the participant's period of continuous employment with the Company
is less than 12 years.
Change in Control Provisions. If there were a Change in Control of the
Company and a SERP participant either (i) had an "involuntary" termination of
employment within three years after the Change in Control, or (ii) had a
"voluntary" termination of employment more than one year but within three years
after the Change in Control, the participant would be entitled to receive
retirement benefits under the SERP upon such termination of employment without
regard to approval by the Chief Executive Officer or any other person. Such
benefits would be calculated as if the participant, on the date of such
termination of employment, were age 62 or older and had at least 12 years of
continuous employment with the Company.
The February 2, 1998 amendments to the SERP redefine "involuntary"
termination of employment, for these purposes, as including voluntary
termination for "Good Reason." A participant's voluntary termination of
employment is deemed to be for Good Reason if it occurs within six months of any
of the following events, and the participant has not consented in writing to
such event:
(i) 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; (ii) a reduction in the participant's annual base salary from
that in effect on, or from any increase approved prior to, the date of the
Change in Control; (iii) a reduction in the overall benefits provided to the
participant by the Company from the amounts in effect on, or from any increases
approved prior to, the date of the Change in Control; (iv) a termination of, or
reduction in the participant's participation under, any stock option or other
incentive compensation plan in effect immediately prior to the Change in
Control, where the participant is not offered the opportunity to participate in
an alternative incentive plan of reasonably equivalent value; (v) a reduction in
the number of paid vacation days per year available to the participant or a
material reduction or elimination of any perquisite enjoyed by the participant
immediately prior to the Change in Control; (vi) a relocation of the
participant's principal place of employment to greater than 35 miles from his
previous place of employment; (vii) a material breach by the Company of any
stock option or restricted stock agreement; or (viii) conduct by the Company,
against the participant's volition, that would cause the participant to commit
fraudulent acts or would expose him to criminal liability. For purposes of
clauses (ii) through (v), Good Reason shall not exist if (x) the aggregate value
of all compensation received by the participant after the Change in Control is
reasonably equivalent to that received or approved to be received prior to the
Change in Control or (y) 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.
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Prior to the February 2, 1998 amendments, "Change in Control" was defined
to include (i) the acquisition of beneficial ownership of securities
representing at least 20% of the voting power of the Company, (ii) a change
during any two-year period 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, (iii) a sale of substantially all of the
property and assets of the Company, (iv) 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, or (v) 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, as amended (the "Exchange Act").
The February 2, 1998 amendments to the SERP expanded the definition of
"Change in Control" to include 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.
The February 2, 1998 amendments to the SERP provide that, not later than a
Change in Control, the Company will transfer to an irrevocable grantor trust (as
described in Section 671 of the Internal Revenue Code), assets equal in value to
all accrued obligations under the SERP as of the date that is one day after a
Change in Control. The Company's obligation to establish and fund such a trust
does not affect the Company's obligation to provide supplemental pension
payments under the SERP to the extent that such benefits are not paid out of the
assets of the trust.
Amendment and Termination. Prior to the February 2, 1998 amendments, the
SERP provided that the amendment, modification, suspension or termination of the
SERP following a Change in Control would cause the full vesting of benefits
accrued under the SERP to any SERP participant who was a participant prior to
the Change in Control. As amended, the SERP provides that it may not be amended,
modified, suspended or terminated following a Change in Control without the
express written consent of all participants.
Claim Review Procedure. The February 2, 1998 amendments to the SERP
establish a procedure for the review of claims relating to benefits allegedly
owing under the SERP. Any participant who believes that he is owed benefits
under the SERP may, within 90 days after such benefits were to have been
received, file a request for review of the claim with one of certain designated
officers of the Company. If such a request is filed and the claim is denied, the
officer with whom the request was filed must notify the claimant of the specific
reasons for the denial of the claim. At such time, the claimant will also be
advised of his right to appeal the denial of his claim to the Plan Appeal
Committee and of the means by which such an appeal should be made. The Plan
Appeal Committee is obligated to act upon any appeal made to it within 90 days
unless unusual circumstances exist, in which case the Plan Appeal Committee must
respond to the appeal within 180 days.
Stock Options and Restricted Stock
Effective February 2, 1998, the Company amended the terms of certain
outstanding stock options and restricted stock, as described below.
Amendment of Stock Options. All nonqualified stock options currently held
by employees of the Company and its affiliates who are participants in the SERP
were amended in the following respects:
(a) Minimum three-month exercise period after termination of
employment. Each option was amended to provide that it will not terminate,
or cease to be exercisable to purchase the underlying shares with respect
to which it had vested as of the date of the optionee's termination of
employment, prior to
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the earlier of (i) the expiration date of the option or (ii) three months
after the date of termination of employment.
(b) Retirement age reduced from 65 to 62. Each option provided that:
(i) if the optionee retired, the option would remain exercisable for three
years thereafter to purchase the underlying shares with respect to which it
had vested as of the date of retirement; and (ii) if the optionee
terminated employment prior to retirement age, the option would remain
exercisable for three months thereafter to purchase the underlying shares
with respect to which it had vested as of the date of termination of
employment. Each option was amended to reduce the retirement age from 65 to
62.
(c) Certain determinations to be made by continuing members of the
Compensation Committee. Each option provided that unless the Compensation
Committee of the Board of Directors determined otherwise within 10 business
days thereafter, the option would become exercisable in full upon the date
that any person became the beneficial owner of 30% or more of the
outstanding Common Stock. Each option was amended so that this
determination may only be made by vote of a majority of the directors of
the Company who are, and immediately prior to such event were, members of
the Compensation Committee.
(d) Amendment of definition of Change in Control. Each option defined
"Change in Control" as the first to occur of the following events: (i) the
dissolution or liquidation of the Company; (ii) a sale of substantially all
of the property and assets of the Company; (iii) a reorganization, merger
or consolidation of the Company the consummation of which results in the
outstanding securities of any class then subject to the option being
exchanged for or converted into cash, property and/or securities not issued
by the Company; (iv) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as directors cease to
constitute a majority of the directors of the Company; or (v) a change of
control of the Company of the type required to be disclosed in a proxy
statement pursuant to Item 6(e) (or any successor provision) of Schedule
14A of Regulation 14A promulgated under the Exchange Act. Each option was
amended to add the following additional event (the "Additional Event"): 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 securities of any class then subject to the option 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.
(e) Acceleration of option upon Change of Control. Each option
provided that if the optionee's employment with the Company or any of its
subsidiaries were voluntarily or involuntarily terminated within three
years after a Change of Control, then (i) the portion of the option that
had not vested on or prior to the date of termination of employment would
fully vest on such date and (ii) the option would remain exercisable until
the earliest of the third anniversary of such date, the expiration date of
the option, or, if applicable, the first anniversary of the optionee's
death. Each option was amended to provide that upon a Change of Control:
(1) the portion of the option that has not vested on or prior thereto will
fully vest on such date and (2) the option will remain exercisable until
the earliest of the third anniversary of such date, the expiration date of
the option, or, if applicable, the first anniversary of the optionee's
death.
All nonqualified stock options which are currently held by employees of the
Company and its affiliates who are not participants in the SERP, and which were
granted by the Company under its 1978, 1980, 1984, 1987, 1990, 1992 or 1995
Stock Incentive Plans, other than options granted pursuant to Schedules approved
by the taxing authorities in the United Kingdom or France, were amended in the
same manner as described in clauses (a), (b) and (c) above, and were also
amended as described below:
(x) Additional event causing acceleration of option. Each option
provided that unless the Compensation Committee of the Board of Directors
determined otherwise, the option would become exercisable in full upon the
approval of any of the following three types of transaction by the Board
and the
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stockholders of the Company: (i) the dissolution or liquidation of the
Company, (ii) a sale of substantially all of the property and assets of the
Company or (iii) a reorganization, merger of consolidation of the Company
the consummation of which would result in the outstanding securities of any
class then subject to the option being exchanged for or converted into
cash, property and/or securities not issued by the Company. Each option was
amended to add the Additional Event described in clause (d) above as a
fourth type of transaction the approval of which has the effect described
in the preceding sentence.
Amendment of Restricted Stock. All restricted stock currently held by
employees of the Company and its affiliates who are participants in the SERP was
amended in the following respects:
(a) Certain determinations to be made by continuing members of the
Compensation Committee. All such restricted stock provided that unless the
Compensation Committee of the Board of Directors determined otherwise
within 10 business days thereafter, all restrictions imposed upon the
restricted stock would lapse if any person became the beneficial owner of
30% or more of the outstanding Common Stock. All restricted stock was
amended so that this determination may only be made by vote of a majority
of the directors of the Company who are, and immediately prior to such
event were, members of the Compensation Committee.
(b) Lapse of restrictions upon a Change of Control. All such
restricted stock provided that if the holder's employment with the Company
or any of its subsidiaries were voluntarily or involuntarily terminated
within three years after any of the events described in clauses (d)(i),
(ii), (iii), (iv) or (v) in Amendment of Stock Options above, then all
restrictions imposed upon the restricted stock would lapse. All such
restricted stock was amended to add the Additional Event described in such
clause (d), and to provide that all restrictions imposed upon the
restricted stock would automatically lapse upon the first to occur of such
events (rather than upon the termination of the holder's employment within
three years thereafter).
All restricted stock which is currently held by employees of the Company
and its affiliates who are not participants in the SERP, and which was granted
by the Company under its 1990 or 1992 Stock Incentive Plans, was amended in the
following respects:
(x) Certain determinations to be made by continuing members of the
Compensation Committee. All such restricted stock provided that all
restrictions imposed upon the restricted stock would lapse upon the
occurrence of any of the following events: (i) unless the Compensation
Committee of the Board of Directors determined otherwise within ten
business days thereafter, the first date upon which any person became the
beneficial owner of 30% or more of the outstanding Common Stock; (ii) any
date upon which the directors of the Company who were nominated by the
Board of Directors for election as directors cease to constitute a majority
of the directors of the Company, unless, prior to such date, the Board of
Directors shall determine otherwise; or (iii) a change in control of the
Company of the type required to be disclosed in a proxy statement pursuant
to Item 6(e) (or any successor provision) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, unless, prior to such change in
control, the Board of Directors shall determine otherwise. All restricted
stock was amended so that the determination described in clause (i) above
may only be made by vote of a majority of the directors of the Company who
are, and immediately prior to such event were, members of the Compensation
Committee.
(y) Lapse of restrictions upon a Change in Control. All such
restricted stock provided that unless the Compensation Committee of the
Board of Directors determined otherwise, all restrictions imposed upon the
restricted stock would lapse upon any of the events described in clauses
(d)(i), (ii) or (iii) in Amendment of Stock Options above. All such
restricted stock was amended to add the Additional Event described in such
clause (d).
Deferred Compensation Plan
The Company has a Deferred Compensation Plan (as amended and restated to
date, the "Deferred Compensation Plan"). The following summary of the material
terms of the Deferred Compensation Plan is
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qualified in its entirety by reference to the full text of the Deferred
Compensation Plan, a copy of which is filed as Exhibit (c)(5) hereto and is
incorporated herein by reference. The Deferred Compensation Plan permits
nonemployee members of the Company's Board of Directors and certain designated
officers and employees of the Company to defer into a deferred compensation
account some or all of such person's retainer, consulting fees, committee fees
and meeting fees (in the case of a nonemployee director) or such person's annual
bonus pursuant to the Company's Annual Management Incentive Plan (in the case of
officers or employees) pursuant to an election made by such person no later than
the last day of the next preceding fiscal year. The annual rate of return
credited to each deferred compensation account equals 120% of the 120-month
rolling average yield on a ten-year U.S. Treasury Note, calculated as of
December 31 of the preceding year. The full value of the deferred compensation
account becomes payable upon death, retirement after the person turns 62 or upon
termination prior to retirement. Up to the full value may be withdrawn within
three years of a Change in Control (in which event a 5% withdrawal penalty
applies), in the event of certain hardship events (in which event no penalty
applies) or otherwise (in which event a 10% withdrawal penalty applies).
"Change in Control" is defined as (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 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 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
Exchange Act.
Not later than a Change in Control, the Company will transfer to an
irrevocable grantor trust (as described in Section 671 of the Internal Revenue
Code), assets equal in value to all accrued obligations under the Deferred
Compensation Plan as of the date that is one day after a Change in Control. The
Company's obligation to establish and fund such a trust does not affect the
Company's obligation to provide benefits payments under the Deferred
Compensation Plan to the extent such benefits are not paid out of the assets of
the trust.
Severance Plan.
On February 2, 1998, the Company's Board of Directors adopted the Computer
Sciences Corporation Severance Plan for Senior Management and Key Employees (the
"Severance Plan"). The following summary of the Severance Plan is qualified in
its entirety by reference to the full text of the Severance Plan, a copy of
which is filed as Exhibit (c)(3) to this Schedule 14D-9 and is incorporated
herein by reference.
The Severance Plan provides for certain payments to covered employees
("Participants") in the event of a change in control of the Company. The payment
is a multiple of the Participant's annual base salary plus the average annual
incentive bonus over the three years prior to the Participant's termination of
employment. The multiple is two for all Participants except Mr. Honeycutt, whose
multiple is three. Participants are also entitled to receive medical and similar
benefits for a period of years equal to the applicable multiple (two or three).
On February 2, a total of 17 Participants (including Mr. Honeycutt) were
designated to be eligible for benefits under the Severance Plan.
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Payments are to be made under the Severance Plan if a Participant has a
voluntary employment termination for "Good Reason" within 24 months following a
Change in Control (as defined in the SERP) or an involuntary employment
termination other than for cause within 36 months following a Change in Control.
In addition, Mr. Honeycutt is entitled to payments under the Severance Plan if
he has a voluntary employment termination, with or without "Good Reason," during
the thirteenth month following a Change in Control. No payments under the
Severance Plan are due if a Participant's employment is terminated for cause or
because of death or disability.
"Good Reason" is defined generally to include a substantial change or
diminution in duties or position, a reduction in annual base salary, a reduction
in the aggregate value of all other benefits (subject to certain exceptions), or
a relocation of the Participant's principal office of more than 35 miles.
The Severance Plan further provides that the Company will reimburse
Participants for any and all excise taxes which must be paid by the Participants
as a consequence of a Change in Control of the Company.
Disputes between the Participant and the Company regarding the Severance
Plan or the amounts payable pursuant thereto will be resolved by final and
binding arbitration. Costs of arbitration, including reasonable attorney fees
and costs, incurred by a Participant will be paid by the Company if the
Participant prevails on any portion of his claims. Such fees and costs will 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 Participant to repay
such amounts if it is ultimately determined that he did not prevail on any
portion of his claims.
Not later than a Change in Control, the Company will 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 Participants in
fulfillment of the Company's obligations to pay their fees and costs as provided
in the preceding paragraph. 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. Such trust by its
terms shall be irrevocable, but shall terminate upon the later of (i) the third
anniversary of a Change in Control or (ii) the disposition of all then pending
claims under the Severance Plan by final arbitration award and final judgment,
all time for appeals 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.
On February 18, 1998, the Company's Board of Directors authorized Mr.
Honeycutt to designate up to 150 additional employees as Participants entitled
to the benefits described above (with the multiple being two). The benefits
would be payable to these additional employees, however, only if the Change in
Control resulted in Parent directly or indirectly controlling the Company. As of
the date hereof, an additional 135 employees have been designated as
Participants under the Severance Plan on the basis described in this paragraph.
1990 Nonemployee Director Retirement Plan.
The Company has a 1990 Nonemployee Director Retirement Plan (the "Director
Retirement Plan"), which was described in the 1997 Proxy Statement. Effective as
of February 2, 1998, the Company amended the Director Retirement Plan to add the
provisions described under "Change in Control Provisions" below, and to restate
the Plan. The following summary of the material terms of the Director Retirement
Plan is qualified in its entirety by reference to the full text of the Director
Retirement Plan, as amended and restated, a copy of which has been filed as
Exhibit (c)(16) hereto and is incorporated herein by reference.
Eligibility and Benefits Payments. A participant in the Director Retirement
Plan (a "Participant") is any director of the Company who (i) rendered service
as a director of the Company during at least part of the period between December
10, 1990 and December 6, 1996; (ii) served as a director of the Company for at
least five years; (iii) is not and has never been an employee of the Company;
and (iv) attained age 70 prior to December 6, 1996. The Director Retirement Plan
provides for annual benefits payments (the "Annual Retirement Benefit") to each
Participant equal to the sum of (a) the annualized base retainer for service as
a director of the Company (excluding any retainer for service on a committee of
the Board of Directors) in
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effect as of the last date upon which the Participant served as a director, plus
(b) the product of (x) the meeting fee in effect as of such date multiplied by
(y) the number of regularly scheduled meetings of the Board of Directors held
during the calendar year ending on such date. One-twelfth of the Annual
Retirement Benefit is paid each month during the period (the "Benefit Period")
commencing on the later of the date the Participant ceased to be a director of
the Company or the date the Participant attained age 65, and continuing for a
number of years equal to the number of complete years the Participant served as
a director of the Company; provided, however, that for any Participant who
served as a director of the Company for at least 10 years the Benefit Period
continues for 10 years or until any later date upon which the Participant dies.
Subject to the provisions described under "Change in Control Provisions" below,
all benefits payable under the Director Retirement Plan are paid in cash from
the general funds of the Company.
The Director Retirement Plan provides that, notwithstanding the foregoing,
benefits payable to a Participant will be denied or discontinued in the event
that a majority of the disinterested directors of the Company determine that (i)
such Participant has willfully failed to perform his or her duties as a director
of the Company (other than due to a failure resulting from incapacity due to
physical or mental illness); (ii) such Participant has failed to be available to
offer advice or counsel as may be reasonably requested by the Board of Directors
after such Participant's retirement from the Board of Directors; or (iii) such
Participant (or, after his death, his designated beneficiary) has willfully
engaged in conduct that is in competition with the business of the Company or is
materially injurious to the Company.
Change in Control Provisions. The Director Retirement Plan provides that,
not later than the occurrence of a Change in Control (as defined in the SERP),
the Company will transfer to an irrevocable grantor trust (as described in
Section 671 of the Internal Revenue Code), assets equal in value to all accrued
obligations under the Director Retirement Plan as of the date that is one day
after a Change in Control. The Company's obligation to establish and fund such a
trust does not affect the Company's obligation to provide benefits payments
under the terms of the Director Retirement Plan to the extent such benefits are
not paid out of the assets of the trust.
The Director Retirement Plan also provides that, on or after the occurrence
of a Change in Control, Section 4 of the Director Retirement Plan (relating to
the source of benefits payments) may not be amended.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD HAS UNANIMOUSLY DETERMINED THAT THE OFFER IS INADEQUATE AND NOT
IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS. THE BOARD UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY NOT TENDER THEIR SHARES PURSUANT
TO THE OFFER.
Copies of a press release announcing the Board's determinations, and a
letter to the stockholders of the Company communicating the Board's
recommendation, are filed as Exhibits (a)(3) and (a)(4) hereto, respectively,
and are incorporated herein by reference.
(B) REASONS FOR RECOMMENDATION. In reaching its determination and
recommendations described in Item 4(a) above, the Board considered a number of
factors, including, without limitation, the following:
(i) The fact that Parent has indicated privately and publicly that it would
be willing to pay $114 in a promptly negotiated transaction;
(ii) The Board's familiarity with, and management's review of, the
Company's business, financial condition, results of operations, business
strategy and future prospects, including projected results of operations;
(iii) The fact that the Company is in robust financial condition, as
reflected by the Company's 'A' credit rating, and the fact that the Company has
achieved a compound annual growth rate of 20.4% in revenue over
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the past five years, 26.3% increase in income before special items over the past
five years, and larger gains in market share and revenue than the Company's
primary competitor in 15 of the last 16 quarters;
(iv) The Board's consideration of information supplied by the Company's
financial advisors concerning premiums paid in other takeover transactions, as
compared with the premium provided by the Offer; analysis of valuation multiples
of revenues, earnings per share, EBITDA and EBIT found in the marketplace
generally and in other takeover transactions, as compared with the multiples
implicit in the Offer; stock price movements; the performance and prospects of
comparable corporations; market capitalization; levered market capitalization;
present value of future stock prices and certain additional financial matters;
(v) The Board's belief that the Company has far greater near- and long-term
prospects than are reflected in the Offer;
(vi) The Board's belief that the Company is unique, and would be impossible
or extremely expensive to replicate in the information technology marketplace;
(vii) Prospects for the Company to grow its business in all of its markets
internally and through acquisitions;
(viii) The importance of a strong financial condition and credit rating in
winning large, long-term outsourcing contracts, and the Board's belief that if
the Company and Parent were combined, the resulting entity would be
irresponsibly leveraged;
(ix) The Board's belief that the Company's ability to provide independent
solutions is a threshold issue for customers who demand platform neutrality, and
the Board's belief that acquisition of the Company by Parent would severely
compromise this neutrality;
(x) The fact that approximately 25% of the Company's anticipated revenues
for fiscal 1999 are derived from outsourcing contracts that contain change in
control provisions that would permit termination if Parent acquires the Company;
(xi) The potential for loss of key personnel if Parent were to gain control
of the Company;
(xii) The disruptive effect of the Offer on the Company's employees,
suppliers and customers;
(xiii) The numerous conditions to which the Offer is subject, including
many conditions that are in the sole discretion of Parent, e.g., Parent's
ability, in its sole discretion, to terminate the Offer now or at any later time
because, as described in clause (x) above, the Company is a party to material
contracts that contain change in control provisions; the satisfaction of other
conditions contained in the Offer awaits the decisions by one or more courts of
issues raised in lawsuits filed within the last thirty days; and
(xiv) The Board's and management's commitment to protecting the best
interests of the stockholders of the Company and enhancing the value of the
Company.
The foregoing discussion of the information and factors considered and
given weight by the Board is not intended to be exhaustive. In view of the
variety of factors considered in its evaluation, the Board did not find it
practicable to and did not quantify or otherwise assign relative weights to the
specific factors considered in reaching its determinations and recommendation.
In addition, individual members of the Board may have given different weights to
different factors.
Background
On December 18, 1997, at Parent's request, the Company's Chief Executive
Officer, Mr. Honeycutt, met with Parent's Chairman, Mr. Wang and Parent's
President, Mr. Kumar. At that meeting, which lasted for approximately one hour,
Messrs. Wang and Kumar expressed an interest in the possibility of Parent
acquiring the Company and mentioned $100 per share as a possible price. Mr.
Honeycutt expressed strong reservations concerning the desirability of such a
transaction and indicated his view that the price mentioned by Messrs. Wang and
Kumar was far short of an amount that would be of interest to the Board of
Directors of the Company. On February 5, 1998, the same three persons held a
second meeting, which lasted approximately
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one and one-half hours, at which Messrs. Wang and Kumar reiterated their
interest in acquiring the Company, this time mentioning $98 as a possible price.
Mr. Honeycutt again expressed his objections to such a transaction.
On February 11, 1998, the Company received a widely publicized letter from
Parent in which Parent's President proposed that Parent and the Company enter
into a consensual merger in which the Company's stockholders would receive $108
per share in cash. The Company scheduled a Board of Directors meeting for
February 18, 1998 to consider this proposal. On Sunday, February 15, 1998, an
investment banker engaged by Parent orally advised the Company's financial
advisor that Parent would be prepared to pay $114 per share in cash for the
Company's outstanding Shares if a negotiated transaction were completed
promptly. Subsequently, the Company received another widely publicized letter
from Parent, which made reference to such conversation. Monday, February 16,
1998, was a Federal holiday. On the morning of February 17, 1998, Parent issued
a press release in which it stated that it had filed with the SEC a Schedule
14D-1 and a Preliminary Solicitation and Proxy Statement, as part of a tender
offer for the Company. In fact, Parent did not file its Schedule 14D-1 and
Preliminary Proxy Statement until approximately 5:20 p.m. on Tuesday, February
17, 1998.
On February 18, 1998, the Company's Board of Directors met to consider
Parent's consensual merger proposal. Neither the Company's Board of Directors
nor its financial or legal advisors had, by that time, completed their review of
Parent's 181 page Schedule 14D-1 filed the previous night.
After receiving the advice of the Company's financial and legal advisors,
and after a thorough discussion among members of the Board concerning the
advantages, disadvantages, risks and problems associated with Parent's
consensual merger proposal, the Board of Directors voted unanimously to reject
it. The Board of Directors was aware, in taking such action, of the indication
by Parent's investment banker that in a negotiated transaction the cash
consideration to the Company's stockholders could be $114 per share.
On February 19, 1998, the Company issued a press release and released a
letter from the Company's Chairman and CEO, Van B. Honeycutt, to Parent's
Chairman and CEO. The press release and the letter stated that, in the opinion
of the Company's Board, Parent's proposal for a consensual merger did not
represent fair value for the Company's stockholders and that any effort to
combine the Company and Parent would not make business sense. A copy of the
press release is attached hereto as Exhibit (a)(1). A copy of the letter follows
and is attached hereto as Exhibit (a)(2).
February 19, 1998
Mr. Charles Wang
Chairman and Chief Executive Officer
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788
Dear Charles:
Our Board of Directors has met and carefully considered the offer
contained in your letter of February 10, 1998 and your subsequent
indications that you would offer $114 per share for the stock of
Computer Sciences Corporation in a friendly transaction. We have not
had the time to review the disclosures in your tender offer and will
furnish you our further responses to the tender offer at a later time.
Our board voted unanimously to reject your proposal and not to
enter into negotiations with Computer Associates on the sale of
Computer Sciences. We believe that the terms of your proposal do not
represent fair value for our shareholders and that any effort to
combine Computer Sciences and Computer Associates does not make
business sense.
On the advice of counsel, we have moved to strengthen our
protections against your ill-considered and unwelcome attempt to force
an acquisition by threatening damage to the value of our company.
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We will utilize every legal means necessary to defeat your
attempt and will hold you and your company responsible for any damages
we sustain.
Our rationale for rejecting a merger of our companies is clear
and compelling.
Your Offer Does Not Represent Fair Value
We believe that CSC has far greater near- and long-term prospects
than are reflected in your bid. Based on our assessment of CSC's
opportunities for growth in revenues and earnings per share, and the
potential such growth has to effect significant appreciation in our
stock price, we do not believe your offer rewards our shareholders for
the true value of their investment. In addition, your offer fails to
recognize that CSC shareholders own a unique asset that is impossible
to replicate in the information technology marketplace. CSC is in
robust financial condition with a compound annual growth rate of 20.4
percent in revenue over the past five years, and a 26.3 percent
increase in income before special items for the same period. We have
made larger gains in market share and revenue than our primary
competitor in fifteen of the last sixteen quarters. We have won or
implemented $6.7 billion in large outsourcing contracts over the past
twelve months and our pipeline of major new business prospects is
extremely promising.
CSC is on course to grow our business in all of our markets
through strong internal growth and an acquisition strategy designed to
enhance our growth in geographic markets, key vertical industries and
specialized service segments.
Combining CSC and CA Does Not Make Sense
CSC's strong financial condition, as reflected by our 'A' credit
rating, is critical to our ability to secure the large, long-term
outsourcing contracts that are a key to growth in IT services. A
combined CSC and CA would be irresponsibly leveraged and thus have a
much lower credit rating and be at a distinct disadvantage in the
competition for such business.
CSC's ability to provide independent solutions is a threshold
issue for customers who demand platform neutrality. This neutrality
would be severely compromised if CSC were to be acquired by CA and, as
a result, we would lose substantial credibility in the marketplace.
You have already stated publicly that you would redirect the efforts
of many CSC employees to sales and service of CA's software products,
a prospect that both our customers and employees would find
unacceptable.
More than 25 percent of CSC's total anticipated revenues for
fiscal 1999 are derived from outsourcing contracts that contain change
in control provisions which would allow customers who are concerned
about such issues to move to another services firm. We have already
been notified by a number of such clients that they will either
exercise such provisions or curtail or reduce the flow of new business
to CSC should a CA takeover occur. In addition, software critical to
CSC's data centers and other operations is licensed to CSC under
contracts which are terminable by the licensor if CA acquires CSC.
The most important asset of Computer Sciences is our people. They
create sustainable competitive advantage in customer satisfaction and
revenue generation, and are the best in the business. It is widely
recognized that CSC and CA have dramatically different cultures, and
it is clear that many of the very assets you are trying to buy -- our
employees -- will decline to join your company.
Our Board of Directors and our management are committed to
maximizing the value of our stockholders' investment, consistent with
the highest standards of responsibility to our customers and
employees. Consistent with our fiduciary duty to stockholders, we are
always prepared to give serious consideration to strategic options
which fairly reflect the value of our corporation and which make
business sense. Clearly, your offer does neither.
Charles, we respectfully suggest that you withdraw your offer
immediately and move on.
Sincerely,
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Van B. Honeycutt
cc: Computer Associates Board of Directors
ON FEBRUARY 27, THE BOARD MET TO CONSIDER THE OFFER. FOLLOWING
PRESENTATIONS BY GOLDMAN, SACHS & CO. AND J.P. MORGAN & CO., INVESTMENT BANKERS,
DISCUSSION AMONG BOARD MEMBERS AND QUESTIONING OF THE INVESTMENT BANKERS BY THE
BOARD, THE BOARD VOTED UNANIMOUSLY TO RECOMMEND THAT THE COMPANY'S STOCKHOLDERS
NOT TENDER THEIR SHARES.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Goldman, Sachs & Co. ("Goldman Sachs") and J.P. Morgan & Co. ("J.P.
Morgan") have been retained by the Company to act as its financial advisors with
respect to the acquisition proposal which Parent has made for the stock of the
Company; Goldman Sachs also has been retained as financial advisor to assist the
Company in responding to any other acquisition proposals it may receive or any
other attempts to acquire control of the Company. Pursuant to the terms of their
engagement letters, Goldman Sachs and J.P. Morgan will receive the following
fees for their services:
(a) a quarterly retainer fee of $2,500,000 for Goldman Sachs and
$1,000,000 for J.P Morgan, payable on the first day of each three-month
period during which they provide such services; and
(b) a fee of $10,000,000 for Goldman Sachs and $4,000,000 for J.P.
Morgan (with the quarterly retainer fees paid under clause (a) above
credited on a one-time basis against such fees), payable on February 11,
1999 and February 13, 1999, respectively, in the event that Parent (and, in
the case of J.P. Morgan, any other person) has not, directly or indirectly,
become the beneficial owner of more than 50% of the outstanding Shares on
or prior to such date.
The Goldman Sachs engagement letter also provides that in the event that
the Company determines to undertake a specific transaction as referred to in
such letter, Goldman Sachs will have the right to act on the Company's behalf in
connection with such transaction on customary terms and conditions, including
customary fee provisions. The J.P. Morgan engagement letter provides that in the
event the Company determines to proceed with a sale, merger, consolidation,
business combination, or certain other specified transactions, during the term
of the engagement the Company will enter into an amendment to the engagement
letter providing for fees to J.P. Morgan in an amount to be determined after
taking into account the results obtained and the custom and practice among
investment bankers acting in similar transactions.
The Company has also agreed to reimburse Goldman Sachs and J.P. Morgan for
their reasonable out-of-pocket expenses, including fees and expenses of counsel,
and to indemnify Goldman Sachs and J.P. Morgan and certain related persons
against certain liabilities in connection with their engagement.
Goldman Sachs and J.P. Morgan have each in the past been retained by the
Company to render investment banking and advisory services, and each has
received reasonable and customary compensation for such services.
The Company has also retained Bozell Sawyer Miller Group ("BSMG") as a
public relations advisor in connection with the Offer, and has retained Morrow &
Co., Inc. ("Morrow") to assist the Company in communicating with its
stockholders and to provide other services in connection with the Offer. The
Company has agreed to pay BSMG and Morrow reasonable and customary compensation
for such services, reimburse them for their reasonable out-of-pocket expenses
and provide customary indemnities.
Except as described above, neither the Company nor any person on its behalf
has employed, retained or compensated any person or class of persons to make
solicitations or recommendations to security holders concerning the Offer.
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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) On February 2, 1998, the Board of Directors of the Company declared a
2-for-1 stock split in the form of a 100% stock dividend with respect to its
common stock, par value $1.00 per share (the "Common Stock") payable on March
23, 1998 to the holders of record of Common Stock on March 2, 1998.
On February 18, 1998, the Board of Directors of the Company authorized and
declared a dividend of one preferred stock purchase right (a "New Right") for
each share of Common Stock. The dividend was paid on February 27, 1998 to the
holders of record of Common Stock as of the close of business on such date. The
New Rights will be issued pursuant to a Rights Agreement dated as of February
18, 1998 by and between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "New Rights Agreement"), a copy of which was
included as Exhibit 10.23 to the Form 8-A filed by the Company with the
Commission on February 25, 1998. The following summary of the New Rights
Agreement is qualified in its entirety by reference to the full text of the New
Rights Agreement, a copy of which is filed as Exhibit (c)(4) to this Schedule
14D-9 and is incorporated herein by reference in its entirety.
On February 18, 1998, the Board of Directors of the Company also amended
the first sentence of Section 3(a) of the Rights Agreement dated as of December
21, 1988, as amended and restated as of August 1, 1996, by and between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Old
Rights Agreement"), in order to add the following additional language at the end
of such sentence:
"provided, however, that, notwithstanding anything to the contrary in the
foregoing definition of the 'Distribution Date,' clause (ii) of the
definition does not apply to the tender offer commenced by CAI Computer
Services Corp. on February 17, 1998."
A copy of the Old Rights Agreement, as amended and restated effective
February 18, 1998 is attached as Exhibit (c)(15) hereto and is incorporated
herein by reference in its entirety.
On February 27, 1998, the Board of Directors adopted a resolution redeeming
the Old Rights and establishing March 30, 1998 as the record date for payment of
the redemption price of 1/6 of 1(c) per Old Right, which will be paid on April
13, 1998.
The following executive officers of the Company effected the following
transactions in the Shares during the past 60 days. No other executive officer,
director, affiliate or subsidiary of the Company effected any transaction in the
Shares during such period.
(i) Van B. Honeycutt, Chairman, President and Chief Executive Officer,
exercised a stock option and purchased 4,200 Shares for $15.25 per Share on
February 20, 1998, the last day prior to the expiration of the option. Mr.
Honeycutt retained the Shares acquired upon such exercise.
(ii) C. Bruce Plowman, Vice President, Corporate and Marketing
Communications, exercised a stock option and purchased 3,000 shares of
Common Stock for $39.25 per share on January 6, 1998. Mr. Plowman sold
these 3,000 shares for $85.06 per share in an open market sale later that
day.
(b) To the best knowledge of the Company, all of its executive officers and
directors presently intend to hold, and not tender to Purchaser, all of the
Shares which they hold of record or beneficially own.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) As of the date hereof, no negotiation has been or is being undertaken
or is underway by the Company in response to the Offer that relates to or could
result in one or more of the following or a combination thereof: (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any of its subsidiaries; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries; (iii) a
tender offer for or other acquisition of securities by or of the Company or (iv)
any material change in the present capitalization or dividend policy of the
Company.
Management and the Board of Directors of the Company intend to explore and
consider all alternatives available to the Company which may provide greater
value to stockholders of the Company than the Offer.
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Such alternatives could include one or more of the following: (i) maintaining
the Company as an independent, publicly-owned corporation in substantially its
present form; (ii) acquisition of the Company by another corporation; (iii)
acquisition of one or more other corporations or units of other corporations by
the Company; (iv) merger or other business combination with another corporation;
(v) divestiture of one or more business units of the Company; (vi) issuance of
capital stock of the Company; (vii) incurrence of funded debt by the Company;
(viii) distribution of cash to stockholders of the Company by way of a dividend,
open-market stock purchase program or tender offer; (ix) exchange offer of
preferred stock or debt securities for Common Stock of the Company; or (x) one
or more partnerships, joint ventures or other strategic relationships with other
parties. In connection with such exploration and consideration, the Company
expects to engage in discussions, and may engage in negotiations, with other
parties. The Board of Directors has determined that disclosure with respect to
the parties to, and the possible terms of, any transactions or proposals of the
type referred to above might jeopardize any discussions or negotiations that the
Company might conduct. Accordingly, the Board has adopted a resolution
instructing management not to disclose the possible terms of any such
transactions or proposals, or the parties thereto, unless and until an agreement
in principle relating thereto has been reached or, upon the advice of counsel,
as may otherwise be required by law.
(b) Other than the February 18, 1998 Board resolution to declare a dividend
of New Rights and the February 27, 1998 Board resolution to redeem the Old
Rights, both of which are described in Item 6(a) hereof, there is no
transaction, Board resolution, agreement in principle or signed contract in
response to the Offer that relates to or would result in one or more of the
matters referred to in clauses (i), (ii), (iii) or (iv) of the first paragraph
of Item 7(a) hereof.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
At a meeting on February 16, 1998, the Board adopted an amendment to the
Company's Bylaws "opting out" of the "Control Shares" provisions of the Nevada
General Corporation Law. The "Control Shares" provisions deny voting rights to
shares acquired by a person, with reference to percentage thresholds stated in
the provisions, unless a sufficient number of other shares are voted in favor of
restoring such voting rights. At its February 18, 1998 meeting, the Board
adopted a number of other amendments to the Company's Bylaws designed to protect
against hasty, ill-considered, actions to disrupt, remove or replace the
Company's Board of Directors with employees of Parent in advance of the Annual
Meeting of Stockholders. The amendments are also intended to assure that within
the limits of applicable Nevada law the Board of Directors will retain
reasonable discretion in scheduling the Annual Meeting in order to assure
adequate time for stockholders to be fully informed concerning the Offer and all
other alternatives which may be available to them. In addition, the Bylaw
amendments conform the provisions for indemnification of directors and officers
to provisions covering the same subject set forth in the Restated Articles of
Incorporation, and more generally remove or mitigate certain ambiguities in the
Bylaws, as they existed prior to such amendments. A copy of the Amended and
Restated Bylaws is attached hereto as Exhibit (c)(6).
The following paragraphs are intended to briefly summarize the substantive
changes made in the several Bylaw amendments. They are subject in all respects
to the exact language of the amended Bylaws, as set forth in Exhibit (c)(6).
The amendment of Article II, Section 2 of the Bylaws deletes language from
the former provision stating that annual meetings of the stockholders shall be
held on the second Monday in August, or at such other time and date as the Board
of Directors shall determine. As amended, the reference to the second Monday in
August is deleted. The amendment of Article II, Section 3 of the Bylaws removes
the ability of holders of a simple majority of the Common Stock to call a
special meeting of stockholders, except for a special meeting called to elect
directors if an Annual Meeting has not been held for 18 months or if directors
were not elected at the last Annual Meeting. The amendment of Article II,
Section 6, which states the general majority voting requirement for action by
stockholders, conforms the Bylaws to the Nevada General Corporation Law and adds
an explicit cross-reference to supermajority provisions elsewhere in the Bylaws.
The amendment of Article II, Section 10 increases from 75% to 90% the
number of shares required for action by written consent of the stockholders. The
amendment of Article II, Section 12 adds a 120-day
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advance notice requirement for stockholder proposals to be considered at an
Annual Meeting. The amendment of Article III, Section 1 removes certain language
considered superfluous. The amendment of Article III, Section 2 removes a
provision in the Bylaws, as they existed prior to such amendments, pursuant to
which the Board could remove any director for cause. The amendment also removes
language taken from the Nevada General Corporation Law concerning the 2/3
supermajority of shares required to remove a director of a Nevada corporation.
The amendment further provides that, because the Company's charter provides for
cumulative voting in the election of directors, the proportion of the
outstanding shares required to remove any director must be no less than the
proportion equal to (a) one minus (b) the ratio of (x) one divided by (y) the
sum of one plus the authorized number of directors. It is the Company's position
that such interpretation is consistent with applicable Nevada law, although the
Company is aware that Parent has made a contrary assertion in the Nevada federal
court lawsuit described in the following paragraph. The amendment of Article
III, Section 7 provides that 24 hours' notice is required for special meetings
of the Board, if such notice is given orally, or by telegraph, facsimile, or
electronic means instead of three days' notice as previously required. The
amendment of Article VII revises the indemnification provisions of the Bylaws to
mirror the provisions of the Company's Restated Articles of Incorporation. The
amendment of Article VIII, Section 1 requires the affirmative vote of more than
80% of the outstanding stock in order to amend or repeal Bylaws by stockholder
action.
From the time that Parent publicly commenced its efforts to acquire the
Company, a number of lawsuits involving the Company have been filed. As noted in
response to Item 4, on February 10, 1998, Parent sent and publicly disclosed a
letter in which it proposed to acquire the Company. On February 11, 1998 a class
action lawsuit was filed in Clark County, Nevada district court seeking to
enjoin the proposed merger transaction from occurring. Other class action
lawsuits were filed in subsequent days by the same counsel seeking contrary
relief. On February 17, 1998, the same date on which it filed its Schedule 14D-1
and its Preliminary Solicitation and Proxy Statement, Parent filed suit in the
United States District Court for the District of Nevada, captioned Computer
Associates International, Inc. v. Computer Sciences Corporation (Case No.
CV-S-98-00278-LDG), seeking (i) a declaratory judgment that "Computer Associates
Schedule 14D-1 complies with applicable federal law," (ii) to enjoin the Company
from amending its Bylaws in certain respects, (iii) to order the Company to
redeem its "poison pill" and to make the provisions of the Nevada Business
Combination Statute inapplicable to the Offer by approving the Offer, and (iv) a
declaration that certain sections of the Bylaws, in conjunction with certain
sections of the Nevada General Corporation Law, inter alia permit a vote or
consent of holders of a majority of the outstanding shares of the Company to
amend the Bylaws, permit Parent, with the vote of two-thirds of the outstanding
voting shares of the Company, to remove a sufficient number of directors to
designate a majority of the Board, permit a majority of the Company's
stockholders to fill vacancies of removed directors or additional seats on the
Board by written consent, prohibit the Company from setting the record date for
determining stockholders entitled to give written consents and agent
solicitations, require that the Company hold its annual meeting on August 10,
1998 and certain other matters. A copy of Parent's Complaint and Parent's Ex
Parte Motion for Expedited Hearing on Claims for Declaratory Relief are attached
hereto as Exhibits (c)(7) and (c)(8), respectively. A copy of Parent's brief in
support of such Motion and on the merits of the relief requested is attached
hereto as Exhibit (c)(9).
On February 23, 1998, the Company filed its Response of Defendant Computer
Sciences Corporation to Plaintiff Computer Associates International, Inc.'s Ex
Parte Motion for Expedited Hearing on Claims for Declaratory Relief. The
Response, inter alia, pointed out that the amendments adopted to the Company's
Bylaws on February 16, 1998 and February 18, 1998 had rendered moot all of the
claims in Parent's Complaint other than Parent's claim that its filings with the
Securities and Exchange Commission were in compliance with all applicable
federal law. The Response also stated that Parent's positions regarding
corporate governance had no merit even under the pre-amendment Bylaws. A copy of
the Response is attached hereto as Exhibit (c)(10).
Also on February 23, 1998, Parent filed its Supplemental and Amended
Complaint. The Supplemental and Amended Complaint seeks emergency delaratory
relief to void the amendments to the Company's Bylaws and to determine
definitively the legality of Parent's Proxy Solicitation. Parent also sought an
injunction
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against the use of a "poison pill" and other anti-takeover measures and certain
other unspecified actions. A copy of the Supplemental and Amended Complaint is
attached hereto as Exhibit (c)(11).
Also on February 23, 1998, the Company filed a lawsuit in the Superior
Court of the State of California for the County of Los Angeles, Central
District, captioned Computer Sciences Corporation v. Computer Associates
International, Inc., et al.(Case No. BC 186394). This Complaint by the Company
included a number of causes of action, including (1) unfair, unlawful, and
fraudulent business acts and practices in violation of California Business and
Professions Code Sections 17200, et seq., including (a) improper attempt to buy
loyalty; (b) attempted economic duress; (c) fraud and deceit; (d) improper
intentional interference; and (e) unfair business acts; (2) economic duress; (3)
intentional interference with prospective economic advantage and contractual
relations; and (4) conspiracy. A copy of the Company's Complaint is attached
hereto as Exhibit (c)(12).
On February 25, 1998, Parent filed its Reply to the Company's Response with
the United States District Court for the District of Nevada. A copy of such
Reply is attached hereto as Exhibit (c)(17).
On February 26, 1998, the United States District Court for the District of
Nevada issued an Order providing for a hearing on Parent's claims for
declaratory relief on March 16, 1998 and rejecting Parent's argument that the
Company should be prevented from conducting discovery in connection with
Parent's claim for a declaratory judgment that Parent's filings with the
Securities and Exchange Commission comply with applicable federal laws, rules
and regulations. A copy of the Order is attached hereto as Exhibit (c)(18).
The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference in its entirety.
ITEM 9. MATERIALS TO BE FILED AS EXHIBITS
(a)(1) Press release issued by the Company dated February 19, 1998.+
(a)(2) Letter from Van B. Honeycutt to Charles Wang, dated February 19, 1998.+
(a)(3) Press release issued by the Company, dated March 2, 1998.*
(a)(4) Letter from Van B. Honeycutt to the Company's Stockholders dated March
2, 1998.*
(c)(1) Excerpts from the Company's Proxy Statement dated July 2, 1997.+
(c)(2) The Company's Supplemental Executive Retirement Plan, as amended and
restated effective as of February 27, 1998.*
(c)(3) The Company's Severance Plan for Senior Management and Key Employees, as
amended and restated effective as of February 18, 1998.+
(c)(4) Rights Agreement dated as of February 18, 1998 by and between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.+
(c)(5) The Company's Deferred Compensation Plan, as amended and restated
effective as of February 2, 1998.+
(c)(6) The Company's Bylaws, as amended and restated February 18, 1998.*
(c)(7) Complaint for Injunctive and Declaratory Relief in Computer Associates
International, Inc. v. Computer Sciences Corporation, case no.
CV-S-98-00278-LDG.+
(c)(8) Ex Parte Motion for Expedited Hearing on Claims for Declaratory Relief
in Computer Associates International, Inc. v. Computer Sciences
Corporation.+
(c)(9) Brief in Support of Motion for Expedited Hearing on Claims for
Declaratory Relief and on the Merits of the Relief Requested in Computer
Associates International, Inc. v. Computer Sciences Corporation.+
(c)(10) Response of the Company to the Ex Parte Motion for Expedited Hearing on
Claims for Declaratory Relief in Computer Associates International, Inc.
v. Computer Sciences Corporation.+
(c)(11) Supplemental and Amended Complaint in Computer Associates International,
Inc. v. Computer Sciences Corporation.+
17
<PAGE> 18
(c)(12) Complaint for (1) Unfair, Unlawful, and Fraudulent Business Acts and
Practices in violation of California Business and Professions Code
Sections 17200 et seq.; (2) Economic Duress; (3) Intentional
Interference with Prospective Economic Advantage and Contractual
Relations; and (4) Conspiracy in Computer Sciences Corporation v.
Computer Associates International, Inc., case no. BC186394.+
(c)(13) Form of Stock Option Agreement.*
(c)(14) Form of Restricted Stock Agreement.*
(c)(15) Amended and Restated Rights Agreement dated as of December 21, 1988, as
amended and restated as of February 18, 1998, by and between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.+
(c)(16) The Company's 1990 Nonemployee Director Retirement Plan, as amended and
restated effective February 2, 1998.*
(c)(17) Reply of Parent in Computer Associates International, Inc. v. Computer
Sciences Corporation.*
(c)(18) Order of the United States District Court for the District of Nevada,
dated February 26, 1998.*
- ------------------------
+ Previously filed.
* Filed herewith.
18
<PAGE> 19
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
COMPUTER SCIENCES CORPORATION
By: /s/ VAN B. HONEYCUTT
------------------------------------
Van B. Honeycutt
Chairman, President and
Chief Executive Officer
Dated: March 2, 1998
19
<PAGE> 20
EXHIBIT INDEX
(a)(1) Press release issued by the Company dated February 19, 1998.+
(a)(2) Letter from Van B. Honeycutt to Charles Wang, dated February 19, 1998.+
(a)(3) Press release issued by the Company, dated March 2, 1998.*
(a)(4) Letter from Van B. Honeycutt to the Company's Stockholders dated March
2, 1998.*
(c)(1) Excerpts from the Company's Proxy Statement dated July 2, 1997.+
(c)(2) The Company's Supplemental Executive Retirement Plan, as amended and
restated effective as of February 27, 1998.*
(c)(3) The Company's Severance Plan for Senior Management and Key Employees, as
amended and restated effective as of February 18, 1998.+
(c)(4) Rights Agreement dated as of February 18, 1998 by and between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.+
(c)(5) The Company's Deferred Compensation Plan, as amended and restated
effective as of February 2, 1998.+
(c)(6) The Company's Bylaws, as amended and restated February 18, 1998.*
(c)(7) Complaint for Injunctive and Declaratory Relief in Computer Associates
International, Inc. v. Computer Sciences Corporation, case no.
CV-S-98-00278-LDG.+
(c)(8) Ex Parte Motion for Expedited Hearing on Claims for Declaratory Relief
in Computer Associates International, Inc. v. Computer Sciences
Corporation.+
(c)(9) Brief in Support of Motion for Expedited Hearing on Claims for
Declaratory Relief and on the Merits of the Relief Requested in Computer
Associates International, Inc. v. Computer Sciences Corporation.+
(c)(10) Response of the Company to the Ex Parte Motion for Expedited Hearing on
Claims for Declaratory Relief in Computer Associates International, Inc.
v. Computer Sciences Corporation.+
(c)(11) Supplemental and Amended Complaint in Computer Associates International,
Inc. v. Computer Sciences Corporation.+
(c)(12) Complaint for (1) Unfair, Unlawful, and Fraudulent Business Acts and
Practices in violation of California Business and Professions Code
Sections 17200 et seq.; (2) Economic Duress; (3) Intentional
Interference with Prospective Economic Advantage and Contractual
Relations; and (4) Conspiracy in Computer Sciences Corporation v.
Computer Associates International, Inc., case no. BC186394.+
(c)(13) Form of Stock Option Agreement.*
(c)(14) Form of Restricted Stock Agreement.*
(c)(15) Amended and Restated Rights Agreement dated as of December 21, 1988, as
amended and restated as of February 18, 1998, by and between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.+
(c)(16) The Company's 1990 Nonemployee Director Retirement Plan, as amended and
restated February 2, 1998.*
(c)(17) Reply of Parent in Computer Associates International, Inc. v. Computer
Sciences Corporation.*
(c)(18) Order of the United States District Court for the District of Nevada,
dated February 26, 1998.*
- ------------------------
+ Previously filed.
* Filed herewith.
20
<PAGE> 1
EXHIBIT (a)(3)
EL SEGUNDO, Calif., March 2 -- Computer Sciences Corporation (NYSE: CSC)
announced today that its Board of Directors has unanimously recommended that
stockholders not tender any of their shares of CSC to Computer Associates
International, Inc. (NYSE: CA). CSC is today mailing a letter to stockholders
setting forth the Board's recommendation, a copy of which is attached to this
press release. Also being mailed to stockholders is a copy of the Schedule 14D-9
filed by CSC with the Securities and Exchange Commission.
CSC provides clients with a wide range of professional services, including
management consulting, information systems consulting and integration, and
operations support. The company has more than 44,000 employees in nearly 600
offices worldwide. For the 12 months ended December 26, 1997, CSC had $6.3
billion in revenue. More information about CSC, including a copy of the letter
to CSC stockholders referred to herein, is available at www.csc.com.
Computer Sciences Corporation cautions that any statements in this document
as to future business results are forward looking statements and by their nature
are necessarily subject to uncertainties concerning events beyond the company's
control, and no assurances can be given that such results will be achieved.
March 2, 1998
Dear Computer Sciences Stockholder:
As you may be aware, Computer Associates International, Inc. has commenced a
tender offer for the outstanding shares of Computer Sciences Corporation at a
cash price of $108 per share.
At a meeting on February 18, 1998, our Board of Directors met to consider
Computer Associates' merger proposal, contained in a letter dated February 10,
1998. After careful consideration of the proposal and the advice of our counsel,
as well as that of our financial advisors, Goldman Sachs & Co. and J.P. Morgan &
Co., the Board concluded unanimously to reject the Computer Associates proposal.
The Board of Directors met again on February 27, 1998, to consider its formal
response to the Computer Associates tender offer, and to review developments to
date. At the end of the meeting, the Board voted unanimously to reaffirm its
rejection of Computer Associates' proposed takeover of our Company. I strongly
urge you to join the Board in rejecting Computer Associates' offer and not
tender any of your shares to Computer Associates.
We firmly believe that Computer Associates' offer does not represent fair value
for our Company. In the coming days, we will provide you with specific
information to substantiate our conviction that Computer Associates' bid falls
short of rewarding our stockholders for the underlying value of Computer
Sciences.
The enclosed Schedule 14D-9, as filed with the Securities and Exchange
Commission, contains extensive information concerning our actions in response to
the Computer Associates offer. I urge you to review it carefully.
The Board of Directors and I thank you for your ongoing support, and promise to
keep you fully informed of developments. In the meantime, we will continue to
focus on moving our Company successfully into the future.
Sincerely,
/s/ VAN B. HONEYCUTT
Van B. Honeycutt
Chief Executive Officer
For questions or comments, please contact Morrow & Co., Inc. at 1-800-662-5200
21
<PAGE> 1
Exhibit (a)(4)
COMPUTER SCIENCES CORPORATION
CSC LOGO
March 2, 1998
Dear Computer Sciences Stockholder:
As you may be aware, Computer Associates International, Inc. has
commenced a tender offer for the outstanding shares of Computer
Sciences Corporation at a cash price of $108 per share.
At a meeting on February 18, 1998, our Board of Directors met to
consider Computer Associates' merger proposal, contained in a
letter dated February 10, 1998. After careful consideration of the
proposal and the advice of our counsel, as well as that of our
financial advisors, Goldman Sachs & Co. and J.P. Morgan & Co., the
Board concluded unanimously to reject the Computer Associates
proposal.
The Board of Directors met again on February 27, 1998, to consider
its formal response to the Computer Associates tender offer, and
to review developments to date. At the end of the meeting, the
Board voted unanimously to reaffirm its rejection of Computer
Associates' proposed takeover of our Company. I strongly urge you
to join the Board in rejecting Computer Associates' offer and not
tender any of your shares to Computer Associates.
We firmly believe that Computer Associates' offer does not
represent fair value for our Company. In the coming days, we will
provide you with specific information to substantiate our
conviction that Computer Associates' bid falls short of rewarding
our stockholders for the underlying value of Computer Sciences.
The enclosed Schedule 14D-9, as filed with the Securities and
Exchange Commission, contains extensive information concerning our
actions in response to the Computer Associates offer. I urge you
to review it carefully.
The Board of Directors and I thank you for your ongoing support,
and promise to keep you fully informed of developments. In the
meantime, we will continue to focus on moving our Company
successfully into the future.
Sincerely,
/s/ VAN B. HONEYCUTT
Van B. Honeycutt
Chief Executive Officer
For questions or comments, please contact Morrow & Co., Inc. at
1-800-662-5200
<PAGE> 1
EXHIBIT (c)(2)
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 27, 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
<PAGE> 2
(c) prior to a Change in Control (as hereinafter defined), the Chief 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-two (62)),
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,
2
<PAGE> 3
and in accordance with social security rules in effect at the time of his
Separation from Service.
(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. If the
period of Continuous Service as of a Participant's Retirement Date is (i) less
than two years but more than one year, "Average Base Salary Rate" means the
average of the Base Salary Rate on his Retirement Date and on the same day and
month of the immediately preceding year, or (ii) less than one year, "Average
Base Salary Rate" means the Base Salary Rate on his 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
3
<PAGE> 4
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.
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
4
<PAGE> 5
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 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
5
<PAGE> 6
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 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
6
<PAGE> 7
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 paragraph (a) preceding and in Article IV and
Article Vl. 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 Vll 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.
ARTICLE X
7
<PAGE> 8
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
8
<PAGE> 9
Service, and (ii) had attained an age equal to the greater of sixty-two (62) or
his or her actual age.
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
<PAGE> 10
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 with
respect to the
10
<PAGE> 11
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.
ARTICLE XVI
11
<PAGE> 12
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.
12
<PAGE> 13
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.
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,
13
<PAGE> 14
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
(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
<PAGE> 1
EXHIBIT (c)(6)
BYLAWS
OF
COMPUTER SCIENCES CORPORATION
As amended February 18, 1998
<PAGE> 2
BYLAWS
OF
COMPUTER SCIENCES CORPORATION
ARTICLE I
OFFICES
Section 1. Principal Office.
----------------
The principal office of the corporation in the State of Nevada shall be in the
City of Reno, County of Washoe.
Section 2. Other Offices.
-------------
The corporation may also have offices in such other places, both within and
without the State of Nevada, as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Annual Meetings.
------------------------
Annual meetings of the stockholders shall be held at the office of the
corporation in the City of El Segundo, State of California or at such other
place, within or without the State of California, as shall be designated by the
Board of Directors.
Section 2. Date of Annual Meetings; Election of Directors.
----------------------------------------------
Annual meetings of the stockholders shall be held at such time and date as the
Board of Directors shall determine. At each such annual meeting, the
stockholders of the corporation shall elect a Board of Directors and transact
such other business as has properly been brought before the meeting in
accordance with Section 12 of this Article II.
Section 3. Special Meetings.
----------------
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, by the Articles of Incorporation or by these
Bylaws, may be called by the Chairman of the Board, the Board of Directors, or
by the president and not otherwise, except as provided in the following
sentence. In the event the corporation shall have failed to hold its annual
meeting of stockholders for a period of 18 months from the last preceding annual
meeting at which directors were elected or if such annual meeting shall have
been held but directors shall not have been elected at such annual meeting, a
special meeting of the stockholders shall be called by the president or
secretary at the request in writing of a majority of the Board of Directors or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request from stockholders shall be directed to the Chairman of the
Board, the president, the vice president or the secretary.
<PAGE> 3
To be in proper written form, a stockholder's notice must set forth (i) the name
and record address of such stockholder, (ii) the class or series and number of
shares of capital stock of the corporation which are owned beneficially or of
record by such stockholder, (iii) a description of all arrangements or
understandings between such stockholder and any other person or persons
(including their names) in connection with the election of directors and any
material interest of such stockholder in such election and (iv) a representation
that such stockholder intends to appear in person or by proxy at such special
meeting to vote on the election of directors at such meeting. The business
transacted at such special meeting shall be confined to the election of
directors.
Section 4. Notices of Meetings.
-------------------
Notices of meetings of the stockholders shall be in writing and signed by the
president, a vice president, the secretary, an assistant secretary, or by such
other person or persons as the directors shall designate. Such notice shall
state the purpose or purposes for which the meeting is called and the time when,
and the place where, it is to be held. A copy of such notice shall be either
delivered personally or shall be mailed, postage prepaid, to each stockholder of
record entitled to vote at such meeting not less than ten (10) nor more than
sixty (60) days before such meeting. If mailed, it shall be directed to the
stockholder at his address as it appears upon the records of the corporation and
upon such mailing of any such notice, the service thereof shall be complete, and
the time of the notice shall begin to run from the date upon which such notice
is deposited in the mail for transmission to such stockholder. If no such
address appears on the books of the corporation and a stockholder has given no
address for the purpose of notice, then notice shall be deemed to have been
given to such stockholder if it is published at least once in a newspaper of
general circulation in the county in which the principal executive office of the
corporation is located. An affidavit of the mailing or publication of any such
notice shall be prima facie evidence of the giving of such notice.
Personal delivery of any such notice to any officer of a corporation
or association, or to any member of a partnership shall constitute delivery of
such notice to such corporation, association or partnership. If any notice
addressed to the stockholder at the address of such stockholder appearing on the
books of the corporation is returned to the corporation by the United States
Postal Service marked to indicate that it is unable to deliver the notice to the
stockholder at such address, all future notices shall be deemed to have been
duly given to such stockholder, without further mailing, if the same shall be
available for the stockholder upon written demand of the stockholder at the
principal executive office of the corporation for a period of one year from the
date of the giving of the notice to all other stockholders.
Section 5. Quorum.
------
The holders of a majority of the stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business,
except as otherwise provided by the statutes of Nevada or by the Articles of
Incorporation. Regardless of whether or not a quorum is present or
2
<PAGE> 4
represented at any annual or special meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present in
person or represented by proxy, provided that when any stockholders' meeting is
adjourned for more than forty-five (45) days, or if after adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting. At
such adjourned meeting at which a quorum shall be present or represented by
proxy, any business may be transacted which might have been transacted at the
meeting as originally noticed.
Section 6. Vote Required.
-------------
When a quorum is present or represented at any meeting, the holders of a
majority of the stock present in person or represented by proxy and voting shall
decide any question brought before such meeting, unless the question is one upon
which, by express provision of the statutes of Nevada, the Articles of
Incorporation or these Bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 7. Cumulative Voting.
-----------------
Except as otherwise provided in the Articles of Incorporation, every stockholder
of record of the corporation shall be entitled at each meeting of the
stockholders to one vote for each share of stock standing in his name on the
books of the corporation. At all elections of directors of this corporation,
each holder of shares of capital stock possessing voting power shall be entitled
to as many votes as shall equal the number of his shares of stock multiplied by
the number of directors to be elected, and he may cast all of such votes for a
single director or may distribute them among the number to be voted for or any
two or more of them, as he may see fit. The stockholders of this corporation and
any proxyholders for such stockholders are entitled to exercise the right to
cumulative voting at any meeting held for the election of directors if: (a) not
less than forty-eight (48) hours before the time fixed for holding such meeting,
if notice of the meeting has been given at least ten (10) days prior to the date
of the meeting, and otherwise not less than twenty-four (24) hours before such
time, a stockholder of this corporation has given notice in writing to the
president or secretary of the corporation that he desires that the voting at
such election of directors shall be cumulative; and (b) at such meeting, prior
to the commencement of voting for the election of directors, an announcement of
the giving of such notice has been made by the chairman or the secretary of the
meeting or by or on behalf of the stockholder giving such notice. Notice to
stockholders of the requirements of the preceding sentence shall be contained in
the notice calling such meeting or in the proxy material accompanying such
notice.
3
<PAGE> 5
Section 8. Conduct of Meetings.
-------------------
Subject to the requirements of the statutes of Nevada, and the express
provisions of the Articles of Incorporation and these Bylaws, all annual and
special meetings of stockholders shall be conducted in accordance with such
rules and procedures as the Board of Directors may determine and, as to matters
not governed by such rules and procedures, as the chairman of such meeting shall
determine. The chairman of any annual or special meeting of stockholders shall
be designated by the Board of Directors and, in the absence of any such
designation, shall be the president of the corporation.
Section 9. Proxies.
-------
At any meeting of the stockholders, any stockholder may be represented and vote
by a proxy or proxies appointed by an instrument in writing. In the event that
such instrument in writing shall designate two or more persons to act as
proxies, a majority of such persons present at the meeting, or, if only one
shall be present, then that one shall have and may exercise all of the powers
conferred by such written instrument upon all of the persons so designated
unless the instrument shall otherwise provide. No such proxy shall be valid
after the expiration of six (6) months from the date of its execution, unless
coupled with an interest, or unless the person executing it specifies therein
the length of time for which it is to continue in force, which in no case shall
exceed seven (7) years from the date of its execution. Subject to the above, any
proxy duly executed is not revoked and continues in full force and effect until
(i) an instrument revoking it or duly executed proxy bearing a later date is
filed with the secretary of the corporation or, (ii) the person executing the
proxy attends such meeting and votes the shares subject to the proxy, or (iii)
written notice of the death or incapacity of the maker of such proxy is received
by the corporation before the vote pursuant thereto is counted.
Section 10. Action by Written Consent.
-------------------------
Any action, except election of directors, which may be taken by a vote of the
stockholders at a meeting, may be taken without a meeting and without notice if
authorized by the written consent of stockholders holding at least ninety
percent (90%) of the voting power.
Section 11. Inspectors of Election.
----------------------
In advance of any meeting of stockholders, the Board of Directors may appoint
inspectors of election to act at such meeting and any adjournment thereof. If
inspectors of election are not so appointed, or if any persons so appointed fail
to appear or refuse to act, then, unless other persons are appointed by the
Board of Directors prior to the meeting, the chairman of any such meeting may,
and on the request of any stockholder or a stockholder proxy shall, appoint
inspectors of election (or persons to replace those who fail to appear or refuse
to act) at the meeting. The number of inspectors shall not exceed three.
The duties of such inspectors shall include: (a) determining the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies; (b) receiving votes, ballots or consents; (c)
4
<PAGE> 6
hearing and determining all challenges and questions in any way arising in
connection with the right to vote; (d) counting and tabulating all votes or
consents and determining the result; and (e) taking such other action as may be
proper to conduct the election or vote with fairness to all stockholders. In the
determination of the validity and effect of proxies, the dates contained on the
forms of proxy shall presumptively determine the order of execution of the
proxies, regardless of the postmark dates on the envelopes in which they are
mailed. The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.
Section 12. Action at Meetings of Stockholders.
----------------------------------
No business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the annual meeting by or at the direction of
the Board of Directors or (c) otherwise properly brought before the annual
meeting by any stockholder of the Corporation (i) who is a stockholder of record
on the date of the giving of the notice provided for in this Section 12 and on
the record date for the determination of stockholders entitled to vote at such
annual meeting and (ii) who complies with the notice procedures set forth in
this Section 12.
In addition to any other applicable requirements, for business
properly to be brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to the
Chairman of the Board, if any, the President, or the Secretary of the
Corporation.
To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
one hundred twenty (120) days nor more than one hundred fifty (150) days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the 5:00 o'clock, p.m., Los Angeles, California time on
the tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice must set forth as
to each matter such stockholder proposes to bring before the annual meeting (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of such stockholder, (iii) the class
5
<PAGE> 7
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by such stockholder and any material interest of such stockholder in such
business and (v) a representation that such stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 12, provided, however, that, once business
has been brought properly before the annual meeting in accordance with such
procedures, nothing in this Section 12 shall be deemed to preclude discussion by
any stockholder of any such business. If the Chairman of an annual meeting
determines that business was not brought properly before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not brought properly before the meeting and such
business shall not be transacted.
ARTICLE III
DIRECTORS
Section 1. Number of Directors.
-------------------
The exact number of directors that shall constitute the authorized number of
members of the Board shall be nine (9), all of whom shall be at least 18 years
of age. The authorized number of directors may from time to time be increased to
not more than fifteen (15) or decreased to not less than three (3) by resolution
of the directors of the corporation amending this section of the Bylaws in
compliance with Article VIII, Section 2 of these Bylaws. Except as provided in
Section 2 of this Article III, each director elected shall hold office until his
successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies.
---------
Vacancies, including those caused by (i) the death, removal, or resignation of
directors, (ii) the failure of stockholders to elect directors at any annual
meeting, and (iii) an increase in the number of directors, may be filled by a
majority of the remaining directors though less than a quorum. When one or more
directors shall give notice of his or their resignation to the Board, effective
at a future date, the acceptance of such resignation shall not be necessary to
make it effective. The Board shall have power to fill such vacancy or vacancies
to take effect when such resignation or resignations shall become effective,
each director so appointed to hold office during the remainder of the term of
office of the resigning director or directors. No director or directors of this
corporation shall be removed from office except upon the affirmative vote of
stockholders owning a fraction of the total number of outstanding shares of the
Company's voting stock equal to (a) one (1) minus (b) the ratio of (x) one (1)
divided by (y) the sum of one (1) plus the authorized number of directors.
6
<PAGE> 8
Section 3. Authority.
---------
The business of the corporation shall be managed and all corporate powers shall
be exercised by or under the direction of the Board of Directors.
Section 4. Meetings.
--------
The Board of Directors of the corporation may hold meetings, both regular and
special, at such place, either within or without the State of Nevada, which has
been designated by resolution of the Board of Directors. In the absence of such
designation, meetings shall be held at the office of the corporation in the City
of El Segundo, State of California.
Section 5. First Meeting.
-------------
The first meeting of the newly elected Board of Directors shall be held
immediately following the annual meeting of the stockholders and no notice of
such meeting to the newly elected directors shall be necessary in order legally
to constitute a meeting, provided a quorum shall be present.
Section 6. Regular Meetings.
----------------
Regular meetings of the Board of Directors may be held without notice at such
time and place as shall from time to time be determined by the Board.
Section 7. Special Meetings.
----------------
Special meetings of the Board of Directors may be called by the Chairman of the
Board, or the president and shall be called by the president or secretary at the
written request of two directors. Notice of the time and place of special
meetings shall be given within 30 days to each director (a) personally or by
telephone, telegraph, facsimile or electronic means, in each case at least
twenty four (24) hours prior to the holding of the meeting, or (b) by mail,
charges prepaid, addressed to him at his address as it is shown upon the records
of the corporation (or, if it is not so shown on such records and is not readily
ascertainable, at the place at which the meetings of the directors are regularly
held) at least three (3) days prior to the holding of the meeting. Notice by
mail shall be deemed to have been given at the time a written notice is
deposited in the United States mails, postage prepaid. Any other written notice
shall be deemed to have been given at the time it is personally delivered to the
recipient or is delivered to a common carrier for transmission, or actually
transmitted by the person giving the notice by electronic means, to the
recipient. Oral notice shall be deemed to have been given at the time it is
communicated, in person or by telephone or wireless, to the recipient or to a
person at the office of the recipient who the person giving the notice has
reason to believe will promptly communicate it to the recipient. Any notice,
waiver of notice or consent to holding a meeting shall state the time, date and
place of the meeting but need not specify the purpose of the meeting.
Section 8. Quorum.
------
Presence in person of a majority of the Board of Directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
7
<PAGE> 9
business and the act of a majority of the directors present and voting at any
meeting, at which a quorum is then present, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by the statutes of
Nevada or by the Articles of Incorporation. A meeting at which a quorum is
initially present shall not continue to transact business in the absence of a
quorum.
Section 9. Action by Written Consent.
-------------------------
Unless otherwise restricted by the Articles of Incorporation or by these Bylaws,
any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting if a written consent thereto is signed
by all members of the Board. Such written consent shall be filed with the
minutes of proceedings of the Board of Directors.
Section 10. Telephonic Meetings.
-------------------
Unless otherwise restricted by the Articles of Incorporation or these Bylaws,
members of the Board of Directors or of any committee designated by the Board of
Directors may participate in a meeting of the Board or committee by means of a
conference telephone network or a similar communications method by which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to the preceding sentence constitutes presence in person at
such meeting.
Section 11. Adjournment.
-----------
A majority of the directors present at any meeting, whether or not a quorum is
present, may adjourn any directors' meeting to another time, date and place. If
any meeting is adjourned for more than twenty-four (24) hours, notice of any
adjournment to another time, date and place shall be given, prior to the time of
the adjourned meeting, to the directors who were not present at the time of
adjournment. If any meeting is adjourned for less than twenty-four (24) hours,
notice of any adjournment shall be given to absent directors, prior to the time
of the adjourned meeting, unless the time, date and place is fixed at the
meeting adjourned.
Section 12. Committees.
----------
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees of the Board of Directors. Such
committee or committees shall have such name or names, shall have such duties
and shall exercise such powers as may be determined from time to time by the
Board of Directors.
Section 13. Committee Minutes.
-----------------
The committees shall keep regular minutes of their proceedings and report the
same to the Board of Directors.
Section 14. Compensation of Directors.
-------------------------
The directors shall receive such compensation for their services as directors,
and such additional compensation for their services as members of any committees
of the Board of Directors, as may be authorized by the Board of Directors.
8
<PAGE> 10
Section 15. Mandatory Retirement of Directors.
---------------------------------
Notwithstanding anything to the contrary in these Bylaws, a director shall not
serve beyond, and shall automatically retire at, the close of the first meeting
of the Board of Directors held during the month in which such director shall
become age 70; provided, however, that any person who was a director on December
6, 1996 and who was age 65 or older on such date may serve until, but shall
automatically retire at, the close of the first meeting of the Board of
Directors held during the month in which such director shall become age 72. If
no meeting of the Board of Directors is held during such month, the director
shall automatically retire as of the last day of such month.
ARTICLE IV
OFFICERS
Section 1. Principal Officers.
------------------
The officers of the corporation shall be elected by the Board of Directors and
shall be a president, a secretary and a treasurer. A resident agent for the
corporation in the State of Nevada shall be designated by the Board of
Directors. Any person may hold two or more offices.
Section 2. Other Officers.
--------------
The Board of Directors may also elect one or more vice presidents, assistant
secretaries and assistant treasurers, and such other officers and agents, as it
shall deem necessary.
Section 3. Qualification and Removal.
-------------------------
The officers of the corporation mentioned in Section 1 of this Article IV shall
hold office until their successors are elected and qualify. Any such officer and
any other officer elected by the Board of Directors may be removed at any time
by the affirmative vote of a majority of the Board of Directors.
Section 4. Resignation.
-----------
Any officer may resign at any time by giving written notice to the corporation,
without prejudice, however, to the rights, if any, of the corporation under any
contract to which such officer is a party. Any such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Powers and Duties; Execution of Contracts.
-----------------------------------------
Officers of this corporation shall have such powers and duties as may be
determined by the Board of Directors. Unless otherwise specified by the Board of
Directors, the president shall be the chief executive officer of the
corporation. Contracts and other instruments in the normal course of business
may be executed on behalf of the corporation by the president or any vice
president of the corporation, or any other person authorized by resolution of
the Board of Directors.
9
<PAGE> 11
ARTICLE V
STOCK AND STOCKHOLDERS
Section 1. Issuance.
--------
Every stockholder shall be issued a certificate representing the number of
shares owned by him in the corporation. If the corporation shall be authorized
to issue more than one class of stock or more than one series of any class, the
certificate shall contain a statement setting forth the office or agency of the
corporation from which stockholders may obtain a copy of a statement or summary
of the designations, preferences and relative or other special rights of the
various classes of stock or series thereof and the qualifications, limitations
or restrictions of such rights. The corporation shall furnish to its
stockholders, upon request and without charge, a copy of such statement or
summary.
Section 2. Facsimile Signatures.
--------------------
Whenever any certificate is countersigned or otherwise authenticated by a
transfer agent or transfer clerk, and by a registrar, then a facsimile of the
signatures of the officers of the corporation may be printed or lithographed
upon such certificate in lieu of the actual signatures. In case any officer or
officers who shall have signed, or whose facsimile signature or signatures shall
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation, before such certificates shall have been
delivered by the corporation, such certificates may nevertheless be issued as
though the person or persons who signed such certificates, had not ceased to be
an officer of the corporation.
Section 3. Lost Certificates.
-----------------
The Board of Directors may direct a new stock certificate to be issued in place
of any certificate alleged to have been lost or destroyed, and may require the
making of an affidavit of that fact by the person claiming the stock certificate
to be lost or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent, require
the owner of the lost or destroyed certificate to give the corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost or destroyed.
Section 4. Transfer of Stock.
-----------------
Upon surrender to the corporation or the transfer agent of the corporation of a
certificate for shares duly endorsed for transfer, it shall be the duty of the
corporation to issue a new certificate, cancel the old certificate and record
the transaction upon its books.
Section 5. Record Date.
-----------
The directors may fix a date not more than sixty (60) days prior to the holding
of any meeting as the date as of which stockholders entitled to notice of and to
vote at such meeting shall be determined; and only stockholders of record on
such day shall be entitled to notice or to vote at such meeting. If no record
date is fixed by the Board of Directors (a) the record date for determining
stockholders entitled to notice of or to vote at a meeting of
10
<PAGE> 12
stockholders shall be the sixtieth (60th) day preceding the day on which the
meeting is held; (b) the record date for determining stockholders entitled to
give consent to corporate action in writing without a meeting, when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given; and (c) the record date for determining stockholders for any
other purpose shall be the day on which the Board of Directors adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such action, whichever is later. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting unless the Board of Directors fixes a new record date
for the adjourned meeting, but the Board of Directors shall fix a new record
date if the meeting is adjourned for more than forty-five (45) days from the
date set for the original meeting.
Section 6. Registered Stock.
----------------
The corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends, and to vote
as such owner and shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the statutes of Nevada.
Section 7. Dividends.
---------
In the event a dividend is declared, the stock transfer books will not be closed
but a record date will be fixed by the Board of Directors and only shareholders
of record on that date shall be entitled to the dividend.
ARTICLE VI
INDEMNIFICATION
Section 1. Indemnity of Directors, Officers and Agents.
-------------------------------------------
The corporation shall indemnify and hold harmless any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was or has agreed to
become a director or officer of the corporation or is serving at the request of
the corporation as a director or officer of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise or by reason of
actions alleged to have been taken or omitted in such capacity or in any other
capacity while serving as a director or officer. The indemnification of
directors and officers by the corporation shall be to the fullest extent
authorized or permitted by applicable law, as such law exists or may hereafter
be amended (but only to the extent that such amendment permits the corporation
to provide broader indemnification rights than permitted prior to the
amendment). The indemnification of directors and officers shall be against all
loss, liability and expense (including attorneys fees, costs, damages,
judgments, fines, amounts paid in settlement and ERISA excise taxes or
penalties) actually and reasonably incurred by or on behalf of a director or
officer in connection with such action, suit or proceeding,
11
<PAGE> 13
including any appeals; provided, however, that with respect to any action, suit
or proceeding initiated by a director or officer, the corporation shall
indemnify such director or officer only if the action, suit or proceeding was
authorized by the board of directors of the corporation, except with respect to
a suit for the enforcement of rights to indemnification or advancement of
expenses in accordance with Section 3 hereof.
Section 2. Expenses
--------
The expenses of directors and officers incurred as a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative shall be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding; provided, however, that if applicable law so requires, the advance
payment of expenses shall be made only upon receipt by the corporation of an
undertaking by or on behalf of the director or officer to repay all amounts as
advanced in the event that it is ultimately determined by a final decision,
order or decree of a court of competent jurisdiction that the director or
officer is not entitled to be indemnified for such expenses under this Article
VI.
Section 3. Enforcement
-----------
Any director or officer may enforce his or her rights to indemnification or
advance payments for expenses in a suit brought against the corporation if his
or her request for indemnification or advance payments for expenses is wholly or
partially refused by the corporation or if there is no determination with
respect to such request within 60 days from receipt by the corporation of a
written notice from the director or officer for such a determination. If a
director or officer is successful in establishing in a suit his or her
entitlement to receive or recover an advancement of expenses or a right to
indemnification, in whole or in part, he or she shall also be indemnified by the
corporation for costs and expenses incurred in such suit. It shall be a defense
to any such suit (other than a suit brought to enforce a claim for the
advancement of expenses under Section 2 of this Article VI where the required
undertaking, if any, has been received by the corporation) that the claimant has
not met the standard of conduct set forth in the Nevada General Corporation Law.
Neither the failure of the corporation to have made a determination prior to the
commencement of such suit that indemnification of the director or officer is
proper in the circumstances because the director or officer has met the
applicable standard of conduct nor a determination by the corporation that the
director or officer has not met such applicable standard of conduct shall be a
defense to the suit or create a presumption that the director or officer has not
met the applicable standard of conduct. In a suit brought by a director or
officer to enforce a right under this Section 3 or by the corporation to recover
an advancement of expenses pursuant to the terms of an undertaking, the burden
of proving that a director or officer is not entitled to be indemnified or is
not entitled to an advancement of expenses under this Section 3 or otherwise,
shall be on the corporation.
Section 4. Non-exclusivity
---------------
The right to indemnification and to the payment of expenses as they are incurred
and in advance of the final disposition of the action, suit or proceeding shall
not be exclusive of any other right to which a person may be
12
<PAGE> 14
entitled under these articles of incorporation or any bylaw, agreement, statute,
vote of stockholders or disinterested directors or otherwise. The right to
indemnification under Section 1 hereof shall continue for a person who has
ceased to be a director or officer and shall inure to the benefit of his or her
heirs, next of kin, executors, administrators and legal representatives.
Section 5. Settlement
----------
The corporation shall not be obligated to reimburse the amount of any settlement
unless it has agreed to such settlement. If any person shall unreasonably fail
to enter into a settlement of any action, suit or proceeding within the scope of
Section 1 hereof, offered or assented to by the opposing party or parties and
which is acceptable to the corporation, then, notwithstanding any other
provision of this Article VI, the indemnification obligation of the corporation
in connection with such action, suit or proceeding shall be limited to the total
of the amount at which settlement could have been made and the expenses incurred
by such person prior to the time the settlement could reasonably have been
effected.
Section 6. Purchase of Insurance.
---------------------
The corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article VI.
Section 7. Conditions
----------
The corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses to
any employee or agent of the corporation or to any director, officer, employee
or agent of any of its subsidiaries to the fullest extent of the provisions of
this Article VI subject to the imposition of any conditions or limitations as
the Board of Directors may deem necessary or appropriate.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Exercise of Rights.
------------------
All rights incident to any and all shares of another corporation or corporations
standing in the name of this corporation may be exercised by such officer, agent
or proxyholder as the Board of Directors may designate. In the absence of such
designation, such rights may be exercised by the Chairman of the Board or the
president of this corporation, or by any other person authorized to do so by the
Chairman of the Board or the president of this corporation. Except as provided
below, shares of this corporation owned by any subsidiary of this corporation
shall not be entitled to vote on any matter. Shares of this corporation held by
this corporation in a fiduciary
13
<PAGE> 15
capacity and shares of this corporation held in a fiduciary capacity by any
subsidiary of this corporation, shall not be entitled to vote on any matter,
except to the extent that the settler or beneficial owner possesses and
exercises a right to vote or to give this corporation or such subsidiary binding
instructions as to how to vote such shares.
Solely for purposes of Section 1 of this Article VII, a "subsidiary"
of this corporation shall mean a corporation, shares of which possessing more
than fifty percent (50%) of the power to vote for the election of directors at
the time determination of such voting power is made, are owned directly, or
indirectly through one or more subsidiaries, by this corporation.
Section 2. Interpretation.
--------------
Unless the context of a Section of these Bylaws otherwise requires, the terms
used in these Bylaws shall have the meanings provided in, and these Bylaws shall
be construed in accordance with the Nevada statutes relating to private
corporations, as found in Chapter 78 of the Nevada Revised Statutes or any
subsequent statute.
ARTICLE VIII
AMENDMENTS
Section 1. Stockholder Amendments.
----------------------
Bylaws may be adopted, amended or repealed by the affirmative vote of more than
eighty percent (80%) of the outstanding voting shares of this corporation.
Section 2. Amendments by Board of Directors.
--------------------------------
Subject to the right of stockholders as provided in Section 1 of this Article
VIII, Bylaws may be adopted, amended or repealed by the Board of Directors.
ARTICLE IX
"ACQUISITION OF CONTROLLING INTEREST" PROVISIONS OF
THE NEVADA GENERAL CORPORATION LAW SHALL NOT APPLY
On and after February 16, 1998, the provisions of Section 78.378 to
78.3793, inclusive, of the Nevada Revised Statutes shall not apply to the
corporation.
14
<PAGE> 1
EXHIBIT (c)(13)
FORM OF STOCK OPTION AGREEMENT
(A) Form of Stock Option Agreements relating to options granted by the
Company to employees of the Company and its affiliates who are
participants in the SERP:
(i) Options granted under the 1990 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(ii) Options granted under the 1992 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(b) Form of Discount Nonqualified Stock Option Agreement
(iii) Options granted under the 1995 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(B) Form of Stock Option Agreements relating to options granted by the
Company to employees of the Company and its affiliates who are not
participants in the SERP:
(i) Options granted under the 1978 Stock Option Plan:
(a) Form of Nonqualified Stock Option Agreement
(ii) Options granted under the 1984 Stock Option Plan:
(a) Form of Nonqualified Stock Option Agreement
(iii) Options granted under the 1987 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(b) Form of Stock Option Agreement issued pursuant to the
Schedule approved by the U.K. Inland Revenue
(iv) Options granted under the 1990 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(b) Form of Stock Option Agreement for French employees
<PAGE> 2
(v) Options granted under the 1992 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(b) Form of Stock Option Agreement issued pursuant to the
Schedule approved by the U.K. Inland Revenue
(vi) Options granted under the 1995 Stock Incentive Plan:
(a) Form of Nonqualified Stock Option Agreement
(C) Form of Amendments of stock options which were issued pursuant to the
Agreements listed in Exhibit (c)(13)(A) or (B) and which are held by
employees of the Company and its affiliates who are participants in the
SERP
(a) Form of Amendment dated as of December 6, 1996
(b) Form of Amendment dated as of February 2, 1998
(D) Form of Amendments of stock options which were issued pursuant to the
Agreements listed in Exhibit (c)(13)(A) or (B) and which are held by
employees of the Company and its affiliates who are not participants in
the SERP
(a) Form of Amendment dated as of December 6, 1996
(b) Form of Amendment dated as of February 2, 1998
<PAGE> 3
EXHIBIT (c)(13)(A)(i)(a)
COMPUTER SCIENCES CORPORATION
1990 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made and
entered into as of the _______ day of__________ , 19_____ (the "Grant Date") by
and between Computer Sciences Corporation, a Nevada corporation (the "Company"),
and ______________________, a full-time employee of the Company and/or one or
more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1990 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on May 7, 1990 and approved by
the shareholders of the Company on August 13, 1990;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the Employee
desires to accept, an option to purchase shares of Common Stock from the Company
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company hereby
grants to the Employee, and the Employee hereby accepts, an option to purchase
_______ shares of Common Stock (the "Option Shares") at an exercise price of
$______ per share (the "Exercise Price"), which option shall expire at 5:00
p.m., California time, on __________ and shall be subject to all of the terms
and conditions set forth in this Agreement (the "Option"). The Option is not
intended to qualify as an incentive option under Section 422A of the Internal
Revenue Code. The Option shall not initially be exercisable to purchase any
Option Shares; provided, however, that upon each anniversary of the Grant Date
indicated below, the
<PAGE> 4
option shall become exercisable to purchase ("vest with respect to") the
percentage of the Option Shares (rounded to the nearest whole share) indicated
below:
PERCENTAGE OF OPTION SHARES THAT VEST
UPON EACH ANNIVERSARY OF GRANT DATE
Percentage of Anniversary of
Option Shares Grant Date
------------- ----------
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Termination within Three Years After Change of Control. If
the Employee's status as a full-time employee of the Company or any of
its subsidiaries is terminated for any reason, or for no reason, within
three years after a Change of Control (as hereinafter defined), then
(A) the portion of the Option that has not vested on or prior to the
date of such termination of full-time status shall fully vest on such
date and (B) the Option shall terminate upon the earliest of the
Expiration Date, the third anniversary of the date of such termination
of full-time status, or, if applicable, the first anniversary of the
date of the Employee's death. "Change of Control" shall mean the first
to occur of the following events: (V) the dissolution or liquidation of
the Company; (W) a sale of substantially all of the property and assets
of the Company; (X) a reorganization, merger or consolidation of the
Company the consummation of which results in the outstanding securities
of any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company; (Y) any date upon which the directors of the Company who were
nominated by the Board of Directors for election as directors cease to
constitute a majority of the directors of the Company or (Z) a change
of control of the Company of the type required to be disclosed in a
proxy statement pursuant to Item 6(e) (or any
2
<PAGE> 5
successor provision) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1 934, as amended (the "Exchange
Act").
(ii) Retirement. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated by
reason of the Retirement (as hereinafter defined) of the Employee, and
a Change of Control shall not have occurred within three years prior
thereto, then (A) the portion of the Option that has not vested on or
prior to the date of such Retirement shall terminate on such date and
(B) the remaining vested portion of the Option shall terminate upon the
earliest of the Expiration Date, the thirtieth day after the date of
such Retirement, or, if applicable, the first anniversary of the date
of the Employee's death. "Retirement' shall mean (X) retirement from
the Company or any of its subsidiaries at age 55 or older (but less
than 65), provided that the Employee shall have been a continuous
full-time employee of the Company or its subsidiaries for at least 10
years prior thereto and the Board of Directors of the Company shall
have determined within 90 days prior thereto that the Employee has made
an outstanding contribution to the affairs of the Company or its
subsidiaries, or (Y) retirement from the Company or any of its
subsidiaries at age 65 or older.
(iii) Death or Permanent Disability. If the Employee's status
as a full-time employee of the Company or any of its subsidiaries is
terminated by reason of the death or Permanent Disability (as
hereinafter defined) of the Employee, and a Change of Control shall not
have occurred within three years prior thereto, then (A) the portion of
the Option that has not vested on or prior to the date of such
termination of full-time status shall terminate on such date and (B)
the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or the first anniversary of the date of
such termination of full-time status. "Permanent Disability" shall mean
the inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can
be expected to result in death or which has lasted or can be expected
to last for a continuous
3
<PAGE> 6
period of not less than 12 months. The Employee shall not be deemed to
have a Permanent Disability until proof of the existence thereof shall
have been furnished to the Board of Directors of the Company in such
form and manner, and at such times, as the Board of Directors may
require. Any determination by the Board of Directors of the Company
that the Employee does or does not have a Permanent Disability shall be
final and binding upon the Company and the Employee.
(iv) Lay-Off or Leave of Absence. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated by reason of a permanent or temporary lay-off or an approved
leave of absence, and a Change of Control shall not have occurred
within three years prior thereto, then (A) the Option shall continue to
be exercisable until the earlier of the Expiration Date or three months
from the date of such termination of full-time status, but only to the
extent that it was exercisable on the date of such termination, (B) if
the Employee shall again become a full-time employee of the Company or
any of its subsidiaries prior to the earlier of the Expiration Date or
the first anniversary of the date of such termination of full-time
status, the Option shall again become exercisable on such date and
shall thereafter be treated for all purposes under this Agreement as
though the Employee had not, prior to such date, ceased to be a
full-time employee of the Company or its subsidiaries, and (C) if the
Employee shall not again become a full-time employee of the Company or
any of its subsidiaries prior to the earlier of the Expiration Date or
the first anniversary of the date of such termination of full-time
status, the Option shall terminate on such earlier date.
(v) other Termination. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated for no
reason, or for any reason other than Retirement, death, Permanent
Disability, permanent or temporary lay-off, or approved leave of
absence, and a Change of Control shall not have occurred within three
years prior thereto, then the Option shall terminate upon the date of
such termination
4
<PAGE> 7
of full-time status.
(b) Death Following Termination of Full-Time Status. Notwithstanding
anything to the contrary in this Agreement, if the Employee shall die at any
time after the termination of his or her status as a full-time employee of the
Company or any of its subsidiaries and prior to the Expiration Date, then (i)
the portion of the Option that has not vested on or prior to the date of such
death shall terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for any reason. In
addition, unless the Committee shall determine otherwise within ten business
days thereafter, the Option shall fully vest with respect to all Option Shares
upon the date of the first public announcement that any person or entity,
together with all Affiliates and Associates (as such capitalized terms are
defined in Rule 12b-2 promulgated under the Exchange Act) of such person or
entity, shall have become the Beneficial Owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of voting securities of the Company
representing 30% or more of the voting power of the Company, provided, however,
that the terms "person" and "entity," as used in this subsection (c), shall not
include (i) the Company or any of its subsidiaries, (ii) any employee benefit
plan of the Company or any of its subsidiaries, or (iii) any entity holding
voting securities of the Company for or pursuant to the terms of any such plan.
(d) Certain Events Causing Termination of Option. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following events, or, if later, the thirtieth day
following the first date upon which such event shall have been approved by both
the Board of Directors and the shareholders of the Company, or upon such later
date as shall be determined by the Committee:
(i) the dissolution or liquidation of the Company; or
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.
5
<PAGE> 8
3. Adjustments. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the option.
4. Exercise. The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal representative,
and after the Employee's death only by the person or entity entitled to do so
under the Employee's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written notice
of such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part:
(a) by the delivery to the Company of a certificate or certificates
representing shares of Common Stock, duly endorsed or accompanied by a duly
executed stock powers, which delivery effectively transfers to the Company good
and valid title to such shares, free and clear of any pledge, commitment, lien,
claim or other encumbrance [such shares to be valued on the basis of the
aggregate Fair Market Value (as defined in the Plan) thereof on the date of
6
<PAGE> 9
much exercise), provided that the Company is not then prohibited from purchasing
or acquiring such shares of Common Stock; and/or
(b) by reducing the number of shares of Common Stock to be issued and
delivered to the Employee upon such exercise [such reduction to be valued on the
basis of the aggregate Fair Market Value (determined on the date of such
exercise) of the additional shares of Common Stock that would otherwise have
been issued and delivered upon such exercise], provided that the Company is not
then prohibited from purchasing or acquiring such additional shares of Common
Stock.
5. Payment of Withholding Taxes.
(a) If the Company is obligated to withhold an amount on account of any
federal, state or local tax imposed as a result of the exercise of the Option,
including, without limitation, any federal, state or other income tax, or any
F.I.C.A., state disability insurance tax or other employment tax, then the
Employee shall, concurrently with such exercise, pay such amount to the Company
in cash or by check payable to the Company.
(b) Notwithstanding subsection (a) above, if the Employee is subject to
Section 16 of the Exchange Act on the Grant Date, then the Employee may not make
a Withholding Election unless:
(i) the Company shall have been subject to the reporting
requirements of Section 13(a) of the Exchange Act for at least one year
prior thereto and shall have filed all reports and statements required
to be filed pursuant to such section during such year;
(ii) the Company on a regular basis releases quarterly and
annual summary statements of its sales and earnings ("Financial Data")
for publication on a wire service, in a financial news service or in a
newspaper of general circulation, or Financial Data is otherwise made
publicly available on a regular basis;
(iii) such Withholding Election is made during a period
commencing on the third business day following a date upon which the
Company releases Financial Data and ending on the twelfth business day
following such date; and
7
<PAGE> 10
(iv) such Withholding Election is not made during the
six-month period commencing on the Grant Date, except in the case of
the death or Permanent Disability of the Employee.
(C) The Committee shall have sole discretion to approve or
disapprove any Withholding Election and may adopt such rules and regulations as
are consistent with and necessary to implement the foregoing. The Committee may
permit the Employee to make a Withholding Election to pay withholding taxes in
excess of the minimum amount required by law, provided that the amount of
withholding taxes so paid does not exceed the estimated total federal, state and
local tax liability of the Employee attributable to such exercise.
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest therein may
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect on
the Grant Date, and is subject to all the terms and conditions of the Plan, as
the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until
8
<PAGE> 11
the Option shall expire, terminate or be exercised in full, the Company shall,
upon written request therefor, send a copy of the Plan, in its then-current
form, to the Employee or any other person or entity then entitled to exercise
the Option.
9. Stockholder Rights. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the Option
granted hereunder shall (a) confer upon the Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of the
Employee, with or without cause, or (c) confer upon the Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. The Employee hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of the Employee at any time and for any reason, or for
no reason, unless the Employee and the Company or such subsidiary are parties to
a written employment agreement that expressly provides otherwise.
11. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, on the one hand, and the
Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement embodies
the entire understanding and agreement of the parties with respect to the
subject matter hereof, and no promise, condition, rep presentation or warranty,
express or implied, not stated or incorporated by reference herein, shall bind
either party hereto. None of the terms and conditions of this Agreement may be
amended, modified, waived or canceled except by a writing, signed by the parties
hereto specifying such amendment, modification, waiver or cancellation. A waiver
by either party at any time of compliance with any
9
<PAGE> 12
of the terms and conditions of this Agreement shall not be considered a
modification, cancellation or consent to a future waiver of such terms and
conditions or of any preceding or succeeding breach thereof, unless expressly so
stated.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the Grant Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
By
- ---------------------------------- -------------------------------------
Employee: Name:
SS.#: Title:
Grant Date:
Grant-Price: By
Option Shares: -------------------------------------
Name:
Title:
10
<PAGE> 13
EXHIBIT (c)(13)(A)(ii)(a)
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made and
entered into as of the ______________ day of________________ 19_ (the "Grant
Date") by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and___________________ , a full-time employee of the Company and/or
one or more of its subsidiaries (the "Employee").
WHEREAS the Company's 1992 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 15, 1992 and approved
by the shareholders of the Company on August 10, 1992;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the Employee
desires to accept, an option to purchase shares of Common Stock from the Company
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company hereby
grants to the Employee, and the Employee hereby accepts, an option to purchase
__________ shares of Common Stock (the "Option Shares") at an exercise price of
$_______ per share (the "Exercise Price"), which option shall expire at 5:00
p.m., California time, on _____________________ and shall be subject to all of
the terms and conditions set forth in this Agreement (the "Option"). The Option
is intended not to qualify as an incentive option under Section 422 of the
Internal Revenue Code. The Option
<PAGE> 14
shall not initially be exercisable to purchase any Option Shares; provided,
however, that upon each anniversary of the Grant Date indicated below, the
Option shall become exercisable to purchase ("vest with respect to") the
percentage of the Option Shares (rounded to the nearest whole share) indicated
below:
PERCENTAGE OF OPTION SHARES THAT VEST
UPON EACH ANNIVERSARY OF GRANT DATE
Percentage of Anniversary of
Option Shares Grant Date
------------- ----------
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Termination Within Three Years After Change of Control.
If the Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated for any reason, or for no reason,
within three years after a Change of Control (as hereinafter defined),
then (A) the portion of the Option that has not vested on or prior to
the date of such termination of full-time status shall fully vest on
such date and (B) the option shall terminate upon the earliest of the
Expiration Date, the third anniversary of the date of such termination
of full-time status, or, if applicable, the first anniversary of the
date of the Employee's death. "Change of Control" shall mean the first
to occur of the following events: (V) the dissolution or liquidation of
the Company; (W) a sale of substantially all of the property and assets
of the Company; (X) a reorganization, merger or consolidation of the
Company the consummation of which results in the outstanding securities
of any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company; (Y) any date upon which the directors of the Company who were
nominated by the Board of Directors for election as directors cease to
2
<PAGE> 15
constitute a majority of the directors of the Company or (Z) a change
of control of the Company of the type required to be disclosed in a
proxy statement pursuant to Item 6(e) (or any successor provision) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(ii) Retirement. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated by
reason of the Retirement (as hereinafter defined) of the Employee, and
a Change of Control shall not have occurred within three years prior
thereto, then (A) the portion of the Option that has not vested on or
prior to the date of such Retirement shall terminate on such date and
(B) the remaining vested portion of the Option shall terminate upon the
earliest of the Expiration Date, the thirtieth day after the date of
such Retirement, or, if applicable, the first anniversary of the date
of the Employee's death. "Retirement" shall mean (X) retirement from
the Company or any of its subsidiaries at age 55 or older (but less
than 65), provided that the Employee shall have been a continuous
full-time employee of the Company or its subsidiaries for at least 10
years prior thereto and the Board of Directors of the Company shall
have determined within 90 days prior thereto that the Employee has made
an outstanding contribution to the affairs of the Company or its
subsidiaries, or (Y) retirement from the Company or any of its
subsidiaries at age 65 or older.
(iii) Death or Permanent Disability. If the Employee's status
as a full-time employee of the Company or any of its subsidiaries is
terminated by reason of the death or Permanent Disability (as
hereinafter defined) of the Employee, and a Change of Control shall not
have occurred within three years prior thereto, then (A) the portion of
the Option that has not vested on or prior to the date of such
termination of full-time status shall terminate on such date and (B)
the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or the first anniversary of the date of
3
<PAGE> 16
such termination of full-time status. "Permanent Disability" shall
mean the inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months.
The Employee shall not be deemed to have a Permanent Disability until
proof of the existence thereof shall have been furnished to the Board
of Directors of the Company in such form and manner, and at such times,
as the Board of Directors may require. Any determination by the Board
of Directors of the Company that the Employee does or does not have a
Permanent Disability shall be final and binding upon the Company and
the Employee.
(iv) Lay-Off or Leave of Absence. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated by reason of a permanent or temporary lay-off or an approved
leave of absence, and a Change of Control shall not have occurred
within three years prior thereto, then (A) the Option shall continue to
be exercisable until the earlier of the Expiration Date or three months
from the date of such termination of full-time status, but only to the
extent that it was exercisable on the date of such termination, (B) if
the Employee shall again become a full-time employee of the Company or
any of its subsidiaries prior to the earlier of the Expiration Date or
the first anniversary of the date of such termination of full-time
status, the Option shall again become exercisable on such date and
shall thereafter be treated for all purposes under this Agreement as
though the Employee had not, prior to such date, ceased to be a
full-time employee of the Company or its subsidiaries, and (C) if the
Employee shall not again become a full-time employee of the Company or
any of its subsidiaries prior to the earlier of the Expiration Date or
the first anniversary of the date of such termination of full-time
status, the Option shall terminate on such earlier date.
(v) Other Termination. If the Employee's status as a full-time
4
<PAGE> 17
employee of the Company or any of its subsidiaries is terminated for no
reason, or for any reason other than Retirement, death, Permanent
Disability, permanent or temporary lay-off, or approved leave of
absence, and a Change of Control shall not have occurred within three
years prior thereto, then the Option shall terminate upon the date of
such termination of full-time status.
(b) Death Following Termination of Full-Time Status. Notwithstanding
anything to the contrary in this Agreement, if the Employee shall die at any
time after the termination of his or her status as a full-time employee of the
Company of any or its subsidiaries and prior to the Expiration Date, then (i)
the portion of the Option that has not vested on or prior to the date of such
death shall terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for any reason. In
addition, unless the Committee shall determine otherwise within ten business
days thereafter, the Option shall fully vest with respect to all Option Shares
upon the date of the first public announcement that any person or entity,
together with all Affiliates and Associates (as such capitalized terms are
defined in Rule 12b-2 promulgated under the Exchange Act) of such person or
entity, shall have become the Beneficial Owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of voting securities of the Company
representing 30% or more of the voting power of the Company, provided, however,
that the terms "person" and "entity," as used in this subsection (c), shall not
include (i) the Company or any of its subsidiaries, (ii) any employee benefit
plan of the Company or any of its subsidiaries, or (iii) any entity holding
voting securities of the Company for or pursuant to the terms of any such plan.
(d) Certain Events Causing Termination of Option. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following events, or, if later, the thirtieth
5
<PAGE> 18
day following the first date upon which such event shall have been approved by
both the Board of Directors and the shareholders of the Company, or upon such
later date as shall be determined by the Committee:
(i) the dissolution or liquidation of the Company; or
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.
3. Adjustments. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. Exercise. The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal representative,
and after the Employee's death only by the person or entity entitled to do so
under the Employee's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written notice
of such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part, by the delivery to
6
<PAGE> 19
the Company of a certificate or certificates representing shares Of Common
Stock, duly endorsed or accompanied by a duly executed stock powers, which
delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value (as define in the Plan) thereof on the date of such exercise), provided
that the Company is not then prohibited from purchasing or acquiring such shares
of Common Stock.
5. Payment of Withholding Taxes. If the Company is obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option, including, without limitation, any
federal, state or other income tax, or any F.I.C.A., state disability insurance
tax or other employment tax, then the Employee shall, concurrently with such
exercise, pay such amount (the "Withholding Liability") to the Company in cash
or by check payable to the Company; provided, however, that the Employee may
instead pay all or any part of the Withholding Liability by the delivery to the
Company of a stock certificate or certificates representing shares of Common
Stock, duly endorsed or accompanied by a duly executed stock powers, which
delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value thereof on the date of such exercise), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common Stock.
6. Stock Exchange Requirements; Applicable Laws; Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or
7
<PAGE> 20
any listing agreement with any such securities exchange, or any other
requirement of law or of any administrative or regulatory body having
jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest therein may
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect on
the Grant Date, and is subject to all the terms and conditions of the Plan, as
the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the Option.
9. Stockholder Rights. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the Option
granted hereunder shall (a) confer upon the Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of the
Employee, with or without cause, or (c) confer upon the Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. The Employee hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of the Employee at any time and for
8
<PAGE> 21
any reason, or for no reason, unless the Employee and the Company or such
subsidiary are parties to a written employment agreement that expressly
provides otherwise.
11. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, on the one hand, and the
Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement embodies
the entire understanding and agreement of the parties with respect to the
subject matter hereof, and no promise, condition, representation or warranty,
express or implied, not stated or incorporated by reference herein, shall bind
either party hereto. None of the terms and conditions of this Agreement may be
amended, modified, waived or canceled except by a writing, signed by the parties
hereto specifying such amendment, modification, waiver or cancellation. A waiver
by either party at any time of compliance with any of the terms and conditions
of this Agreement shall not be considered a modification, cancellation or
consent to a future waiver of such terms and conditions or of any preceding or
succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California applicable
to contracts made and performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Grant Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
By
- ---------------------------------- --------------------------------------
Employee: Name:
Title:
SS#:
Grant Date: By
--------------------------------------
Name:
Grant Price: Title:
Options Granted:
9
<PAGE> 22
EXHIBIT (c)(13)(A)(ii)(b)
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualifed Stock Option Agreement ("Agreement") is made and
entered into as of the________________day of______________,19___(the "Grant
Date") by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and___________________, a full-time employee of the Company and/or
one or more of its subsidiaries (the "Employee").
WHEREAS the Company's 1992 Stock Incentive Plan (the "Plan") was adopted
by the Board of Directors of the Company on June 15, 1992 and approved by the
shareholders of the Company on August 10, 1992;
WHEREAS, pursuant to the Plan, the Company is authorized to grant options
to purchase shares of its common stock, par value $1.00 per share (the "Common
Stock"), to any employee of the Company or its subsidiaries upon such terms and
conditions as shall be determined by the committee of the Board of Directors
administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the Employee
desires to accept, an option to purchase shares of Common Stock from the Company
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
<PAGE> 23
1. Grant of Options; Certain Terms and Conditions. The Company hereby grants to
the Employee, and the Employee hereby accepts, an option to purchase__________
shares of Common Stock (the "Option Shares") at an exercise price of
$_____________ per share (the "Exercise Price"), which option shall expire at
5:00 p.m., California time, on_________and shall be subject to all of the terms
and conditions set forth in this Agreement (the "Option"). THE OPTION IS
INTENDED NOT TO QUALIFY AS AN INCENTIVE OPTION UNDER SECTION 422 OF THE INTERNAL
REVENUE CODE. The Option shall not initially be exercisable to purchase any
Option Shares; provided, however, that upon each anniversary of the Grant Date
indicated below, the Option shall become exercisable to purchase ("vest with
respect to") the number of Option Shares indicated below:
NUMBER OF OPTION SHARES THAT VEST
UPON EACH ANNIVERSARY OF GRANT DATE
Number of Anniversary of
Option Shares Grant Date
------------- --------------
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Termination Within Three Years After Change of Control.
If the Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated for any reason, or for no reason,
within three years after a Change of Control (as hereinafter defined),
then (A) the portion of the Option that has not vested on or prior to
the date of such termination of full-time status shall fully vest on
such date and (B) the Option shall terminate upon the earliest
2
<PAGE> 24
of the Expiration Date, the third anniversary of the date of such
termination of full-time status, or, if applicable, the first
anniversary of the date of the Employee's death. "Change of Control"
shall mean the first to occur of the following events: (V) the
dissolution or liquidation of the Company; (W) a sale of substantially
all of the property and assets of the Company; (X) a reorganization,
merger or consolidation of the Company, the consummation of which
results in the outstanding securities of any class then subject to the
Option being exchanged for or converted into cash, property and/or
securities not issued by the Company; (Y) any date upon which the
directors of the Company who were nominated by the Board of Directors
for election as directors cease to constitute a majority of the
directors of the Company or (Z) a change of control of the Company of
the type required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
Exchange Act").
(ii) Retirement. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated by
reason of the Retirement (as hereinafter defined) of the Employee, and a
Change of Control shall not have occurred within three years prior
thereto, then (A) the portion of the Option that has not vested on or
prior to the date of such Retirement shall terminate on such date and
(B) the remaining vested portion of the Option shall terminate upon the
earliest of the Expiration Date, the thirtieth day after the date of
such Retirement, or, if applicable, the first anniversary of the
3
<PAGE> 25
date of the Employee's death. "Retirement" shall mean (X) retirement
from the Company or any of its subsidiaries at age 55 or older (but less
than 65), provided that the Employee shall have been a continuous
full-time employee of the Company or its subsidiaries for at least 10
years prior thereto and the Board of Directors of the Company shall have
determined within 90 days prior thereto that the Employee has made an
outstanding contribution to the affairs of the Company or its
subsidiaries, or (Y) retirement from the Company or any of its
subsidiaries at age 65 or older.
(iii) Death, Permanent Disability or Termination Without Cause.
If the Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of the death or Permanent
Disability (as hereinafter defined) of the Employee, or if the Employee
is removed from his position as President and Chief Executive Officer of
the Company by the Board of Directors other than for Cause (as
hereinafter defined) ("Termination Without Cause"), and a Change of
Control shall not have occurred within three years prior thereto, then
(A) the portion of the Option that has not vested on or prior to the
date of such termination of full-time status shall fully vest on such
date and (B) the Option shall terminate upon the earlier of the
Expiration Date or the first anniversary of the date of such termination
of full-time status. "Permanent Disability" shall mean the inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The
4
<PAGE> 26
Employee shall not be deemed to have a Permanent Disability until proof
of the existence thereof shall have been furnished to the Board of
Directors of the Company in such form and manner, and at such times, as
the Board of Directors may require. Any determination by the Board of
Directors of the Company that the Employee does or does not have a
Permanent Disability shall be final and binding upon the Company and the
Employee. "Cause" shall mean (X) the Employee's conviction of a felony
offense or other crime of moral turpitude, after all appeals, (Y) the
Employee's commission of an act of dishonesty, fraud or other moral
turpitude against the Company or (Z) the Employee's willful failure or
refusal to comply with written, lawful directives of the Board of
Directors, provided that he shall have first received written notice
from the Board of the specific acts of failure or refusal and shall have
continued to engage in such acts or failures after receiving such notice
and after having had a reasonable amount of time to comply with such
directives.
(iv) Other Termination. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries terminates for any
reason other than Retirement, Death, Permanent Disability or Termination
Without Cause, and a Change of Control shall not have occurred within
three years prior thereto, then the Option shall terminate upon the date
of such termination of full-time status.
(b) Death Following Termination of Full-Time Status. Notwithstanding
anything to the contrary in this Agreement, if the Employee shall die at any
time after the termination of his or her status as a
5
<PAGE> 27
full-time employee of the Company of any or its subsidiaries and prior to the
Expiration Date, then (i) the portion of the Option that has not vested on or
prior to the date of such death shall terminate on such date and (ii) the
remaining vested portion of the Option shall terminate on the earlier of the
Expiration Date or the first anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for any reason. In
addition, unless the Committee shall determine otherwise within ten business
days thereafter, the Option shall fully vest with respect to all Option Shares
upon the date of the first public announcement that any person or entity,
together with all Affiliates and Associates (as such capitalized terms are
defined in Rule 12b-2 promulgated under the Exchange Act) of such person or
entity, shall have become the Beneficial Owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of voting securities of the Company
representing 30% or more of the voting power of the Company, provided, however,
that the terms "person" and "entity," as used in this subsection (c), shall not
include (i) the Company or any of its subsidiaries, (ii) any employee benefit
plan of the Company or any of its subsidiaries, or, (iii) any entity holding
voting securities of the Company for or pursuant to the terms of any such plan.
(d) Certain Events Causing Termination of Option. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following events, or, if later, the thirtieth day
following the first date upon which such event shall have been approved by both
the Board of Directors and the shareholders of the Company, or upon such later
date as shall be determined by the Committee:
6
<PAGE> 28
(i) the dissolution or liquidation of the Company; or
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.
3. Adjustments. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. Exercise. The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal representative,
and after the Employee's death only by the person or entity entitled to do so
under the Employee's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written notice
of such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the
7
<PAGE> 29
aggregate Exercise Price for such shares (the "Exercise Notice"), together with
payment in full of such aggregate Exercise Price in cash or by check payable to
the Company; provided, however, that payment of such aggregate Exercise Price
may instead be made, in whole or in part, by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly endorsed
or accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and clear of
any pledge, commitment, lien, claim or other encumbrance (such shares to be
valued on the basis of the aggregate Fair Market Value (as defined in the Plan)
thereof on the date of such exercise), provided that the Company is not then
prohibited from purchasing or acquiring such shares of Common Stock.
5. Payment of Withholding Taxes. If the Company is obligated to withhold
an amount on account of any federal, state or local tax imposed as a result of
the exercise of the Option, including, without limitation, any federal, state or
other income tax, or any F.I.C.A., state disability insurance tax or other
employment tax, then the Employee shall, concurrently with such exercise, pay
such amount (the "Withholding Liability") to the Company in cash or by check
payable to the Company; provided, however, that the Employee may instead pay all
or any part of the Withholding Liability by the delivery to the Company of a
stock certificate or certificates representing shares of Common Stock, duly
endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such shares, free
and clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value thereof on
the date of such
8
<PAGE> 30
exercise), provided that the Company is not then prohibited from purchasing or
acquiring such shares of Common Stock.
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest therein may
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect on the
Grant Date, and is subject to all the terms and conditions of the Plan, as the
same may be amended from time to time; provided, however, that no such amendment
shall deprive the Employee, without his or her consent, of the Option or of any
of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be
9
<PAGE> 31
exercised in full, the Company shall; upon written request therefor, send a copy
of the Plan, in its then-current form, to the Employee or any other person or
entity then entitled to exercise the Option.
9. Stockholder Rights. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the Option
granted hereunder shall (a) confer upon the Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of the
Employee, with or without cause, or (c) confer upon the Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. THE EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF THE EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR
NO REASON, UNLESS THE EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO
A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
11. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, on the one hand, and the
Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement embodies
the entire understanding and agreement of the parties with respect to the
subject matter hereof, and no promise, condition, representation or
10
<PAGE> 32
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or canceled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of the
terms and conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California applicable to
contracts made and performed entirely within the State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Grant Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
__________________________ By____________________________________
Employee: Name:
Title:
SS#:
Grant Date: By____________________________________
Name:
Grant Price: Title:
Options Granted:
11
<PAGE> 33
EXHIBIT (c)(13)(A)(iii)(a)
COMPUTER SCIENCES CORPORATION
1995 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made
and entered into as of the ____________ day of _____________, 19__ the "Grant
Date") by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and ________________________, a full-time employee of the Company
and/or one or more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1995 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 12, 1995 and approved
by the stockholders of the Company on August 14, 1995;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the
Employee desires to accept, an option to purchase shares of Common Stock from
the Company upon the terms and conditions set forth herein, which terms and
conditions have been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company
hereby grants to the Employee, and the Employee hereby accepts, an option to
purchase __________ shares of Common Stock (the "Option Shares") at an exercise
price of $___________________ per share (the "Exercise Price"), which option
shall expire at 5:00 p.m., California time, on ______________________________
and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). THE OPTION IS INTENDED NOT TO QUALIFY AS AN INCENTIVE
OPTION UNDER SECTION 422 OF THE INTERNAL REVENUE CODE. The Option shall not
initially be exercisable to purchase any Option Shares; provided, however, that
upon each anniversary of the Grant Date indicated below, the Option shall become
exercisable to purchase ("vest with respect to") the percentage of the Option
Shares (rounded to the nearest whole share) indicated below:
Percentage of Option Shares Vesting Anniversary of Grant Date
----------------------------------- -------------------------
20%
20%
20%
20%
20%
<PAGE> 34
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Termination Within Three Years After Change of
Control. If the Employee's status as a full-time employee of the
Company or any of its subsidiaries is terminated for any reason,
or for no reason, within three years after a Change of Control
(as hereinafter defined), then (A) the portion of the Option that
has not vested on or prior to the date of such termination of
full-time status shall fully vest on such date and (B) the Option
shall terminate upon the earliest of the Expiration Date, the
third anniversary of the date of such termination of full-time
status, or, if applicable, the first anniversary of the date of
the Employee's death. "Change of Control" shall mean the first to
occur of the following events: (V) the dissolution or liquidation
of the Company; (W) a sale of substantially all of the property
and assets of the Company; (X) a reorganization, merger or
consolidation of the Company the consummation of which results in
the outstanding securities of any class then subject to the
Option being exchanged for or converted into cash, property
and/or securities not issued by the Company; (Y) any date upon
which the directors of the Company who were nominated by the
Board of Directors for election as directors cease to constitute
a majority of the directors of the Company or (Z) a change of
control of the Company of the type required to be disclosed in a
proxy statement pursuant to Item 6(e) (or any successor
provision) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(ii) Retirement. If the Employee's status as a
full-time employee of the Company or any of its subsidiaries is
terminated after December 31, 1996 by reason of the Retirement
(as hereinafter defined) of the Employee, and a Change of Control
shall not have occurred within three years prior thereto, then
(A) the portion of the Option that has not vested on or prior to
the date of such Retirement shall terminate on such date and (B)
the remaining vested portion of the Option shall terminate upon
the earlier of the Expiration Date or the third anniversary of
the date of such Retirement, provided that if the Employee shall
die prior to such earlier date, the remaining vested portion of
the Option shall remain exercisable until, but shall terminate
upon, the earlier of the Expiration Date or the first anniversary
of the date of the Employee's death. "Retirement" shall mean (X)
retirement from the Company or any of its subsidiaries at age 55
or older (but less than 65), provided that the Employee shall
have been a continuous full-time employee of the Company or its
subsidiaries for at least 10 years prior thereto and the Board of
Directors of the Company shall have determined within 90 days
prior thereto that the Employee has made an outstanding
contribution to the affairs of the Company or its subsidiaries,
or (Y) retirement from the Company or any of its subsidiaries at
age 65 or older.
2
<PAGE> 35
(iii) Death or Permanent Disability. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of the death or
Permanent Disability (as hereinafter defined) of the Employee,
and a Change of Control shall not have occurred within three
years prior thereto, then (A) the portion of the Option that has
not vested on or prior to the date of such termination of
full-time status shall terminate on such date and (B) the
remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or the first anniversary of the
date of such termination of full-time status. "Permanent
Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than 12 months. The Employee shall not be
deemed to have a Permanent Disability until proof of the
existence thereof shall have been furnished to the Board of
Directors of the Company in such form and manner, and at such
times, as the Board of Directors may require. Any determination
by the Board of Directors of the Company that the Employee does
or does not have a Permanent Disability shall be final and
binding upon the Company and the Employee.
(iv) Lay-Off or Leave of Absence. If the Employee's
status as a full-time employee of the Company or any of its
subsidiaries is terminated by reason of a permanent or temporary
lay-off or an approved leave of absence, and a Change of Control
shall not have occurred within three years prior thereto, then
(A) the Option shall continue to be exercisable until the earlier
of the Expiration Date or three months from the date of such
termination of full-time status, but only to the extent that it
was exercisable on the date of such termination, (B) if the
Employee shall again become a full-time employee of the Company
or any of its subsidiaries prior to the earlier of the Expiration
Date or the first anniversary of the date of such termination of
full-time status, the Option shall again become exercisable on
such date and shall thereafter be treated for all purposes under
this Agreement as though the Employee had not, prior to such
date, ceased to be a full-time employee of the Company or its
subsidiaries, and (C) if the Employee shall not again become a
full-time employee of the Company or any of its subsidiaries
prior to the earlier of the Expiration Date or the first
anniversary of the date of such termination of full-time status,
the Option shall terminate on such earlier date.
(v) Other Termination. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated for no reason, or for any reason other than
Retirement,
3
<PAGE> 36
death, Permanent Disability, permanent or temporary lay-off, or
approved leave of absence, and a Change of Control shall not have
occurred within three years prior thereto, then the Option shall
terminate upon the date of such termination of full-time status.
(b) Death Following Termination of Full-Time Status.
Notwithstanding anything to the contrary in this Agreement, if the
Employee shall die at any time after the termination of his or her
status as a full-time employee of the Company of any or its subsidiaries
and prior to the Expiration Date, then (i) the portion of the Option
that has not vested on or prior to the date of such death shall
terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or the
first anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole
discretion, may accelerate the exercisability of the Option at any time
and for any reason. In addition, unless the Committee shall determine
otherwise within ten business days thereafter, the Option shall fully
vest with respect to all Option Shares upon the date of the first public
announcement that any person or entity, together with all Affiliates and
Associates (as such capitalized terms are defined in Rule 12b-2
promulgated under the Exchange Act) of such person or entity, shall have
become the Beneficial Owner (as defined in Rule 13d-3 promulgated under
the Exchange Act) of voting securities of the Company representing 30%
or more of the voting power of the Company, provided, however, that the
terms "person" and "entity," as used in this subsection (c), shall not
include (i) the Company or any of its subsidiaries, (ii) any employee
benefit plan of the Company or any of its subsidiaries, or (iii) any
entity holding voting securities of the Company for or pursuant to the
terms of any such plan.
(d) Certain Events Causing Termination of Option.
Notwithstanding anything to the contrary in this Agreement, the Option
shall terminate upon the consummation of any of the following events,
or, if later, the thirtieth day following the first date upon which such
event shall have been approved by both the Board of Directors and the
shareholders of the Company, or upon such later date as shall be
determined by the Committee:
(i) the dissolution or liquidation of the Company;
or
(ii) a sale of substantially all of the property
and assets of the Company, unless the terms of such sale shall
provide otherwise.
3. Adjustments. In the event that the outstanding securities of
the class then subject to the Option are increased, decreased or exchanged for
or converted into cash, property and/or a different number or kind of
securities, or
4
<PAGE> 37
cash, property and/or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. Exercise.
(a) The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal
representative, and after the Employee's death only by the person or
entity entitled to do so under the Employee's last will and testament or
applicable intestate law. The Option may only be exercised by the
delivery to the Company of a written notice of such exercise, which
notice shall specify the number of Option Shares to be purchased (the
"Purchased Shares") and the aggregate Exercise Price for such shares
(the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided,
however, that payment of such aggregate Exercise Price may instead be
made, in whole or in part, by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly
endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair
Market Value (as hereinafter defined) thereof on the date of such
exercise), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.
(b) The "Fair Market Value" of a share of Common Stock on
any day shall be equal to the last sale price, regular way, of a share
of Common Stock on such day, or in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.
5. Payment of Withholding Taxes. If the Company is obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option, including, without limitation, any
federal, state
5
<PAGE> 38
or other income tax, or any F.I.C.A., state disability insurance tax or other
employment tax, then the Employee shall, concurrently with such exercise, pay
such amount (the "Withholding Liability") to the Company in cash or by check
payable to the Company; provided, however, that the Employee may instead pay all
or any part of the Withholding Liability by either of the following methods:
(a) by the delivery to the Company of a stock certificate
or certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value
thereof on the date of such exercise), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common
Stock; or
(b) by instructing the Company to withhold shares of
Common Stock otherwise issuable upon such exercise of the Option (such
withholding to be valued on the basis of the aggregate Fair Market Value
of the withheld shares on the date of such exercise), provided that if
the Employee is then subject to Section 16(b) of the Exchange Act, such
method of payment may only be used if, in the opinion of the General
Counsel of the Company, such use would not cause the Employee to incur
any liability pursuant to Section 16(b).
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest
therein may be sold, assigned, conveyed, gifted, pledged, hypothecated or
otherwise transferred in any manner other than by will or the laws of descent
and distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect
on the Grant Date, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
6
<PAGE> 39
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the Option.
9. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon the Employee any right to
continue in the employ of the Company or any of its subsidiaries, (b) affect the
right of the Company and each of its subsidiaries to terminate the employment of
the Employee, with or without cause, or (c) confer upon the Employee any right
to participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. THE EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF THE EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR
NO REASON, UNLESS THE EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO
A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect to
the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or canceled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of the
terms and conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
7
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the Grant Date.
COMPUTER SCIENCES CORPORATION
By
- ----------------------------- -----------------------------
Employee: Name:
Title:
SS#:
Grant Date:
Grant Price: By
Options Granted: -----------------------------
Name:
Title:
8
<PAGE> 41
EXHIBIT (c)(13)(B)(i)(a)
Dear ______________________:
The Committee administering the 1978 Stock Option Plan, as amended (the
"1978 Plan"), of Computer Sciences Corporation (hereinafter called the
"Company") has adopted a resolution authorizing the Company to grant you on the
date hereof an option under the 1978 Plan to purchase _____________ shares of
the Company's $1.00 par value common stock (the "Common Stock of the Company"),
at a price which has been determined to be $________ per share, SUBJECT TO AND
ONLY UPON THE FOLLOWING TERMS AND CONDITIONS:
1. The specified term of this option shall be, subject to the
provisions of paragraph 4 below, a period of ten years and thirty days,
commencing on the date hereof and expiring at 5:00 o'clock P.M. California time,
on____________________.
2. This option shall not be exercisable as to any shares covered hereby
until _______________________. Thereafter, this option shall become exercisable
as to the percentages of the shares covered hereby on the dates set forth in the
following table:
Total Percentage
Date Exercisable
---- -----------
<PAGE> 42
However, subject to paragraph 8 below, this option will become exercisable in
full (i) at the discretion of the Board of Directors of the Company, upon your
death or permanent disability prior to the expiration date of this option, if
the Board of Directors determines that your contribution to the affairs of the
Company has been outstanding, and (ii) pursuant to paragraph 7 below.
3. This option is not transferable by you except by will or the laws of
descent and distribution.
4. In the event you voluntarily terminate your employment or your
employment is involuntarily terminated other than by reason of your death or
permanent disability, this option shall terminate on the date of termination of
your employment. If your employment by the Company is terminated by reason of
your permanent disability, at a time when you have not fully exercised this
option, you shall have the right to exercise this option for no more than the
number of shares as to which this option is exercisable on the date of such
termination of your employment and such right shall lapse and this option shall
terminate one year after the date your employment by the Company is so
terminated.
5. This option may be exercised during your lifetime only by you or
your legal representative. If you die at a time when you have not fully
exercised this option, any person empowered to do so under your will or the then
applicable laws of descent and distribution shall have the right to exercise
this option for no more than the number of shares as to which this option is
exercisable on the date of your death and such right shall lapse and this option
shall terminate one year after your death.
6. If the outstanding shares of Common Stock of the Company are changed
by any stock dividend, stock split or combination of shares, the number of
shares then subject to this option shall be proportionately adjusted. If the
outstanding shares of Common Stock of the Company are exchanged for a different
number or class of shares of stock of the Company by reason of a merger,
reorganization,
-2-
<PAGE> 43
recapitalization or other change in the corporate stock structure, there shall
be substituted for each share of Common Stock of the Company then subject to
this option, the number and kind of shares of stock into which each outstanding
share of Common Stock of the Company shall be so exchanged. In the event of any
such adjustment, the purchase price per share for the shares subject to this
option shall be proportionately adjusted so that there will be no change in the
aggregate purchase price for the shares then subject to option.
7. In the event of the dissolution or liquidation of the Company
(whether or not as a part of a corporate reorganization) or upon a merger,
consolidation or other reorganization in which the Company is not the survivor
(a "Cancellation Event"), then this option, or portion thereof which remains
outstanding on the date of consummation of the Cancellation Event shall be
cancelled and be of no further force and effect on such consummation; provided,
however, that upon the approval of the Cancellation Event by the stockholders of
the Company, or the approval of the Cancellation Event by the Board of Directors
of the Company if stockholder approval is not required, this option will become
exercisable as to all of the shares covered hereby, irrespective of the
provisions of paragraph 2. You will be given prompt notice of such approval by
the stockholders of the Company or its Board of Directors. To the extent that
this option is exercised after the giving of such notice and prior to the
consummation of the Cancellation Event with respect to shares as to which this
option, but for the provisions of this paragraph, would not otherwise be
exercisable (the "Unexercisable Portion of the Option"), then any exercise of
all or part of the Unexercisable Portion of the Option under this paragraph 7
shall not be effective until immediately prior to the consummation of the
Cancellation Event. After you have been given such notice and prior to the
consummation of the Cancellation Event, you may also make your exercise of all
or part of any exercisable portion of this option contingent on the consummation
of the Cancellation Event. If the parties to the
-3-
<PAGE> 44
Cancellation Event should terminate it or if either of such parties is unable to
meet the conditions precedent to the consummation of the Cancellation Event
within the time scheduled therefor or any extension thereof mutually agreed upon
by such parties, then any exercise of the Unexercisable Portion of this option
pursuant to this paragraph and any contingent exercise of the exercisable
portion of this option pursuant to the preceding sentence will be of no force
and effect. Thereafter, this option will be exercisable only to the extent
permitted under other provisions hereof.
8. This option shall not become exercisable and the Company shall have
no obligation to issue shares upon exercise of the option unless:
(a) All registration and other qualification under all applicable
federal and state laws, rules and regulations, including the Securities Act of
1933, of the shares of Common Stock of the Company issuable upon exercise of
options granted under the 1978 Plan continues to be effective;
(b) The shares issuable upon exercise of options granted under the 1978
Plan shall have been (and shall continue to be) admitted to trading, upon
official notice of issuance on any stock exchange on which the other shares of
the Common Stock of the Company are listed; and
(c) You shall have complied with all the provisions of this
Agreement. The Company will use its best efforts to maintain the fulfillment of
conditions (a) and (b) above.
9. This option is subject to all of the terms and conditions of the
1978 Plan, including those set forth in this agreement. You may inspect a copy
of the 1978 Plan at the office of the Secretary of the Company.
10. This option may be exercised, in whole or in part, only by delivery
to the Secretary or Corporate Controller of the Company in a manner and on a
form prescribed by the Committee administering the 1978 Plan, of a notice in
writing (an "Exercise Notice") stating that this option is exercised as to a
specified number of whole shares. The Exercise Notice shall be accompanied by
the purchase price for
-4-
<PAGE> 45
the shares to be purchased upon such exercise of this option. If this option is
exercised subsequent to your termination of employment with the Company, the
purchase price shall be paid in cash or by certified or cashier's check. If you
exercise this option prior to termination of your employment with the Company,
you may also elect to pay any portion of the purchase price by surrendering to
the Company outstanding whole shares of the Common Stock of the Company of an
aggregate value not exceeding the total purchase price for shares with respect
to which this option is exercised, in which case you shall pay the excess of
such total purchase price over the value of the whole shares so surrendered in
cash or by certified or cashier's check. If you elect to surrender whole shares
of the Common Stock of the Company in payment of any part of such purchase
price, certificates evidencing the Common Stock of the Company so surrendered,
properly endorsed or assigned to the Company, shall accompany the Exercise
Notice. Such stock will be valued for this purpose at a price equal to the
closing price on the New York Stock Exchange on the date that the Exercise
Notice is delivered. You can elect to pay the purchase price in whole or in part
by surrendering shares of the Common Stock of the Company only on a day on which
the New York Stock Exchange is open for business and only if the Common Stock of
the Company has not been suspended from trading at any time during that day. The
obligation of the Company to issue certificates evidencing your shares upon
exercise of this option is also subject to the provisions of paragraph 8 above
and to compliance with all applicable requirements of law with respect to the
issuance and sale of such shares, including any provision of any federal or
state income tax law, rule or regulation which may require that either the
Company withhold specified amounts of your income for the payment of taxes or
that you pay the amount required on account of such taxes. Certificates
evidencing the shares of Common Stock of the Company issuable to you upon
exercise of this option will be retained by the Company until such time as you
have made arrangements satisfactory to the Committee to pay the amount of tax
required to be withheld under any federal or state income
-5-
<PAGE> 46
tax law, rule or regulation. If you have not made such arrangements prior to the
expiration of the Company's fiscal year but in any event no later than thirty
(30) days after the date of your Exercise Notice, the sale of shares upon the
exercise of such option will be rescinded, the certificates evidencing such
Common Stock of the Company will be cancelled and the consideration you have
paid or delivered as the purchase price will be returned to you. In such event,
you shall nonetheless be deemed to have exercised this option as to the number
of shares specified in such Exercise Notice and the number of shares covered
hereby with respect to which you can exercise this option thereafter on the
dates set forth in paragraph 2 hereof shall be reduced by the number of shares
specified in such Exercise Notice.
11. Nothing in this agreement shall confer upon you any right to
continue in the employ of the Company or to interfere with or restrict in any
way the rights of the Company, which are hereby expressly reserved, to discharge
any employee at any time, with or without cause.
This letter shall serve as the Company's official notification to you
that the above-outlined option to purchase 3,000 shares of its common stock has
been granted to you effective as of the date hereof. Please indicate your
agreement to the foregoing by executing the copy of this agreement and returning
it to the undersigned.
Very truly yours,
COMPUTER SCIENCES CORPORATION
---------------------------------
---------------------------------
The foregoing is agreed to: Grant Date:
Grant Price:
Employee Shares Granted:
SS#
-6-
<PAGE> 47
EXHIBIT (c)(13)(B)(ii)(a)
Dear _________________________,
The Committee administering the 1984 Stock Option Plan, as amended (the
"1984 Plan"), approved August 13, 1984, by shareholders of Computer Sciences
Corporation (hereinafter called the "Company") has granted to you on the date
hereof an option under the 1984 Plan to purchase ________________ shares of the
Company's $1.00 par value common stock (the "Common Stock of the Company"), at a
price of $ ____ per share, SUBJECT TO AND ONLY UPON THE FOLLOWING TERMS AND
CONDITIONS:
1. The specified term of this option shall be, subject to the
provisions of paragraph 4 below, a period of ten years plus thirty days,
commencing on the date hereof and expiring at 5:00 p.m., California time, on
_____________________.
2. This option shall not be exercisable as to any shares covered hereby
prior to ___________________. Thereafter, this option shall become cumulatively
exercisable as to the percentages of the number of shares covered hereby on the
dates set forth in the following table:
Date Percentage Exercisable
---- ----------------------
<PAGE> 48
However, subject to paragraph 8 below, this option will become
exercisable in full (i) at the discretion of the Board of Directors of the
Company, upon your death or permanent and total disability prior to the
expiration date of this option, if the Board of Directors determines that your
contribution to the affairs of the Company has been outstanding, and (ii)
pursuant to paragraph 7 below.
3. This option is not transferable by you except by will or the laws of
descent and distribution.
4. In the event you voluntarily terminate your employment or your
employment is involuntarily terminated other than by reason of your death or
permanent and total dis ability, this option shall terminate on the date of
termination of your employment. If your employment by the Company is terminated
by reason of your death or permanent and total disability, at a time when you
have not fully exercised this option, you or your personal representative shall
have the right to exercise this option for no more than (i) the number of shares
as to which this option is exercisable on the date of such termination of your
employment, and (ii) such additional shares, if any, as are determined by the
Board of Directors in an action pursuant to clause (i) of paragraph 2 above.
Such right shall lapse and this option shall terminate one year after the date
your employment by the Company is terminated by reason of your permanent and
total disability, and one year from the date of death or ten years from the date
of grant of this option, whichever occurs earlier, if your
-2-
<PAGE> 49
employment is terminated by reason of your death.
5. This option may be exercised during your lifetime only by you or
your legal representative. If you die at a time when you have not fully
exercised this option, any personal representative empowered to do so under your
will or the then applicable laws of descent and distribution shall have the
right to exercise this option.
6. If the outstanding shares of Common Stock of the Company are changed
by any stock dividend, stock split or combination of shares, the number of
shares then subject to this option shall be proportionately adjusted. If the
outstanding shares of Common Stock of the Company are exchanged for a different
number or class of shares of stock of the Company by reason of a merger,
reorganization, recapitalization or other change in the corporate stock
structure, there shall be substituted for each share of Common Stock of the
Company then subject to this option, the number and kind of shares of stock into
which each outstanding share of Common Stock of the Company shall be so
exchanged. In the event of any such adjustment, the purchase price per share for
the shares subject to this option shall be proportionately adjusted so that
there will be no change in the aggregate purchase price for the shares then
subject to option.
7. In the event of either (i) the dissolution or liquidation of the
Company (whether or not as a part of a corporate reorganization) or (ii) a
merger, consolidation or other reorganization in which the Company is not the
survivor (either event being a "Cancellation
-3-
<PAGE> 50
Event") then this option, or portion thereof which remains outstanding on the
date of consummation of the Cancellation Event shall be cancelled and be of no
further force and effect on such consummation; provided, however, that upon the
approval of the Cancellation Event by the shareholders of the Company, or the
approval of the Cancellation Event by the Board of Directors of the Company if
shareholder approval is not required, this option will become exercisable
as to all of the shares covered hereby, irrespective of the provisions of
paragraph 2. You will be given prompt notice of such approval by the
shareholders of the Company or its Board of Directors. To the extent that this
option is exercised after the giving of such notice and prior to the
consummation of the Cancellation Event with respect to shares as to which this
option, but for the provisions of this paragraph, would not otherwise be
exercisable (the "Unexercisable Portion of the Option") then any exercise of all
or part of the Unexercisable Portion of the Option under this paragraph 7 shall
not be effective until immediately prior to the consummation of the Cancellation
Event, you may also make your exercise of all or part of any exercisable portion
of this option contingent on the consummation of the Cancellation Event. If the
parties to the Cancellation Event should terminate it or if either of such
parties is unable to meet the conditions precedent to the consummation of the
Cancellation Event within the time scheduled therefore or any extention thereof
mutually agreed upon by such parties, then any exercise of the Unexercisable
Portion of this option pursuant to this paragraph and any contingent
-4-
<PAGE> 51
exercise of the exercisable portion of this option pursuant to the preceding
sentence will be of no force and effect. Thereafter, this option will be
exercisable only to the extent permitted under other provisions hereof.
8. This option shall not become exercisable and the Company shall have
no obligation to issue shares upon exercise of the option unless:
(a) All registration and other qualification under all applicable
federal and state laws, rules and regulations, including the Securities
Act of 1933, of the shares of Common Stock of the Company issuable upon
exercise of options granted under the 1984 Plan continues to be
effective;
(b) The shares issuable upon exercise of options granted under the 1984
Plan shall have been (and shall continue to be) admitted to trading,
upon official notice of issuance, on any stock exchange on which the
other shares of the Common Stock of the Company are listed; and
(c) You shall have complied with all the provisions of this Agreement.
9. This option is subject to all of the terms and conditions of the
1984 Plan, including those set forth in this Agreement. You may inspect a copy
of the 1984 Plan at the office of the Secretary of the Company.
-5-
<PAGE> 52
10. This option may be exercised, in whole or in part, only by delivery
to the Secretary or Corporate Controller of the Company, in a manner and on a
form prescribed by the Committee administering the 1984 Plan, of a notice in
writing (an "Exercise Notice"), stating that this option is exercised as to a
specified number of whole shares. The Exercise Notice shall be accompanied by
the purchase price for the shares to be purchased upon such exercise of this
option. If this option is exercised subsequent to your termination of employment
with the Company, the purchase price shall be paid in cash or by certified or
cashier's check. If you exercise this option prior to termination of your
employment with the Company, you may also elect to pay any portion of the
purchase price by surrendering to the Company outstanding whole shares of the
Common Stock of the Company of an aggregate value not exceeding the total
purchase price for shares with respect to which this option is exercised, in
which case you shall pay the excess of such total purchase price over the value
of the whole shares so surrendered in cash or by certified or cashier's check.
If you elect to surrender whole shares of the Common Stock of the Company in
payment of any part of such purchase price, certificates evidencing the Common
Stock of the Company so surrendered, properly endorsed or assigned to the
Company, shall accompany the Exercise Notice. Such stock will be valued for this
purpose at a price equal to the closing price on the New York Stock Exchange on
the date that the Exercise Notice is delivered. You can elect to pay the
purchase price in whole or in part by surrendering shares of the Common Stock of
the Company
-6-
<PAGE> 53
only on a day on which the New York Stock Exchange is open for business and only
if the Common Stock of the Company has not been suspended from trading at any
time during that day. The obligation of the Company to issue certificates
evidencing your shares upon exercise of this option is also subject to the
provisions of paragraph 8 above and to compliance with all applicable
requirements of law with respect to the issuance and sale of such shares,
including any provision of any federal or state income tax law, rule or
regulation which may require that either the Company withhold specified amounts
of your income for the payment of taxes or that you pay the amount required on
account of such taxes. Certificates evidencing the shares of Common Stock of the
Company issuable to you upon exercise of this option will be retained by the
Company until such time as you have made arrangements satisfactory to the
Committee to pay the amount of tax required to be withheld under any federal or
state income tax law, rule or regulation. If you have not made such arrangements
prior to the expiration of the Company's fiscal year but in any event no later
than thirty (30) days after the date of your Exercise Notice, the sale of shares
upon the exercise of such option will be rescinded, the certificates evidencing
such Common Stock of the Company will be cancelled and the consideration you
have paid or delivered as the purchase price will be returned to you. In such
event, you shall nonetheless be deemed to have exercised this option as to the
number of shares specified in such Exercise Notice and the number of shares
covered hereby with respect to which you can exercise this option
-7-
<PAGE> 54
thereafter on the dates set forth in paragraph 2 hereof shall be reduced by the
number of shares specified in such Exercise Notice.
11. Nothing in this Agreement shall confer upon you any right to
continue in the employ of the Company or to interfere with or restrict in any
way the rights of the Company, which are hereby expressly reserved, to discharge
any employee at any time, with or without cause.
This letter shall serve as the Company's official notification to you
that the above-outlined option to purchase shares of its common stock has been
granted to you effective as of the date hereof. Please indicate your agreement
to the foregoing by executing the copy of this Agreement and returning it to the
undersigned.
Very truly yours,
COMPUTER SCIENCES CORPORATION
By_________________________________________
By_________________________________________
The foregoing is agreed to: Grant Date: _____________________
___________________________ Grant Price: ____________________
No. of Shares:___________________
SS#________________________
-8-
<PAGE> 55
EXHIBIT (c)(13)(B)(iii)(a)
Re: Non-Qualified Stock Option
Dear __________________________:
The Committee administering the 1987 Stock Incentive Plan, (the "1987
Plan"), approved August 10, 1987, by shareholders of Computer Sciences
Corporation (hereinafter called the "Company") has granted to you on the date
hereof an option under the 1987 Plan to purchase ____ shares of the Company's
$1.00 par value common stock (the "Common Stock") at a price of $ ___ per share,
SUBJECT TO AND ONLY UPON THE FOLLOWING TERMS AND CONDITIONS:
1. The specified term of this option shall be, subject to the provisions
of paragraph 5 below, a period of ten years and thirty days, commencing on
the date below and expiring at 5:00 p.m., California time, on
___________________.
2. This option shall not be exercisable as to any shares covered hereby
prior to ________________. Thereafter, this option shall become
cumulatively exercisable as to the percentages of the number of shares
covered hereby on the dates set forth in the following table:
Date Percentage Exercisable
---- ----------------------
<PAGE> 56
However, subject to paragraph 8 below, this option may become
exercisable, in whole or in part, (i) at the sole discretion of the Committee
upon your permanent or temporary layoff, retirement, death or disability (as
defined in the 1987 Plan) prior to the expiration date of this option, or (ii)
pursuant to paragraph 7(b) below.
3. No right or interest under the 1987 Plan may be transferred,
assigned or encumbered by you other than by will, or by the laws of descent and
distribution.
4. With respect to this option, if you are on leave of absence for any
reason, the Committee may, at its sole discretion, determine that you will be
considered as still in the employ of the Company, provided that rights to this
option during your leave of absence will be limited to the extent to which such
right was earned or vested at the commencement of such leave of absence.
5. This option shall terminate on the date of termination of your
employment with the Company, for any reason, except as follows: (i) if your
employment is terminated by reason of your permanent or temporary layoff, this
option will expire three months after the date of termination or the date in
paragraph 1, whichever occurs sooner. This option may be exercised in accordance
with the terms and conditions of the 1987 Plan, but only to the extent
exercisable within three months after permanent or temporary layoff, unless the
Committee determines otherwise. If you are terminated by the Company because of
permanent or temporary layoff and return to the employ of the Company within
three months after the date of such layoff, any unexercised portion of this
option will be exercisable in accordance with the
-2-
<PAGE> 57
terms and conditions set forth at the time this option was granted, except that
any conditions which may require continued employment will not be deemed to
apply to the three month or shorter period during which time you were not
employed by the Company due to termination as described in this paragraph; (ii)
if you retire from the employ of the Company (after age 60, or earlier with the
consent of the Committee), this option will expire three years thereafter or the
date in paragraph 1, whichever occurs sooner. During this period, this option
may be exercised in accordance with the terms and conditions of the 1987 Plan,
but only to the extent exercisable on the date of retirement, unless otherwise
determined by the Committee; (iii) if your employment is terminated by reason of
your death or disability while employed by the Company, this option will expire
three years after the date of death or disability, unless the date in paragraph
1 occurs sooner. If you die or suffer a disability within the three-year period
referred to in subparagraph (ii) above, this option will expire upon the later
of three years after retirement or one year after the date of death or
disability, unless the date in paragraph 1 occurs sooner. This option may be
exercised only to the extent exercisable on the date of death or disability,
unless otherwise determined by the Committee.
6. This option may be exercised during your lifetime only by you or
your guardian or legal representative. If you die at a time when you have not
fully exercised this option, any personal representative empowered to do so
under your will or the then applicable laws of descent and distribution shall
have the right to
-3-
<PAGE> 58
exercise this option in accordance with paragraph 5 (iii).
7(a). In the event of any changes affecting the shares of Common Stock
as a result of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or the like, the Committee shall make
such adjustment in the maximum number of shares authorized under the 1987 Plan
and in the number of shares, option prices or other prices of shares subject to
outstanding awards granted under the 1987 Plan without change in the aggregate
purchase price or value.
7(b). In the event of (i) the dissolution or liquidation of the
Company, or (ii) a reorganization, merger or consolidation where the class of
securities under the 1987 Plan are exchanged for or converted into cash or
property or securities not issued by the Company, or (iii) a change in control
of the Company (as defined in the 1987 Plan), the Committee may determine, in
its sole discretion, that this option is then exercisable, in whole or in part,
irrespective of the provisions of paragraph 2.
8. This option shall not become exercisable and the Company shall have no
obligation to issue shares upon exercise of the option unless:
(a) All registration and other qualification under all applicable
federal and state laws, rules and regulations, including the Securities
Act of 1933, of the shares of Common Stock of the Company issuable upon
exercise of options granted under the 1987 Plan continues to be
effective;
(b) The shares issuable upon exercise of options granted under
-4-
<PAGE> 59
the 1987 Plan shall have been (and shall continue to be) admitted to
trading, upon official notice of issuance, on any stock exchange on which
the other shares of the Common Stock of the Company are listed; and
(c) You shall have complied with all the provisions of this Agreement.
9. This option is subject to all of the terms and conditions of the
1987 Plan, including those set forth in this Agreement. You may inspect a copy
of the 1987 Plan at the office of the Secretary of the Company.
10. This option may be exercised, in whole or in part, only by delivery
to the Secretary or Corporate Controller of the Company, in a manner and on a
form prescribed by the Committee administering the 1987 Plan, of a notice in
writing (an "Exercise Notice"), stating that this option is exercised as to a
specified number of whole shares. The Exercise Notice shall be accompanied by
the purchase price for the shares to be purchased upon such exercise of this
option. If this option is exercised subsequent to your termination of employment
with the Company, the purchase price shall be paid in cash or by certified or
cashier's check. If you exercise this option prior to termination of your
employment with the Company, you may also elect to pay any portion of the
purchase price by surrendering to the Company outstanding whole shares of the
Common Stock of the Company of an aggregate value not exceeding the total
purchase price for shares with respect to which this option is exercised, in
which case you shall pay the excess of such total purchase price over the value
of the whole shares
-5-
<PAGE> 60
so surrendered in cash or by certified or cashier's check. If you elect to
surrender whole shares of the Common Stock of the Company in payment of any part
of such purchase price, certificates evidencing the Common Stock of the Company
so surrendered, properly endorsed or assigned to the Company, shall accompany
the Exercise Notice. Such stock will be valued for this purpose at a price equal
to,the closing price of the New York Stock Exchange Composite Tape on the date
that the Exercise Notice is delivered. You can elect to pay the purchase price
in whole or in part by surrendering shares of the Common Stock of the Company
only on a day on which the New York Stock Exchange is open for business and only
if the Common Stock of the Company has not been suspended from trading at any
time during that day. The obligation of the Company to issue certificates
evidencing your shares upon exercise of this option is also subject to the
provisions of paragraph 8 above and in compliance with all applicable
requirements of law with respect to the issuance and sale of such shares,
including any provision of any federal or state income tax law, rule or
regulation which may require that either the Company withhold specified amounts
of your income for the payment of taxes or that you pay the amount required on
account of such taxes. Certificates evidencing the shares of Common Stock of the
Company issuable to you upon exercise of this option will be retained by the
Company until such time as you have made arrangements satisfactory to the
Committee to pay the amount of tax required to be withheld under any federal or
state income tax law, rule or regulation. If you have not made such arrangements
prior to the expiration of the Company's fiscal year but in any event no
-6-
<PAGE> 61
later than thirty (30) days after the date of your Exercise Notice, the sale of
shares upon the exercise of such option will be rescinded, the certificates
evidencing such Common Stock of the Company will be cancelled and the
consideration you have paid or delivered as the purchase price will be returned
to you. In such event, you shall nonetheless be deemed to have exercised this
option as to the number of shares specified in such Exercise Notice and the
number of shares covered hereby with respect to which you can exercise this
option thereafter on the dates set forth in paragraph 2 hereof shall be reduced
by the number of shares specified in such Exercise Notice.
11. Nothing in this Agreement shall confer upon you any right to continue
in the employ of the Company or affect the right of the Company to terminate
your employment at any time, with or without cause.
This letter shall serve as the Company's official notification to you that
the above-outlined option to purchase shares of its Common Stock has been
granted to you effective as of the date thereof. Please indicate your agreement
to the foregoing by executing the copy of this Agreement and returning it to the
undersigned.
Grant Date: _________________ Very truly yours,
Grant Price:_________________ COMPUTER SCIENCES CORPORATION
No. of Shares:
The foregoing is agreed to:
___________________________ By _______________________
SS#:_______________________ By _______________________
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<PAGE> 62
EXHIBIT (c)(13)(B)(iii)(b)
Re: Non-Qualified Stock Option
Dear ___________________________:
The Committee administering the 1987 Stock Incentive Plan, approved
August 10, 1987, by shareholders of Computer Sciences Corporation (hereinafter
called the "Company") as amended by the "Schedule to 1987 Stock Incentive Plan"
attached hereto and made a part hereof (collectively the "1987 Plan") has
granted to you on the date hereof an option under the 1987 Plan to purchase
_____ shares of the Company's $1.00 par value common stock (the "Common Stock")
at a price of $ ___________ per share, SUBJECT TO AND ONLY UPON THE FOLLOWING
TERMS AND CONDITIONS:
1. The specified term of this option shall be, subject to the
provisions of paragraph 4 below, a period of ten years and thirty days,
commencing on the date below and expiring at 5:00 p.m., California time, on
______________________.
2. This option shall not be exercisable as to any shares covered hereby
prior to ___________________. Thereafter, this option shall become cumulatively
exercisable as to the percentages of the number of shares covered hereby on the
dates set forth in the following table:
1
<PAGE> 63
Date Percentage Exercisable
- ---- ----------------------
3. No right or interest under the 1987 Plan may be transferred,
assigned or encumbered by you other than by will, or by the laws of descent and
distribution.
4. This option shall terminate on the date of termination of your
employment with the Company, for any reason, except as may be otherwise provided
in the 1987 Plan (including the Schedule thereto).
5. This option may be exercised during your lifetime only by you or
your guardian or legal representative. If you die, any personal representative
empowered to do so under your will or the then applicable laws of descent and
distribution shall have the right to exercise this option in accordance with the
terms of the 1987 Plan (including the Schedule thereto).
6. This option shall not become exercisable and the Company shall have
no obligation to issue shares upon exercise of the option unless:
2
<PAGE> 64
(a) All registration and other qualification under all applicable
federal and state laws, rules and regulations, including the Securities
Act of 1933, of the shares of Common Stock of the Company issuable upon
exercise of options granted under the 1987 Plan continues to be effective;
(b) The shares issuable upon exercise of options granted under the
1987 Plan shall have been (and shall continue to be) admitted to trading,
upon official notice of issuance, on any stock exchange on which the other
shares of the Common Stock of the Company are listed; and
(c) You shall have complied with all the provisions of this
Agreement.
7. This option is subject to all of the terms and conditions of the
1987 Plan, (including the Schedule thereto). You may inspect a copy of the 1987
Plan at the office of the Secretary of the Company. In the event of an
inconsistency between the Plan as originally approved, the Schedule to the 1987
Stock Incentive Plan and this Agreement the following descending order of
precedence shall apply:
1. The Schedule to the 1987 Stock Incentive Plan
2. This Agreement
3. The 1987 Stock Incentive Plan as originally approved.
3
<PAGE> 65
8. This option may be exercised, in whole or in part, only by delivery
to the Secretary or Corporate Controller of the Company, in a manner and on a
form prescribed by the Committee administering the 1987 Plan, of a notice in
writing (an "Exercise Notice"), stating that this option is exercised as to a
specified number of whole shares. The Exercise Notice shall be accompanied by
the purchase price for the shares to be purchased upon such exercise of this
option. If this option is exercised subsequent to your termination of employment
with the Company, the purchase price shall be paid in cash or by certified or
cashier's check. If you exercise this option prior to termination of your
employment with the Company, you may also elect to pay any portion of the
purchase price by surrendering to the Company outstanding whole shares of the
Common Stock of the Company of an aggregate value not exceeding the total
purchase price for shares with respect to which this option is exercised, in
which case you shall pay the excess of such total purchase price over the value
of the whole shares so surrendered in cash or by certified or cashier's check.
If you elect to surrender whole shares of the Common Stock of the Company in
payment of any part of such purchase price, certificates evidencing the Common
Stock of the Company so surrendered, properly endorsed or assigned to the
Company, shall accompany the Exercise Notice. Such stock will be valued for this
purpose at a price equal to the closing price of the New York Stock Exchange
Composite Tape on the date that the Exercise Notice is delivered. You can elect
to pay the purchase price in whole or in part by surrendering shares of the
Common Stock of the Company only on a day on which the New York Stock Exchange
is open
4
<PAGE> 66
for business and only if the Common Stock of the Company has not been suspended
from trading at any time during that day. The obligation of the Company to issue
certificates evidencing your shares upon exercise of this option is also subject
to the provisions of paragraph 6 above and to compliance with all applicable
requirements of law with respect to the issuance and sale of such shares,
including any provision of any federal or state income tax law, rule or
regulation which may require that either the Company withhold specified amounts
of your income for the payment of taxes or that you pay the amount required on
account of such taxes. Certificates evidencing the shares of Common Stock of the
Company issuable to you upon exercise of this option will be retained by the
Company until such time as you have made arrangements satisfactory to the
Committee to pay the amount of tax required to be withheld under any federal or
state income tax law, rule or regulation. If you have not made such arrangements
prior to the expiration of the Company's fiscal year but in any event no later
than thirty (30) days after the date of your Exercise Notice, the sale of shares
upon the exercise of such option will be rescinded, the certificates evidencing
such Common Stock of the Company will be cancelled and the consideration you
have paid or delivered as the purchase price will be returned to you. In such
event, you shall nonetheless be deemed to have exercised this option as to the
number of shares specified in such Exercise Notice and the number of shares
covered hereby with respect to which you can exercise this option thereafter on
the dates set forth in paragraph 2 hereof shall be reduced by the number of
shares specified in such Exercise Notice.
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<PAGE> 67
9. Nothing in this Agreement shall confer upon you any right to continue
in the employ of the Company or affect the right of the Company to terminate
your employment at any time, with or without cause.
This letter shall serve as the Company's official notification to you that
the above-outlined option to purchase shares of its Common Stock has been
granted to you effective as of the date thereof. Please indicate your agreement
to the foregoing by executing the copy of this Agreement and returning it to the
undersigned.
Very truly yours,
COMPUTER SCIENCES CORPORATION
By
---------------------------------------
Name:
Title:
By
---------------------------------------
Name:
Title:
The foregoing is agreed Grant Date:
to:
Grant Price:
---------------------- No. of Shares:
Employee
6
<PAGE> 68
COMPUTER SCIENCES CORPORATION
SCHEDULE TO 1987 STOCK INCENTIVE PLAN
<PAGE> 69
COMPUTER SCIENCES CORPORATION
SCHEDULE TO 1987 STOCK INCENTIVE PLAN
Preamble
This Schedule is solely for the benefit of employees of the Company and of any
corporation under the Control of the Company who reside in the United Kingdom.
The terms and conditions of the Schedule are established to be a Plan capable of
approval as an "approved share option scheme" under Schedule 10 to the Finance
Act 1984 of the United Kingdom.
1. DEFINITIONS
In this Schedule the following words and expressions shall have the following
meanings:
"Adoption Date" the date on which the Board
adopted these Rules.
"Associated Company" has the same meaning as in
Section 302 of the Income and
Corporation Taxes Act 1970.
"Board" the board of directors of the
Company or, except in Rule
10.4, a duly constituted
committee thereof.
"Company' Computer Sciences Corporation,
a Nevada corporation (or, in
respect of any "new rights"
within the meaning of Rule
7.4, the "acquiring company"
within the meaning of Rule
7.4).
"Control" has the same meaning as in
Section 534 of the Income and
Corporation Taxes Act 1970.
"Date of Grant" the date in which an Option
is, was or is to be granted
under the Plan.
"Dealing Day" a day on which the Stock
Exchange is open for, and
transacts business in, shares.
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<PAGE> 70
"Eligible Employee" any employee (other than a
director) of any Participating
Company who at the relevant
time:
i is required to devote to
his duties not less than
20 hours per week (excluding
meal breaks) and
ii. is not precluded by paragraph
4(l)(b) of Schedule 10 (material
interest in a close company)
from participating in the Plan,
and
iii. does not own stock
possessing more than 5% of
the total combined voting
power of all classes of
stock in the Company.
"Governing Plan" the Company's 1987 Stock Incentive
Plan under which the Rules operate
as a schedule thereto.
"Market Value" if the Shares are at the time
listed on the Stock Exchange, then
on any day the reported closing
price of a Share as such price is
officially reported, on that day or
the last preceding Dealing Day;
if the Shares are at the time not
listed on the Stock Exchange, then
on any day the market value of a
Share determined in accordance with
the provisions of part VIII of the
Capital Gains Tax Act 1979 and
agreed prior to that day for the
purposes of the Plan with the
Inland Revenue Shares Valuation
Division.
"Option" a right to subscribe for Shares
granted (or to be granted) in
accordance with the Rules of this
Plan.
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<PAGE> 71
"Participating Company" the Company and any other
corporation of which the Company
has Control and which is for the
time being nominated by the Board
to be a participating company.
"Plan" the employee share option plan
constituted and governed by these
Rules as from time to time amended.
"Relevant Emoluments" the meaning which the term bears in
paragraph 5(2) of Schedule 10 by
virtue of paragraph 5(5).
"Rules" This schedule to the Governing
Plan.
"Schedule 10" Schedule 10 to the Finance Act
1984.
"Share" An ordinary share of common stock
of $1.00 par value in the capital
of the Company which satisfies the
conditions specified in paragraphs
7 to 11 inclusive of Schedule 10
(or, in respect of any "new rights"
within the meaning of Rule 7.4, a
share in the capital of the
"acquiring company" within the
meaning of Rule 7.4 which satisfies
the said conditions).
"Stock Exchange" The New York Stock Exchange.
"Subscription Price" the price at which each Share
subject to an Option may be
acquired on the exercise of that
Option being, subject to Rule 8,
the higher of:
i. the nominal (par) value of a
Share and
ii. the Market Value of a Share on
the day the Option was granted
pursuant to Rule 2.
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<PAGE> 72
"Subsisting Option" an Option which has neither lapsed
nor been exercised.
"Year of Assessment" a year beginning on any 6
April and ending on the
following 5 April.
References to legislation are references to United Kingdom statutes and
include such enactments modified, extended or re-enacted.
2. GRANT OF OPTIONS
From time to time, but in any case not earlier than the Adoption Date
nor later than June 19, 1997, the Board may select at its discretion
(without being bound by selections made in prior years) one or more
Eligible Employees whom the Board determines to have a direct and
significant impact on the performance of the Company, and may following
such selection grant to such one or more Eligible Employees an Option
to acquire Shares in the Company. The grant of each such Option shall
be evidenced by the issue to the Option holder of a certificate of
option specifying:
i. the maximum number of Shares over which that Option shall
relate, being determined at the discretion of the Board save
that it shall not be so large that the grant of such Option
over that number of Shares would cause the limits specified in
Rule 5 to be exceeded, and
ii. the Subscription Price at which Shares may be acquired on the
exercise of the Option, and
iii. such other conditions to be met before an Option may be
exercised as the Board may determine (and in particular the
achievement of preestablished performance objectives), subject
to these having been approved in advance by the Inland Revenue
- such approval being unnecessary if the conditions relate to
growth in corporate sales, profit, return on capital, return
on stockholders' funds or similar published and objective
measures of corporate performance.
The certificate of option shall in other respects be in such form, not
inconsistent with these Rules, as the Board may determine.
3. OTHER TERMS OF OPTIONS
3.1 Unless the Option is to be granted under seal, a consideration not
exceeding (pound)-1 shall be paid by the Eligible Employee.
3.2 other than as a result of the operation of Rule 8, the terms of a
Subsisting Option shall not be altered without the prior consent of the
Inland Revenue.
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<PAGE> 73
4. NON-TRANSFERABILITY OF OPTIONS
No Option may be transferred, assigned or charged and any purported
transfer, assignment or charge shall cause the Option to lapse
forthwith. Each certificate of Option shall carry a statement to this
effect.
5. LIMITATIONS ON GRANTS
5.1 No Option shall be granted pursuant to Rule 2 above if such grant would
result in the aggregate of
i. the number of Shares over which Subsisting Options over unissued
Shares have been granted under these Rules and
ii. the number of Shares which have been issued on the exercise of
Options granted under these Rules and
iii. the number of Shares over which subsisting options over unissued
Shares have otherwise been granted under the Governing Plan during
the period since June 19, 1987 and
iv. the number of Shares which have otherwise been issued pursuant to
the Governing Plan during the period since June 19, 1987
exceeding 750,000 Shares (or such other higher figure as may be approved
by the Company's stockholders from time to time for the purposes of the
Governing Plan).
5.2 No Option shall be granted to an Eligible Employee if immediately
following such grant he would hold Subsisting Options over Shares with
an aggregate Subscription Price exceeding the greater of
i. (pound)100,000 or
ii. four times the amount of the Eligible Employee's Relevant
Emoluments for the current or preceding Year of Assessment
(whichever of those years gives the greater amount) or, if there
were no Relevant Emoluments for the preceding Year of Assessment,
four times the amount of the Relevant Emoluments for the period of
twelve months beginning with the first day during the current Year
of Assessment in respect of which there are Relevant Emoluments.
For the purposes of this Rule 5.2, Options shall include all Options
granted under this Plan and all options granted under any other plan
approved under Schedule 10 and established by the Company or any
Associated Company thereof.
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<PAGE> 74
6. EXERCISE OF OPTIONS
6.1 (a) Subject to Rule 9 below and to Rule 2(iii) any Subsisting
Option may be exercised in whole or in part at such time or
times, during such period, and for such number of Shares as
shall be determined by the Board and set out in the certificate
of option.
(b) In the event of the death of an Option holder, his personal
representatives may (if so provided in the certificate of option
and subject to Rule 6.2) exercise any Subsisting Option to the
extent provided in the certificate of option within a period not
exceeding twelve months from the death of the Option holder.
(c) In the event of the Option holder ceasing to be an employee of
any Participating Company by reason of injury, disability,
redundancy or retirement or, at the discretion of the Board, for
any other reason may (if so provided in the certificate of
option and subject to Rule 6.2) exercise any Subsisting Option
to the extent provided in the certificate of option within a
period not exceeding thirty-six (or in the case of redundancy,
three) months from the date of cessation.
(d) in the event of the Option holder ceasing to be an employee of
any Participating Company by reason of dismissal for fault, or
for any reason not covered by the relevant certificate of
option, any Subsisting option shall thereupon lapse.
6.2 An Option shall lapse on the earliest of the following events:
i. any date specified in the certificate of option.
ii. the tenth anniversary of the date of grant.
iii. the first anniversary of the Option holder's death.
iv. unless the certificate of option specifies a shorter period,
thirty-six months following the Option holder ceasing to be an
employee of any Participating Company (except in the case of
redundancy when the period shall be reduced to three months).
v. on completion of the dissolution, liquidation, reorganization,
merger or consolidation of the Company pursuant to Rule 7
(unless an option swap under Rule 7.3 is in operation).
vi. the Option holder being adjudicated bankrupt.
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<PAGE> 75
7. LIQUIDATIONS, CAPITAL RECONSTRUCTIONS AND TAKEOVERS
7.1 In the event that the Company or its stockholders enters into an
agreement to dissolve or liquidate the Company, all Subsisting Options
shall immediately become fully exercisable.
7.2 In the event that the Company seeks the approval of its stockholders to
an agreement to reorganize, merge or consolidate the Company with one
or more corporations as a result of which the outstanding Shares are
exchanged for (or converted into) cash, property or other securities
not issued by the Company, then all Subsisting Options shall
immediately become fully exercisable, unless the Board has elected for
an "option swap" as set out in Rules 7.3 and 7.4 below.
7.3 The Board may elect for an option swap to become operative if a company
(the "acquiring company") obtains Control of the Company as a result of
making either a general offer to acquire the whole of the issued share
capital of the Company subject to a condition which (if satisfied) will
result in the person making the offer having Control of the Company, or
a general offer to acquire all of the Shares.
7.4 If the Board elects for an option swap, then any option holder shall,
by agreement with the acquiring company and within a period not
exceeding six months beginning with the time when the acquiring company
has obtained Control of the Company (and any condition subject to which
the offer is made is satisfied), release his rights under the Plan
(the "old rights") in consideration of the grant to him of rights (the
"new rights") which are equivalent to the old rights but relate to
shares in a different company - whether the acquiring company itself or
some other company falling within paragraphs 7(b) or 7(c) of Schedule
10; and for this purpose the new rights will be regarded as equivalent
to the old rights if the new rights satisfy the provisions of paragraph
4A(3) of Schedule 10.
7.5 The exercise of an Option pursuant to Rules 7.1 and 7.2 shall be
subject to the provisions of Rule 9 below.
7.6 The grant of Options under this Plan shall in no way affect the right of
the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
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<PAGE> 76
8. VARIATION OF SHARE CAPITAL
In the event of any capitalization or rights issue or any
consolidation, sub-division or reduction of capital by the Company, the
aggregate number of Shares issuable under the Plan, the number of
Shares subject to any Option and the Subscription Price for each of
those Shares shall be adjusted in such appropriate and proportional
manner as the Board confirms to be fair and reasonable provided that:
i. the aggregate amount payable on the exercise of an Option in
full is not increased, and
ii. no adjustment shall be made without the prior approval of the
Board of Inland Revenue, and
iii. following the adjustment the Shares continue to satisfy the
conditions specified in paragraphs 7 to 11 inclusive of Schedule
10.
9. MANNER OF EXERCISE OF OPTIONS
9.1 No Option may be exercised by an individual at any time when he is
precluded by paragraph 4(l)(b) of Schedule 10 from participating in
the Plan (material interest in a close company).
9.2 No Option may be exercised at any time when the Shares which may be
thereby acquired are not Shares as defined in Rule 1.1.
9.3 An Option shall be exercised by the Option holder, or in the case of an
Option exercisable in accordance with Rule 6.1(b) his personal
representatives, giving notice to the Company in writing of the whole
number of Shares in respect of which he wishes to exercise the Option
accompanied by the appropriate payment in full and the relevant
certificate of option and shall be effective on the date of its receipt
by the Company.
9.4 The Company will allot and if necessary issue Shares pursuant to a
notice of exercise within 30 days of the date of exercise. Save for any
rights determined by reference to a date preceding the date of
allotment, such Shares where issued shall rank pari passu with the
other shares of the same class in issue at the date of allotment.
9.5 When an Option is exercised only in part, the balance shall remain
exercisable on the same terms as originally applied to the whole Option
and, insofar as the partial exercise is not already provided for in the
certificate of option, a new certificate of option shall be issued
accordingly by the Company as soon as possible after the partial
exercise. No fractional Shares may be issued pursuant to the exercise
of an Option.
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<PAGE> 77
10. ADMINISTRATION AND AMENDMENT
10.1 The Plan shall be administered by the Board whose decision on all
disputes shall be final.
10.2 The Board may from time to time amend these Rules provided that:
i. no amendment may detrimentally affect an Option holder as
regards to an Option granted prior to the amendment being made
ii. no amendment may be made which would change the class of persons
eligible to receive Options, or materially increase the benefits
accruing to Option holders or increase the limit specified in
Rule 5.1 or change Rule 10.4 without the prior approval of the
Company's stockholders, and
iii. no amendment shall have effect until approved by the Inland
Revenue as not being contrary to Schedule 10.
10.3 The cost of establishing and operating the Plan shall be borne by the
Participating Companies in such proportions as the Board shall
determine.
10.4 The Board may establish a committee consisting of not less than three
disinterested persons (who are not and have not within the preceding
twelve months been themselves eligible to receive grants of Options
under the Plan or any other plan of the Company) and to whom any or all
of its powers in relation to the Plan may be delegated.
10.5 Any notice or other communication under or in connection with the Plan
may be given by the Company either personally or by post and to the
Company either personally or by post to an authorized representative;
items sent by post shall be prepaid and shall be deemed to have been
received 72 hours after posting.
10.6 The Company shall at all times keep available sufficient authorized and
unissued Shares to satisfy the exercise to the full extent still
possible of all Options which have neither lapsed nor been fully
exercised, taking account of any other obligations of the Company to
issue unissued Shares.
10.7 The Board may at any time terminate the Plan but the provisions of the
Plan shall remain in force for Subsisting Options.
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<PAGE> 78
10.8 Nothing in these Rules or in any document pursuant hereto shall
confer on any Eligible Employee any rights not expressed herein, in
particular any right to remain in the employ of the Company.
10.9 Except insofar as this Plan shall be construed as a Schedule to the
Governing Plan (and is established under the authority of Rule 11 of
the Governing Plan), the Governing Plan shall not apply to the Plan.
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<PAGE> 79
EXHIBIT (c)(13)(B)(iv)(a)
COMPUTER SCIENCES CORPORATION
1990 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made
and entered into as of the ___________day of ________, 19__ (the "Grant Date")
by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and ___________________, a full-time employee of the Company and/or
one or more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1990 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on May 7, 1990 and approved by
the stockholders of the Company on August 13, 1990;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the
Employee desires to accept, an option to purchase shares of Common Stock from
the Company upon the terms and conditions set forth herein, which terms and
conditions have been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company
hereby grants to the Employee, and the Employee hereby accepts, an option to
purchase _________ shares of Common Stock (the "Option Shares") at an exercise
price of $_______ per share (the "Exercise Price"), which option shall expire at
5:00 p.m., California time, on _________________________ and shall be subject to
all of the terms and conditions set forth in this Agreement (the "Option"). THE
OPTION IS INTENDED NOT TO QUALIFY AS AN INCENTIVE OPTION UNDER SECTION 422 OF
THE INTERNAL REVENUE CODE. The Option shall not initially be exercisable to
purchase any Option Shares; provided, however, that upon each anniversary of the
Grant Date indicated below, the Option shall become exercisable to purchase
("vest with respect to") the percentage of the Option Shares (rounded to the
nearest whole share) indicated below:
Percentage of Option Shares Vesting Anniversary of Grant Date
<PAGE> 80
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Retirement. If the Employee's status as a
full-time employee of the Company or any of its subsidiaries is
terminated by reason of the Retirement (as hereinafter defined)
of the Employee, then (A) the portion of the Option that has not
vested on or prior to the date of such Retirement shall
terminate on such date and (B) the remaining vested portion of
the Option shall terminate upon the earliest of the Expiration
Date, the thirtieth day after the date of such Retirement, or,
if applicable the first anniversary of the date of the
Employee's death. "Retirement" shall mean (X) retirement from
the Company or any of its subsidiaries at age 55 or older (but
less than 65), provided that the Employee shall have been a
continuous full-time employee of the Company or its subsidiaries
for at least 10 years prior thereto and the Board of Directors
of the Company shall have determined within 90 days prior
thereto that the Employee has made an outstanding contribution
to the affairs of the Company or its subsidiaries, or (Y)
retirement from the Company or any of its subsidiaries at age 65
or older.
(ii) Death or Permanent Disability. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of the death or
Permanent Disability (as hereinafter defined) of the Employee,
then (A) the portion of the Option that has not vested on or
prior to the date of such termination of full-time status shall
terminate on such date and (B) the remaining vested portion of
the Option shall terminate upon the earlier of the Expiration
Date or the first anniversary of the date of such termination of
full-time status. "Permanent Disability" shall mean the inability
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months. The Employee shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been
furnished to the Board of Directors of the Company in such form
and manner, and at such times, as the Board of Directors may
require. Any determination by the Board of Directors of the
Company that the Employee does or does not have a Permanent
Disability shall be final and binding upon the Company and the
Employee.
(iii) Lay-Off or Leave of Absence. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of a permanent or
temporary lay-off or an approved leave of absence, then (A) the
Option shall continue to be
2
<PAGE> 81
exercisable until the earlier of the Expiration Date or three
months from the date of such termination of full-time status, but
only to the extent that it was exercisable on the date of such
termination, (B) if the Employee shall again become a full-time
employee of the Company or any of its subsidiaries prior to the
earlier of the Expiration Date or the first anniversary of the
date of such termination of full-time status, the Option shall
again become exercisable on such date and shall thereafter be
treated for all purposes under this Agreement as though the
Employee had not, prior to such date, ceased to be a full-time
employee of the Company or its subsidiaries, and (C) if the
Employee shall not again become a full-time employee of the
Company or any of its subsidiaries prior to the earlier of the
Expiration Date or the first anniversary of the date of such
termination of full-time status, the Option shall terminate on
such earlier date.
(iv) Other Termination. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated for no reason, or for any reason other than
Retirement, death, Permanent Disability, permanent or temporary
lay-off, or approved leave of absence, then the Option shall
terminate upon the date of such termination of full-time status.
(b) Death Following Termination of Full-Time Status.
Notwithstanding anything to the contrary in this Agreement, if the
Employee shall die at any time after the termination of his or her
status as a full-time employee of the Company of any or its subsidiaries
and prior to the Expiration Date, then (i) the portion of the Option
that has not vested on or prior to the date of such death shall
terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or the
first anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole
discretion, may accelerate the exercisability of the Option at any time
and for any reason. In addition, the Option shall fully vest with
respect to all Option Shares upon the first to occur of the following:
(i) unless the Committee shall determine otherwise,
the approval of any of the following by both the Board of
Directors and the shareholders of the Company: (A) the
dissolution or liquidation of the Company, (B) a sale of
substantially all of the property and assets of the Company or
(C) a reorganization, merger of consolidation of the Company the
consummation of which would result in the outstanding securities
of any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company;
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<PAGE> 82
(ii) unless the Committee shall determine otherwise
within ten business days thereafter, the public announcement that
any person or entity, together with all Affiliates and Associates
(as such capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company representing
30% or more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in this
subsection (ii), shall not include (A) the Company or any of its
subsidiaries, (B) any employee benefit plan of the Company or any
of its subsidiaries, or (C) any entity holding voting securities
of the Company for or pursuant to the terms of any such plan;
(iii) any date upon which the directors of the
Company who were nominated by the Board of Directors for election
as directors cease to constitute a majority of the directors of
the Company, unless, prior to such date, the Board of Directors
shall determine otherwise; or
(iv) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, unless, prior to such
change of control, the Board of Directors shall determine
otherwise.
(d) Certain Events Causing Termination of Option.
Notwithstanding anything to the contrary in this Agreement, the Option
shall terminate upon the consummation of any of the following events,
or, if later, the thirtieth day following the first date upon which such
event shall have been approved by both the Board of Directors and the
shareholders of the Company, or upon such later date as shall be
determined by the Committee:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property
and assets of the Company, unless the terms of such sale shall
provide otherwise; or
(iii) a reorganization, merger or consolidation of
the Company that results in the outstanding securities of any
class then subject to the Option being exchanged for or converted
into cash, property and/or securities not issued by the Company,
unless the terms of such reorganization, merger or consolidation
provide otherwise.
3. Adjustments. In the event that the outstanding securities of
the class then subject to the Option are increased, decreased or exchanged for
or converted into cash, property and/or a different number or kind of
securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in
4
<PAGE> 83
either case as a result of a reorganization, merger, consolidation,
recapitalization, reclassification, dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split or the
like, or in the event that substantially all of the property and assets of the
Company are sold, then, unless such event shall cause the Option to terminate
pursuant to Section 2(d) hereof, the Committee shall make appropriate and
proportionate adjustments in the number and type of shares or other securities
or cash or other property that may thereafter be acquired upon the exercise of
the Option; provided, however, that any such adjustments in the Option shall be
made without changing the aggregate Exercise Price of the then unexercised
portion of the Option.
4. Exercise.
(a) The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal
representative, and after the Employee's death only by the person or
entity entitled to do so under the Employee's last will and testament or
applicable intestate law. The Option may only be exercised by the
delivery to the Company of a written notice of such exercise, which
notice shall specify the number of Option Shares to be purchased (the
"Purchased Shares") and the aggregate Exercise Price for such shares
(the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided,
however, that payment of such aggregate Exercise Price may instead be
made, in whole or in part, by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly
endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair
Market Value (as hereinafter defined) thereof on the date of such
exercise), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.
(b) The "Fair Market Value" of a share of Common Stock on
any day shall be equal to the last sale price, regular way, of a share
of Common Stock on such day, or in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.
5. Payment of Withholding Taxes. If the Company is obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option, including, without limitation, any
federal, state or other income tax, or any F.I.C.A., state disability insurance
tax or other employment tax, then the Employee shall, concurrently with such
exercise, pay such amount (the "Withholding Liability") to the Company in cash
or by check payable to the Company;
5
<PAGE> 84
provided, however, that the Employee may instead pay all or any part of the
Withholding Liability by either of the following methods:
(a) by the delivery to the Company of a stock certificate
or certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value
thereof on the date of such exercise), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common
Stock; or
(b) by instructing the Company to withhold shares of
Common Stock otherwise issuable upon such exercise of the Option (such
withholding to be valued on the basis of the aggregate Fair Market Value
of the withheld shares on the date of such exercise), provided that if
the Employee is then subject to Section 16(b) of the Exchange Act, such
method of payment may only be used if, in the opinion of the General
Counsel of the Company, such use would not cause the Employee to incur
any liability pursuant to Section 16(b).
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest
therein may be sold, assigned, conveyed, gifted, pledged, hypothecated or
otherwise transferred in any manner other than by will or the laws of descent
and distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect
on the Grant Date, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the Option.
6
<PAGE> 85
9. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon the Employee any right to
continue in the employ of the Company or any of its subsidiaries, (b) affect the
right of the Company and each of its subsidiaries to terminate the employment of
the Employee, with or without cause, or (c) confer upon the Employee any right
to participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. THE EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF THE EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR
NO REASON, UNLESS THE EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO
A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect to
the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or canceled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of the
terms and conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
7
<PAGE> 86
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the Grant Date.
COMPUTER SCIENCES CORPORATION
By
- ----------------------------- -----------------------------
Employee: Name:
Title:
SS#:
Grant Date:
Grant Price: By
Options Granted: -----------------------------
Name:
Title:
8
<PAGE> 87
EXHIBIT (c)(13)(B)(iv)(b)
COMPUTER SCIENCES CORPORATION
1990 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made and
entered into as of the ___ day of __________, 19_ (the "Grant Date") by and
between Computer Sciences Corporation, a Nevada corporation (the "Company"),
and ___________, a full-time employee of the Company and/or one or more of its
subsidiaries (the "Employee").
WHEREAS, the Company's 1990 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on May 7, 1990 and approved by
the shareholders of the Company on August 13, 1990;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the Employee
desires to accept, an option to purchase shares of Common Stock from the Company
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; certain Terms and Conditions. The Company hereby
grants to the Employee, and the Employee hereby accepts, an option to purchase
_________ shares of Common Stock (the "Option Shares") at an exercise price of
$________ per share (the "Exercise Price") , which option shall expire at 5:00
p.m., California time, on _________ and shall be subject to all of the terms and
conditions set forth in this Agreement (the "Option"). The Option is intended
not to qualify as an incentive option under Section 422 of the Internal Revenue
Code. The Option
<PAGE> 88
shall not initially be exercisable to purchase any Option Shares; provided,
however, that upon each anniversary of the Grant Date indicated below, the
option shall become exercisable to purchase ("vest with respect to") the
percentage of the Option Shares (rounded to the nearest whole share) indicated
below:
PERCENTAGE OF OPTION SHARES THAT VEST
UPON EACH ANNIVERSARY OF GRANT DATE
Percentage of Anniversary of
Option Shares Grant Date
------------- ----------
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Retirement. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated by
reason of the Retirement (as hereinafter defined) of the Employee, then
(A) the portion of the Option that has not vested on or prior to the
date of such Retirement shall terminate on such date and (B) the
remaining vested portion of the Option shall terminate upon the
earliest of the Expiration Date, the thirtieth day after the date of
such Retirement, or, if applicable, six months after the date of the
Employee's death. "Retirement" shall mean (X) retirement from the
Company or any of its subsidiaries at age 55 or older (but less than
65), provided that the Employee shall have been a continuous full-time
employee of the Company or its subsidiaries for at least 10 years prior
thereto and the Board of Directors of the Company shall have determined
within 90 days prior thereto that the Employee has made an outstanding
contribution to the affairs of the Company or its subsidiaries, or (Y)
retirement from the Company or any of its subsidiaries at age 65 or
older.
(ii) Death or Permanent Disability. If the Employee's status
as a full-time employee of the Company or any of its subsidiaries is
2
<PAGE> 89
terminated by reason of the death or Permanent Disability (as
hereinafter defined) of the Employee, then (A) the portion of the
Option that has not vested on or prior to the date of such termination
of full-time status shall terminate an such date and (B) the remaining
vested portion of the Option shall terminate upon the earlier of the
Expiration Date or six months after the date of such termination of
full-time status. "Permanent Disability" shall mean the inability to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The Employee shall not be
deemed to have a Permanent Disability until proof of the existence
thereof shall have been furnished to the Board of Directors of the
Company in such form and manner, and at such times, as the Board of
Directors may require. Any determination by the Board of Directors of
the Company that the Employee does or does not have a Permanent
Disability shall be final and binding upon the Company and the
Employee.
(iii) Lay-Off or Leave of Absence. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated by reason of a permanent or temporary lay-off or an approved
leave of absence, then (A) the Option shall continue to be exercisable
until the earlier of the Expiration Date or three months from the date
of such termination of full-time status, but only to the extent that it
was exercisable on the date of such termination, (B) if the Employee
shall again become a full-time employee of the company or any of its
subsidiaries prior to the earlier of the Expiration Date or the first
anniversary of the date of such termination of full-time status, the
option shall again become exercisable on such date and shall thereafter
be treated for all purposes under this Agreement as though the Employee
had not, prior to such date, ceased to be a full-time employee of the
Company or its subsidiaries, and (C) if the Employee shall not again
3
<PAGE> 90
become a full-time employee of the Company or any of its subsidiaries
prior to the earlier of the Expiration Date or the first anniversary of
the date of such termination of full-time status, the option shall
terminate on such earlier date.
(iv) Other Termination. If the Employee's status as a
full-time employee of the Company or any of its subsidiaries is
terminated for no reason, or for any reason other than Retirement,
death, Permanent Disability, permanent or temporary lay-off, or
approved leave of absence, then the Option shall terminate upon the
date of such termination of full-time status.
(b) Death Following Termination of Full-Time Status. Notwithstanding
anything to the contrary in this Agreement, if the Employee shall die at any
time after the termination of his or her status as a full-time employee of the
Company of any or its subsidiaries and prior to the Expiration Date, then (i)
the portion of the Option that has not vested on or prior to the date of such
death shall terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or six months after
the date of such death.
(c) Acceleration of Option. The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for any reason. In
addition, the Option shall fully vest with respect to all option Shares upon the
first to occur of the following:
(i) unless the Committee shall determine otherwise, the
approval of any of the following by both the Board of Directors and the
shareholders of the Company: (A) the dissolution or liquidation of the
Company, (B) a sale of substantially all of the property and assets of
the Company or (C) a reorganization, merger of consolidation of the
Company the consummation of which would result in the outstanding
securities of any class then subject to the option being exchanged for
or converted into cash, property and/or securities not issued by the
Company;
(ii) unless the Committee shall determine otherwise within ten
4
<PAGE> 91
business days thereafter, the public announcement that any person or
entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of
such person or entity, has become the Beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of voting securities of
the Company representing 30% or more of the voting power of the
Company, provided, however, that the terms "person" and "entity," as
used in this subsection (ii), shall not include (A) the Company or any
of its subsidiaries, (B) any employee benefit plan of the Company or
any of its subsidiaries, or (C) any entity holding voting securities of
the Company for or pursuant to the terms of any such plan;
(iii) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as directors
cease to constitute a majority of the directors of the Company, unless,
prior to such date, the Board of Directors shall determine otherwise;
or
(iv) a change of control of the Company of the type required to be
disclosed in a proxy statement pursuant to Item 6(e) (or any successor
provision) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act, unless, prior to such change of control, the Board of
Directors shall determine otherwise.
(d) Certain Events Causing Termination of Option. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate upon the
consummation of any of the following events, or, if later, the thirtieth day
following the first date upon which such event shall have been approved by both
the Board of Directors and the shareholders of the Company, or upon such later
date as shall be determined by the Committee:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise; or
(iii) a reorganization, merger or consolidation of the Company
that results in the outstanding securities of any class then subject to
5
<PAGE> 92
the Option being exchanged for or converted into cash, property and/or
securities not issued by the Company, unless the terms of such
reorganization, merger or consolidation provide otherwise.
3. Adjustments. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. Exercise. The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal representative,
and after the Employee's death only by the person or entity entitled to do so
under the Employee's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written notice
of such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice") , together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part, by the delivery to the Company of a certificate or certificates
representing shares of Common Stock, duly endorsed or accompanied by a duly
executed stock powers, which delivery effectively transfers to the Company good
and valid title to such
6
<PAGE> 93
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value (as defined in the Plan) thereof on the date of such exercise), provided
that the Company is not then prohibited from purchasing or acquiring such shares
of Common Stock.
5. Payment of Withholding Taxes. If the Company is obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option, including, without limitation, any
federal, state or other income tax, or any F.I.C.A., state disability insurance
tax or other employment tax, then the Employee shall, concurrently with such
exercise, pay such amount (the "Withholding Liability") to the Company in cash
or by check payable to the Company; provided, however, that the Employee may
instead pay all or any part of the Withholding Liability by the delivery to the
Company of a stock certificate or certificates representing shares of Common
Stock, duly endorsed or accompanied by a duly executed stock powers, which
delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value thereof on the date of such exercise), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common Stock.
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
company, such issuance or delivery would cause the company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7
<PAGE> 94
7. Nontransferability. Neither the Option nor any interest therein may
be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect on
the Grant Date, and is subject to all the terms and conditions of the Plan, as
the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the Option.
9. Stockholder Rights. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the Option
granted hereunder shall (a) confer upon the Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of the
Employee, with or without cause, or (c) confer upon the Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. The Employee hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of the Employee at any time and for any reason, or for
no reason, unless the Employee and the Company or such subsidiary are parties to
a written employment agreement that expressly provides otherwise.
8
<PAGE> 95
11. Successors. This Agreement shall be binding upon and inure to the
benefit of the company and its successors and assigns, on the one hand, and the
Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement embodies
the entire understanding and agreement of the parties with respect to the
subject matter hereof, and no promise, condition, representation or warranty,
express or implied, not stated or incorporated by reference herein, shall bind
either party hereto. None of the terms and conditions of this Agreement may be
amended, modified, waived or canceled except by a writing, signed by the parties
hereto specifying such amendment, modification, waiver or cancellation. A waiver
by either party at any time of compliance with any of the terms and conditions
of this Agreement shall not be considered a modification, cancellation or
consent to a future waiver of such terms and conditions or of any preceding or
succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California applicable
to contracts made and performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Grant Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
By
- ------------------------------ ----------------------------------------
Employee: Name:
Title:
SS#:
By
----------------------------------------
Grant Date: Name:
Title:
Grant Price:
Options Granted:
9
<PAGE> 96
EXHIBIT (c)(13)(B)(v)(a)
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made
and entered into as of the _______ day of __________________, 19___ (the
"Grant Date") by and between Computer Sciences Corporation, a Nevada corporation
(the "Company"), and ____________________________, a full-time employee of the
Company and/or one or more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1992 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 15, 1992 and approved
by the stockholders of the Company on August 10, 1992;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the
Employee desires to accept, an option to purchase shares of Common Stock from
the Company upon the terms and conditions set forth herein, which terms and
conditions have been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company
hereby grants to the Employee, and the Employee hereby accepts, an option to
purchase __________ shares of Common Stock (the "Option Shares") at an exercise
price of $_________ per share (the "Exercise Price"), which option shall expire
at 5:00 p.m.,California time, on _____________________ and shall be subject to
all of the terms and conditions set forth in this Agreement (the "Option"). THE
OPTION IS INTENDED NOT TO QUALIFY AS AN INCENTIVE OPTION UNDER SECTION 422 OF
THE INTERNAL REVENUE CODE. The Option shall not initially be exercisable to
purchase any Option Shares; provided, however, that upon each anniversary of the
Grant Date indicated below, the Option shall become exercisable to purchase
("vest with respect to") the percentage of the Option Shares (rounded to the
nearest whole share) indicated below:
Percentage of Option Shares Vesting Anniversary of Grant Date
<PAGE> 97
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Retirement. If the Employee's status as a
full-time employee of the Company or any of its subsidiaries is
terminated after December 31, 1996 by reason of the Retirement
(as hereinafter defined) of the Employee, then (A) the portion of
the Option that has not vested on or prior to the date of such
Retirement shall terminate on such date and (B) the remaining
vested portion of the Option shall terminate upon the earlier of
the Expiration Date or the third anniversary of the date of such
Retirement, provided that if the Employee shall die prior to such
earlier date, the remaining vested portion of the Option shall
remain exercisable until, but shall terminate upon, the earlier
of the Expiration Date or the first anniversary of the date of
the Employee's death. "Retirement" shall mean (X) retirement from
the Company or any of its subsidiaries at age 55 or older (but
less than 65), provided that the Employee shall have been a
continuous full-time employee of the Company or its subsidiaries
for at least 10 years prior thereto and the Board of Directors of
the Company shall have determined within 90 days prior thereto
that the Employee has made an outstanding contribution to the
affairs of the Company or its subsidiaries, or (Y) retirement
from the Company or any of its subsidiaries at age 65 or older.
(ii) Death or Permanent Disability. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of the death or
Permanent Disability (as hereinafter defined) of the Employee,
then (A) the portion of the Option that has not vested on or
prior to the date of such termination of full-time status shall
terminate on such date and (B) the remaining vested portion of
the Option shall terminate upon the earlier of the Expiration
Date or the first anniversary of the date of such termination of
full-time status. "Permanent Disability" shall mean the inability
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months. The Employee shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been
furnished to the Board of Directors of the Company in such form
and manner, and at such times, as the Board of Directors may
require. Any determination by the Board of Directors of the
Company that the Employee does or does not have a Permanent
Disability shall be final and binding upon the Company and the
Employee.
(iii) Lay-Off or Leave of Absence. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of a permanent or
temporary lay-off or an approved leave of absence, then (A) the
Option shall continue to be
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<PAGE> 98
exercisable until the earlier of the Expiration Date or three
months from the date of such termination of full-time status, but
only to the extent that it was exercisable on the date of such
termination, (B) if the Employee shall again become a full-time
employee of the Company or any of its subsidiaries prior to the
earlier of the Expiration Date or the first anniversary of the
date of such termination of full-time status, the Option shall
again become exercisable on such date and shall thereafter be
treated for all purposes under this Agreement as though the
Employee had not, prior to such date, ceased to be a full-time
employee of the Company or its subsidiaries, and (C) if the
Employee shall not again become a full-time employee of the
Company or any of its subsidiaries prior to the earlier of the
Expiration Date or the first anniversary of the date of such
termination of full-time status, the Option shall terminate on
such earlier date.
(iv) Other Termination. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated for no reason, or for any reason other than
Retirement, death, Permanent Disability, permanent or temporary
lay-off, or approved leave of absence, then the Option shall
terminate upon the date of such termination of full-time status.
(b) Death Following Termination of Full-Time Status.
Notwithstanding anything to the contrary in this Agreement, if the
Employee shall die at any time after the termination of his or her
status as a full-time employee of the Company of any or its subsidiaries
and prior to the Expiration Date, then (i) the portion of the Option
that has not vested on or prior to the date of such death shall
terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or the
first anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole
discretion, may accelerate the exercisability of the Option at any time
and for any reason. In addition, the Option shall fully vest with
respect to all Option Shares upon the first to occur of the following:
(i) unless the Committee shall determine otherwise,
the approval of any of the following by both the Board of
Directors and the shareholders of the Company: (A) the
dissolution or liquidation of the Company, (B) a sale of
substantially all of the property and assets of the Company or
(C) a reorganization, merger of consolidation of the Company the
consummation of which would result in the outstanding securities
of any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company;
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<PAGE> 99
(ii) unless the Committee shall determine otherwise
within ten business days thereafter, the public announcement that
any person or entity, together with all Affiliates and Associates
(as such capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company representing
30% or more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in this
subsection (ii), shall not include (A) the Company or any of its
subsidiaries, (B) any employee benefit plan of the Company or any
of its subsidiaries, or (C) any entity holding voting securities
of the Company for or pursuant to the terms of any such plan;
(iii) any date upon which the directors of the
Company who were nominated by the Board of Directors for election
as directors cease to constitute a majority of the directors of
the Company, unless, prior to such date, the Board of Directors
shall determine otherwise; or
(iv) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, unless, prior to such
change of control, the Board of Directors shall determine
otherwise.
(d) Certain Events Causing Termination of Option.
Notwithstanding anything to the contrary in this Agreement, the Option
shall terminate upon the consummation of any of the following events,
or, if later, the thirtieth day following the first date upon which such
event shall have been approved by both the Board of Directors and the
shareholders of the Company, or upon such later date as shall be
determined by the Committee:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property
and assets of the Company, unless the terms of such sale shall
provide otherwise; or
(iii) a reorganization, merger or consolidation of
the Company that results in the outstanding securities of any
class then subject to the Option being exchanged for or converted
into cash, property and/or securities not issued by the Company,
unless the terms of such reorganization, merger or consolidation
provide otherwise.
3. Adjustments. In the event that the outstanding securities of
the class then subject to the Option are increased, decreased or exchanged for
or converted into cash, property and/or a different number or kind of
securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in
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<PAGE> 100
either case as a result of a reorganization, merger, consolidation,
recapitalization, reclassification, dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split or the
like, or in the event that substantially all of the property and assets of the
Company are sold, then, unless such event shall cause the Option to terminate
pursuant to Section 2(d) hereof, the Committee shall make appropriate and
proportionate adjustments in the number and type of shares or other securities
or cash or other property that may thereafter be acquired upon the exercise of
the Option; provided, however, that any such adjustments in the Option shall be
made without changing the aggregate Exercise Price of the then unexercised
portion of the Option.
4. Exercise.
(a) The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal
representative, and after the Employee's death only by the person or
entity entitled to do so under the Employee's last will and testament or
applicable intestate law. The Option may only be exercised by the
delivery to the Company of a written notice of such exercise, which
notice shall specify the number of Option Shares to be purchased (the
"Purchased Shares") and the aggregate Exercise Price for such shares
(the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided,
however, that payment of such aggregate Exercise Price may instead be
made, in whole or in part, by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly
endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair
Market Value (as hereinafter defined) thereof on the date of such
exercise), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.
(b) The "Fair Market Value" of a share of Common Stock on
any day shall be equal to the last sale price, regular way, of a share
of Common Stock on such day, or in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.
5. Payment of Withholding Taxes. If the Company is obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option, including, without limitation, any
federal, state or other income tax, or any F.I.C.A., state disability insurance
tax or other employment tax, then the Employee shall, concurrently with such
exercise, pay such amount (the "Withholding Liability") to the Company in cash
or by check payable to the Company;
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<PAGE> 101
provided, however, that the Employee may instead pay all or any part of the
Withholding Liability by either of the following methods:
(a) by the delivery to the Company of a stock certificate
or certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value
thereof on the date of such exercise), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common
Stock; or
(b) by instructing the Company to withhold shares of
Common Stock otherwise issuable upon such exercise of the Option (such
withholding to be valued on the basis of the aggregate Fair Market Value
of the withheld shares on the date of such exercise), provided that if
the Employee is then subject to Section 16(b) of the Exchange Act, such
method of payment may only be used if, in the opinion of the General
Counsel of the Company, such use would not cause the Employee to incur
any liability pursuant to Section 16(b).
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest
therein may be sold, assigned, conveyed, gifted, pledged, hypothecated or
otherwise transferred in any manner other than by will or the laws of descent
and distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect
on the Grant Date, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the Option.
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<PAGE> 102
9. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon the Employee any right to
continue in the employ of the Company or any of its subsidiaries, (b) affect the
right of the Company and each of its subsidiaries to terminate the employment of
the Employee, with or without cause, or (c) confer upon the Employee any right
to participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. THE EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF THE EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR
NO REASON, UNLESS THE EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO
A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect to
the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or canceled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of the
terms and conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
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<PAGE> 103
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the Grant Date.
COMPUTER SCIENCES CORPORATION
By
- ----------------------------- -----------------------------
Employee: Name:
Title:
SS#:
Grant Date:
Grant Price: By
Options Granted: -----------------------------
Name:
Title:
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<PAGE> 104
EXHIBIT (c)(13)(B)(v)(b)
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made and
entered into as of the ___________ day of _________________, 19___ (the "Grant
Date") by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and ___________________________, a full-time employee of the
Company and/or one or more of its subsidiaries (the "Employee").
WHEREAS the Company's 1992 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 15, 1992, approved by
the shareholders of the Company on August 10, 1992, and adapted by the
conforming "Schedule to 1992 Stock Incentive Plan" attached hereto and made a
part hereof (collectively the "1992 Plan") to comply with applicable laws of
the United Kingdom;
WHEREAS, pursuant to the 1992 Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the 1992 Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the
Employee desires to accept, an option to purchase shares of Common Stock from
the Company upon the terms and conditions set forth herein, which terms and
conditions have been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company
hereby grants to the Employee, and the Employee hereby accepts, an option to
purchase ____________ shares of Common Stock (the "Option Shares") at an
exercise price of $__________ per share (the "Exercise Price"), which option
shall expire at 5:00 p.m., California time, on _____________________________
and shall be subject to all of the terms and conditions set forth in this
Agreement including the Schedule thereto, (the "Option"). THE OPTION IS
INTENDED NOT TO QUALIFY AS AN INCENTIVE OPTION UNDER SECTION 422 OF THE U.S.
INTERNAL REVENUE CODE. The Option shall not initially be exercisable to
<PAGE> 105
purchase any Option Shares; provided, however, that upon each anniversary of the
Grant Date indicated below, the Option shall become exercisable to purchase
("vest with respect to") the percentage of the Option Shares (rounded to
nearest whole share) indicated below:
PERCENTAGE OF OPTION SHARES THAT VEST
UPON EACH ANNIVERSARY OF GRANT DATE
Percentage of Anniversary of
Option Shares Grant Date
2. Acceleration and Termination. This option shall terminate on the
date of termination of your employment with the Company, for any reason, except
as may be otherwise provided in the 1992 Plan. The Committee, in its sole
discretion, may accelerate the exercisability of the Option at any time and for
any reason.
3. Adjustments. In the event of any change to the outstanding
securities of the class then subject to the Option and for whatever reason for
the change, the Committee shall make appropriate and proportionate adjustments
pursuant to the 1992 Plan.
4. Exercise. The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal
representative, and after the Employee's death only by the person or entity
entitled to do so under the Employee's last will and testament or applicable
intestate law and in accordance with the terms of the 1992 Plan. The Option
may only be exercised by the delivery to the Company of a written notice of
such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part, by the delivery to the Company of a certificate or certificates
representing shares of Common Stock, duly endorsed or accompanied by a duly
executed stock powers, which delivery effectively transfers to the Company good
and valid title to such shares, free and clear of any pledge, commitment, lien,
claim or other encumbrance (such shares to
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<PAGE> 106
be valued on the basis of the aggregate Fair Market Value (as defined in the
1992 Plan) thereof on the date of such exercise), provided that the Company is
not then prohibited from purchasing or acquiring such shares of Common Stock.
5. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, (including the Schedule thereto),
no shares of stock purchased upon exercise of the Option, and no certificate
representing all or any part of such shares, shall be issued or delivered if,
in the opinion of counsel to the Company, such issuance or delivery would cause
the Company to be in violation of or to incur liability under any federal,
state or other securities law, or any rules, regulation or procedure of any
national securities exchange upon which any securities of the Company are
listed, or any listing agreement with any such securities exchange, or any
other requirement of law or of any administrative or regulatory body having
jurisdiction over the Company.
6. Nontransferability. Neither the Option nor any interest therein
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.
7. Plan. The Option is granted pursuant to the 1992 Plan, as in
effect on the Grant Date, and is subject to all the terms and conditions of the
1992 Plan, as the same may be amended from time to time; provided, however,
that no such amendment shall deprive the Employee, without his or her consent,
of the Option or of any of the Employee's rights under this Agreement
(including the Schedule thereto). The interpretation and construction by the
Committee of the 1992 Plan, this Agreement, the Option and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the 1992 Plan shall be final and binding upon the Employee. Until the Option
shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the
Option. In the event of an inconsistency between the Plan as originally
approved, the Schedule to the 1992 Stock Incentive Plan and this Agreement the
following descending order of precedence shall apply:
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<PAGE> 107
1. The Schedule to the 1992 Incentive Plan
2. This Agreement
3. The 1992 Stock Incentive Plan as originally approved provided
that in no event shall the obligations of the Company be
construed more broadly than the authority extended by the
Company's stockholders pursuant to the 1992 Stock Incentive
Plan.
8. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement (including the
Schedule thereto).
9. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon the Employee any right to
continue in the employ of the Company or any of its subsidiaries, (b) affect
the right of the Company and each of its subsidiaries to terminate the
employment of the Employee, with or without cause, or (c) confer upon the
Employee any right to participate in any employee welfare or benefit plan or
other program of the Company or any of its subsidiaries other than the 1992
Plan. THE EMPLOYEE HEREBY ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF
ITS SUBSIDIARIES MAY TERMINATE THE EMPLOYMENT OF THE EMPLOYEE AT ANY TIME AND
FOR ANY REASON, OR FOR NO REASON, UNLESS THE EMPLOYEE AND THE COMPANY OR SUCH
SUBSIDIARY ARE PARTIES TO A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY
PROVIDES OTHERWISE.
10. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
11. Entire Agreement; Amendments and Waivers. This Agreement,
(including the 1992 Plan), embodies the entire understanding and agreement of
the parties with respect to the subject matter hereof, and no promise,
condition, representation or warranty, express or implied, not stated or
incorporated by reference herein, shall bind either party hereto. None of the
terms and conditions of this Agreement (including the Schedule thereto) may be
amended, modified, waived or canceled except by a writing, signed by the
parties hereto specifying such amendment, modification, waiver or cancellation.
A waiver by either party at any time of compliance with any of
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<PAGE> 108
the terms and conditions of this Agreement shall not be considered a
modification, cancellation or consent to a future waiver of such term and
conditions or of any preceding or succeeding breach thereof, unless expressly
so stated.
12. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California applicable
to contracts made and performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the Grant Date.
The foregoing is agreed to:
COMPUTER SCIENCES CORPORATION
________________________ By ________________________________
Employee: Name:
Title:
SS#:
By ________________________________
Grant Date: Name:
Title:
Grant Price:
Options Granted:
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<PAGE> 109
COMPUTER SCIENCES CORPORATION
SCHEDULE TO 1992 STOCK INCENTIVE PLAN
<PAGE> 110
COMPUTER SCIENCES CORPORATION
SCHEDULE TO 1992 STOCK INCENTIVE PLAN
RULES OF THE COMPUTER SCIENCES CORPORATION
EMPLOYEE SHARE OPTION PLAN
PREAMBLE
This Schedule is solely for the benefit of employees of the Company and of any
corporation under the Control of the Company who reside in the United Kingdom.
The terms and conditions of the Schedule are established to be a Plan capable of
approval as an "approved share option scheme" under Schedule 9 to the Income &
Corporation Taxes Act of 1988.
1. DEFINITIONS
In this Schedule the following words and expressions shall have the
following meanings:
"Adoption Date" the date on which the Board adopted these
Rules
"Approval Date" the date on which the Plan is approved by
the Board of the Inland Revenue under
Schedule 9
"Associated Company" has the same meaning as in Section 416
"Board" the board of directors of the Company or,
except in Rule 10.4, a duly constituted
committee thereof
"Company" Computer Sciences Corporation, a Nevada
corporation (or, in respect of any "new
rights" within the meaning of Rule 7.4, the
"acquiring company" within the meaning of
Rule 7.4)
"Control" has the same meaning as in Section 840
"Date of Grant" the date in which an option is, was or is
to be granted under the Plan
"Dealing Day a day on which the Stock Exchange is open
for, and transacts business in, shares
"Eligible Employee" (a) any employee (other than a director) of
any Participating Company who at the
relevant time:
(i) is required to devote to his
duties not less than 20 hours per
week (excluding meal breaks; and
(ii) is not precluded by paragraph 8
of Schedule 9 (material interest
in a close company) from
participating in the Plan; and
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<PAGE> 111
(iii) does not own stock possessing
more than 5% of the total
combined voting power of all
classes of stock in the Company;
or
(b) any director of any Participating
Company who is required to devote to his
duties not less than 25 hours per week
(excluding meal breaks; and
(i) is not precluded by paragraph 8
of Schedule 9 (material interest
in a close company) from
participating in the Plan; and
(ii) does not own stock possessing
more than 5% of the total
combined voting power of all
classes of stock in the Company
"Governing Plan" the company's 1992 Stock Incentive Plan
under which the rules operate as a schedule
thereto
"Market Value" if the Shares are at the time listed on the
Stock Exchange, then on any day the reported
closing price of a Share as such price is
officially reported, on that day or the last
preceding Dealing Day;
if the Shares are at the time not listed on
the Stock Exchange, then on any day the
market value of a share determined in
accordance with the provisions of Part VIII
of the Taxation of Capital Gains Act 1992
and agreed prior to that day for the
purposes of the Plan with the Inland Revenue
Shares Valuation Division
"Option" a right to subscribe for Shares granted (or
to be granted) in accordance with the Rules
of this Plan
"Option Holder" an individual to whom an Option has been
granted or his personal representatives
"Participating Company" the Company and any other corporation of
which the Company has Control and which is
for the time being nominated by the Board to
be a participating company
"Plan" the employee share option plan constituted
and governed by these Rules as from time to
time amended
"Relevant Emoluments" the meaning which the term bears in
paragraph 28(2) of Schedule 9 by virtue of
sub-paragraph 4 of that paragraph
"Rules" this schedule to the Governing Plan
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<PAGE> 112
"Share" an ordinary share of common stock of $1.00
par value in the capital of the Company
which satisfies the conditions specified in
paragraph 10 to 14 inclusive of Schedule 9
(or, in respect of any New Option within the
meaning of Rule 7.4, a share in the capital
of the Acquiring Company within the meaning
of Rule 7.4, which satisfies the said
conditions)
"Stock Exchange" the New York Stock Exchange
"Subscription Price" the price at which each Share subject to an
Option may be acquired on the exercise of
that Option being, subject to Rule 8, the
higher of:
(i) the nominal (par) value of a Share and
(ii) the Market Value of a Share on the day
the Option was issued pursuant to Rule
2
"Subsisting Option" an Option which has neither lapsed nor been
exercised
"TA 1988" the Income and Corporation Taxes Act 1988
"Year of Assessment" a year beginning on any 6 April and ending
on the following 5 April
References to legislation are references to United Kingdom statutes and
include such enactments modified, extended or re-enacted and where an
Act is not otherwise specified refers to TA 1988.
2. GRANT OF OPTIONS
At any time, but in any case not earlier than the later of the Adoption
Date or the Approval Date nor later than June 15, 2002 the Board may
select at its discretion (without being bound by selections made in
prior years) one or more Eligible Employees whom the Board determines to
have a direct and significant impact on the performance of the Company,
and may following such selection invite them to apply for the grant of
an Option to acquire Shares in the Company. Each invitation to apply
shall specify:
(i) the date (being neither earlier than 7 nor later than 14 days
after the issue of the invitation) by which an application must
be made;
(ii) the maximum number of Shares over which that individual may on
that occasion apply for an Option, being determined at the
absolute discretion of the Board save that it shall not be so
large that the grant of such Option over that number of Shares
would cause the limits specified in Rule 5.2 to be exceeded;
(iii) the Subscription Price at which Shares may be acquired on the
exercise of the Option; and
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<PAGE> 113
(iv) such other conditions to be met before an Option may be
exercised relating to growth in corporate sales, profit, return
on capital, return on stockholders' funds or similar published
and objective measures of corporate performance.
Each invitation shall be accompanied by an application form in such
form, not inconsistent with these Rules, as the Board may determine.
3. APPLICATION FOR OPTIONS
3.1 Not later than the date specified in the invitation each Eligible
Employee to whom an invitation has been issued in accordance with Rule 2
above may apply to the Board, using the application form supplied, for
an Option over a number of Shares not exceeding the number specified in
the invitation.
3.2 Unless the Option is to be granted under seal, a consideration not
exceeding (Pound)l shall be paid by the Eligible Employee.
4. GRANT OF OPTION
4.1 Not later than the twenty-first day following the issue of invitations
the Board may grant to each applicant who is still an Eligible Employee
an Option over the number of Shares specified in his application.
4.2 As soon as possible after Options have been granted the Board shall
issue an option certificate in respect of each Option in such form, not
inconsistent with these Rules, as the Board may determine.
4.3 No Option may be transferred, assigned or charged and any purported
transfer, assignment or charge shall cause the Option to lapse
forthwith. Each option certificate shall carry a statement to this
effect.
5. LIMITATION ON GRANTS
5.1 No Option shall be granted pursuant to Rule 2 above if such grant would
result in the aggregate of
(i) the number of Shares over which Subsisting Options over unissued
Shares have been granted under these Rules; and
(ii) the number of Shares which have been issued on the exercise of
Options granted under these Rules; and
(iii) the number of Shares which have otherwise been issued pursuant
to the Governing Plan during the period since 15 June 1992
exceeding 1,000,000 Shares (or such other higher figure as may be
approved by the Company's stockholders from time to time for the
purposes of the Governing Plan).
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5.2 No Option shall be granted to an Eligible Employee if immediately
following such grant he would hold Subsisting Options over Shares with
an aggregate Subscription Price exceeding the greater of
(i) (Pound)100,000; or
(ii) four times the amount of the Eligible Employee's Relevant
Emoluments for the current or preceding Year of Assessment
(whichever of those years gives the greater amount) or, if there
were not Relevant Emoluments for the preceding Year of
Assessment, four times the amount of the Relevant Emoluments for
the period of twelve months beginning with the first day during
the current Year of Assessment in respect of which there are
Relevant Emoluments.
For the purposes of this Rule 5.2, Options shall include all Options
granted under this Plan and all options granted under any other plan
approved under Schedule 9 and established by the Company or any
Associated Company thereof.
6. EXERCISE OF OPTIONS
6.1 (a) subject to Rule 9 below and to Rule 2 (iv), any Subsisting
Option may be exercised in whole or in part at such time or
times, during such period, and for such number of Shares as
shall be determined by the Board and set out in the option
certificate.
(b) in the event of the death of an Option holder, his personal
representatives may (if so provided in the option certificate
and subject to rule 6.2) exercise any Subsisting Option to the
extent provided in the option certificate within a period not
exceeding twelve months from the death of the Option holder.
(c) in the event of the Option holder ceasing to be an employee of
any Participating Company by reason of injury, disability,
redundancy or retirement or, at the discretion of the Board, for
any other reason the Option holder may (if so provided in the
option certificate and subject to Rule 6.2) exercise any
Subsisting Option to the extent provided in the option
certificate within a period not exceeding thirty-six (or in the
case of redundancy, three) months from the date of cessation.
(d) in the event of the Option holder ceasing to be an employee of
any Participating Company by reason of dismissal for fault, or
for any reason not covered by the relevant option certificate,
any Subsisting Option shall thereupon lapse.
6.2 An Option shall lapse on the earliest of the following events:
(i) any date specified in the option certificate.
(ii) the tenth anniversary of the Date of Grant.
(iii) the first anniversary of the Option holder's death.
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(iv) unless the option certificate specifies a shorter period,
thirty-six months following the Option holder ceasing to be an
employee of any Participating Company (except in the case of
redundancy when the period shall be reduced to three months)
other than by reason of his death.
(v) on completion of the dissolution, liquidation, reorganization,
merger or consolidation of the Company pursuant to Rule 7
(unless an option swap under Rule 7.3 is in operation.
7. RECONSTRUCTIONS AND TAKEOVERS
7.1 If any person obtains control of the Company as a result of making:
(i) a general offer to acquire the whole of the issued share capital
of the Company which is made on a condition such that if it is
satisfied the person making the offer will have Control of the
Company; or
(ii) a general offer to acquire all the shares in the Company which
are of the same class as the Shares
then any Subsisting Option may subject to Rule 7.4 below be exercised
within six months of the time when the person making the offer has
obtained Control of the Company and any condition subject to which the
offer is made has been satisfied.
7.2 If under section 425 of the Companies Act 1985 the Court sanctions a
compromise or arrangement proposed for the purposes of or in connection
with a scheme for the reconstruction of the Company or its amalgamation
with any other company or companies, any Subsisting Option may, subject
to Rule 7.4 below, be exercised within six months of the Court
sanctioning the compromise or arrangement.
7.3 If any person becomes bound or entitled to acquire shares in the Company
under sections 428 to 430 of the said Act of 1985 any Subsisting Option
may, subject to Rule 7.4 below, be exercised at any time when that
person remains so bound or entitled.
7.4 If as result of the events specified in Rules 7.1 or 7.2 a company has
obtained Control of the Company, or if a company has become bound or
entitled as mentioned in Rule 7.3, the Option Holder may, by agreement
with that other company (the "Acquiring Company"), within the
appropriate period, release such Subsisting Option (the "Old Option")
for an option (the "New Option") which satisfies the conditions that it:
(i) is over shares in the Acquiring Company or some other company
falling within paragraph (b) or paragraph (c) of paragraph 10,
Schedule 9, which satisfy the conditions specified in paragraphs
10 to 14 inclusive of Schedule 9;
(ii) is a right to acquire such number of such shares as has on
acquisition for the New Option an aggregate market value equal to
the aggregate Market Value of the shares subject to the Old
Option on its release;
(iii) has a subscription price per share such that the aggregate price
payable on the complete exercise equals the aggregate price which
would have been payable on complete exercise of the Old Option;
and
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(iv) is otherwise identical in terms to the Old Option.
The New Option shall, for all other purposes of this Plan, be treated as
having been acquired at the same time as the Old Option.
Where any New Options are granted pursuant to this clause 7.4, Rules
4.3, 6, 7, 8, 9, 10.1 and 10.3 to 10.6 shall, in relation to the New
Options, be construed as if references to the Company and to the Shares
were references to the Acquiring Company, or as the case may be, to the
other company to whose shares the New Options relate, and to the shares
in that other company, but references to Participating Company shall
continue to be construed as if references to the Company were references
to Computer Sciences Corporation.
7.5 If the Company passes a resolution for voluntary winding up, any
Subsisting Option may be exercised within six months of the passing of
the Resolution.
7.6 For the purposes of this Rule 7 other than Rule 7.4 a person shall be
deemed to have obtained Control of a Company if he and others acting in
concern with him have together obtained Control of it.
7.7 The exercise of an Option pursuant to the preceding provisions of this
Rule 7 shall be subject to the provisions of Rule 9 below.
7.8 Where in accordance with Rule 7.4 Subsisting Options are released and
New Options granted the New Options shall not be exercisable in
accordance with Rule 7.1, 7.2 and 7.3 above by virtue of the event by
reason of which the New Options were granted.
8. VARIATION OF SHARE CAPITAL
In the event of any capitalization or rights issue or any consolidation,
sub-division or reduction of capital by the Company, the aggregate
number of Shares issuable under the Plan, the number of Shares subject
to any Option and the Subscription Price for each of those Shares shall
be adjusted in such appropriate and proportional manner as the Board
confirms to be fair and reasonable provided that;
(i) the aggregate amount payable on the exercise of an Option in
full is not increased; and
(ii) no adjustment shall be made without the prior approval of the
Board of Inland Revenue; and
(iii) following the adjustment the Shares continue to satisfy the
conditions specified in paragraphs 10 to 14 inclusive of
Schedule 9.
[(iv) the Subscription Price for a share is not reduced below its
nominal value].
9. MANNER OF EXERCISE OF OPTIONS
9.1 No Option may be exercised by an individual at any time when he is
precluded by paragraph 8 of Schedule 9 from participating in the Plan
(material interest in a close company).
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9.2 No Option may be exercised at any time when the Shares which may be
thereby acquired are not Shares as defined in Rule 1.1.
9.3 An Option shall be exercised by the Option Holder, or in the case of an
Option exercisable in accordance with Rule 6.1(b) by his personal
representatives, giving notice to the Company in writing of the number
Shares in respect of which he wishes to exercise the Option accompanied
by the appropriate payment in full and the relevant option certificate
and shall be effective on the date of its receipt by the Company.
9.4 Shares shall be allotted and issued pursuant to a notice of exercise
within 30 days of the date of exercise and a definite share certificate
issued to the Option holder in respect thereof. Save for any rights
determined by reference to a date preceding the date of allotment, such
Shares where issued shall rank pari passu with the other shares of the
same class in issue at the date of allotment.
9.5 When an Option is exercised only in part, the balance shall remain
exercisable on the same terms as originally applied to the whole Option
and, a new option certificate shall be issued accordingly by the Company
as soon as possible after the partial exercise. No fractional Shares may
be issued pursuant to the exercise of an Option.
10 ADMINISTRATION AND AMENDMENT
10.1 The Plan shall be administered by the Board whose decision on all
disputes shall be final.
10.2 The Board may from time to time amend these Rules provided that:
(i) no amendment may detrimentally affect an Option holder as
regards an Option granted prior to the amendment being made;
(ii) no amendment may be made which would change the class of persons
eligible to receive Options, or materially increase the benefits
accruing to Option holders or increase the limit specified in
Rule 5.1 or change Rule 10.4 without the prior approval of the
Company's stockholders in general meeting; and
(iii) no amendment shall have effect until approved by the Board of
Inland Revenue as not being contrary to Schedule 9.
10.3 The cost of establishing and operating the Plan shall be borne by the
Participating Companies in such proportions as the Board shall
determine.
10.4 The Board may establish a committee consisting of not less than three
disinterested persons (who are not and have not within the preceding
twelve months been themselves eligible to receive grants of Options
under the Plan or any other plan of the Company), unless applicable
securities laws otherwise permit, and to whom any or all of its powers
in relation to the Plan may be delegated. The Board may at any time
dissolve the Committee, after its constitution or direct the manner in
which it shall act.
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10.5 Any notice or other communication under or in connection with the Plan
may be given by the Company either personally or by post and to the
Company either personally or by post to an authorized representative;
items set by post shall be prepaid and shall be deemed to have been
received 72 hours after posting.
10.6 The Company shall at all times keep available sufficient authorized and
unissued shares to satisfy the exercise to the full extent still
possible of all Options which have neither lapsed or been fully
exercised, taking account of any other obligations of the company to
issue unissued shares.
10.7 The Board may at any time terminate the Plan but the provisions of the
Plan shall remain in force for Subsisting Options.
10.8 Nothing in these Rules or in any document pursuant hereto shall confer
on any Eligible Employee any rights not expressed herein, in particular
any right to remain in the employ of the Company.
10.9 Except insofar as this Plan shall be construed as a Schedule to the
Governing Plan the Governing Plan shall not apply to the Plan.
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EXHIBIT (c)(13)(B)(vi)(a)
COMPUTER SCIENCES CORPORATION
1995 STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") is made
and entered into as of the _______ day of _____________, 19___ (the "Grant
Date") by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and ______________________________, a full-time employee of the
Company and/or one or more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1995 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 12, 1995 and approved
by the stockholders of the Company on August 14, 1995;
WHEREAS, pursuant to the Plan, the Company is authorized to grant
options to purchase shares of its common stock, par value $1.00 per share (the
"Common Stock"), to any employee of the Company or its subsidiaries upon such
terms and conditions as shall be determined by the committee of the Board of
Directors administering the Plan (the "Committee"); and
WHEREAS, the Company desires to grant to the Employee, and the
Employee desires to accept, an option to purchase shares of Common Stock from
the Company upon the terms and conditions set forth herein, which terms and
conditions have been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and
the covenants set forth herein, the parties hereto hereby agree as follows:
1. Grant of Options; Certain Terms and Conditions. The Company
hereby grants to the Employee, and the Employee hereby accepts, an option to
purchase __________ shares of Common Stock (the "Option Shares") at an exercise
price of $_________ per share (the "Exercise Price"), which option shall expire
at 5:00 p.m., California time, on ____________________ and shall be subject to
all of the terms and conditions set forth in this Agreement (the "Option"). THE
OPTION IS INTENDED NOT TO QUALIFY AS AN INCENTIVE OPTION UNDER SECTION 422 OF
THE INTERNAL REVENUE CODE. The Option shall not initially be exercisable to
purchase any Option Shares; provided, however, that upon each anniversary of the
Grant Date indicated below, the Option shall become exercisable to purchase
("vest with respect to") the percentage of the Option Shares (rounded to the
nearest whole share) indicated below:
Percentage of Option Shares Vesting Anniversary of Grant Date
<PAGE> 120
2. Acceleration and Termination.
(a) Termination of Status as Full-Time Employee.
(i) Retirement. If the Employee's status as a
full-time employee of the Company or any of its subsidiaries is
terminated by reason of the Retirement (as hereinafter defined)
of the Employee, then (A) the portion of the Option that has not
vested on or prior to the date of such Retirement shall terminate
on such date and (B) the remaining vested portion of the Option
shall terminate upon the earliest, of the Expiration Date, the
thirtieth day after the date of such Retirement, or, if
applicable, the first anniversary of the date of the Employee's
death. "Retirement" shall mean (X) retirement from the Company or
any of its subsidiaries at age 55 or older (but less than 65),
provided that the Employee shall have been a continuous full-time
employee of the Company or its subsidiaries for at least 10 years
prior thereto and the Board of Directors of the Company shall
have determined within 90 days prior thereto that the Employee
has made an outstanding contribution to the affairs of the
Company or its subsidiaries, or (Y) retirement from the Company
or any of its subsidiaries at age 65 or older.
(ii) Death or Permanent Disability. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of the death or
Permanent Disability (as hereinafter defined) of the Employee,
then (A) the portion of the Option that has not vested on or
prior to the date of such termination of full-time status shall
terminate on such date and (B) the remaining vested portion of
the Option shall terminate upon the earlier of the Expiration
Date or the first anniversary of the date of such termination of
full-time status. "Permanent Disability" shall mean the inability
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months. The Employee shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been
furnished to the Board of Directors of the Company in such form
and manner, and at such times, as the Board of Directors may
require. Any determination by the Board of Directors of the
Company that the Employee does or does not have a Permanent
Disability shall be final and binding upon the Company and the
Employee.
(iii) Lay-Off or Leave of Absence. If the
Employee's status as a full-time employee of the Company or any
of its subsidiaries is terminated by reason of a permanent or
temporary lay-off or an approved leave of absence, then (A) the
Option shall continue to be
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exercisable until the earlier of the Expiration Date or three
months from the date of such termination of full-time status, but
only to the extent that it was exercisable on the date of such
termination, (B) if the Employee shall again become a full-time
employee of the Company or any of its subsidiaries prior to the
earlier of the Expiration Date or the first anniversary of the
date of such termination of full-time status, the Option shall
again become exercisable on such date and shall thereafter be
treated for all purposes under this Agreement as though the
Employee had not, prior to such date, ceased to be a full-time
employee of the Company or its subsidiaries, and (C) if the
Employee shall not again become a full-time employee of the
Company or any of its subsidiaries prior to the earlier of the
Expiration Date or the first anniversary of the date of such
termination of full-time status, the Option shall terminate on
such earlier date.
(iv) Other Termination. If the Employee's status as
a full-time employee of the Company or any of its subsidiaries is
terminated for no reason, or for any reason other than
Retirement, death, Permanent Disability, permanent or temporary
lay-off, or approved leave of absence, then the Option shall
terminate upon the date of such termination of full-time status.
(b) Death Following Termination of Full-Time Status.
Notwithstanding anything to the contrary in this Agreement, if the
Employee shall die at any time after the termination of his or her
status as a full-time employee of the Company of any or its subsidiaries
and prior to the Expiration Date, then (i) the portion of the Option
that has not vested on or prior to the date of such death shall
terminate on such date and (ii) the remaining vested portion of the
Option shall terminate on the earlier of the Expiration Date or the
first anniversary of the date of such death.
(c) Acceleration of Option. The Committee, in its sole
discretion, may accelerate the exercisability of the Option at any time
and for any reason. In addition, the Option shall fully vest with
respect to all Option Shares upon the first to occur of the following:
(i) unless the Committee shall determine otherwise,
the approval of any of the following by both the Board of
Directors and the shareholders of the Company: (A) the
dissolution or liquidation of the Company, (B) a sale of
substantially all of the property and assets of the Company or
(C) a reorganization, merger of consolidation of the Company the
consummation of which would result in the outstanding securities
of any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company;
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(ii) unless the Committee shall determine otherwise
within ten business days thereafter, the public announcement that
any person or entity, together with all Affiliates and Associates
(as such capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company representing
30% or more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in this
subsection (ii), shall not include (A) the Company or any of its
subsidiaries, (B) any employee benefit plan of the Company or any
of its subsidiaries, or (C) any entity holding voting securities
of the Company for or pursuant to the terms of any such plan;
(iii) any date upon which the directors of the
Company who were nominated by the Board of Directors for election
as directors cease to constitute a majority of the directors of
the Company, unless, prior to such date, the Board of Directors
shall determine otherwise; or
(iv) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, unless, prior to such
change of control, the Board of Directors shall determine
otherwise.
(d) Certain Events Causing Termination of Option.
Notwithstanding anything to the contrary in this Agreement, the Option
shall terminate upon the consummation of any of the following events,
or, if later, the thirtieth day following the first date upon which such
event shall have been approved by both the Board of Directors and the
shareholders of the Company, or upon such later date as shall be
determined by the Committee:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property
and assets of the Company, unless the terms of such sale shall
provide otherwise; or
(iii) a reorganization, merger or consolidation of
the Company that results in the outstanding securities of any
class then subject to the Option being exchanged for or converted
into cash, property and/or securities not issued by the Company,
unless the terms of such reorganization, merger or consolidation
provide otherwise.
3. Adjustments. In the event that the outstanding securities of
the class then subject to the Option are increased, decreased or exchanged for
or converted into cash, property and/or a different number or kind of
securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in
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either case as a result of a reorganization, merger, consolidation,
recapitalization, reclassification, dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split or the
like, or in the event that substantially all of the property and assets of the
Company are sold, then, unless such event shall cause the Option to terminate
pursuant to Section 2(d) hereof, the Committee shall make appropriate and
proportionate adjustments in the number and type of shares or other securities
or cash or other property that may thereafter be acquired upon the exercise of
the Option; provided, however, that any such adjustments in the Option shall be
made without changing the aggregate Exercise Price of the then unexercised
portion of the Option.
4. Exercise.
(a) The Option shall be exercisable during the Employee's
lifetime only by the Employee or by his or her guardian or legal
representative, and after the Employee's death only by the person or
entity entitled to do so under the Employee's last will and testament or
applicable intestate law. The Option may only be exercised by the
delivery to the Company of a written notice of such exercise, which
notice shall specify the number of Option Shares to be purchased (the
"Purchased Shares") and the aggregate Exercise Price for such shares
(the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided,
however, that payment of such aggregate Exercise Price may instead be
made, in whole or in part, by the delivery to the Company of a
certificate or certificates representing shares of Common Stock, duly
endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair
Market Value (as hereinafter defined) thereof on the date of such
exercise), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.
(b) The "Fair Market Value" of a share of Common Stock on
any day shall be equal to the last sale price, regular way, of a share
of Common Stock on such day, or in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.
5. Payment of Withholding Taxes. If the Company is obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the exercise of the Option, including, without limitation, any
federal, state or other income tax, or any F.I.C.A., state disability insurance
tax or other employment tax, then the Employee shall, concurrently with such
exercise, pay such amount (the "Withholding Liability") to the Company in cash
or by check payable to the Company;
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provided, however, that the Employee may instead pay all or any part of the
Withholding Liability by either of the following methods:
(a) by the delivery to the Company of a stock certificate
or certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value
thereof on the date of such exercise), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common
Stock; or
(b) by instructing the Company to withhold shares of
Common Stock otherwise issuable upon such exercise of the Option (such
withholding to be valued on the basis of the aggregate Fair Market Value
of the withheld shares on the date of such exercise), provided that if
the Employee is then subject to Section 16(b) of the Exchange Act, such
method of payment may only be used if, in the opinion of the General
Counsel of the Company, such use would not cause the Employee to incur
any liability pursuant to Section 16(b).
6. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if, in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
rule, regulation or procedure of any national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company.
7. Nontransferability. Neither the Option nor any interest
therein may be sold, assigned, conveyed, gifted, pledged, hypothecated or
otherwise transferred in any manner other than by will or the laws of descent
and distribution.
8. Plan. The Option is granted pursuant to the Plan, as in effect
on the Grant Date, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive the Employee, without his or her consent, of the Option
or of any of the Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon the Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
the Employee or any other person or entity then entitled to exercise the Option.
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9. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
10. Employment Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon the Employee any right to
continue in the employ of the Company or any of its subsidiaries, (b) affect the
right of the Company and each of its subsidiaries to terminate the employment of
the Employee, with or without cause, or (c) confer upon the Employee any right
to participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. THE EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF THE EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR
NO REASON, UNLESS THE EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO
A WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect to
the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or canceled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of the
terms and conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the Grant Date.
COMPUTER SCIENCES CORPORATION
By
- ----------------------------- -----------------------------
Employee: Name:
Title:
SS#:
Grant Date:
Grant Price: By
Options Granted: -----------------------------
Name:
Title:
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EXHIBIT (c)(13)(C)(a)
AMENDMENT OF NON-QUALIFIED STOCK OPTION AGREEMENTS
This Amendment of Non-Qualified Stock Option Agreements ("Amendment") is
unilaterally made and entered into by Computer Sciences Corporation (the
"Company") as of December 6, 1996 for the purpose of amending the Non-Qualified
Stock Option Agreements by and between the Company and the person listed on
Exhibit A attached hereto, who is an employee of the Company or its affiliates
(the "Employee"), relating to the outstanding non-qualified stock options listed
on Exhibit A hereto (the "Agreements").
WHEREAS, the Company desires to confer an additional benefit, but not
impose any additional obligations, upon the Employee under the Agreements;
NOW, THEREFORE, in consideration of the foregoing recital and the
anticipated reliance by the Employee upon the amendment of the Agreements
effected hereby, each of the Agreements is hereby amended to add the following
provision:
"Section 1A. Notwithstanding anything to the contrary in this
Agreement, if the Employee's status as a full-time employee of the
Company or any of its subsidiaries is terminated after December 31, 1996
by reason of the Retirement (as hereinafter defined) of the Employee,
and a Change of Control shall not have occurred within three years prior
thereto, then (A) the portion of the Option that has not vested on or
prior to the date of such Retirement shall terminate on such date and
(B) the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or the third anniversary of the date of
such Retirement, provided that if the Employee shall die prior to such
earlier date, the remaining vested portion of the Option shall remain
exercisable until, but shall terminate upon, the earlier of the
Expiration Date or the first anniversary of the date of the Employee's
death. "Retirement" shall mean (X) retirement from the Company or any of
its subsidiaries at age 55 or older (but less than 65), provided that
the Employee shall have been a continuous full-time employee of the
Company or its subsidiaries for at least 10 years prior thereto and the
Board of Directors of the Company shall have determined within 90 days
prior thereto that the Employee has made an outstanding contribution to
the affairs of the Company or its subsidiaries, or (Y) retirement from
the Company or any of its subsidiaries at age 65 or older."
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly
executed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By
----------------------------------
Van B. Honeycutt
President and Chief Executive Officer
<PAGE> 128
EXHIBIT A
Name of the Employee: _________________________
Description of Non-Qualified Stock Options:
Original Number of
Date of Grant Name of Plan Underlying Shares
- ------------- ------------ ------------------
2
<PAGE> 129
EXHIBIT (c)(13)(C)(b)
AMENDMENT OF NON-QUALIFIED STOCK OPTION AGREEMENTS
This Amendment of Non-Qualified Stock Option Agreements ("Amendment") is
unilaterally made and entered into by Computer Sciences Corporation (the
"Company") as of February 2, 1998 for the purpose of amending the Non-Qualified
Stock Option Agreements by and between the Company and the person listed on
Exhibit A attached hereto, who is an employee of the Company or its affiliates
(the "Employee"), relating to the outstanding non-qualified stock options listed
on Exhibit A hereto (the "Agreements").
WHEREAS, the Company desires to confer an additional benefit, but not
impose any additional obligations, upon the Employee under the Agreements;
NOW, THEREFORE, in consideration of the foregoing recital and the
anticipated reliance by the Employee upon the amendment of the Agreements
effected hereby, the Agreements are hereby amended as follows:
1. Retirement Age Reduced from Age 65 to Age 62. Section 2(a)(i) of each
Agreement dated on or after December 6, 1996, and Section 1A of each Agreement
dated prior to December 6, 1996, is hereby revised to reduce the retirement age
from 65 to 62, and is hereby amended to read in its entirety as follows:
"Notwithstanding anything to the contrary in this Agreement, if
the Employee's status as a full-time employee of the Company or any of
its subsidiaries is terminated after February 2, 1998 by reason of the
Retirement (as hereinafter defined) of the Employee, then (A) the
portion of the Option that has not vested on or prior to the date of
such Retirement shall terminate on such date and (B) the remaining
vested portion of the Option shall terminate upon the earlier of the
Expiration Date or the third anniversary of the date of such Retirement,
provided that if the Employee shall die prior to such earlier date, the
remaining vested portion of the Option shall remain exercisable until,
but shall terminate upon, the earlier of the Expiration Date or the
first anniversary of the date of the Employee's death. "Retirement"
shall mean (X) retirement from the Company or any of its subsidiaries at
age 55 or older (but less than 62), provided that the Employee shall
have been a continuous full-time employee of the Company or its
subsidiaries for at least 10 years prior thereto and the Board of
Directors of the Company shall have determined within 90 days prior
thereto that the Employee has made an outstanding contribution to the
affairs of the Company or its subsidiaries, or (Y) retirement from the
Company or any of its subsidiaries at age 62 or older."
2. Minimum Three-Month Exercise Period after Termination of Employment.
Each of the Agreements is hereby amended to add the following provision:
"Section 1B Notwithstanding anything to the contrary in this
Agreement, if the Employee's status as a full-time employee of the
Company or any of its subsidiaries is voluntarily or involuntarily
terminated for any reason or
<PAGE> 130
for no reason, then the Option shall not terminate, or cease to be
exercisable to purchase the underlying shares with respect to which the
Option had vested as of the date of such termination of full-time
status, prior to the earlier of the Expiration Date or three months
after the date of such termination of full-time status."
3. Acceleration of Option. Section 2(c)(i) (or the comparable provision)
of each Agreement is hereby amended to insert the following clause:
"or (D) a merger, consolidation, reorganization or other business
combination to which the Company is a party and the consummation of
which would 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) would represent less than 50% of the voting power of the
Company immediately following such business combination;"
and Section 2(c)(ii) (or the comparable provision) of each Agreement is hereby
amended to insert the phrase", by vote of a majority of the directors of the
Company who are, and immediately prior to such event were, members of the
Committee," so that Section 2(c)(i) and (ii), together with the lead-in thereto,
shall read in their entirety as follows:
"Section 2(c) The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for any
reason. In addition, the Option shall fully vest with respect to all
Option Shares upon the first to occur of the following:
(i) unless the Committee shall determine otherwise,
the approval of any of the following by both the Board of
Directors and the shareholders of the Company: (A) the
dissolution or liquidation of the Company, (B) a sale of
substantially all of the property and assets of the Company, (C)
a reorganization, merger of consolidation of the Company the
consummation of which would result in the outstanding securities
of any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company, or (D) a merger, consolidation, reorganization or other
business combination to which the Company is a party and the
consummation of which would 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) would
2
<PAGE> 131
represent less than 50% of the voting power of the Company
immediately following such business combination;
(ii) unless the Committee, by vote of a majority of the
directors of the Company who are, and immediately prior to such
event were, members of the Committee, shall determine otherwise
within ten business days thereafter, the public announcement that
any person or entity, together with all Affiliates and Associates
(as such capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company representing
30% or more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in this
subsection (ii), shall not include (A) the Company or any of its
subsidiaries, (B) any employee benefit plan of the Company or any
of its subsidiaries, or (C) any entity holding voting securities
of the Company for or pursuant to the terms of any such plan;"
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly
executed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By
----------------------------------
Van B. Honeycutt
Chairman, President
and Chief Executive Officer
3
<PAGE> 132
EXHIBIT A
Name of the Employee: _________________________
Description of Non-Qualified Stock Options:
Original Number of
Date of Grant Name of Plan Underlying Shares
- ------------- ------------ ------------------
4
<PAGE> 133
EXHIBIT (c)(13)(D)(a)
AMENDMENT OF NON-QUALIFIED STOCK OPTION AGREEMENTS
This Amendment of Non-Qualified Stock Option Agreements ("Amendment") is
unilaterally made and entered into by Computer Sciences Corporation (the
"Company") as of December 6, 1996 for the purpose of amending the Non-Qualified
Stock Option Agreements by and between the Company and the person listed on
Exhibit A attached hereto, who is an employee of the Company or its affiliates
(the "Employee"), relating to the outstanding non-qualified stock options listed
on Exhibit A hereto (the "Agreements").
WHEREAS, the Company desires to confer an additional benefit, but not
impose any additional obligations, upon the Employee under the Agreements;
NOW, THEREFORE, in consideration of the foregoing recital and the
anticipated reliance by the Employee upon the amendment of the Agreements
effected hereby, each of the Agreements is hereby amended to add the following
provision:
"Section 1A. Notwithstanding anything to the contrary in this
Agreement, if the Employee's status as a full-time employee of the
Company or any of its subsidiaries is terminated after December 31, 1996
by reason of the Retirement (as hereinafter defined) of the Employee,
then (A) the portion of the Option that has not vested on or prior to
the date of such Retirement shall terminate on such date and (B) the
remaining vested portion of the Option shall terminate upon the earlier
of the Expiration Date or the third anniversary of the date of such
Retirement, provided that if the Employee shall die prior to such
earlier date, the remaining vested portion of the Option shall remain
exercisable until, but shall terminate upon, the earlier of the
Expiration Date or the first anniversary of the date of the Employee's
death. "Retirement" shall mean (X) retirement from the Company or any of
its subsidiaries at age 55 or older (but less than 65), provided that
the Employee shall have been a continuous full-time employee of the
Company or its subsidiaries for at least 10 years prior thereto and the
Board of Directors of the Company shall have determined within 90 days
prior thereto that the Employee has made an outstanding contribution to
the affairs of the Company or its subsidiaries, or (Y) retirement from
the Company or any of its subsidiaries at age 65 or older."
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly
executed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By
---------------------------------------
Van B. Honeycutt
President and Chief Executive Officer
<PAGE> 134
EXHIBIT A
Name of the Employee:
-------------------------
Description of Non-Qualified Stock Options:
Original Number of
Date of Grant Name of Plan Underlying Shares
- ------------- ------------ ------------------
2
<PAGE> 135
EXHIBIT (c)(13)(D)(b)
AGREEMENT WITH PARTICIPANTS IN
THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Agreement is made and entered into as of February 2, 1998 by and
among Computer Sciences Corporation (the "Company"), Van B. Honeycutt, the
Chairman, President and Chief Executive Officer of the Company (the "Chief
Executive Officer"), and the person listed on Exhibit A attached hereto, who is
both an employee of the Company or its affiliates and a participant in the
Company's Supplemental Executive Retirement Plan (the "Employee").
WHEREAS, the Supplemental Executive Retirement Plan was amended,
effective as of the date hereof (as so amended, the "SERP");
WHEREAS, Article III of the SERP provides that no person shall be a
participant in the SERP unless such individual (a) has been specifically
designated as such in a written instrument executed by the Chief Executive
Officer and (b) has consented to be governed by the terms of the SERP pursuant
to a written instrument satisfactory in form to the Company;
WHEREAS, the parties hereto desire that this Agreement constitute a
written instrument, satisfactory in form to the Company, pursuant to which the
Chief Executive Officer specifically designates the Employee as a participant in
the SERP and the Employee consents to be governed by the terms of the SERP;
WHEREAS, all stock options and restricted stock which were issued by the
Company to the Employee at any time and which are currently outstanding are
listed on Exhibit A attached hereto (collectively, the "Stock Options" and the
"Restricted Stock," respectively); and
WHEREAS, the Company desires to confer an additional benefit, but not
impose any additional obligations, upon the Employee under the agreements
between the Company and the Employee relating to the Stock Options
(collectively, the "Stock Option Agreements") and the Restricted Stock
(collectively, the "Restricted Stock Agreements");
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants set forth herein, the parties hereto hereby agree as follows:
1. Participation in the SERP. The Chief Executive Officer hereby
confirms that, as contemplated in Article III of the SERP, he has designated the
Employee as a participant in the SERP. The Employee hereby confirms that, as
contemplated in Article III, the Employee has consented to be governed by the
terms of the SERP (as amended effective as of the date hereof), and the Company
hereby confirms that this Agreement is satisfactory in form for purposes of
evidencing such consent.
<PAGE> 136
2. Amendment of Stock Option Agreements.
(a) Retirement Age Reduced from Age 65 to Age 62. Section
2(a)(ii) (or the similar provision) of each Stock Option Agreement dated
on or after December 6, 1996, and Section 1A of each Stock Option
Agreement dated prior to December 6, 1996, is hereby revised to reduce
the retirement age from 65 to 62, and is hereby amended to read in its
entirety as follows:
"Notwithstanding anything to the contrary in this
Agreement, if the Employee's status as a full-time employee of
the Company or any of its subsidiaries is terminated after
February 2, 1998 by reason of the Retirement (as hereinafter
defined) of the Employee, then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement shall
terminate on such date and (B) the remaining vested portion of
the Option shall terminate upon the earlier of the Expiration
Date or the third anniversary of the date of such Retirement,
provided that if the Employee shall die prior to such earlier
date, the remaining vested portion of the Option shall remain
exercisable until, but shall terminate upon, the earlier of the
Expiration Date or the first anniversary of the date of the
Employee's death. "Retirement" shall mean (X) retirement from the
Company or any of its subsidiaries at age 55 or older (but less
than 62), provided that the Employee shall have been a continuous
full-time employee of the Company or its subsidiaries for at
least 10 years prior thereto and the Board of Directors of the
Company shall have determined within 90 days prior thereto that
the Employee has made an outstanding contribution to the affairs
of the Company or its subsidiaries, or (Y) retirement from the
Company or any of its subsidiaries at age 62 or older."
(b) Minimum Three-Month Exercise Period after Termination of
Employment. Each of the Stock Option Agreements is hereby amended to add
the following provision:
"Section 1B Notwithstanding anything to the contrary in
this Agreement, if the Employee's status as a full-time employee
of the Company or any of its subsidiaries is voluntarily or
involuntarily terminated for any reason or for no reason, then
the Option shall not terminate, or cease to be exercisable to
purchase the underlying shares with respect to which the Option
had vested as of the date of such termination of full-time
status, prior to the earlier of the Expiration Date or three
months after the date of such termination of full-time status."
(c) Acceleration of Stock Options upon a Change of Control. With
respect to each Stock Option Agreement which contains the following
provision as Section 2(a)(i):
2
<PAGE> 137
"Section 2(a)(i) Termination Within Three Years After
Change of Control. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated
for any reason, or for no reason, within three years after a
Change of Control (as hereinafter defined), then (A) the portion
of the Option that has not vested on or prior to the date of such
termination of full-time status shall fully vest on such date and
(B) the Option shall terminate upon the earliest of the
Expiration Date, the third anniversary of the date of such
termination of full-time status, or, if applicable, the first
anniversary of the date of the Employee's death. "Change of
Control" shall mean the first to occur of the following events:
(V) the dissolution or liquidation of the Company; (W) a sale of
substantially all of the property and assets of the Company; (X)
a reorganization, merger or consolidation of the Company the
consummation of which results in the outstanding securities of
any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company; (Y) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as
directors cease to constitute a majority of the directors of the
Company or (Z) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")."
such provision is hereby deleted. All Stock Option Agreements are hereby amended
to add the following provision as Section 2A:
"Section 2A Acceleration of Option Upon Change of Control.
Notwithstanding anything to the contrary in this Agreement, upon
the date of a Change of Control (as hereinafter defined): (A) the
portion of the Option that has not vested on or prior thereto
shall fully vest on such date and (B) the Option shall remain
exercisable until, and shall terminate upon, the earlier of the
Expiration Date or, if applicable, the first anniversary of the
date of the Employee's death. "Change of Control" shall mean the
first to occur of the following events: (U) the dissolution or
liquidation of the Company; (V) a sale of substantially all of
the property and assets of the Company; (W) a merger,
consolidation, reorganization or other business combination to
which the Company is a party and the consummation of which
results in the outstanding securities of any class then subject
to the Option being exchanged for or
3
<PAGE> 138
converted into cash, property and/or securities not issued by the
Company; (X) 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
securities of any class then subject to the Option 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, (Y) any date upon which the directors of the Company
who were nominated by the Board of Directors for election as
directors cease to constitute a majority of the directors of the
Company or (Z) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")."
(d) Certain Determinations to be made by Continuing Members of
the Compensation Committee. Section 2(c)(ii) (or the comparable
provision) of each Stock Option Agreement is hereby amended to insert
the phrase ", by vote of a majority of the directors of the Company who
are, and immediately prior to such event were, members of the
Committee," so that such subsection, together with the lead-in thereto,
shall read in its entirety as follows:
"Section 2(c) The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for
any reason. In addition, the Option shall fully vest with respect
to all Option Shares upon the first to occur of the following:
(i) . . .
(ii) unless the Committee, by vote of a majority of
the directors of the Company who are, and immediately
prior to such event were, members of the Committee, shall
determine otherwise within ten business days thereafter,
the public announcement that any person or entity,
together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the
Company representing 30% or more of the voting power of
the Company, provided, however, that the terms "person"
and "entity," as used in this subsection (ii), shall not
include (A) the Company or any of its subsidiaries, (B)
any employee benefit plan of the Company or any of its
subsidiaries, or (C) any entity
4
<PAGE> 139
holding voting securities of the Company for or pursuant
to the terms of any such plan;"
3. Amendment of Restricted Stock Agreements.
(a) Acceleration of Stock Options upon a Change of Control. With
respect to each Restricted Stock Agreement which contains the following
provision:
"Section 3(a) Immediately prior to the occurrence of any
of the following events (or, if the Employee shall not be a
full-time employee of the Company or any of its subsidiaries on
the date of such event because of an approved leave of absence,
upon the first day thereafter on which the Employee shall again
have become a full-time employee of the Company or any of its
subsidiaries), all applicable Forfeiture Periods shall terminate
and no Restricted Share shall thereafter be subject to the
restrictions on transfer imposed pursuant to Section 2 hereof:
(i)the termination of the Employee's status as
a full-time employee of the Company or any of its
subsidiaries for no reason, or for any reason, within
three years following (A) the dissolution or
liquidation of the Company, (B) a sale of
substantially all of the property and assets of the
Company, (C) a reorganization, merger or consolidation
of the Company the consummation of which results in
the outstanding securities of any class then
comprising the Restricted Shares being exchanged for
or converted into cash, property and/or securities not
issued by the Company, (D) any date upon which the
directors of the Company who were nominated by the
Board of Directors for election as directors cease to
constitute a majority of the directors of the Company
or (E) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant
to Item 6(e) (or any successor provision) of Schedule
14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
or"
such clause (i) is hereby deleted. All Restricted Stock Agreements are hereby
amended to add the following provision as Section 3A:
"Section 3A Notwithstanding anything to the contrary in
this Agreement, upon the first to occur of the following, all
applicable Forfeiture Periods shall terminate and no Restricted
Share shall thereafter be subject to the restrictions on transfer
imposed pursuant to Section 2 hereof: (A) the dissolution or
liquidation of the Company, (B) a sale of substantially all of
the property and assets of the Company, (C) a
5
<PAGE> 140
merger, consolidation, reorganization or other business
combination to which the Company is a party and the consummation
of which results in the outstanding securities of any class then
comprising the Restricted Shares being exchanged for or converted
into cash, property and/or securities not issued by the Company;
(D) 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 securities of any
class then comprising the Restricted Shares 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; (E) any
date upon which the directors of the Company who were nominated
by the Board of Directors for election as directors cease to
constitute a majority of the directors of the Company or (F) a
change of control of the Company of the type required to be
disclosed in a proxy statement pursuant to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")."
(b) Certain Determinations to be made by Continuing Members of
the Compensation Committee. Section 3(a)(ii) (or the comparable
provision) of each Restricted Stock Agreement is hereby amended to
insert the phrase ", by vote of a majority of the directors of the
Company who are, and immediately prior to such event were, members of
the Committee," so that Section 3(a) shall read in its entirety as
follows:
"Section 3(a) Immediately prior to the occurrence of any
of the following events (or, if the Employee shall not be a
full-time employee of the Company or any of its subsidiaries on
the date of such event because of an approved leave of absence,
upon the first day thereafter on which the Employee shall again
have become a full-time employee of the Company or any of its
subsidiaries), all applicable Forfeiture Periods shall terminate
and no Restricted Share shall thereafter be subject to the
restrictions on transfer imposed pursuant to Section 2 hereof:
(i) [DELETED]
(ii) unless the Committee, by vote of a majority of
the directors of the Company who are, and immediately
prior to such event were, members of the Committee, shall
determine otherwise within ten business days thereafter,
the public
6
<PAGE> 141
announcement that any person or entity, together with all
Affiliates and Associates (as such capitalized terms are
defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of
such person or entity, has become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act)
of voting securities of the Company representing 30% or
more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in
this subsection, shall not include (A) the Company or any
of its subsidiaries, (B) any employee benefit plan of the
Company or any of its subsidiaries, or (C) any entity
holding voting securities of the Company for or pursuant
to the terms of any such plan."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
--------------------------------
EMPLOYEE
--------------------------------
VAN B. HONEYCUTT
Chairman, President
and Chief Executive Officer,
Computer Sciences Corporation
COMPUTER SCIENCES CORPORATION
By
----------------------------------
Hayward D. Fisk
Vice President, General Counsel
and Secretary
7
<PAGE> 142
EXHIBIT A
Name of the Employee:
-------------------------
Description of Non-Qualified Stock Options:
Original Number of
Date of Grant Name of Plan Underlying Shares
- ------------- ------------ ------------------
Description of Restricted Stock:
Date of Grant Name of Plan Number of Shares
- ------------- ------------ ----------------
8
<PAGE> 1
EXHIBIT (C)(14)
FORM OF RESTRICTED STOCK AGREEMENT
(A) Form of Restricted Stock Agreements relating to restricted stock granted
by the Company to employees of the Company and its affiliates who are
participants in the SERP:
(i) Restricted Stock granted under the 1990 Stock Incentive Plan:
(a) Form of Restricted Stock Agreement
(ii) Restricted Stock granted under the 1992 Stock Incentive Plan:
(a) Form of Restricted Stock Agreement
(B) Form of Restricted Stock Agreements relating to restricted stock granted
by the Company to employees of the Company and its affiliates who are
not participants in the SERP:
(i) Restricted Stock granted under the 1990 Stock Incentive Plan:
(a) Form of Restricted Stock Agreement
(ii) Restricted Stock granted under the 1992 Stock Incentive Plan:
(a) Form of Restricted Stock Agreement
(C) Form of Amendments of restricted stock which was issued pursuant to the
Agreements listed in Exhibit (c)(14)(A) or (B) and which is held by
employees of the Company and its affiliates who are participants in the
SERP
(a) Form of Amendment dated as of February 2, 1998
(D) Form of Amendments of restricted stock which was issued pursuant to the
Agreements listed in Exhibit (c)(14)(A) or (B) and which is held by
employees of the Company and its affiliates who are not participants in
the SERP
(a) Form of Amendment dated as of February 2, 1998
<PAGE> 2
EXHIBIT (c)(14)(A)(i)(a)
COMPUTER SCIENCES CORPORATION
1990 STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
RS NO.
This Restricted Stock Agreement ("Agreement") is made and entered
into as of the _____ day of __________, 19__ (the "Award Date") by and between
Computer Sciences Corporation, a Nevada corporation (the "Company"), and a
full-time employee of the Company and/or one or more of its subsidiaries (the
"Employee").
WHEREAS, the Company's 1990 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on May 7, 1990 and approved by
the shareholders of the Company on August 13, 1990;
WHEREAS, pursuant to the Plan, the Company is authorized to sell
shares of its common stock, par value $1.00 per share (the "Common Stock"), to
any employee of the Company or its subsidiaries upon such terms and conditions
as shall be determined by the committee of the Board of Directors administering
the Plan (the "Committee"); and
WHEREAS, the Company desires to sell shares of Common Stock to the
Employee, and the Employee desires to purchase such shares from the Company,
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Sale of Restricted Shares. The Company hereby sells to the
Employee, and the Employee hereby purchases from the Company, __________ shares
of Common Stock (the "Restricted Shares"), which Restricted Shares are subject
to all of the terms and conditions set forth in this Agreement, including,
without limitation, the restrictions on transfer imposed pursuant to Section 2
hereof. The purchase price for the Restricted Shares is $1.00 per share, and the
Company hereby acknowledges the sufficiency of such purchase price and the
Company's receipt thereof on or prior to the date upon which this Agreement
shall be executed and on or within 60 days following the Award Date.
<PAGE> 3
2 Certain Restrictions on Transfer.
(a) No Restricted Share shall be sold, exchanged, assigned,
alienated, pledged, hypothecated, gifted or otherwise transferred in any manner
other than pursuant to Section 8 hereof; provided, however, that upon the
expiration of each "Forfeiture Period" indicated below (or the earlier
termination of such Forfeiture Period pursuant to the provisions of this
Agreement), the foregoing restrictions on transfer shall cease to apply to the
percentage of the Restricted Shares subject to such Forfeiture Period:
Percentage of Expiration of
Restricted Shares Forfeiture Period
----------------- -----------------
(b) Notwithstanding the foregoing, if the Employee shall cease to be
a full-time employee of the Company or any of its subsidiaries because of an
approved leave of absence, any Forfeiture Period that would otherwise expire
during such leave of absence shall instead continue until and expire upon the
earlier of (i) the first date thereafter upon which the Employee shall again be
a full-time employee of the Company or any of its subsidiaries, or (ii) two
years after the date upon which such leave of absence shall have commenced.
3. Early Termination of Forfeiture Periods.
(a) Immediately prior to the occurrence of any of the following
events (or, if the Employee shall not be a full-time employee of the Company or
any of its subsidiaries on the date of such event because of an approved leave
of absence, upon the first day thereafter on which the Employee shall again have
become a full-time employee of the Company or any of its subsidiaries), all
applicable Forfeiture Periods shall terminate and no Restricted Share shall
thereafter be subject to the restrictions on transfer imposed pursuant to
Section 2 hereof:
(i) the termination of the Employee's status as a
full-time employee of the Company or any of its subsidiaries for no
reason, or for 2
2
<PAGE> 4
any reason, within three years following (A) the dissolution or
liquidation of the Company, (B) a sale of substantially all of the
property and assets of the Company, (C) a reorganization, merger or
consolidation of the Company the consummation of which results in
the outstanding securities of any class then comprising the
Restricted Shares being exchanged for or converted into cash,
property and/or securities not issued by the Company, (D) any date
upon which the directors of the Company who were nominated by the
Board of Directors for election as directors cease to constitute a
majority of the directors of the Company or (E) a change of control
of the Company of the type required to be disclosed in a proxy
statement pursuant to Item 6(e) (or any successor provision) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); or (ii)
unless the Committee shall determine otherwise within ten business
days thereafter, the public announcement that any person or entity,
together with all Affiliates and Associates (as such capitalized
terms are defined in Rule 12b-2 promulgated under the Exchange Act)
of such person or entity, has become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Company representing 30% or more of the voting
power of the Company, provided, however, that the terms "person" and
"entity," as used in this subsection (ii), shall not include (A) the
Company or any of its subsidiaries, (B) any employee benefit plan of
the Company or any of its subsidiaries, or (C) any entity holding
voting securities of the Company for or pursuant to the terms of any
such plan;
(b) In addition, the Committee, in its sole discretion, may
accelerate the expiration or termination of any Forfeiture Period at any time
and for any reason.
4. Repurchase of Restricted Shares. Notwithstanding anything to the
contrary in this Agreement, if any of the following events shall occur prior to
the expiration or termination of any Forfeiture Period, then, unless
3
<PAGE> 5
the Committee shall determine otherwise, the Company shall repurchase all
Restricted Shares subject to such Forfeiture Period at a purchase price of $1.00
per share:
(a) the termination of the Employee's status as a full-time employee
of the Company or any of its subsidiaries for no reason, or for any reason other
than an approved leave of absence; or
(b) the failure of the Employee again to have become a full-time
employee of the Company or any of its subsidiaries within one year following the
date upon which he or she shall have ceased to be a full-time employee of the
Company or any of its subsidiaries because of- an approved leave of -absence.
5. Payment of withholding Taxes.
(a) If the Company becomes obligated to withhold an amount on
account of any federal, state or local tax imposed as a result of the sale of
the Restricted Shares to the Employee pursuant to this Agreement or the
termination of the restrictions imposed upon the Restricted Shares hereunder,
including, without limitation, any federal, state or other income tax, or any
F.I.C.A., state disability insurance tax or other employment tax (the date upon
which the Company becomes so obligated shall be referred to herein as the
"Withholding Date,), then the Employee shall pay such amount (the "Withholding
Liability") to the Company on the Withholding Date in cash or by check payable
to the Company.
(b) Notwithstanding subsection (a) above, if the Employee is subject
to Section 16 of the Exchange Act on the Award Date, then the Employee may not
make a Withholding Election unless:
(i) the Company shall have been subject to the reporting
requirements of Section 13(a) of the Exchange Act for at least one
year prior thereto and shall have filed all reports and statements
required to be filed pursuant to such section during such year;
(ii) the Company on a regular basis releases quarterly
and annual summary statements of its sales and earnings (,Financial
Data-) for publication on a wire service, in a financial news
service or in a
4
<PAGE> 6
newspaper of general circulation, or Financial Data is otherwise
made publicly available on a regular basis;
(iii) such Withholding Election is made during a period
commencing on the third business day following a date upon which the
Company releases Financial Data and ending on the twelfth business
day following such date; and
(iv) such Withholding Election is not made during the
six-month period commencing on the Award Date, except in the case of
the death or disability of the Employee.
(c) The Committee shall have sole discretion to approve or
disapprove any Withholding Election and may adopt such rules and regulations as
are consistent with and necessary to implement the foregoing. The Committee may
permit the Employee to make a Withholding Election to pay withholding taxes in
excess of the minimum amount required by law, provided that the amount of
withholding taxes so paid does not exceed the estimated total federal, state and
local tax liability of the Employee attributable to such sale or such
termination of restrictions.
6. Escrow.
(a) Until a Forfeiture Period shall expire or terminate, (i) the
record address of the holder of record of the Restricted Shares subject to such
Forfeiture Period shall be c/o the Secretary of the Company at the address of
the Company's principal executive office, (ii) the stock certificate
representing such Restricted shares (together with any cash, property and/or
securities comprising all or any part of such Restricted Shares as provided in
Section 7 hereof) shall be held in escrow in the custody of the Secretary of the
Company, duly endorsed in blank or accompanied by a duly executed stock powers,
and (iii) such stock certificate shall contain the following legend:
"THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT, TRANSFER OR OTHER
DISPOSITION OF THE SHARES EVIDENCED BY THIS CERTIFICATE IN
RESTRICTED IN ACCORDANCE WITH A CERTAIN RESTRICTED STOCK AGREEMENT
BETWEEN THE NAMED SHAREHOLDER AND THE COMPANY."
(b) From and after the date upon which a Forfeiture Period shall
5
<PAGE> 7
expire or terminate, the holder of record of the Restricted Shares subject to
such Forfeiture Period shall be entitled (provided that the Employee shall have
paid the Withholding Liability to the Company pursuant to Section 5 hereof) to
receive the stock certificate representing such Restricted Shares (together with
any cash, property and/or securities comprising all or any part of such
Restricted Shares as provided in Section 7 hereof), which stock certificate
shall not contain the legend set forth in subsection (a)(iii) above.
7. Voting; Dividends; Certain Corporate Transactions. The holder of
record of any Restricted Share shall be entitled to exercise all voting rights
with respect to such share and to receive all regular, quarterly cash dividends
paid with respect thereto. In the event that the outstanding securities of any
class then comprising the Restricted Shares are increased, decreased or
exchanged for or converted into cash, property and/or a different number or kind
of securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in either case as a result of a reorganization,
merger" consolidation, recapitalization, reclassification, dividend (other than
a regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, then, unless the Committee shall determine otherwise,
the term "Restricted Shares," as used in this Agreement, shall, from and after
the date of such event, include such cash, property and/or securities so
distributed in respect of the Restricted Shares, or into or for which the
Restricted shares are so increased, decreased, exchanged or converted.
8. Permitted Transfers. Notwithstanding anything to the contrary in
this Agreement, the Employee may transfer any or all of the Restricted Shares by
gift or sale (provided that the sale price of such Restricted Shares does not
exceed $1.00 per share) to any of the following:
(a) one or more of the Employee's spouse, the Employee's
son or daughter or a descendant of either, the Employee's father or
mother or an ancestor of either, or the Employee's step-child or
step-parent (each of the persons described in this clause (a) is
referred to herein as a
6
<PAGE> 8
"Family Member"); and/or
(b) one or more trusts for the benefit of the Employee
or one or more Family Members;
provided, however, that (x) such transferred Restricted Shares shall continue to
be subject to all of the terms and conditions of this Agreement as if the
Employee continued to hold such shares, and the transferee of such shares shall,
in a duly executed document delivered to the Company and reasonably satisfactory
in form and substance to the Committee, consent thereto and agree to be bound by
all of the terms and conditions of this Agreement as if such transferee were the
Employee, and (y) such transferee shall deliver to the Secretary of the Company
a duly executed stock powers with respect to such transferred Restricted Shares,
which stock powers shall be held in escrow by the Secretary pursuant to Section
6 hereof. In determining whether any person is or is not a Family Member for
purposes of this Section 8, a legally adopted child shall be deemed to be a
child by blood.
9. Plan. The Restricted Shares are being sold hereunder pursuant to
the Plan, as in effect on the Award Date, and are subject to all the terms and
conditions of the Plan, as the same may be amended from time to time; provided,
however, that no such amendment shall deprive the Employee, without his or her
consent, of the Restricted Shares or of any of the Employee's rights under this
Agreement. The interpretation and construction by the Committee of the Plan,
this Agreement and such rules and regulations as may be adopted by the Committee
for the purpose of administering the Plan shall be final and binding upon
Employee. Until the applicable Forfeiture Period with respect to a Restricted
Share shall expire or terminate, the Company shall, upon written request
therefor, send a copy of the Plan, in its then current form, to the holder of
record of such Restricted Share.
10. Employment Rights. No provision of this Agreement shall (a)
confer upon the Employee any right to continue in the employ of the Company or
any of its subsidiaries, (b) affect the right of the Company and each of its
subsidiaries to terminate the employment of the Employee, with or without
7
<PAGE> 9
cause, or (c) confer upon Employee any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its
subsidiaries other than the Plan. The Employee hereby acknowledges and agrees
that the Company and each of its subsidiaries may terminate the employment of
the Employee at any time and for any reason, or for no reason, unless the
Employee and the Company or such subsidiary are parties to a written employment
agreement that expressly provides otherwise.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, an the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect to
the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be A-ended, modified, waived or canceled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of the
terms and conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement -shall be governed by and
construed and enforced in accordance with the laws of the state of California
applicable to contracts made and performed entirely within such state.
8
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Award Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
__________________________ By___________________________
Employee: Name:
SS#: Title:
By___________________________
Name:
Title:
9
<PAGE> 11
EXHIBIT (c)(14)(A)(ii)(a)
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
RS No.
This Restricted Stock Agreement ("Agreement") is made and entered
into as of the ____________ day of ___________________, 19__ (the "Award Date")
by and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and _____________________________, a full-time employee of the
Company and/or one or more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1992 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 15, 1992 and approved
by the shareholders of the Company on August 10, 1992;
WHEREAS, pursuant to the Plan, the Company is authorized to sell
shares of its common stock, par value $1.00 per share (the "Common Stock"), to
any employee of the Company or its subsidiaries upon such terms and conditions
as shall be determined by the committee of the Board of Directors administering
the Plan (the "Committee"); and
WHEREAS, the Company desires to sell shares of Common Stock to the
Employee, and the Employee desires to purchase such shares from the Company,
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Sale of Restricted Shares. The Company hereby sells to the
Employee, and the Employee hereby purchases from the Company, _____ ________
shares of Common Stock (the "Restricted Shares"), which Restricted Shares are
subject to all of the terms and conditions set forth in this Agreement,
including, without limitation, the restrictions on transfer imposed pursuant to
Section 2 hereof. The purchase price for the Restricted Shares is $1.00 per
share, and the Company hereby acknowledges the sufficiency of such purchase
price and the Company's receipt thereof on or prior to the date upon which this
Agreement shall be executed and on or within 60 days following the Award Date.
<PAGE> 12
2. Certain Restrictions on Transfer.
(a) No Restricted Share shall be sold, exchanged, assigned,
alienated, pledged, hypothecated, gifted or otherwise transferred in any manner
other than pursuant to Section 8 hereof; provided, however, that upon the
expiration of each "Forfeiture Period" indicated below (or the earlier
termination of such Forfeiture Period pursuant to the provisions of this
Agreement), the foregoing restrictions on transfer shall cease to apply to the
percentage of the Restricted Shares subject to such Forfeiture Period:
<TABLE>
<CAPTION>
Percentage of Expiration of
Restricted Shares Forfeiture Period
----------------- -----------------
<S> <C>
</TABLE>
(b) Notwithstanding the foregoing, if the Employee
shall cease to be a full-time employee of the Company or any of its
subsidiaries because of an approved leave of absence, any Forfeiture Period
that would otherwise expire during such leave of absence shall instead continue
until and expire upon the earlier of (i) the first date thereafter upon which
the Employee shall again be a full-time employee of the Company or any of its
subsidiaries, or (ii) two years after the date upon which such leave of absence
shall have commenced.
3. Early Termination of Forfeiture Periods.
(a) Immediately prior to the occurrence of any of the
following events (or, if the Employee shall not be a full-time employee of the
Company or any of its subsidiaries on the date of such event because of an
approved leave of absence, upon the first day thereafter on which the Employee
shall again have become a full-time employee of the Company or any of its
subsidiaries), all applicable Forfeiture Periods shall terminate and no
Restricted Share shall thereafter be subject to the restrictions on transfer
imposed pursuant to Section 2 hereof:
(i) the termination of the Employee's status as a
full-time employee of the Company or any of its subsidiaries for no
reason, or for any reason, within three years following (A) the
dissolution or liquidation of the Company, (B) a sale of
substantially all of the property and assets of the Company, (C) a
reorganization, merger or consolidation of the Company
2
<PAGE> 13
the consummation of which results in the outstanding securities of
any class then comprising the Restricted Shares being exchanged for
or converted into cash, property and/or securities not issued by the
Company, (D) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as directors
cease to constitute a majority of the directors of the Company or
(E) a change of control of the Company of the type required to be
disclosed in a proxy statement pursuant to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); or
(ii) unless the Committee shall determine otherwise
within ten business days thereafter, the public announcement that
any person or entity, together with all Affiliates and Associates
(as such capitalized terms are defined in Rule 12b-2 promulgated
under the Exchange Act) of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company representing 30%
or more of the voting power of the Company, provided, however, that
the terms "person" and "entity," as used in this subsection (ii),
shall not include (A) the Company or any of its subsidiaries, (B)
any employee benefit plan of the Company or any of its subsidiaries,
or (C) any entity holding voting securities of the Company for or
pursuant to the terms of any such plan;
(b) In addition, the Committee, in its sole discretion,
may accelerate the expiration or termination of any Forfeiture Period at any
time and for any reason.
4. Repurchase of Restricted Shares. Notwithstanding
anything to the contrary in this Agreement, if any of the following events
shall occur prior to the expiration or termination of any Forfeiture Period,
then, unless the Committee shall determine otherwise, the Company shall
repurchase all Restricted Shares subject to such Forfeiture Period at a
purchase price of $1.00 per share:
(a) the termination of the Employee's status as a
full-time employee of the Company or any of its subsidiaries for no reason, or
for any reason other than an approved leave of absence; or
(b) the failure of the Employee again to have become
a full-time
3
<PAGE> 14
employee of the Company or any of its subsidiaries within one year following
the date upon which he or she shall have ceased to be a full-time employee of
the Company or any of its subsidiaries because of an approved leave of absence.
5. Payment of Withholding Taxes.
(a) If the Company becomes obligated to withhold an
amount on account of any federal, state or local tax imposed as a result of the
sale of the Restricted Shares to the Employee pursuant to this Agreement or the
termination of the restrictions imposed upon the Restricted Shares hereunder,
including, without limitation, any federal, state or other income tax, or any
F.I.C.A., state disability insurance tax or other employment tax (the date upon
which the Company becomes so obligated shall be referred to herein as the
"Withholding Date"), then the Employee shall pay such amount (the "Withholding
Liability") to the Company on the Withholding Date in cash or by check payable
to the Company; provided, however, that, in the discretion of the Committee,
the Employee may, pursuant to an irrevocable election of the Employee (a
"Withholding Election") made on or prior to the Withholding Date, instead pay
all or any part of the Withholding Liability by the delivery to the Company of
a stock certificate or certificates representing shares of Common Stock, duly
endorsed or accompanied by a duly executed stock powers, which delivery
effectively transfers to the Company good and valid title to such shares, free
and clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value (as defined
in the Plan) thereof on the Withholding Date), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common Stock.
(b) Notwithstanding subsection (a) above, if the
Employee is subject to Section 16 of the Exchange Act on the Award Date, then
the Employee may not make a Withholding Election unless:
(i) (A) the Company shall have been subject to the
reporting requirements of Section 13(a) of the Exchange Act for at
least one year prior thereto and shall have filed all reports and
statements required to be filed pursuant to such section during such
year, (B) the Company on a regular basis releases quarterly and
annual summary statements of its sales and earnings ("Financial
Data") for publication on a wire service, in a
4
<PAGE> 15
financial news service or in a newspaper of general circulation, or
Financial Data is otherwise made publicly available on a regular
basis, and (C) such Withholding Election is made during a period
commencing on the third business day following a date upon which the
Company releases Financial Data and ending on the twelfth business
day following such date; or
(ii) such Withholding Election is made at least six months prior to
the Withholding Date,.
(c) The Committee shall have sole discretion to
approve or disapprove any Withholding Election and may adopt such rules and
regulations as are consistent with and necessary to implement the foregoing.
6. Escrow.
(a) Until a Forfeiture Period shall expire or
terminate, (i) the record address of the holder of record of the Restricted
Shares subject to such Forfeiture Period shall be c/o the Secretary of the
Company at the address of the Company's principal executive office, (ii) the
stock certificate representing such Restricted Shares (together with any cash,
property and/or securities comprising all or any part of such Restricted Shares
as provided in Section 7 hereof) shall be held in escrow in the custody of the
Secretary of the Company, duly endorsed in blank or accompanied by a duly
executed stock powers, and (iii) such stock certificate shall contain the
following legend:
"The sale, pledge, hypothecation, assignment, transfer or
other disposition of the shares evidenced by this
certificate is restricted in accordance with a certain
Restricted Stock Agreement dated as of (Award Date to be
inserted) by and between the named shareholder and the
Company."
(b) From and after the date upon which a Forfeiture Period
shall expire or terminate, the holder of record of the Restricted Shares
subject to such Forfeiture Period shall be entitled (provided that the Employee
shall have paid the Withholding Liability to the Company pursuant to Section 5
hereof) to receive the stock certificate representing such Restricted Shares
(together with any cash, property and/or securities comprising all or any part
of such Restricted Shares as provided in Section 7 hereof), which stock
certificate shall not contain the legend set forth in subsection (a)(iii)
above.
5
<PAGE> 16
7. Voting; Dividends; Certain Corporate Transactions. The
holder of record of any Restricted Share shall be entitled to exercise all
voting rights with respect to such share and to receive all regular, quarterly
cash dividends paid with respect thereto. In the event that the outstanding
securities of any class then comprising the Restricted Shares are increased,
decreased or exchanged for or converted into cash, property and/or a different
number or kind of securities, or cash, property and/or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
reclassification, dividend (other than a regular, quarterly cash dividend) or
other distribution, stock split, reverse stock split or the like, then, unless
the Committee shall determine otherwise, the term "Restricted Shares," as used
in this Agreement, shall, from and after the date of such event, include such
cash, property and/or securities so distributed in respect of the Restricted
Shares, or into or for which the Restricted Shares are so increased, decreased,
exchanged or converted.
8. Permitted Transfers. Notwithstanding anything to the
contrary in this Agreement, at any time following the expiration of six months
after the Award Date the Employee may transfer any or all of the Restricted
Shares to any person or entity ; provided, however, that (a) such transferred
Restricted Shares shall continue to be subject to all of the terms and
conditions of this Agreement as if the Employee continued to hold such shares,
and the transferee of such shares shall, in a duly executed document delivered
to the Company and reasonably satisfactory in form and substance to the
Committee, consent thereto and agree to be bound by all of the terms and
conditions of this Agreement as if such transferee were the Employee, and (b)
such transferee shall deliver to the Secretary of the Company a duly executed
stock powers with respect to such transferred Restricted Shares, which stock
powers shall be held in escrow by the Secretary pursuant to Section 6 hereof.
9. Plan. The Restricted Shares are being sold hereunder
pursuant to the Plan, as in effect on the Award Date, and are subject to all
the terms and conditions of the Plan, as the same may be amended from time to
time; provided, however, that no such amendment shall deprive the Employee,
without his or her consent, of the Restricted Shares or of any of the
Employee's rights under this
6
<PAGE> 17
Agreement. The interpretation and construction by the Committee of the Plan,
this Agreement and such rules and regulations as may be adopted by the
Committee for the purpose of administering the Plan shall be final and binding
upon Employee. Until the applicable Forfeiture Period with respect to a
Restricted Share shall expire or terminate, the Company shall, upon written
request therefor, send a copy of the Plan, in its then current form, to the
holder of record of such Restricted Share.
10. Employment Rights. No provision of this Agreement shall
(a) confer upon the Employee any right to continue in the employ of the Company
or any of its subsidiaries, (b) affect the right of the Company and each of its
subsidiaries to terminate the employment of the Employee, with or without
cause, or (c) confer upon Employee any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its
subsidiaries other than the Plan. THE EMPLOYEE HEREBY ACKNOWLEDGES AND AGREES
THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY TERMINATE THE EMPLOYMENT OF
THE EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR NO REASON, UNLESS THE
EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A WRITTEN EMPLOYMENT
AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
11. Successors. This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns, on the one
hand, and the Employee and his or her heirs, beneficiaries, legatees and
personal representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect to
the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or cancelled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of
the terms and conditions of this Agreement shall not be considered a
modification, cancellation or consent to a future waiver of such terms and
conditions or of any preceding or succeeding breach thereof, unless expressly
so stated.
7
<PAGE> 18
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the Award Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
________________________________ By______________________________
Employee: Name:
Title:
SS#:
Grant Date: By______________________________
Name:
Grant Price: Title:
Chief Financial Officer
Options Granted:
8
<PAGE> 19
EXHIBIT (C)(14)(B)(i)(a)
COMPUTER SCIENCES CORPORATION
1990 STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
RS NO.
This Restricted Stock Agreement ('Agreement') is made and entered into
as of the_____________ day of,____________ 19___ (the 'Award Date') by and
between Computer Sciences Corporation, a Nevada corporation (the "Company'), and
_____________, a full-time employee of the Company and/or one or more of its
subsidiaries (the "Employee").
WHEREAS, the Company's 1990 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on May 7, 1990 and approved by
the shareholders of the Company on August 13, 1990;
WHEREAS, pursuant to the Plan, the Company is authorized to sell shares
of its common stock, par value $1.00 per share (the "Common Stock"), to any
employee of the Company or its subsidiaries upon such terms and conditions as
shall be determined by the committee of the Board of Directors administering the
Plan (the "Committee"); and
WHEREAS, the Company desires to sell shares of Common Stock to the
Employee, and the Employee desires to purchase such shares from the Company,
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Sale of Restricted Shares. The Company hereby sells to the Employee,
and the Employee hereby purchases from the Company, _____________ shares of
Common Stock (the "Restricted Shares"), which Restricted Shares are subject to
all of the terms and conditions set forth in this Agreement, including, without
limitation, the restrictions on transfer imposed pursuant to Section 2 hereof.
The purchase price for the Restricted Shares is $1.00 per share, and the Company
hereby acknowledges the sufficiency of such purchase price and the Company's
receipt thereof on or prior to the date upon which this Agreement shall be
executed and on or within 60 days following the Award Date.
<PAGE> 20
2. Certain Restrictions on Transfer.
(a) No Restricted Share shall be sold, exchanged, assigned, alienated,
pledged, hypothecated, gifted or otherwise transferred in any manner other than
pursuant to Section 8 hereof; provided, however, that upon the expiration of
each "Forfeiture Period" indicated below (or the earlier termination of such
Forfeiture Period pursuant to the provisions of this Agreement), the foregoing
restrictions on transfer shall cease to apply to the percentage of the
Restricted Shares subject to such Forfeiture Period:
Percentage of Expiration of
Restricted Shares Forfeiture Period
----------------- -----------------
(b) Notwithstanding the foregoing, if the Employee shall cease to be a
full-time employee of the Company or any of its subsidiaries because of an
approved leave of absence, any Forfeiture Period that would otherwise expire
during such leave of absence shall instead continue until and expire upon the
earlier of (i) the first date thereafter upon which the Employee shall again be
a full-time employee of the Company or any of its subsidiaries, or (ii) two
years after the date upon which such leave of absence shall have commenced.
3. Early Termination of Forfeiture Periods.
(a) Immediately prior to the occurrence of any of the following events,
all applicable Forfeiture Periods shall terminate and no Restricted Share shall
thereafter be subject to the restrictions on transfer imposed pursuant to
Section 2 hereof:
(i) unless the Committee shall determine otherwise within ten
business days thereafter, the public announcement that any person or
entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of
such person or entity, has become the Beneficial owner (as defined in
Rule 13d-3 promulgated under
2
<PAGE> 21
the Exchange Act) of voting securities of the Company representing 30%
or more of the voting power of the Company, provided, however, that the
terms "Person" and "entity," as used in this subsection (i), shall not
include (A) the Company or any of its subsidiaries, (B) any employee
benefit plan of the Company or any of its subsidiaries, or (C) any
entity holding voting securities of the Company for or pursuant to the
terms of any such plan;
(ii) any date upon which the directors of the Company who were
nominated by the Board of Directors for election as directors cease to
constitute a majority of the directors of the Company, unless, prior to
such date, the Board of Directors shall determine otherwise; or
(iii) a change of control of the Company of the type required
to be disclosed in a proxy statement pursuant to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, unless, prior to such change of control, the
Board of Directors shall determine otherwise.
(b) Unless the Committee shall determine otherwise, including, without
limitation, a determination to repurchase any such Restricted Shares pursuant to
Section 4(c) hereof, all applicable Forfeiture Periods shall terminate and no
Restricted Shares shall thereafter be subject to the restrictions on transfer
imposed pursuant to Section 2 hereof upon the occurrence of any of the following
events:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property and assets of
the Company; or
(iii) a reorganization, merger or consolidation of the Company
that results in the outstanding securities of any class then comprising
the Restricted Shares being exchanged for or converted into cash,
property and/or securities not issued by the Company.
(c) In the event that the Employee shall not be a full-time employee of
the Company or any of its subsidiaries on the date of any of the
3
<PAGE> 22
events specified in Section 3(a) or (b) hereof because of an approved leave of
absence, such subsections shall become applicable to the Employee on the first
date thereafter upon which the Employee shall again have become a full-time
employee of the Company or any of its subsidiaries, provided that such day
occurs within one year following the date upon which he or she shall have ceased
to be such a full-time employee.
(d) In addition, the Committee, in its sole discretion, may accelerate
the expiration or termination of any Forfeiture Period at any time and for any
reason.
4. Repurchase of Restricted Shares. If any of the following events
shall occur prior to the expiration or termination of any Forfeiture Period,
then, unless the Committee shall determine otherwise, the Company shall
repurchase all Restricted Shares subject to such Forfeiture Period at a purchase
price of $1.00 per share:
(a) the termination of the Employee's status as a full-time employee of
the Company or any of its subsidiaries for no reason, or for any reason other
than an approved leave of absence;
(b) the failure of the Employee again to have become a full-time
employee of the Company or any of its subsidiaries within one year following the
date upon which he or she shall have ceased to be a full-time employee of the
Company or any of its subsidiaries because of an approved leave of absence; or
(c) the consummation of any of the following events (unless such event
shall, pursuant to Section 3(b) hereof, cause such Forfeiture Period to
terminate and such Restricted Shares to cease to be subject to the restrictions
on transfer imposed pursuant to Section 2 hereof): (i) the dissolution or
liquidation of the Company, (ii) a sale of substantially all of the property and
assets of the Company or (iii) a reorganization, merger or consolidation of the
Company that results in the outstanding securities of any class then comprising
the Restricted Shares being exchanged for or converted into cash, property
and/or securities not issued by the Company.
4
<PAGE> 23
5. Payment of Withholding Taxes.
(a) If the Company becomes obligated to withhold an amount on account
of any federal, state or local tax imposed as a result of the sale of the
Restricted Shares to the Employee pursuant to this Agreement or the termination
of the restrictions imposed upon the Restricted Shares hereunder, including,
without limitation, any federal, state or other income tax, or any F.I.C.A.,
state disability insurance tax or other employment tax (the date upon which the
Company becomes so obligated shall be referred to herein as the "Withholding
Date"), then the Employee shall pay such amount (the "Withholding Liability") to
the Company on the Withholding Date in cash or by check payable to the Company;
provided, however, that, in the discretion of the Committee, the Employee may,
pursuant to an irrevocable election of the Employee (a "Withholding Election")
made on or prior to the Withholding Date, instead pay all or any part of the
Withholding Liability by the delivery to the Company of a stock certificate or
certificates representing shares of Common Stock, duly endorsed or accompanied
by a duly executed stock powers, which delivery effectively transfers to the
Company good and valid title to such shares, free and clear of any pledge,
commitment, lien, claim or other encumbrance [such shares to be valued on the
basis of the aggregate Fair Market Value (as defined in the Plan) thereof on the
Withholding Date], provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.
(b) Notwithstanding subsection (a) above, if the Employee is subject to
Section 16 of the Exchange Act on the Award Date, then the Employee may not make
a Withholding Election unless:
(i) the Company shall have been subject to the reporting
requirements of Section 13(a) of the Exchange Act for at least one year
prior thereto and shall have filed all reports and statements required
to be filed pursuant to such section during such year;
(ii) the Company on a regular basis releases quarterly and
annual summary statements of its sales and earnings ("Financial Data")
for publication on a wire service, in a financial news service or in a
5
<PAGE> 24
newspaper of general circulation, or Financial Data is otherwise made
publicly available on a regular basis;
(iii) such Withholding Election is made during a period
commencing on the third business day following a date upon which the
Company releases Financial Data and ending on the twelfth business day
following such date; and
(iv) such Withholding Election is not made during the
six-month period commencing on the Award Date, except in the case of
the death or disability of the Employee.
(c) The Committee shall have sole discretion to approve or disapprove
any Withholding Election and may adopt such rules and regulations as are
consistent with and necessary to implement the foregoing. The Committee may
permit the Employee to make a Withholding Election to pay withholding taxes in
excess of the minimum amount required by law, provided that the amount of
withholding taxes so paid does not exceed the estimated total federal, state and
local tax liability of the Employee attributable to such sale or such
termination of restrictions.
6. Escrow.
(a) Until a Forfeiture Period shall expire or terminate, (i) the record
address of the holder of record of the Restricted Shares subject to such
Forfeiture Period shall be c/o the Secretary of the Company at the address of
the Company's principal executive office, (ii) the stock certificate
representing such Restricted Shares (together with any cash, property and/or
securities comprising all or any part of such Restricted Shares as provided in
Section 7 hereof) shall be held in escrow in the custody of the Secretary of the
Company, duly endorsed in blank or accompanied by a duly executed stock powers,
and (iii) such stock certificate shall contain the following legend:
"The sale, pledge, hypothecation, assignment, transfer or other
disposition of the shares evidenced by this certificate is restricted
in accordance with a certain Restricted Stock Agreement between the
named shareholder and the Company."
(b) From and after the date upon which a Forfeiture Period shall
6
<PAGE> 25
expire or terminate, the holder of record of the Restricted Shares subject to
such Forfeiture Period shall be entitled (provided that the Employee shall have
paid the Withholding Liability to the Company pursuant to Section 5 hereof) to
receive the stock certificate representing such Restricted Shares (together with
any cash, property and/or securities comprising all or any part of such
Restricted Shares as provided in Section 7 hereof), which stock certificate
shall not contain the legend set forth in subsection (a)(iii) above.
7. Voting; Dividends; Certain Corporate Transactions. The holder of
record of any Restricted Share shall be entitled to exercise all voting rights
with respect to such share and to receive all regular, quarterly cash dividends
paid with respect thereto. In the event that the outstanding securities of any
class then comprising the Restricted Shares are increased, decreased or
exchanged for or converted into cash, property and/or a different number or kind
of securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, reclassification, dividend (other than
a regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, then, unless the Committee shall determine otherwise,
the term "Restricted Shares," as used in this Agreement, shall, from and after
the date of such event, include such cash, property and/or securities so
distributed in respect of the Restricted Shares, or into or for which the
Restricted Shares are so increased, decreased, exchanged or converted.
8. Permitted Transfers. Notwithstanding anything to the contrary in
this Agreement, the Employee may transfer any or all of the Restricted Shares by
gift or sale (provided that the sale price of such Restricted Shares does not
exceed $1.00 per share) to any of the following:
(a) one or more of the Employee's spouse, the Employee's son
or daughter or a descendant of either, the Employee's father or mother
or an ancestor of either, or the Employee's step-child or step-parent
(each of the persons described in this clause (a) is referred to herein
as a
7
<PAGE> 26
"Family Member"); and/or
(b) one or more trusts for the benefit of the Employee or one
or more Family Members; provided, however, that (x) such transferred
Restricted Shares shall continue to be subject to all of the terms and
conditions of this Agreement as if the Employee continued to hold such
shares, and the transferee of such shares shall, in a duly executed
document delivered to the Company and reasonably satisfactory in form
and substance to the Committee, consent thereto and agree to be bound
by all of the terms and conditions of this Agreement as if such
transferee were the Employee, and (y) such transferee shall deliver to
the Secretary of the Company a duly executed stock powers with respect
to such transferred Restricted Shares, which stock powers shall be held
in escrow by the Secretary pursuant to Section 6 hereof. In determining
whether any person is or is not a Family Member for purposes of this
Section 8, a legally adopted child shall be deemed to be a child by
blood.
9. Plan. The Restricted Shares are being sold hereunder pursuant to the
Plan, as in effect on the Award Date, and are subject to all the terms and
conditions of the Plan, as the same may be amended from time to time; provided,
however, that no such amendment shall deprive the Employee, without his or her
consent, of the Restricted Shares or of any of the Employee's rights under this
Agreement. The interpretation and construction by the Committee of the Plan,
this Agreement and such rules and regulations as may be adopted by the Committee
for the purpose of administering the Plan shall be final and binding upon
Employee. Until the applicable Forfeiture Period with respect to a Restricted
Share shall expire or terminate, the Company shall, upon written request
therefor, send a copy of the Plan, in its then current form, to the holder of
record of such Restricted Share.
10. Employment Rights. No provision of this Agreement shall (a) confer
upon the Employee any right to continue in the employ of the Company or any of
its subsidiaries, (b) affect the right of the Company and each of its
subsidiaries to terminate the employment of the Employee, with or without
8
<PAGE> 27
cause, or (c) confer upon Employee any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its
subsidiaries other than the Plan. The Employee hereby acknowledges and agrees
that the Company and each of its subsidiaries may terminate the employment of
the Employee at any time and for any reason, or for no reason, unless the
Employee and the Company or such subsidiary are parties to a written employment
agreement that expressly provides otherwise.
11. Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, on the one hand, and the
Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement embodies
the entire understanding and agreement of the parties with respect to the
subject matter hereof, and no promise, condition, representation or warranty,
express or implied, not stated or incorporated by reference herein, shall bind
either party hereto. None of the terms and conditions of this Agreement may be
amended, modified, waived or cancelled except by a writing, signed by the
parties hereto specifying such amendment, modification, waiver or cancellation.
A waiver by either party at any time of compliance with any of the terms and
conditions of this Agreement shall not be considered a modification,
cancellation or consent to a future waiver of such terms and conditions or of
any preceding or succeeding breach thereof, unless expressly so stated.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California applicable
to contracts made and performed entirely within such state.
9
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Award Date.
COMPUTER SCIENCES CORPORATION
By
-------------------------------------
Employee: Name:
------------------------- Title:
SS#:
By
-------------------------------------
Name:
Title:
10
<PAGE> 29
EXHIBIT (c)(14)(B)(ii)(a)
COMPUTER SCIENCES CORPORATION
1992 STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
RS No.
This Restricted Stock Agreement ("Agreement") is made and entered
into as of the _______ day of __________________, 19__ (the "Award Date") by
and between Computer Sciences Corporation, a Nevada corporation (the
"Company"), and ______________________________, a full-time employee of the
Company and/or one or more of its subsidiaries (the "Employee").
WHEREAS, the Company's 1992 Stock Incentive Plan (the "Plan") was
adopted by the Board of Directors of the Company on June 15, 1992 and approved
by the shareholders of the Company on August 10, 1992;
WHEREAS, pursuant to the Plan, the Company is authorized to sell
shares of its common stock, par value $1.00 per share (the "Common Stock"), to
any employee of the Company or its subsidiaries upon such terms and conditions
as shall be determined by the committee of the Board of Directors administering
the Plan (the "Committee"); and
WHEREAS, the Company desires to sell shares of Common Stock to the
Employee, and the Employee desires to purchase such shares from the Company,
upon the terms and conditions set forth herein, which terms and conditions have
been approved by the Committee;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Sale of Restricted Shares. The Company hereby sells to the
Employee, and the Employee hereby purchases from the Company, _____ _____
shares of Common Stock (the "Restricted Shares"), which Restricted Shares are
subject to all of the terms and conditions set forth in this Agreement,
including, without limitation, the restrictions on transfer imposed pursuant to
Section 2 hereof. The purchase price for the Restricted Shares is $1.00 per
share, and the Company hereby acknowledges the sufficiency of such purchase
price and the Company's receipt thereof on or prior to the date upon which this
Agreement shall be executed and on or within 60 days following the Award Date.
<PAGE> 30
2. Certain Restrictions on Transfer.
(a) No Restricted Share shall be sold, exchanged, assigned,
alienated, pledged, hypothecated, gifted or otherwise transferred in any manner
other than pursuant to Section 8 hereof; provided, however, that upon the
expiration of each "Forfeiture Period" indicated below (or the earlier
termination of such Forfeiture Period pursuant to the provisions of this
Agreement), the foregoing restrictions on transfer shall cease to apply to the
percentage of the Restricted Shares subject to such Forfeiture Period:
<TABLE>
<CAPTION>
Percentage of Expiration of
Restricted Shares Forfeiture Period
----------------- -----------------
<S> <C>
</TABLE>
(b) Notwithstanding the foregoing, if the Employee shall cease to
be a full-time employee of the Company or any of its subsidiaries because of an
approved leave of absence, any Forfeiture Period that would otherwise expire
during such leave of absence shall instead continue until and expire upon the
earlier of (i) the first date thereafter upon which the Employee shall again be
a full-time employee of the Company or any of its subsidiaries, or (ii) two
years after the date upon which such leave of absence shall have commenced.
3. Early Termination of Forfeiture Periods.
(a) Immediately prior to the occurrence of any of the following
events, all applicable Forfeiture Periods shall terminate and no Restricted
Share shall thereafter be subject to the restrictions on transfer imposed
pursuant to Section 2 hereof:
(i) unless the Committee shall determine otherwise within
ten business days thereafter, the public announcement that any person or
entity, together with all Affiliates and Associates (as such capitalized
terms are defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of such person or
entity, has become the Beneficial Owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of voting securities of the Company
representing 30% or more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in this
subsection (i), shall not include (A) the Company or any of its
2
<PAGE> 31
subsidiaries, (B) any employee benefit plan of the Company or any of
its subsidiaries, or (C) any entity holding voting securities of the
Company for or pursuant to the terms of any such plan;
(ii) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as directors cease
to constitute a majority of the directors of the Company, unless, prior
to such date, the Board of Directors shall determine otherwise; or
(iii) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item 6(e) (or
any successor provision) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, unless, prior to such change of control, the
Board of Directors shall determine otherwise.
(b) Unless the Committee shall determine otherwise, including,
without limitation, a determination to repurchase any such Restricted Shares
pursuant to Section 4(c) hereof, all applicable Forfeiture Periods shall
terminate and no Restricted Shares shall thereafter be subject to the
restrictions on transfer imposed pursuant to Section 2 hereof upon the
occurrence of any of the following events:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property and
assets of the Company; or
(iii) a reorganization, merger or consolidation of the
Company that results in the outstanding securities of any class then
comprising the Restricted Shares being exchanged for or converted into
cash, property and/or securities not issued by the Company.
(c) In the event that the Employee shall not be a full-time
employee of the Company or any of its subsidiaries on the date of any of the
events specified in Section 3(a) or (b) hereof because of an approved leave of
absence, such subsections shall become applicable to the Employee on the first
date thereafter upon which the Employee shall again have become a full-time
employee of the Company or any of its subsidiaries, provided that such day
occurs within one year following the date upon which he or she shall have
ceased to be such a full-time employee.
3
<PAGE> 32
(d) In addition, the Committee, in its sole discretion, may
accelerate the expiration or termination of any Forfeiture Period at any time
and for any reason.
4. Repurchase of Restricted Shares. If any of the following
events shall occur prior to the expiration or termination of any Forfeiture
Period, then, unless the Committee shall determine otherwise, the Company shall
repurchase all Restricted Shares subject to such Forfeiture Period at a
purchase price of $1.00 per share:
(a) the termination of the Employee's status as a full-time
employee of the Company or any of its subsidiaries for no reason, or for any
reason other than an approved leave of absence;
(b) the failure of the Employee again to have become a full-time
employee of the Company or any of its subsidiaries within one year following
the date upon which he or she shall have ceased to be a full-time employee of
the Company or any of its subsidiaries because of an approved leave of absence;
or
(c) the consummation of any of the following events (unless such
event shall, pursuant to Section 3(b) hereof, cause such Forfeiture Period to
terminate and such Restricted Shares to cease to be subject to the restrictions
on transfer imposed pursuant to Section 2 hereof): (i) the dissolution or
liquidation of the Company, (ii) a sale of substantially all of the property
and assets of the Company or (iii) a reorganization, merger or consolidation of
the Company that results in the outstanding securities of any class then
comprising the Restricted Shares being exchanged for or converted into cash,
property and/or securities not issued by the Company.
5. Payment of Withholding Taxes.
(a) If the Company becomes obligated to withhold an amount on
account of any federal, state or local tax imposed as a result of the sale of
the Restricted Shares to the Employee pursuant to this Agreement or the
termination of the restrictions imposed upon the Restricted Shares hereunder,
including, without limitation, any federal, state or other income tax, or any
F.I.C.A., state disability insurance tax or other employment tax (the date upon
which the Company becomes so obligated shall be referred to herein as the
"Withholding Date"), then the Employee shall pay such amount (the "Withholding
Liability") to the Company on
4
<PAGE> 33
the Withholding Date in cash or by check payable to the Company; provided,
however, that, in the discretion of the Committee, the Employee may, pursuant
to an irrevocable election of the Employee (a "Withholding Election") made on
or prior to the Withholding Date, instead pay all or any part of the
Withholding Liability by the delivery to the Company of a stock certificate or
certificates representing shares of Common Stock, duly endorsed or accompanied
by a duly executed stock powers, which delivery effectively transfers to the
Company good and valid title to such shares, free and clear of any pledge,
commitment, lien, claim or other encumbrance (such shares to be valued on the
basis of the aggregate Fair Market Value (as defined in the Plan) thereof on
the Withholding Date), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.
(b) Notwithstanding subsection (a) above, if the Employee is
subject to Section 16 of the Exchange Act on the Award Date, then the Employee
may not make a Withholding Election unless:
(i) (A) the Company shall have been subject to the
reporting requirements of Section 13(a) of the Exchange Act for at least
one year prior thereto and shall have filed all reports and statements
required to be filed pursuant to such section during such year, (B) the
Company on a regular basis releases quarterly and annual summary
statements of its sales and earnings ("Financial Data") for publication
on a wire service, in a financial news service or in a newspaper of
general circulation, or Financial Data is otherwise made publicly
available on a regular basis, and (C) such Withholding Election is made
during a period commencing on the third business day following a date
upon which the Company releases Financial Data and ending on the twelfth
business day following such date; or
(ii) such Withholding Election is made at least six months
prior to the Withholding Date.
(c) The Committee shall have sole discretion to approve or
disapprove any Withholding Election and may adopt such rules and regulations as
are consistent with and necessary to implement the foregoing.
6. Escrow.
(a) Until a Forfeiture Period shall expire or terminate, (i) the
5
<PAGE> 34
record address of the holder of record of the Restricted Shares subject to such
Forfeiture Period shall be c/o the Secretary of the Company at the address of
the Company's principal executive office, (ii) the stock certificate
representing such Restricted Shares (together with any cash, property and/or
securities comprising all or any part of such Restricted Shares as provided in
Section 7 hereof) shall be held in escrow in the custody of the Secretary of
the Company, duly endorsed in blank or accompanied by a duly executed stock
powers, and (iii) such stock certificate shall contain the following legend:
"The sale, pledge, hypothecation, assignment, transfer or
other disposition of the shares evidenced by this certificate
is restricted in accordance with a certain Restricted Stock
Agreement dated as of (Award Date to be inserted) by and
between the named shareholder and the Company."
(b) From and after the date upon which a Forfeiture Period shall
expire or terminate, the holder of record of the Restricted Shares subject to
such Forfeiture Period shall be entitled (provided that the Employee shall have
paid the Withholding Liability to the Company pursuant to Section 5 hereof) to
receive the stock certificate representing such Restricted Shares (together
with any cash, property and/or securities comprising all or any part of such
Restricted Shares as provided in Section 7 hereof), which stock certificate
shall not contain the legend set forth in subsection (a)(iii) above.
7. Voting; Dividends; Certain Corporate Transactions. The holder
of record of any Restricted Share shall be entitled to exercise all voting
rights with respect to such share and to receive all regular, quarterly cash
dividends paid with respect thereto. In the event that the outstanding
securities of any class then comprising the Restricted Shares are increased,
decreased or exchanged for or converted into cash, property and/or a different
number or kind of securities, or cash, property and/or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
reclassification, dividend (other than a regular, quarterly cash dividend) or
other distribution, stock split, reverse stock split or the like, then, unless
the Committee shall determine otherwise, the term "Restricted Shares," as used
in this Agreement, shall, from and after the date of such event, include such
6
<PAGE> 35
cash, property and/or securities so distributed in respect of the Restricted
Shares, or into or for which the Restricted Shares are so increased, decreased,
exchanged or converted.
8. Permitted Transfers. Notwithstanding anything to the contrary
in this Agreement, at any time following the expiration of six months after the
Award Date the Employee may transfer any or all of the Restricted Shares to any
person or entity; provided, however, that (a) such transferred Restricted Shares
shall continue to be subject to all of the terms and conditions of this
Agreement as if the Employee continued to hold such shares, and the transferee
of such shares shall, in a duly executed document delivered to the Company and
reasonably satisfactory in form and substance to the Committee, consent thereto
and agree to be bound by all of the terms and conditions of this Agreement as if
such transferee were the Employee, and (b) such transferee shall deliver to the
Secretary of the Company a duly executed stock powers with respect to such
transferred Restricted Shares, which stock powers shall be held in escrow by the
Secretary pursuant to Section 6 hereof.
9. Plan. The Restricted Shares are being sold hereunder
pursuant to the Plan, as in effect on the Award Date, and are subject to all
the terms and conditions of the Plan, as the same may be amended from time to
time; provided, however, that no such amendment shall deprive the Employee,
without his or her consent, of the Restricted Shares or of any of the
Employee's rights under this Agreement. The interpretation and construction by
the Committee of the Plan, this Agreement and such rules and regulations as may
be adopted by the Committee for the purpose of administering the Plan shall be
final and binding upon Employee. Until the applicable Forfeiture Period with
respect to a Restricted Share shall expire or terminate, the Company shall,
upon written request therefor, send a copy of the Plan, in its then current
form, to the holder of record of such Restricted Share.
10. Employment Rights. No provision of this Agreement shall (a)
confer upon the Employee any right to continue in the employ of the Company or
any of its subsidiaries, (b) affect the right of the Company and each of its
subsidiaries to terminate the employment of the Employee, with or without
cause, or (c) confer upon Employee any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its
subsidiaries other than the Plan.
7
<PAGE> 36
The Employee hereby acknowledges and agrees that the Company and each of its
subsidiaries may terminate the employment of the Employee at any time and for
any reason, or for no reason, unless the Employee and the Company or such
subsidiary are parties to a written employment agreement that expressly
provides otherwise.
11. Successors. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Employee and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.
12. Entire Agreement; Amendments and Waivers. This Agreement
embodies the entire understanding and agreement of the parties with respect
to the subject matter hereof, and no promise, condition, representation or
warranty, express or implied, not stated or incorporated by reference herein,
shall bind either party hereto. None of the terms and conditions of this
Agreement may be amended, modified, waived or cancelled except by a writing,
signed by the parties hereto specifying such amendment, modification, waiver or
cancellation. A waiver by either party at any time of compliance with any of
the terms and conditions of this Agreement shall not be considered a
modification, cancellation or consent to a future waiver of such terms and
conditions or of any preceding or succeeding breach thereof, unless expressly
so stated.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
applicable to contracts made and performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the Award Date.
The foregoing is agreed to: COMPUTER SCIENCES CORPORATION
_____________________________ By _____________________________
Employee: Name:
Title:
SS#:
Grant Date:
By _____________________________
Name:
Grant Price: Title:
Options Granted:
8
<PAGE> 37
EXHIBIT (c)(14)(C)(a)
AGREEMENT WITH PARTICIPANTS IN
THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Agreement is made and entered into as of February 2, 1998 by and
among Computer Sciences Corporation (the "Company"), Van B. Honeycutt, the
Chairman, President and Chief Executive Officer of the Company (the "Chief
Executive Officer"), and the person listed on Exhibit A attached hereto, who is
both an employee of the Company or its affiliates and a participant in the
Company's Supplemental Executive Retirement Plan (the "Employee").
WHEREAS, the Supplemental Executive Retirement Plan was amended,
effective as of the date hereof (as so amended, the "SERP");
WHEREAS, Article III of the SERP provides that no person shall be a
participant in the SERP unless such individual (a) has been specifically
designated as such in a written instrument executed by the Chief Executive
Officer and (b) has consented to be governed by the terms of the SERP pursuant
to a written instrument satisfactory in form to the Company;
WHEREAS, the parties hereto desire that this Agreement constitute a
written instrument, satisfactory in form to the Company, pursuant to which the
Chief Executive Officer specifically designates the Employee as a participant in
the SERP and the Employee consents to be governed by the terms of the SERP;
WHEREAS, all stock options and restricted stock which were issued by the
Company to the Employee at any time and which are currently outstanding are
listed on Exhibit A attached hereto (collectively, the "Stock Options" and the
"Restricted Stock," respectively); and
WHEREAS, the Company desires to confer an additional benefit, but not
impose any additional obligations, upon the Employee under the agreements
between the Company and the Employee relating to the Stock Options
(collectively, the "Stock Option Agreements") and the Restricted Stock
(collectively, the "Restricted Stock Agreements");
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants set forth herein, the parties hereto hereby agree as follows:
1. Participation in the SERP. The Chief Executive Officer hereby
confirms that, as contemplated in Article III of the SERP, he has designated the
Employee as a participant in the SERP. The Employee hereby confirms that, as
contemplated in Article III, the Employee has consented to be governed by the
terms of the SERP (as amended effective as of the date hereof), and the Company
hereby confirms that this Agreement is satisfactory in form for purposes of
evidencing such consent.
<PAGE> 38
2. Amendment of Stock Option Agreements.
(a) Retirement Age Reduced from Age 65 to Age 62. Section
2(a)(ii) (or the similar provision) of each Stock Option Agreement dated
on or after December 6, 1996, and Section 1A of each Stock Option
Agreement dated prior to December 6, 1996, is hereby revised to reduce
the retirement age from 65 to 62, and is hereby amended to read in its
entirety as follows:
"Notwithstanding anything to the contrary in this
Agreement, if the Employee's status as a full-time employee of
the Company or any of its subsidiaries is terminated after
February 2, 1998 by reason of the Retirement (as hereinafter
defined) of the Employee, then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement shall
terminate on such date and (B) the remaining vested portion of
the Option shall terminate upon the earlier of the Expiration
Date or the third anniversary of the date of such Retirement,
provided that if the Employee shall die prior to such earlier
date, the remaining vested portion of the Option shall remain
exercisable until, but shall terminate upon, the earlier of the
Expiration Date or the first anniversary of the date of the
Employee's death. "Retirement" shall mean (X) retirement from the
Company or any of its subsidiaries at age 55 or older (but less
than 62), provided that the Employee shall have been a continuous
full-time employee of the Company or its subsidiaries for at
least 10 years prior thereto and the Board of Directors of the
Company shall have determined within 90 days prior thereto that
the Employee has made an outstanding contribution to the affairs
of the Company or its subsidiaries, or (Y) retirement from the
Company or any of its subsidiaries at age 62 or older."
(b) Minimum Three-Month Exercise Period after Termination of
Employment. Each of the Stock Option Agreements is hereby amended to add
the following provision:
"Section 1B Notwithstanding anything to the contrary in
this Agreement, if the Employee's status as a full-time employee
of the Company or any of its subsidiaries is voluntarily or
involuntarily terminated for any reason or for no reason, then
the Option shall not terminate, or cease to be exercisable to
purchase the underlying shares with respect to which the Option
had vested as of the date of such termination of full-time
status, prior to the earlier of the Expiration Date or three
months after the date of such termination of full-time status."
(c) Acceleration of Stock Options upon a Change of Control. With
respect to each Stock Option Agreement which contains the following
provision as Section 2(a)(i):
2
<PAGE> 39
"Section 2(a)(i) Termination Within Three Years After
Change of Control. If the Employee's status as a full-time
employee of the Company or any of its subsidiaries is terminated
for any reason, or for no reason, within three years after a
Change of Control (as hereinafter defined), then (A) the portion
of the Option that has not vested on or prior to the date of such
termination of full-time status shall fully vest on such date and
(B) the Option shall terminate upon the earliest of the
Expiration Date, the third anniversary of the date of such
termination of full-time status, or, if applicable, the first
anniversary of the date of the Employee's death. "Change of
Control" shall mean the first to occur of the following events:
(V) the dissolution or liquidation of the Company; (W) a sale of
substantially all of the property and assets of the Company; (X)
a reorganization, merger or consolidation of the Company the
consummation of which results in the outstanding securities of
any class then subject to the Option being exchanged for or
converted into cash, property and/or securities not issued by the
Company; (Y) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as
directors cease to constitute a majority of the directors of the
Company or (Z) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")."
such provision is hereby deleted. All Stock Option Agreements are hereby amended
to add the following provision as Section 2A:
"Section 2A Acceleration of Option Upon Change of Control.
Notwithstanding anything to the contrary in this Agreement, upon
the date of a Change of Control (as hereinafter defined): (A) the
portion of the Option that has not vested on or prior thereto
shall fully vest on such date and (B) the Option shall remain
exercisable until, and shall terminate upon, the earlier of the
Expiration Date or, if applicable, the first anniversary of the
date of the Employee's death. "Change of Control" shall mean the
first to occur of the following events: (U) the dissolution or
liquidation of the Company; (V) a sale of substantially all of
the property and assets of the Company; (W) a merger,
consolidation, reorganization or other business combination to
which the Company is a party and the consummation of which
results in the outstanding securities of any class then subject
to the Option being exchanged for or
3
<PAGE> 40
converted into cash, property and/or securities not issued by the
Company; (X) 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
securities of any class then subject to the Option 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, (Y) any date upon which the directors of the Company
who were nominated by the Board of Directors for election as
directors cease to constitute a majority of the directors of the
Company or (Z) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")."
(d) Certain Determinations to be made by Continuing Members of
the Compensation Committee. Section 2(c)(ii) (or the comparable
provision) of each Stock Option Agreement is hereby amended to insert
the phrase ", by vote of a majority of the directors of the Company who
are, and immediately prior to such event were, members of the
Committee," so that such subsection, together with the lead-in thereto,
shall read in its entirety as follows:
"Section 2(c) The Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for
any reason. In addition, the Option shall fully vest with respect
to all Option Shares upon the first to occur of the following:
(i) . . .
(ii) unless the Committee, by vote of a majority of
the directors of the Company who are, and immediately
prior to such event were, members of the Committee, shall
determine otherwise within ten business days thereafter,
the public announcement that any person or entity,
together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of such person or entity, has become the
Beneficial Owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the
Company representing 30% or more of the voting power of
the Company, provided, however, that the terms "person"
and "entity," as used in this subsection (ii), shall not
include (A) the Company or any of its subsidiaries, (B)
any employee benefit plan of the Company or any of its
subsidiaries, or (C) any entity
4
<PAGE> 41
holding voting securities of the Company for or pursuant
to the terms of any such plan;"
3. Amendment of Restricted Stock Agreements.
(a) Acceleration of Stock Options upon a Change of Control. With
respect to each Restricted Stock Agreement which contains the following
provision:
"Section 3(a) Immediately prior to the occurrence of any
of the following events (or, if the Employee shall not be a
full-time employee of the Company or any of its subsidiaries on
the date of such event because of an approved leave of absence,
upon the first day thereafter on which the Employee shall again
have become a full-time employee of the Company or any of its
subsidiaries), all applicable Forfeiture Periods shall terminate
and no Restricted Share shall thereafter be subject to the
restrictions on transfer imposed pursuant to Section 2 hereof:
(i)the termination of the Employee's status as
a full-time employee of the Company or any of its
subsidiaries for no reason, or for any reason, within
three years following (A) the dissolution or
liquidation of the Company, (B) a sale of
substantially all of the property and assets of the
Company, (C) a reorganization, merger or consolidation
of the Company the consummation of which results in
the outstanding securities of any class then
comprising the Restricted Shares being exchanged for
or converted into cash, property and/or securities not
issued by the Company, (D) any date upon which the
directors of the Company who were nominated by the
Board of Directors for election as directors cease to
constitute a majority of the directors of the Company
or (E) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant
to Item 6(e) (or any successor provision) of Schedule
14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
or"
such clause (i) is hereby deleted. All Restricted Stock Agreements are hereby
amended to add the following provision as Section 3A:
"Section 3A Notwithstanding anything to the contrary in
this Agreement, upon the first to occur of the following, all
applicable Forfeiture Periods shall terminate and no Restricted
Share shall thereafter be subject to the restrictions on transfer
imposed pursuant to Section 2 hereof: (A) the dissolution or
liquidation of the Company, (B) a sale of substantially all of
the property and assets of the Company, (C) a
5
<PAGE> 42
merger, consolidation, reorganization or other business
combination to which the Company is a party and the consummation
of which results in the outstanding securities of any class then
comprising the Restricted Shares being exchanged for or converted
into cash, property and/or securities not issued by the Company;
(D) 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 securities of any
class then comprising the Restricted Shares 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; (E) any
date upon which the directors of the Company who were nominated
by the Board of Directors for election as directors cease to
constitute a majority of the directors of the Company or (F) a
change of control of the Company of the type required to be
disclosed in a proxy statement pursuant to Item 6(e) (or any
successor provision) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")."
(b) Certain Determinations to be made by Continuing Members of
the Compensation Committee. Section 3(a)(ii) (or the comparable
provision) of each Restricted Stock Agreement is hereby amended to
insert the phrase ", by vote of a majority of the directors of the
Company who are, and immediately prior to such event were, members of
the Committee," so that Section 3(a) shall read in its entirety as
follows:
"Section 3(a) Immediately prior to the occurrence of any
of the following events (or, if the Employee shall not be a
full-time employee of the Company or any of its subsidiaries on
the date of such event because of an approved leave of absence,
upon the first day thereafter on which the Employee shall again
have become a full-time employee of the Company or any of its
subsidiaries), all applicable Forfeiture Periods shall terminate
and no Restricted Share shall thereafter be subject to the
restrictions on transfer imposed pursuant to Section 2 hereof:
(i) [DELETED]
(ii) unless the Committee, by vote of a majority of
the directors of the Company who are, and immediately
prior to such event were, members of the Committee, shall
determine otherwise within ten business days thereafter,
the public
6
<PAGE> 43
announcement that any person or entity, together with all
Affiliates and Associates (as such capitalized terms are
defined in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of
such person or entity, has become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act)
of voting securities of the Company representing 30% or
more of the voting power of the Company, provided,
however, that the terms "person" and "entity," as used in
this subsection, shall not include (A) the Company or any
of its subsidiaries, (B) any employee benefit plan of the
Company or any of its subsidiaries, or (C) any entity
holding voting securities of the Company for or pursuant
to the terms of any such plan."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
--------------------------------
EMPLOYEE
--------------------------------
VAN B. HONEYCUTT
Chairman, President
and Chief Executive Officer,
Computer Sciences Corporation
COMPUTER SCIENCES CORPORATION
By
----------------------------------
Hayward D. Fisk
Vice President, General Counsel
and Secretary
7
<PAGE> 44
EXHIBIT A
Name of the Employee:
-------------------------
Description of Non-Qualified Stock Options:
Original Number of
Date of Grant Name of Plan Underlying Shares
- ------------- ------------ ------------------
Description of Restricted Stock:
Date of Grant Name of Plan Number of Shares
- ------------- ------------ ----------------
<PAGE> 45
EXHIBIT (c)(14)(D)(a)
AMENDMENT OF RESTRICTED STOCK AGREEMENTS
This Amendment of Restricted Stock Agreements ("Amendment") is
unilaterally made and entered into by Computer Sciences Corporation (the
"Company") as of February 2, 1998 for the purpose of amending the Restricted
Stock Agreements by and between the Company and the person listed on Exhibit A
attached hereto, who is an employee of the Company or its affiliates (the
"Employee"), relating to the outstanding restricted stock listed on Exhibit A
hereto (the "Agreements").
WHEREAS, the Company desires to confer an additional benefit, but not
impose any additional obligations, upon the Employee under the Agreements;
NOW, THEREFORE, in consideration of the foregoing recital and the
anticipated reliance by the Employee upon the amendment of the Agreements
effected hereby, Section 3(a)(i) of each Agreement is hereby amended to insert
the phrase ", by vote of a majority of the directors of the Company who are, and
immediately prior to such event were, members of the Committee," and Section
3(b) of each Agreement is hereby amended to insert the following subsection
(iv):
"(iv) 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 securities of any class then
comprising the Restricted Shares 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."
so that Section 3(a) and (b) shall read in their entirety as follows:
"Section 3 Early Termination of Forfeiture Periods.
(a) Immediately prior to the occurrence of any of the following
events, all applicable Forfeiture Periods shall terminate and no
Restricted Share shall thereafter be subject to the restrictions on
transfer imposed pursuant to Section 2 hereof:
(i) unless the Committee, by vote of a majority of the
directors of the Company who are, and immediately prior to such
event were, members of the Committee, shall determine otherwise
within ten business days thereafter, the public announcement that
any person or entity, together with all Affiliates and Associates
(as such capitalized terms are defined in Rule 12b-2 promulgated
under the Securities
<PAGE> 46
Exchange Act of 1934, as amended (the "Exchange Act") of such
person or entity, has become the Beneficial Owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Company representing 30% or more of the voting
power of the Company, provided, however, that the terms "person"
and "entity," as used in this subsection (i), shall not include
(A) the Company or any of its subsidiaries, (B) any employee
benefit plan of the Company or any of its subsidiaries, or (C)
any entity holding voting securities of the Company for or
pursuant to the terms of any such plan;"
(ii) any date upon which the directors of the Company who
were nominated by the Board of Directors for election as
directors cease to constitute a majority of the directors of the
Company, unless, prior to such date, the Board of Directors shall
determine otherwise; or
(iii) a change of control of the Company of the type
required to be disclosed in a proxy statement pursuant to Item
6(e) (or any successor provision) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, unless, prior to such
change of control, the Board of Directors shall determine
otherwise.
(b) Unless the Committee shall determine otherwise, including,
without limitation, a determination to repurchase any such Restricted
Shares pursuant to Section 4(c) hereof, all applicable Forfeiture Periods
shall terminate and no Restricted Shares shall thereafter be subject to
the restrictions on transfer imposed pursuant to Section 2 hereof upon the
occurrence of any of the following events:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property and
assets of the Company;
(iii) a merger, consolidation, reorganization or other
business combination to which the Company is a party and the
consummation of which results in the outstanding securities of
any class then comprising the Restricted Shares being exchanged
for or converted into cash, property and/or securities not issued
by the Company; or
(iv) 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
securities of any class then comprising the Restricted Shares
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
2
<PAGE> 47
converted as a result of such business combination) represent
less than 50% of the voting power of the Company immediately
following such business combination."
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly
executed as of the day and year first above written.
COMPUTER SCIENCES CORPORATION
By
----------------------------------
Van B. Honeycutt
Chairman, President
and Chief Executive Officer
3
<PAGE> 48
EXHIBIT A
Name of the Employee:
-------------------------
Description of Restricted Stock:
Date of Grant Name of Plan Number of Shares
- ------------- ------------ ----------------
4
<PAGE> 1
EXHIBIT (c)(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> 2
(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,
2
<PAGE> 3
fiduciary relationship or other security arrangement shall be established
to assure payment;
(ii) no Participants 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
benefit 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
3
<PAGE> 4
(c) interpret and construe the terms and provisions of this Plan.
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.
4
<PAGE> 1
Exhibit (c)(17)
RECEIVED
AND FILED
FEB 25 2:19 PM '98
LANCE D. WILSON
CLERK
BY:_______________
DEPUTY
SCHRECK MORRIS
STEVE MORRIS
1200 Bank of America Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
(702) 474-9400
HOWARD, DARBY & LEVIN
C. WILLIAM PHILLIPS
1330 Avenue of the Americas
New York, New York 10019
(212) 841-1000
Attorneys for Plaintiff
Computer Associates International, Inc.
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
COMPUTER ASSOCIATES )
INTERNATIONAL, INC., )
)
Plaintiff )
)
v. )
) CV-S-98-00278-LDG
COMPUTER SCIENCES ) (RLH)
CORPORATION, IRVING W. BAILEY, )
HOWARD P. ALLEN, JAMES R. MELLOR, )
WILLIAM P. RUTLEDGE, WARREN )
MCFARLAN, THOMAS A. MCDONNELL, )
RICHARD C. LAWTON, LEON J. LEVEL, )
WILLIAM R. HOOVER and )
VAN B. HONEYCUTT. )
)
Defendants. )
)
___________________________________)
COMPUTER ASSOCIATES' REPLY TO COMPUTER SCIENCES RESPONSE TO
THE COURT'S FEBRUARY 18 ORDER AND
IN SUPPORT OF COMPUTER ASSOCIATES' MOTION
FOR EXPEDITED DECLARATION
AND ON THE MERITS OF THE RELIEF REQUESTED
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
Table of Contents ....................................................... i-ii
Table of Authorities .................................................... iii-iv
Introduction ............................................................ 1
Statement of Facts ...................................................... 4
Argument ................................................................ 8
Point I By Adopting the Bylaw Amendments, the CSC
Directors Violated Their Fiduciary Duties
to the Shareholders ...................................... 10
A. The Primary Purpose of the Board's Bylaw
Amendments Is To Disenfranchise the
CSC Shareholders ...................................... 10
B. Nevada's "Other Constituencies" Statue Does
Not Authorize the Unreasonable Defensive
Measures Taken by the CSC Board ....................... 18
Point II The Board Did Not Have the Power to Remove
the Shareholders' Right to Amend the Bylaws .............. 19
Point III The Board Did Not Have the Power To
Revoke The Shareholders' Right to
Remove Directors ......................................... 22
Point IV The Proposals Contained In The Proxy
Solicitation Are Consistent With The
Bylaws and Nevada Law .................................... 23
A. Nevada Law and the Bylaws Should be Interpreted
Consistently With the Paramount Role of the
Shareholder Franchise in Corporate Government ......... 23
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B. Under the Nevada Director Removal Statute,
Two-Thirds of the CSC Shareholders May
Remove Two-Thirds of the Directors ....................... 24
C. Vacancies On the Board May Be Filled
By the Written Consent of the
Shareholder .............................................. 25
D. CSC Lacks Statutory Authority to Set
the Record Date for Computer Associates'
Solicitations ............................................ 26
E. The Bylaws Require Written Consent of a
Majority of Shareholders to Amend the
Bylaws ................................................... 26
F. The Annual Meeting Must Be Held On
August 10, 1998 .......................................... 27
Conclusion ................................................................. 28
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TABLE OF AUTHORITIES
CASE PAGE
Aetna Life Ins. Co. v. Haworth
- ------------------------------
300 U.S. 227 (1937) ................................................... 9
Aprahamian v. HBO & Co.
- ----------------------
531 A.2d 1204 (Del. Ch. 1987) ......................................... n.6
Blasius Indus, Inc. v. Atlas Corp.
- ---------------------------------
564 A.2d 651 (Del. Ch. 1988) .......................................... passim
Centaur Partners v. National Intergroup, Inc.
- ---------------------------------------------
582 A.2d 923 (Del. 1990) .............................................. n.7
Central Montana Elec. Power Coop., Inc. v. Bonneville Power Admin.
- ------------------------------------------------------------------
840 F.2d 1472 (9th Cir. 1988) ......................................... 10
Edgar v. MITE
- -------------
457 U.S. 624 (1982) ................................................... 3
Frantz Manuf. Co. v. EAC Indus.
- -------------------------------
501 A.2d 401 (Del. 1985) .............................................. n.9
Hilton Hotels Corp. v. ITT Corp.,
- ---------------------------------
978 F. Supp. 1342 (D. Nev. 1997) ...................................... passim
Hilton Hotels Corp. v. ITT Corp.,
- ---------------------------------
962 F. Supp. 1309 (D. Nev. 1997) ...................................... 28
IBS Fin. Corp. v. Seidman & Assocs. L.L.C.
- ------------------------------------------
No. 97-5056, 1998 WL 52292 (3d Cir. Feb. 11, 1998) .................... 16
ICN Pharmaceuticals, Inc. v. Khan
- ---------------------------------
2 F.3d 484 (2d Cir. 1993) ............................................. 3
Maryland Cas. Co. v. Pacific Coal & Oil Co.
- -------------------------------------------
312 U.S. 270 (1941) ................................................... 9
Packer v. Yampol
- ----------------
No. 8432, 1986 WL 4748 (Del. Ch. Apr. 18, 1986) ....................... 17
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Roven v. Cotter,
- ----------------
547 A.2d 603 (Del. Ch. 1988) .......................................... 21
Schnell v. Chris-Craft Indus. Inc.
- ----------------------------------
285 A.2d 437 (Del. 1971) .............................................. n.9
Shoen v. AMERCO
- ---------------
885 F. Supp. 1332 (D. Nev. 1994) ........................... 11-17, n.4, 13-14
Stroud v. Grace
- ---------------
606 A.2d 75 (Del. 1992) ............................................... n.4
Unitrin Inc. v. American Gen. Corp.,
- ------------------------------------
651 A.2d 1361 (Del. 1995) ............................................. n.4
Unocal Corp. v. Mesa Petroleum Co.
- ----------------------------------
493 A.2d 946 (Del. 1985) .............................................. n.4
STATUTES
Nev. Rev. Stat. Section 78.120(2) ....................................... n.7
Nev. Rev. Stat. Section 78.138 .......................................... 15, 18
Nev. Rev. Stat. Section 78.335(1)(b) .................................... 22, 23
Nev. Rev. Stat. Section 78.390(1) ....................................... 23
28 U.S.C. Section 2201 .................................................. 19
Fed. R. Civ.P.57 ........................................................ 10
OTHER AUTHORITIES
Legislative History 91-4 A.B. 655 of the 66th Session of the Nevada
Legislative, 1991 (Minutes of Assembly Committee on Judiciary;
May 21, 1991) ......................................................... 19
Legislative History 93-3, A.B. 387 of the 67th Session of the Nevada
Legislature ........................................................... n.10
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This reply is necessary to address the points raised in Computer
Sciences Corporation's ("CSC") "Response" of February 23, which go well beyond
the issues raised in Computer Associates International, Inc.'s ("Computer
Associates") motion to expedite declaratory relief. CSC's response asserts there
is nothing for the Court to declare judgement on because the day after this
suit was filed -- and on the same day the Court's order directing CSC to file
a response was entered and served -- the CSC Board met and restructured CSC's
Bylaws to entrench the Board and current management by eliminating its
shareholder's rights to consider CA's tender offer and matters related thereto
and this Court's authority to enforce those rights. These amendments to CSC's
Bylaws are void under the Bylaws, Nevada law, and prior decisions of this Court.
INTRODUCTION
Just four months ago, in Hilton Hotels Corp. v. ITT, this Court
struck down the efforts of ITT management to deprive its shareholders of their
basic right to decide whether to accept Hilton's tender offer. As the Court
noted, "even if an action is normally permissible, and the board adopts it in
good faith, a board cannot undertake such action if the primary purpose is to
disenfranchise the shareholders in light of a proxy contest." Hilton Hotels
Corp. v. ITT, 978 F. Supp. 1342, 1348-49 (D. NEV. 1977).
Last week, the CSC Board of Directors directly violated this
<PAGE> 7
holding. The day after Computer Associates announced its $9 billion tender
offer and proxy contest, the CSC Board met and gutted CSC's Bylaws, stripping
away the basic franchise rights of its shareholders. In particular, the Board
unilaterally revoked its shareholders' rights to remove directors, call
meetings, act by consent, or make bylaw amendments -- precisely the bylaws that
Computer Associates relied upon in commencing its proxy campaign and this
lawsuit. Two of these amendments are invalid even without Hilton, because the
Board lacked the power to adopt them under Nevada statutes and CSC's Bylaws.
CSC attempts to rationalize these actions by claiming that it merely
"adopted measures designed to give it more time to consider the offer, and make
a proper, well-informed recommendation to its shareholders." CSC Response at
10. The facts give the lie to this explanation: The CSC Board has already
considered -- and publicly rejected -- Computer Associates' offer. It has
refused to negotiate or even to explore whether another, higher offer is
available. Indeed, the Board has stated that "any effort to combine [CSC] and
Computer Associates would not make business sense," and has engaged in baseless
attacks on Computer Associates and its principals.
The Board's stated reasons are a pretext for its real agenda, to kill this
deal. The Board needs no more time, since it has already rejected the Offer.
Further, its bylaw changes allow the Board to delay any shareholder
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vote by over one year, a time period designed to preclude any transaction. Cf.
Hilton, 978 F. Supp. at 1348 ("ITT shareholders will have no choice but to
accept the Comprehensive Plan and a majority of ITT's incumbent board members
for another year."). The Board betrays its agenda by purporting to embrace
"expedited consideration" for one of Computer Associates' claims, and then
proposing a four-month delay while it subjects Computer Associates to
extraordinary discovery - over 20 depositions and the production of warehouses
of documents on unrelated transactions completed years ago.
CSC argues that Computer Associates' application for expedited treatment
on its Bylaws claims has been rendered moot by the Board's Bylaw amendments.
The Board's illegal actions cannot moot Computer Associates' claims. To the
contrary, CSC's unprecedented and illegal effort to bulldoze away its
shareholders' rights underscores the urgent need for resolution of these
issues. As the United States Supreme Court has noted, "delay can seriously
impede a tender offer," permanently tilting the playing field against the
tender offer because it provides
incumbent management with a powerful tool to combat
tender offers, perhaps to the detriment of the stockholders
who will not have an offer before them during this
period. These consequences are precisely what Congress
determined should be avoided ....
Edgar v. MITE, 457 U.S. 624, 635, 637 (1982). ICN Pharmaceuticals, Inc. v.
Khan, 2 F.3d 484, 492 (2d Cir. 1993) ("Time is of the essence in these
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contests, and delay can be a potent weapon favoring incumbent management.").
Computer Associates asks that the Court restore CSC shareholders' clear
rights under Hilton to exercise their franchise. The relief is needed now: CSC
management knows all too well that delay is their only defense to the deal, and
therefore seeks to stall as long as possible the determination by the
shareholders or by the Court. The resolution of these legal issues need not be
delayed: No discovery is needed to resolve the bylaw issues raised in Computer
Associates' original complaint, which the precedents of this Court and the
courts of Delaware dispositively resolve. Nor is any discovery needed to
declare that CSC's bylaw amendments are plainly unlawful, as alleged in
Computer Associates' Supplemental and Amended Complaint.
CSC shareholders should not be stripped of their right to decide.
Statement of Facts(1)
- --------------------
(1) CSC's Response seeks to smear Computer Associates with accusations of
misconduct, including misrepresentations to the SEC, false statements to the
press, threatening statements to CSC's CEO, and undefined "unseemly" conduct.
CSC Response at 2-4. The claims are false. In the same vein, CSC's misleading
comment ("supported" by mostly outdated news articles) that Computer Associates
will mistreat CSC customers and employees after a merger is also false. CSC
Response at 4 & n.2. As CSC knows, Computer Associates has stated that no CSC
jobs will be cut as a result of the merger -- a promise that Computer Associates
has made and kept before. See Fortune, July 21, 1997 (Cheyenne Software
structure and employees kept intact after acquisition by Computer Associates);
PC Week Online, Oct. 7, 1996 ("CA scores points with users on no-layoff
announcement").
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On February 17, 1998, Computer Associates set out to replace the CSC Board
of Directors by straightforward and democratic means. It publicly filed a
preliminary consent solicitation with the SEC, commenced a tender offer (the
"Offer"), and filed a complaint with this Court, seeking to clarify exactly
what percentage of voting shares was needed to replace CSC's directors.
Computer Associates asked this Court to interpret the CSC Bylaws and to
declare, inter alia, that:
(a) a majority of the outstanding voting shares are sufficient to
amend the Bylaws by written consent;
(b) two-thirds of the outstanding voting shares, acting by consent,
are sufficient to remove at least a majority of the directors;
and
(c) a majority of the outstanding voting shares are sufficient
- ---------------
CSC also pulls out-of-context quotes from a highly selective sampling of
articles, all apparently intended to lessen the Court's opinion of Computer
Associates. CSC Response at 4, n.2. We can just as easily counter with positive
articles about Computer Associates or with press critical about CSC. See, e.g.,
Fortune, July 21, 1997 (Computer Associates' customers, polled by consulting
analyst, either "thrilled" with customer support or believe it has improved);
New York Times, February 4, 1997 (industry analysts agree that "kinder,
gentler" Computer Associates is focused on customer satisfaction); USA Today,
Sept. 2, 1997 (boy reunited with mother after twelve years because of $350,000
computer system donated by CEO of Computer Associates to National Center for
Missing and Exploited Children); Computerworld, May 19, 1997 (large corporate
customer cancels contract with CSC because of dissatisfaction with CSC's
performance).
This campaign is relevant, if at all, to CSC shareholders. It serves no
purpose here.
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to fill vacancies caused by removal of directors by written
consent.
Computer Associates also explained that (i) if it failed to receive
written consent to replace a majority of directors, it would attempt to call a
special meeting on this question, and (ii) if it failed to remove sufficient
directors by a special meeting, it would seek to replace them at the annual
meeting. The complaint sought a declaration that the Bylaws required CSC to hold
its annual meeting on August 10, 1998.(2)
The next day, February 18, CSC's Board gutted CSC's corporate
governance structure. Without seeking shareholder comment or approval, the CSC
Board marched methodically through its Bylaws, amending each bylaw that
Computer Associates relied upon in seeking shareholder approval (the "Bylaw
Amendments"). The Board's clear purpose was to prevent the CSC shareholders
from voting on Computer Associates' proposals, and to render Computer
Associates' consent solicitation and this lawsuit useless.
Specifically, the CSC Board's Bylaws Amendments:
- Virtually eliminated the right of shareholders to initiate and
_______________________________
(2) The background and specific details of the Offer already have been
described in Computer Associates' initial Brief in Support of Motion for
Expedited Declaration, dated February 17, 1998 ( the "Initial Brief").
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<PAGE> 12
enact bylaw amendments, by increasing the percentage of shareholders
required from a majority to 90%, an extreme supermajority level that,
for all practical purposes, is impossible to achieve. (Article VIII,
Section 1);
- Virtually eliminated the right of shareholders to remove directors
through written consent, by increasing the percentage of shareholders
required from two-thirds to 90% (Article III, Section 2);
- Eliminated the shareholders' right to call a special meeting of
shareholders for any purpose, except as provided by Nevada law;
- Enacted an employee severance plan under which the current CEO may,
in his discretion, give away millions of dollars of company money to
as many as 150 employees only if Computer Associates acquires CSC;
and
- Eliminated the requirement (observed throughout CSC's existence) to
hold its annual shareholders meeting on the second Monday in August,
giving the Board complete discretion to decide when the annual
meeting will occur and enabling it to delay the meeting for at least
a year (Article II,
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Section 2).
The day after it overhauled the Company's Bylaws, the CSC Board announced
its rejection of Computer Associates' offer. In a February 19 conference call
with members of the investment community, Van Honeycutt, CSC's Chief Executive
officer, referred to Computer Associates' offer as "low ball," "a ridiculous
number," and "a joke." In a letter sent to the CEO of Computer Associates the
same day, Honeycutt asserted that "any effort to combine Computer Sciences and
Computer Associates does not make business sense."(3) (Emphasis added.)
In the meantime, CSC shareholders have had no say on whether to sell their
company. Without the Court's intervention to restore the Bylaws, they will have
none.
Argument
The shareholders' right to vote "underlies the concept of corporate
democracy." Hilton Hotels v. ITT Corp, 978 F. Supp. 1342, 1347 (D. Nev. 1997).
Interference with the shareholder franchise is especially
serious. It is not be left to the Board's business
judgment, precisely because it undercuts a primary
justification for allowing directors to rely upon
their business judgment in almost every
- ------------------
(3) CSC February 19, 1998 press release (attached as Exhibit 4 to the
Supplemental and Amended Complaint).
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other context.
Id. at 1351.
The Bylaw Amendments dramatically restrict the shareholder franchise,
virtually eliminating the power of CSC shareholders to remove directors, call
shareholder meetings, act by consent, or amend the Bylaws. The purpose of the
Board's amendments is as transparent as their effect: to entrench management at
the expense of the shareholder franchise. Because these amendments were adopted
for "the primary purpose...to disenfranchise the shareholders in light of a
proxy contest." Hilton, 978 F. Supp. at 1349 (citing Blasius Indus., Inc. v.
Atlas Corp., 564 A.2d 651,652 (Del. Ch. 1988)), and because there is no
"compelling justification" (Hilton 978 F. Supp. at 1351) to block the
shareholder franchise, the amendments constitute a clear breach of the Board's
fiduciary duty under Nevada law and this court's precedents.
The CSC Board's assault on shareholder democracy makes expedited review
essential. The Bylaw Amendments, if allowed to stand, will preclude any
meaningful exercise of the shareholder franchise and effectively kill the
tender offer. See Maryland Cas. Co. V. Pacific Coal & Oil Co., 312 U.S. 270,273
(1941); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241 (1937). The
Declaratory Judgment Act, 28 U.S.C. Section 2201, authorizes federal courts to
make prospective declarations regarding "the rights and other legal
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relations of any interested party," and both the Act itself and Federal Rule of
Civil Procedure 57 permit the Court to grant expedited review of such an
action. See Central Montana Elec. Power Coop., Inc. v. Booneville Power Admin.,
840 F.2d 1472, 1475 & n.1 (9th Cir. 1988); Fed. R. Civ. P. 57 (allowing courts
to "order a speedy hearing of an action for a declaratory judgment").
Point I
BY ADOPTING THE BYLAW AMENDMENTS, THE CSC DIRECTORS
VIOLATED THEIR FIDUCIARY DUTIES TO SHAREHOLDERS.
A. The Primary Purpose of the Board's Bylaw Amendments Is To Disenfranchise the
CSC Shareholders.
In Hilton, this Court held that Board actions that have the "primary
purpose of interfer[ing] with [the] shareholder franchise" are highly suspect
under Nevada law and must be struck down unless accompanied by a "compelling
justification":
[E]ven if an action is normally permissible, and the board adopts it
in good faith and with proper care, a board cannot undertake such
action if the primary purpose is to disenfranchise the shareholders in
light of a proxy contest.
978 F. Supp. at 1348-49.(4)
- -------------------------
(4) When a Board adopts defensive measures "in response to a perceived threat to
corporate policy and effectiveness that touches upon issues of control," the
heightened scrutiny of Unocal Corp., v. Mesa Petroleum Co., 493 A.2d 946 (Del.
1985), applies. Unitrin Inc. v. American Gen. Corp., 651.A.2d 1361, 1372 n.9
(Del. 1995) (internal quotation marks omitted); Hilton, 978 F. Supp. at 1347.
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The reason is that "[i]nterference with shareholder voting" undermines the
essence of corporate democracy, and destroys the balance of power between
shareholders and directors. Shoen, 885 F. Supp. at 1340-41. It is precisely
because shareholders exert control over directors that courts normally give a
great deal of deference to the Board's decisions on the day-to-day affairs of
the company. Id, at 1340. But to protect this dynamic, courts cannot defer to
Board efforts that interfere with the free exercise of the franchise:
[I]nterference with shareholder voting is an especially serious matter, not
to be left to the directors' business judgment, precisely because it
undercuts a primary justification for allowing directors to rely on their
judgment in almost every other context. Put another way, "the ordinary
considerations to which the business judgment rule originally responded are
simply not present in the shareholder voting context," because when a board
interferes with shareholder voting it interferes with the very "allocation,
between
- ----------------------
That test requires the Board to show that it had reasonable grounds for
believing that such a threat existed, and that its defensive measures were
reasonable in relation to the threat. Hilton, 978 F. Supp. at 1347.
When these defensive measures interfere with the shareholder franchise, both the
Blasius and Unocal doctrines are implicated. See Hilton, 978 F. Supp. at 1346;
Stroud v. Grace, 606 A.2d 75, 92 n.3 (Del. 1992). Whatever doctrinal label is
applied, the test in this situation is the same: "A board's unilateral decision
to adopt a defensive measure touching upon issues of control that purposefully
disenfranchises its shareholders. . .cannot be sustained without a compelling
justification." Hilton, 978 F. Supp. at 1346; (quoting Stroud, 606 A.2d at 92,
n.3). Because the CSC Board's actions affect stockholder voting rights and the
allocation of power between directors and stockholders, we analyze these
actions under Blasius, as the Hilton and Shoen courts did. Hilton, 978 F. Supp.
at 1348-50, 1351; Shoen, 885 F. Supp. at 1340-42.
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shareholders as a class and the board, of effective power with respect
to governance of the corporation."
Id. at 1340-41 (citations omitted) (quoting Blasius, 564 A.2d at 659, 660). See
also Hilton, 978 F. Supp. at 1347 ("This Court fully endorses the reasoning in
Shoen and Blasius regarding the importance of shareholder franchise to the
entire scheme of corporate governance.")
To determine the board's "primary purpose," Hilton relied on
"circumstantial evidence," because "a board would likely never concede that
its primary purpose was to entrench itself." Hilton, 978 F. Supp. at 1349. The
factors applied by the Hilton court, as relevant here, are (1) the timing of
the Board's actions; (2) the effect on shareholders of the actions; (3) whether
the same directors that took the actions are the ones entrenched by the
actions; (4) the benefits to the corporation of the actions; and (5) the
Board's stated purpose for the actions.
The details of the Bylaw Amendments and the circumstances of their
enactment demonstrate that the Board's primary purpose and effect was to
interfere with the free exercise of the shareholder franchise. Because the
Board's Bylaw amendments--all enacted on February 18, 1998 in a coordinated
response to Computer Associates' actions the day before--are "inextricably
related," the Court need only find that a substantial portion of the amendments
violate Blasius in order to strike down the entire set of
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amendments. Hilton, 978 F. Supp at 1350.
Factor 1. Transparent Timing. One day after Computer Associates made
public its consent solicitation and Offer, the CSC Board met and substantially
eliminated the ability of CSC shareholders to amend the bylaws, to remove CSC
directors, to act by written consent, and to call special meetings. Because of
the timing of these changes, CSC's purpose is apparent: to manipulate the
corporate election machinery to defeat Computer Associates' consent
solicitation.
Factor 2. Harmful Effect on CSC Shareholders. The negative affect on
the shareholders' voting rights is dramatic. On February 17, the day Computer
Associates' preliminary consent solicitation and Offer were made public, CSC
shareholders had the following voting rights:
a) a majority of shareholders could amend the Bylaws by written
consent;
b) two-thirds of the shareholders could remove a sufficient number
of directors to designate a majority of the Board; and
c) a majority of shareholders could call a special meeting.
One day later, all of these voting rights were gone. After the Board's Bylaw
Amendments, shareholders need the votes of 90% of the outstanding shares to
amend the Bylaws, to remove directors, and to take any action written.
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<PAGE> 19
consent.
CSC claims that by increasing the requirements for shareholder actions to
90%, it merely "tightened, but did not eliminate" the possibility of
shareholder actions. CSC Response at 12.(5) But the new levels operate as a
complete bar. As the affidavit of former SEC Commissioner and Chief Economist
Charles C. Cox confirms, it will be impossible to clear this 90% hurdle as a
practical matter -- whether to amend the Bylaws, act by written consent, or
remove the directors:
A requirement of 90% approval of the voting power of a
corporation such as CSC cannot be met for any practical
purpose. Due to the wide distribution of ownership of CSC
shares, and the fact that many shareholders do not vote
under any circumstances, the CSC shareholders will be unable
to garner 90% of the voting power of the corporation in
support of any shareholder proposal even if the proposal has
overwhelming shareholder support. Actions predicated on
approval of 90% of the shareholders will never be taken.
Affidavit of Charles C. Cox, dated February 24, 1998, [Paragraph] 10 (emphasis
added), filed herewith. See also Hilton, 978 F. Supp. at 1344 (illegal ITT Plan
increased to 80% the shareholder vote required to (i) remove directors without
- ---------------
(5) CSC misleads the Court by repeatedly claiming that the amended version of
Article VIII, Section 1 requires only an 80% supermajority to amend the Bylaws.
See CSC Response at 11-12. As CSC surely knows, this is not what their own
amended bylaw provides. The new Article VIII, Section 1 requires a 90%
supermajority to amend the Bylaws, as the Bylaws attached to the declaration of
CSC's attorney confirm.
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<PAGE> 20
cause, (ii) repeal this 80% removal, and (iii) repeal classified board
provision).
The Bylaw Amendments also take away the shareholders' right to call a
special meeting, and grant the Board complete discretion to set the annual
meeting date. Even if two-thirds of CSC's shareholders believe that CSC should
accept Computer Associates' offer and therefore want to replace CSC's Board
now, the Board can refuse to schedule the annual meeting until February 1999,
thus entrenching itself and resisting for a year this shareholder
supermajority. Cf. Hilton, 978 F. Supp. at 1348 ("At the very minimum, ITT
shareholders will have no choice but to accept the Comprehensive Plan and a
majority of ITT's incumbent board members for another year. Therefore, the
Comprehensive Plan is preclusive.")
Factor 3. Entrenchment. The directors that enacted these Bylaw Amendments
are the same directors that benefit from these actions. The amendments will
ensure that they are insulated from shareholder democracy and will preserve
their positions.
Factor 4. No Corporate Benefit. Interfering with the shareholder franchise
confers no legitimate benefits on the corporation. Sec. e.g., Hilton, 978 F.
Supp. at 1351 ("[]Nothing in [Nev. Rev. Stat. Section 78.138] suggests that the
interests of third parties are as important as the right of shareholder
franchise.").
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<PAGE> 21
Factor 5. CSC's Stated Reasons. CSC argues that these bylaws
amendments are "designed to give it time to consider the offer, and make a
proper, well-informed recommendation to its shareholders." CSC Response at 10.
This rationalization is disingenuous and hypocritical in light of the Board's
decision to reject the Offer out of hand. Moreover, the Board's decision -- to
permanently strip away the shareholder franchise in response to an already
rejected offer -- is so excessive that it belies its purported rationale. CSC
shareholders do not need to be protected from themselves in deciding whether to
replace their own representatives on the Board. Their rights to decide for
themselves -- rights that they had until February 18 -- should be restored.
Courts have consistently found improper interference with the
shareholder franchise in less egregious situations than the one presented here.
The Third Circuit recently held that a board of directors violated Blasius by
reducing the number of directors from seven to six, because the board's purpose
was to prevent dissident shareholders from gaining two seats on the board, IBS
Fin. Corp. v. Seidman & Assocs., L.L.C. No. 97-5056, 1998 WL 52292, at *11 (3d
Cir. Feb. 11, 1998).
In Shoen, the Board's acceleration of the annual meeting date
affected a dissident shareholder's proxy solicitation efforts and was
overturned. The court explained that this interference with the shareholder
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franchise was sufficient to trigger the Blasius standard; "[W]hile shareholders
can still vote their shares freely, the range of choices available to them has
been narrowed by the advancement of the meeting date and [the shareholder's]
consequent inability to campaign." 885 F. Supp. at 1342. See also Packer v.
Yampol, No. 8432, 1986 WL 4748, *14-15 (Del. Ch. Apr. 18, 1986) (invalidating
issuance of preferred stock with "supervoting" features in response to proxy
contest, since it dilutes voting power of existing shares and generally makes
defeat of management more difficult).(6)
As in Hilton, where the actions of ITT's Board "violate[d] the power
relationship between ITT's board and ITT's shareholders," 978 F. Supp. at 1346,
the actions of CSC's Board substantially skew the allocation of power between
the shareholders and the Board. See also Shoen. 885 F. Supp. at 1341 ("[W]hen a
board interferes with shareholder voting it interferes with the very
'allocation, between shareholders as a class and the board, of effective power
with respect to governance of the corporation.'") (quoting Blasius, 564 A.2d at
659, 660). Because there is no "compelling justification"
- ----------------
In Aprahamian v. HBO & Co., 531 A.2d 1204, 1206-07, 1208 (Del Ch. 1987),
the Board delayed the annual meeting, thereby changing the record date and
invalidating proxies that dissident stockholders had already solicited. This
presented the distinct possibility -- but just a possibility -- that the will
of the majority would be defeated. The court held that because fundamental
rights were involved, this possibility was enough to justify strict review, and
invalidated the Board's action; "[I]n the interests of corporate democracy,
those in charge of the election machinery of a corporation must be held to the
highest standard in providing for and conducting corporate elections."
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<PAGE> 23
for such serious infringement of shareholder voting rights, the Bylaw
Amendments should be declared invalid.
B. Nevada's "Other Constituencies" Statute Does Not Authorize the
Unreasonable Defensive Measures Taken by the CSC Board.
Section 78.138 provides that directors "may consider" the interest of
other constituencies in resisting a change of control. Nev. Rev. Stat. Section
78.138(3),(4). CSC invokes the statute as a pretext to justify its actions.
This Court has already made clear in Hilton that Section 78.138
cannot justify interference with the shareholder franchise:
Other constituencies may be considered under that provision, but
nothing in that statute suggests that the interests of third parties
are as important as the right of shareholder franchise. While the two
interests are not exclusive, neither are they equal. The right of
shareholders to vote on directors at an annual meeting is a
fundamental principle of corporate law and it is not outweighed by
the interests listed in NRS Section 78.138.
978 F. Supp. at 1351 (Emphasis added.) Section 78.138 merely acknowledges that
non-shareholder interests may be considered by the Board in deciding whether to
oppose a tender offer. It does not authorize responses to such an offer that
subvert the shareholder franchise.
The legislative history of the statute confirms this. Contrary to
CSC's suggestion, nothing in the legislative history evidences an intent that
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<PAGE> 24
the statute could be used to limit the shareholder franchise as a means of
increasing directors' ability to resist a potential change in control. To the
contrary, the statute's principal drafter assured lawmakers that under NRS
Section 78.138, shareholders would be
protected by the same devices they had enjoyed for a long
time... [S]hareholders had the power to vote out management,
and it was power that had not been used enough in the
past... In that respect the system was self-correcting and
the mechanisms were there for shareholders to control
management if they chose to do so.
Legislative History 91-4 A.B. 655 of the 66th Session of the Nevada
Legislature, 1991 (Minutes of Assembly Committee on Judiciary; May 21, 1991,
at 14 (Statement of John P. Fowler)) (emphasis added). The legislative intent
behind the statute thus directly contradicts CSC's attempt to use the statute
as a justification for its disenfranchisement of CSC's shareholders.
The Court should declare all the Board's Bylaw Amendments to be invalid.
POINT II
THE BOARD DID NOT HAVE THE POWER TO REMOVE
THE SHAREHOLDERS' RIGHT TO AMEND THE BYLAWS.
The CSC Board's actions to strip away its shareholders' right to amend the
Bylaws not only violates Hilton's prohibition against interference with the
shareholder franchise, but also exceeds the express limits placed upon
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<PAGE> 25
the Board's authority under the Bylaws. Until February 18, the Bylaws
explicitly subordinated the Board's power to amend them to the will of a
majority of CSC's shareholders. The previous Article VIII of the Bylaws (titled
"Amendments") reads as follows:
Section 1. Stockholder Amendments.
Bylaws may be adopted, amended or repealed by the affirmative
vote or written consent of a majority of the outstanding voting
shares of this corporation, except as otherwise provided by the
statutes of Nevada, the Articles of Incorporation, or elsewhere
in these Bylaws.
Section 2. Amendments by Board of Directors.
Subject to the right of stockholders as provided in Section 1
of this Article VIII, Bylaws may be adopted, amended or repealed
by the Board of Directors. (Emphasis added).
The previous Article VIII is clear on its face and guaranteed to CSC
shareholders that a majority can adopt, amend, or repeal a bylaw. The Board's
right to amend the Bylaws is expressly subject to this right and cannot be
taken away by the Board. This check on the power of CSC's Board is a
fundamental, defining feature of CSC's corporate structure. Those who own CSC
stock have the security of knowing that they hold the power to block
directorial abuse by assembling a majority of their fellow shareholders, a
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<PAGE> 26
power not enjoyed by shareholders of all companies.(7)
If the CSC Board wishes to take away the majority's power to amend
the Bylaws, it is obligated to get the approval of that very majority.
Otherwise, the protection afforded by Article VIII is illusory and its terms
meaningless. See Roven v. Correr, 547 A.2d 603,608 (Del. Ch. 1988) (unilateral
attempts by directors to restrict that power "are contrary to basic principles
of corporate democracy, and the expressed will of the majority").(8)
The CSC Board seeks to usurp any future vote of the shareholder
majority, barring them from amending the Bylaws unless a 90% vote is achieved.
CSC's amendment negates the explicit reservation of power
- ----------------------------
(7) Indeed, Nevada law provides that the power of the Board of Directors of a
Nevada corporation to dictate the corporation's bylaws is subordinated to the
stockholders' power to do so. Nev. Rev. Stat. Section 78.120(2). Under this
statute, bylaws adopted by the stockholders trump any voted by the Board.
(8) Moreover, supermajority requirements are strongly disfavored by the law
and therefore the authority to impose them must be clear. See Centaur Partners
v. National Intergroup, Inc., 582 A.2d 923,927 (Del. 1990):
[T]he rules of corporate democracy are based in large part upon the
principle that a majority of the votes cast at a stockholders meeting is
sufficient to elect directors.... [A] charter or bylaw provision which
purports to alter this provision must be 'positive, explicit, clear and
readily understandable....' This presumption is overcome only by a clear,
unambiguous and unequivocal statement, in the charter or by-laws of a
corporation, expressing the stockholders' desire that a specific percentage
of votes be required.
Id. at 927. See also id. ("There must be no doubt that the shareholders
intended that a supermajority would be required"). Article VIII of the Bylaws,
by contrast, is a clear statement that the Board does not have the power to
enact this supermajority provision.
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<PAGE> 27
to shareholders in the Bylaws, violates fundamental precepts of shareholder
government,and is abusive.(9) Computer Associates respectfully requests that
the CSC Board's amendment to Article VIII of the Bylaws be declared invalid.
Point III
THE BOARD DID NOT HAVE THE POWER
TO REVOKE THE SHAREHOLDERS' RIGHT TO REMOVE DIRECTORS.
One of the Board's Bylaw Amendments increases the shareholder percentage
required to remove directors from two-thirds to 90%. Under the plain language
of Nev. Rev. Stat. Section 78.335(1)(b), the Board lacks the power to make that
change. The statute explicitly gives a corporation this right to increase its
removal percentage above two-thirds, but that change can only be effective if
made to the articles of incorporation, not by a bylaw amendment;
The articles of incorporation may require the concurrence of a larger
percentage of the stock entitled to voting power in order to remove a
director.
- ------------
(9) The 90% requirement for shareholder approval of bylaw amendments may also
be struck down simply because it is unreasonable. "[B]ylaws must be reasonable
in their application." Frantz Manuf, Co. v. EAC Indus. 501 A.2d 401, 407 (Del.
1985) (citing Schnell v. Chris-Craft Indus. Inc., 285 A.2d 437 (Del. 1971)).
Because less than 90% of outstanding shares actually cast votes in proxy
contests, the Board's 90% requirement is effectively impossible to reach. See
Affidavit of Charles C. Cox, Sections 10-11, filed herewith. This bylaw is
unreasonable and void.
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<PAGE> 28
Nev. Rev. Stat. Section 78.335(1)(b) (emphasis added).
CSC argues that cumulative voting always requires 90% of the shareholders
to remove directors, and that their bylaw amendment simply restates that
requirement. This is a fundamental misunderstanding of cumulative voting. The
purpose of cumulative voting is to protect the minority, not to disenfranchise
the majority. As we explain in our Initial Brief and hereafter at Point IV B,
below, two-thirds of the shareholders may remove two-thirds of the directors
under cumulative voting. Because the Board's 90% amendment cannot be justified
by the cumulative voting provision, it can only be accomplished through an
amendment to the Articles of Incorporation, which requires a vote of
shareholders. Nev. Rev. Stat. Section 78.390(1). The Court should therefore
declare the Board's amendment to Article III, Section 2 of the Bylaws invalid.
POINT IV
THE PROPOSALS CONTAINED IN THE PROXY SOLICITATION
ARE CONSISTENT WITH THE BYLAWS AND NEVADA LAW.
CSC claims that, even if its Bylaw Amendments are illegal, Computer
Associates' proxy contest is not permitted under the original Bylaws. Its
reasoning is mistaken.
A. Nevada Law and the CSC Bylaws Should Be Interpreted Consistently
With the Paramount Role of the Shareholder Franchise in Corporate
Governance.
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<PAGE> 29
CSC incorrectly assets that anti-takeover policies are the "aims of
Nevada law" that should guide the Court's analysis of its Bylaws. CSC Response
at 15. To the contrary, "the importance of the shareholder franchise" and the
fact that the directors' power over a corporation "is limited by the right of
shareholders to vote for the members of the board" are the relevant Nevada
policies. Hilton, 978 F. Supp. at 1347.(10)
B. Under the Nevada Director Removal Statute, Two-Thirds of the CSC
Shareholders May Remove Two-Thirds of the Directors.
CSC mischaracterizes Computer Associates' proposal regarding the
removal of directors. The CSC Bylaws require approval of two-thirds of
outstanding shares to remove a director. Under cumulative voting, which
provides that removal requires the approval of "a sufficient number of shares
to have prevented [a director's] election in the first instance," (Article II,
Section 2), such a two-thirds majority could remove six of nine directors.
If Computer Associates receives the support of 67% of the CSC
shareholders to remove the current directors, it is possible that up to 33% of
- ---------------
(10) CSC'S claim that Nevada corporate law embodies an exceptional
"anti-takeover" bias is also contradicted by the Nevada Legislature's 1993
decision to amend the Nevada Business Combination Statutes by reducing
restrictions on corporate combinations with major shareholders. Indeed, a
spokesman for the drafters of the 1993 amendments told the Nevada Legislature
that "the climate has changed" since the passage of the 1991 provisions, and
that "major stockholders should be permitted to consummate major transactions
with their corporations with fewer restrictions from the business combinations
statutes." Legislative History 93-3, A.B. 387 of the 67th Session of the Nevada
Legislature, Remarks of John P. Fowler, at 3 (emphasis added). The Legislature
has never sought to give corporate boards carte blanche to prevent takeovers.
-24-
<PAGE> 30
The shareholders would still support the current Board. At an election, if this
one-third minority pooled their votes and used cumulative voting, they could
elect three of CSC's nine directors. A two-thirds majority of the shareholders,
if they pooled their votes, would be able to elect six of the nine directors.
Computer Associates seeks only a declaration of this straightforward
proposition, which is wholly consistent with relevant Nevada statutes, the
Bylaws, and cumulative voting.
C. Vacancies on the Board May Be Filled
By the Written Consent of the Shareholders.
CSC acknowledges that its "stockholders have the authority . . . to fill
Board vacancies resulting from removals" (CSC Response at 17), but asserts that
they may not do so by written consent. Its argument is that Article II, Section
10 of the Bylaws, which provides that action may be taken by consent of 75% of
the shares, but exempts the election of directors, deprives even 100% of the
shareholders of the right to appoint directors by consent.
Unless otherwise provided in the Bylaws, Nevada statutes permit
shareholders to accomplish by written consents what they could accomplish at a
meeting, and by the same voting requirements in effect at the meeting. See Nev.
Rev. Stat. Section 78.320. Article II, Section 10 of the Bylaws does not
prohibit the election of directors by written consent, but exempts the subject
of the election of director from the general 75% requirement. Therefore,
directors can be elected by written consent by the vote that would
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<PAGE> 31
be required at a meeting. This is the only interpretation of the Bylaw that
preserves the scheme of cumulative voting in the context of written consents.
In arguing this point, CSC ignores that Computer Associates has asked
the CSC shareholders to amend the Bylaws to make clearer their right to elect
directors by written consent. The ambiguity in the exemption - which should be
read as affirming that cumulative voting provisions of Article II, Section 7,
and not a 75% threshold apply to the election of directors by consent - is the
reason Computer Associates seeks the Court's clarification.
D. CSC Lacks Statutory Authority to Set
the Record Date for Computer Associates' Solicitations.
CSC seeks to set the record date for the solicitation of written
consents, but the power to do so was repealed by the legislature in 1991. The
question before the Court is whether it should presume that the legislature
acted purposefully, and intended to withdraw the Board's power to select the
record date for a consent solicitation.
E. The Bylaws Require Written Consent of a
Majority of Shareholders to Amend the Bylaws.
Article VIII, Section 1 could hardly be clearer on the right of a
majority to amend the Bylaws by consent: "Bylaws may be adopted, amended or
repealed by the affirmative vote or written consent of a majority of the
outstanding voting shares of this corporation, except as otherwise provided by
the statutes of Nevada, the Articles of Incorporation or elsewhere in these
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<PAGE> 32
Bylaws," (Emphasis added). Notwithstanding this specific authorization, CSC
argues that under the general provisions on written consent (Article II, Section
10), 75% of the voting power is required to amend the Bylaws by consent.
The general 75% consent requirement contained in Article II, Section 10
is not a limiting provision, but a catch-all authorization that only applies in
the absence of a more specific provision concerning the percentage of
shareholders needed to act by consent. See e.g. Article II, Section 2 (providing
that any director may be removed "by the vote or written consent of shareholders
of the corporation representing not less than two-thirds" of the voting power).
CSC's interpretation of Article II, Section 10 renders the words of
Article VIII, Section 1 meaningless. Why would that Article have explicitly
referred to the amendment of the bylaws by ""written consent of a majority of
the outstanding voting shares" if shareholder action by written consent required
75% of the voting power in all cases? CSC points to the provision permitting an
exception "elsewhere in these Bylaws." What CSC seeks, however, is not an
exception in a specific bylaw, but a nullification of the majority rule set
forth in Article VIII, Section 1.
F. The Annual Meeting Must Be Held on August 10, 1998.
CSC assets that under the Bylaws, the Board has wide
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<PAGE> 33
discretion to set the date of the annual meeting, relying on Hilton. But the
Hilton court made clear that the ITT bylaws, unlike CSC's Bylaws, did not
indicate a specific date for the annual meeting. Hilton Hotels Corp., v. ITT
Corp., 962 Supp. 1309, 1310 (D. Nev. 1997).
Computer Associates has proposed that CSC shareholders amend the Bylaws
to clarify this obligation to hold the meeting in August. In response, on
February 18, CSC amended the Bylaws to provide discretion to the Board to push
the meeting back another six months. CSC maintains that it is protecting the
shareholders from a "quick and ill considered vote," but its action make clear
that CSC seeks to delay the meeting and deprive CSC shareholders of their right
to accept or reject the Offer.
Conclusion
For the foregoing reasons, Computer Associates respectfully requests
that the Court promptly (a) declare the Bylaw Amendments invalid
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<PAGE> 34
under Nevada law and Hilton, and unauthorized under Nevada statutes and CSC's
Bylaws, and (b) grant the relief requested in Computer Associates' initial
motion.
Dated: February 25, 1998
Respectfully submitted,
SCHRECK MORRIS
By: [SIG]
--------------------
STEVE MORRIS
MATTHEW McCAUGHEY
1200 Bank of America Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
(702) 382-2101
HOWARD, DARBY & LEVIN
C. WILLIAM PHILLIPS
P. BENJAMIN DUKE
ADAM B. SIEGEL
DAVID H. HOFFMAN
1330 Avenue of the Americas
New York, New York 10019
(212) 841-1000
Attorneys for
COMPUTER ASSOCIATES
INTERNATIONAL, INC.
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<PAGE> 35
CERTIFICATE OF SERVICE
Pursuant to Fed.R.Civ.P. 5(b), I certify that I am an employee of
SCHRECK MORRIS, and that on this day I deposited for overnight delivery via
Federal Express and by Hand Delivery at Las Vegas, Nevada, a true copy of the
following enclosed which postage was prepaid for overnight delivery: COMPUTER
ASSOCIATES' REPLY TO COMPUTER SCIENCES RESPONSE TO THE COURT'S FEBRUARY 18
ORDER AND IN SUPPORT OF COMPUTER ASSOCIATES' MOTION FOR EXPEDITED DECLARATION
AND ON THE MERITS OF THE RELIEF REQUESTED:
Relief Requested:
WAYNE W. SMITH VIA FEDERAL EXPRESS
JOSEPH P. BUSCH, III
THOMAS S. JONES
ELIZABETH A. WARKE
GIBSON, DUNN & CRUTCHER, LLP
4 Park Plaza, Suite 1400
Irvine, CA 92614-8557
ATTORNEYS FOR DEFENDANT,
COMPUTER SCIENCES CORP.
DAVID A. BATTAGLIA VIA FEDERAL EXPRESS
MICHELLE H. TREMAIN
ROBYN C. CROWTHER
GIBSON, DUNN & CRUTCHER LLP
333 South Grand Avenue
Los Angeles, CA 90071-3197
ATTORNEYS FOR DEFENDANT,
COMPUTER SCIENCES CORP.
-30-
<PAGE> 36
C. STANLEY HUNTERTON HAND DELIVERY
TERRY JOHN CARE
HUNTERTON & ASSOCIATES
300 S. Fourth St., Ste. 1110
Las Vegas, NV 89101
ATTORNEYS FOR DEFENDANT,
COMPUTER SCIENCES CORP.
DATED this 25th day of February, 1998
By: [SIG]
-------------------------------
An Employee of Schreck Morris
-31-
<PAGE> 37
RECEIVED
AND FILED
FEB 25 2:20 PM '98
LANCE S. WILSON
CLERK
BY____________________
DEPUTY
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
- ---------------------------------------)
COMPUTER ASSOCIATES )
INTERNATIONAL, INC. )
)
Plaintiff, )
)
vs. ) CV-S-98-00278-LDG (RHL)
)
COMPUTER SCIENCES CORPORATION, )
)
Defendant. )
- ---------------------------------------)
AFFIDAVIT OF CHARLES C. COX
IN SUPPORT OF COMPUTER ASSOCIATES
STATE OF ILLINOIS )
:
COUNTY OF COOK )
Charles C. Cox, being duly sworn, states:
1. I am Senior Vice President of Lexecon, Inc., a consulting firm that
specializes in the application of economics to a variety of legal and
regulatory issues. Among the staff and professional affiliates of Lexecon are
several prominent academics (including two recipients of the Nobel Prize in
economics) and a group of full-time economists, accountants, computer
programmers, and research assistants.
2. I have served as Commissioner of the U.S. Securities and Exchange
Commission (SEC) from 1983 to 1989 and was Acting Chairman of the SEC in 1987.
During this time, I was responsible for enforcing and interpreting the federal
securities laws. I was Chief Economist of the SEC from 1982 to 1983 when I was
responsible for analyzing the economic effects of proposed rules and
legislation, and for evaluating established SEC policy. Before joining the SEC,
I was a professor in the Economics Department at Ohio State University and
<PAGE> 38
-2-
in the College of Business at Texas A&M University. My research and teaching
focused on the regulation of economic activity and the operation of financial
markets. I have published numerous articles on financial markets and securities
regulation.
3. I served from 1990 to 1993 as Chairman of United Shareholders
Association, a nonprofit, nationwide organization that advocated shareholder
rights and management accountability to shareholders. I am a member of the
American Economic Association. I have testified as an expert regarding tender
offers in both federal and state courts. My curriculum vitais attached as
Exhibit A.
4. I have reviewed the Bylaws of Computer Sciences Corporation
("CSC," the "Company") as they existed on February 17, 1998 (the "Bylaws"). I
have also reviewed the amendments to these Bylaws adopted by the CSC Board of
Directors (the "Board") on February 18, 1998 (the "Amendments").
5. The Amendments were adopted in the midst of a battle for
corporate control, the day after Computer Associates International, Inc.
("Computer Associates") announced a tender offer for all outstanding shares of
CSC (the "Tender Offer"). Computer Associates also announced its upcoming
solicitation of consents, agent designations and proxies to replace members of
the Board (the "Proxy Solicitation"). The Proxy Solicitation seeks to
facilitate the Tender Offer by enabling shareholders to replace a majority of
the Board by consent or at a special or annual meeting. A crucial part of the
Proxy Solicitation is bylaw amendments that would prevent the Board from
delaying the annual meeting and would introduce other changes helpful in
enabling shareholders to replace a majority of the Board.
6. The Amendments substantially changed CSC's corporate governance
structure, taking away important voting or participation rights from
shareholders. These rights are important because CSC's "poison pill" and other
defensive devices make it prohibitively expensive for Computer Associates to
consummate the Tender Offer without Board approval. Since the CSC Board has
already announced its opposition to the Computer Associates offer,
<PAGE> 39
-3-
the only way shareholders can accept the Computer Associates Offer is to
replace a majority of the CSC board.
7. The Amendments blocked the CSC shareholders from deciding
whether to accept Computer Associates' offer. In particular, the Amendments:
o removed the shareholders' ability to call a special meeting,
unless there has been no annual meeting for at least eighteen
months;
o raised the percentage of shareholders needed to amend the Bylaws
from a simple majority to 90% of the voting power of CSC;
o raised the percentage of shareholders needed to remove any
director to 90%; and
o gave the Board the power to delay the annual meeting of CSC
until at least a year from now, February 1999.
8. In my opinion, these Amendments have the effect of insulating
the current Board from reasonable shareholder supervision and review. Taken
together, the Amendments have denied the CSC shareholders the power to remove
their directors during intervals of at least eighteen months and, if operative,
the Amendments strip the CSC shareholders of their rights to decide whether to
sell the Company to Computer Associates within a reasonable time period.
9. The purpose of the Amendments is evidenced by the amendment to
change the percentage of shareholders needed to amend the Bylaws. The Bylaws
allowed a majority of shareholders to amend the Bylaws. This right of
shareholders was fundamental to the corporate governance of CSC. A majority of
shareholders could act together to decide important questions about the
Company's future, including whether it should remain independent.
10. All that has changed now, in the face of a contest for control,
the Board has changed the rules of the game dramatically. The Amendments now
require a supermajority
<PAGE> 40
-4-
of 90% to amend the Bylaws. A requirement of 90% approval of the voting power
of a corporation such as CSC cannot be met for any practical purpose.(1) Due to
the wide distribution of ownership of CSC shares, and the fact that many
shareholders do not vote under any set of circumstances, the CSC shareholders
will be unable to garner 90% of the voting power of the corporation in support
of any shareholder proposal even if the proposal has overwhelming shareholder
support. Actions predicated on approval of 90% of the shareholders will never
be taken.
11. The data show that less than 90% of shareholders vote in corporate
elections. First, academic studies of shareholder voting in proxy contests and
other corporate elections show that typically about 80% of outstanding shares
are voted.(2) Second, based on the annual shareholder votes in 1996 and 1997,
CSC Shareholders vote less than 90% of CSC's outstanding shares. Third, none of
the takeover offers involving a proxy contest from 1988 to the present (that
are contained in the SDC mergers and acquisitions database and reported in The
Wall Street Journal) had as much as 90% of the outstanding shares voted. See
Exhibit B.
12. When the directors of public companies act in response to a tender
offer and proxy contest, their actions must be carefully evaluated. Any efforts
to raise the barrier for shareholder action, which have the effect of
frustrating the exercise of shareholder franchise and prolonging the directors'
terms of office, should be viewed with enhanced
______________
(1) CSC's response to the Court misstates that the requirement for shareholders
amendment to the Bylaws is 80%. That is not correct -- the Amendments state
that it is 90%. But even a change to 80%, in the middle of a battle for
corporate control, significantly disenfranchises shareholders.
(2) See, for example, Peter Dodd and Jerald B. Warner, On Corporate Governance,
A Study of Proxy Contests, J of Financial Economics, 11 (1983) 406; Philip
J. Young. James A. Miller, and G. William Glezen, Trading Volume, Management
Solicitation and Shareholder Voting, J. of Financial Economics 33 (1993) 63;
James A. Brickley, Ronald C. Lease, and Clifford W. Smith, Jr., Ownership
Structure and Voting on Antitakeover Amendments, J of Financial Economics 20
(1988) 288; and Karen Van Nuys, Corporate Governance Through the Proxy
Process, Evidence from the 1989 Honeywell Proxy Solicitation, J of Financial
Economics 34 (1993) 120.
<PAGE> 41
-5-
scrutiny. Actions that may be legal and appropriate in the absence of a contest
for control can become illegal after such a contest has commenced. A board may
not respond to a potential acquirer by disabling the shareholders from removing
the board.
13. CSC has done just that. By eliminating the ability of shareholders to
call a special meeting; by raising the threshold to 90% to amend the Bylaws and
to remove directors; and by postponing the annual meeting until at least
February 1999, the Board has eliminated the avenues that were open to the
shareholders to remove the Board in the next twelve months. It is unacceptable
to remove the power of shareholders to act just when they might be interested in
availing themselves of such powers.
14. The Board has claimed that it has acted to give itself "breathing
space" to allow it to review its options and conduct CSC's business so as to
maximize shareholder value. It has usurped the power to set the date of the
annual meeting, placing within its discretion the power to delay the annual
meeting until at least one year from now. In my view, such a delay is excessive
and unjustifiable. Potential acquirers typically cannot wait twelve months for
a response, and therefore, a twelve-month delay is the equivalent of a denial of
the shareholders' ability to consider an offer.
15. A year would be an excessive period of time even if the CSC board
were searching for a "white knight" or developing strategic alternatives for the
Company. An analysis of the SDC mergers and acquisitions database for 1996 and
1997 shows that for seven hostile tender offers where the target was acquired by
a white knight, six were completed in less than eight months. Only one took
more than a year -- 13 months. See Exhibit C.
16. Moreover, CSC has stated publicly that it is determined to remain an
independent company. Because CSC is not searching for an alternative
transaction, the options open to the CSC shareholders are clear and ready for
consideration: accept Computer Associates all-cash offer, or remain
shareholders of an independent CSC. The CSC share-
<PAGE> 42
-6-
holders do not require a year to determine whether they prefer the status quo to
a fully-financed all-cash offer from Computer Associates. Computer Associates'
Tender Offer and Proxy Solicitation are designed to allow the CSC shareholders
to make this choice; the Amendments remove the decision from the shareholders
and place it with the Board.
17. The Amendments deny the CSC shareholders a meaningful opportunity
to consider and act upon the Tender Offer and the Proxy Solicitation.
/s/ CHARLES C. COX
-----------------------------
Charles C. Cox
Sworn to before me
this 24th day of February, 1998
/s/ GWEN M. DUBOVIK
- -----------------------------
Notary Public
[SEAL]
<PAGE> 43
CERTIFICATE OF SERVICE
Pursuant to Fed.R.Civ.P.5(b), I certify that I am an employee of SCHRECK
MORRIS, and that on this day I deposited for overnight delivery via Federal
Express and by Hand Delivery at Las Vegas, Nevada, a true copy of the following
enclosed which postage was prepaid for overnight delivery: AFFIDAVIT OF CHARLES
C. COX IN SUPPORT OF COMPUTER ASSOCIATES:
WAYNE W. SMITH VIA FEDERAL EXPRESS
JOSEPH P. BUSCH, III
THOMAS S. JONES
ELIZABETH A. WARKE
GIBSON, DUNN & CRUTCHER, LLP
4 Park Plaza, Suite 1400
Irvine, CA 92614-8557
ATTORNEYS FOR DEFENDANT,
COMPUTER SCIENCES CORP.
DAVID A. BATTAGLIA VIA FEDERAL EXPRESS
MICHELLE H. TREMAIN
ROBYN C. CROWTHER
GIBSON, DUNN & CRUTCHER, LLP
333 South Grand Avenue
Los Angeles, CA 90071-3197
ATTORNEYS FOR DEFENDANT,
COMPUTER SCIENCES CORP.
C. STANLEY HUNTERTON HAND DELIVERY
TERRY JOHN CARE
HUNTERTON & ASSOCIATES
300 S. Fourth St., Ste. 1110
Las Vegas, NV 89101
ATTORNEYS FOR DEFENDANT,
COMPUTER SCIENCES CORP.
DATED this 25th day of February, 1998.
By: [SIG]
----------------------------------
An Employee of Schreck Morris
<PAGE> 44
A
<PAGE> 45
CHARLES C. COX February 1998
Business Address: Lexecon Inc.
332 South Michigan Avenue
Suite 1300
Chicago, Illinois 60604
(312) 322-0260
Home Address: 811 Castlewood Terrace
Chicago, Illinois 60640
(773) 989-7523
PROFESSIONAL EXPERIENCE
Principal and Senior Vice President, Lexecon Inc. (1989-present).
Chairman, United Shareholders Association (1990-1993).
Commissioner, U.S. Securities and Exchange Commission (1983-1989); Acting
Chairman, U.S. Securities and Exchange Commission (1987); Chief Economist, U.S.
Securities and Exchange Commission (1982-1983).
Assistant Professor of Management, Texas A&M University (1980-1982); Director
of John M. Olin Fellowship Program, Texas A&M University (1981-1982).
Assistant Professor of Economics, Ohio State University (1972-1980).
National Fellow of the Hoover Institution, Stanford University (1977-1978).
AREAS OF SPECIALIZATION
Financial Markets, Industrial Organization, Money and Banking.
EDUCATION
University of Chicago, Chicago, Illinois: Ph.D. 1975.
University of Chicago, Chicago, Illinois: A.M. 1970.
University of Washington, Seattle, Washington: B.A. 1967.
PUBLICATIONS
Futures Trading and Market Information, Journal of Political Economy, 84
(December 1976).
The Enforcement of Public Price Controls, Journal of Political Economy, 88
(October 1980).
Monopoly Explanations of the Great Depression and Public Policies Toward
Business, The Great Depression Revisited, edited by Karl Brunner (1981).
<PAGE> 46
- 2 -
Greenmail, the Market for Corporate Control and Governance, Texas A&M Business
Forum, 1 (Winter 1984).
Accounting Standards From an Economist's Perspective, Journal of Comparative
Business and Capital Market Law, 7 (December 1985). Reprinted in The SEC
and Accounting: The First 50 Years, edited by Robert H. Mundheim and
Noyes E. Leech (1986).
Public Accounting: Whose Profession Is It Anyway, Ohio CPA Journal, 45 (Spring
1988).
Investment Company Servicing: Growth, Innovation and Competition, American
Banker (May 9, 1986).
Conflicts of Interest - A Regulator's View, Trust Management Update, No. 97
(June 1986).
Regulatory Implications of Computerized Communications in Securities Markets,
Technology and the Regulation of Financial Markets, edited by Anthony
Saunders and Lawrence J. White (1986).
The Market for Markets: Developments of International Securities Trading (with
Douglas C. Michael), Catholic University Law Review, 36 (Summer 1987);
reprinted in Corporate Practice Commentator, 30, No. 3 (1988).
Internationalization of the Capital Markets: The Experience of the Securities
and Exchange Commission, Maryland Journal of International Law and Trade.
11 (Summer 1987).
Anti-Merger Mania, Journal for Corporate Growth, 3 (Fall 1987).
Two Views on the Law of Insider Trading, The Legal Environment of Business by
Roger E. Meiners, Al H. Ringleb, and Frances L. Edwards (1988).
Bases of Insider Trading Law (with Kevin S. Fogarty), Ohio State Law Journal,
49 No. 2 (1988).
An American Perspective on the 1987 Stock Market Crash, Securities Bulletin of
The Stock Exchange of Hong Kong, 28 (August 1988).
Review of Steven Lustgarten, Industrial Concentration and Inflation, Journal of
Money, Credit, and Banking, 8 (February 1976).
Review of Walter C. Labys (ed.) Quantitative Models of Commodity Markets,
Journal of Political Economy, 84 (June 1976).
Review of John T. Dunlop and Kenneth J. Fedor (ed.), The Lessons of Wage and
Price Controls - The Food Sector, Journal of Political Economy, 88
(December 1980).
Comment, Why Monetarism is Failing, Wall Street Journal (December 22, 1980).
Review of Arnold R. Weber and Daniel J.B. Mitchell, The Pay Board's Progress:
Wage Controls in Phase II, Journal of Money, Credit, and Banking, 13
(February 1981).
Review of Edward H. Clarke, Demand Revelation and the Provision of Public
Goods, Journal of Economic Literature (December 1981).
<PAGE> 47
-3-
SFC Not Avoiding Concept of Fraud. Legal Times (December 7, 1987).
TESTIMONY
Testimony of Charles C. Cox in Re: Safety-Kleen Corporation v. Laidlaw
Environmental Services, Inc., No. 97C8003, United States District Court,
Northern District of Illinois, Eastern Division, (January 30 & February 2,
1998).
Deposition of Charles C. Cox in Re: Safety-Kleen Corporation v. Laidlaw
Environmental Services, Inc., No. 97C8003, United States District Court,
Northern District of Illinois, Eastern Division, (January 23, 1998).
Testimony of Charles C. Cox in Re: Public Communication v. True North
Communications Inc., et al., No. 97 C 8263, District Court for the
Northern District of Illinois, Eastern Division, (December 26 & 29, 1997).
Affidavit of Charles C. Cox in Re: Publicis Communication v. True North
Communications Inc., et al., No. 97 C 8263, District Court for the
Northern District of Illinois, Eastern Division, (December 15, 1997).
Testimony of Charles C. Cox in Re: Augustus Condus, et al. v. Howard Savings
Bank, et al., Civil Action Nos. 89-5131 and 91-2465 and Leo A. Gutman et
al, v. Howard Savings Bank, et al.; Civil Action No. 90-2397; United
States District Court for the District of New Jersey, (November 20, 1997).
Deposition of Charles C. Cox in Re: Morton S. Goldfine and Adrienne M. Goldfine
vs. Michael L. Steinberg, American Express Company, Shearson Lehman
Brothers Holdings, Inc., et al., No. 93 L 5233, Circuit Court of Cook
County, Illinois, (October 27 & 28, 1997).
Deposition of Charles C. Cox in Re: NASD Regulation, Inc., Market Surveillance
Committee v. Morgan Stanley & Co., Inc. et al, Disciplinary Hearing Panel
of the Market Regulation Committee, NASD Regulation, Inc., CMS960235 (July
15, 1997).
Deposition of Charles C. Cox in Re: Robert Stuchen, et al., Plaintiffs vs. Duty
Free International, et al., Defendants; Superior Court of the State of
Delaware (New Castle County), Civil Action No. 94C-12-124; and Victor M.
Guerra, et al., Plaintiffs v. Duty Free International, et al., Defendants:
Superior Court of the State of Delaware (New Castle County), Civil Action
No. 95C-04-13 (June 4, 1997).
Deposition of Charles C. Cox in Re: Augustus Condus, et al. v. Howard Savings
Bank, et al.; Civil Action No. 91-2465 and Leo A. Gutman, et al, v. Howard
Savings Bank, et al.; Civil Action No. 90-2397: United States District
Court for the District of New Jersey (WGB) (February 14, 1997).
Deposition of Charles C. Cox in Re: Joseph W. and Helen B. Teague et al,
Plaintiffs vs. James O. Bakker, Defendant; United States District Court
for the Western District of North Carolina, Civil Action No. 3:87CV514
(June 28, 1996).
<PAGE> 48
-4-
Affidavit of Charles C. Cox in Re: Evelyn Shea et. al, Plaintiffs v. New York
Life Insurance Company et al, Defendants: United States District Court,
Southern District of Florida, Case No. 96-0746-CIV-NESBITT (June 21, 1996)
Deposition of Charles C. Cox in Re: Raisy Levitan et. al., Plaintiffs v. A Pea
In the Pod, et. al., Defendants; United States District Court for the
Northern District of Texas, Dallas Division, Civil Action No. 3-94
CV-0247D (June 12, 1996).
Deposition of Charles C. Cox in Re: Janet Ziemack et. al., Plaintiffs against
Centel Corporation et. al., Defendants; United States District Court for
the Northern District of Illinois, Eastern Division, No. 92 C3551 (May 23,
24, 1996).
Deposition of Charles C. Cox in Re: Nasdaq Market-Makers Antitrust Litigation.
United States District Court for the Southern District of New York, 94
Civ. 3996 (RWS) M.D.L. No. 1023 (May 10, 11, 1996).
Affidavit of Charles C. Cox in Re: Nasdaq Market-Makers Antitrust Litigation;
United States District Court for the Southern District of New York, 94
Civ. 3996 (RWS) M.D.L. No. 1023 (April 30, 1996).
Deposition of Charles C. Cox in Re: Wayne Laverne Prim, Plaintiff vs. Loretta
Jean Prim, Defendant; Ninth Judicial District Court of the State of Nevada
in and for the County of Douglas, No. 31327, Dept. No. 1 (November
20, 1995).
Testimony of Charles C. Cox in Re: M.R. 2131. The Capital Market Deregulation
and Liberalization Act of 1995; Subcommittee on Telecommunications and
Finance of The House Committee on Energy and Commerce (November 14, 1995).
Testimony of Charles C. Cox in Re: Douglas E. O'Neil et. al., V. Curtis H.
Appel, et. al., Price Waterhouse and Embrace Systems Corporation: United
States District Court for the Western District of Michigan, Southern
Division, No. 1:84-CV-97 (RHB) (August 25, 1995).
Declaration of Charles C. Cox in Re: Mark Erwin, Trustee, Mark Erwin Sales Inc.
Defined Benefit Plan et. al., Plaintiffs v. Resources High Equity Inc. et.
al., Defendants: Superior Court for the State of California. County of Los
Angeles, Case No.: BC080254 (July 11, 1995).
Affidavit of Charles C. Cox in Re: Douglas E. O'Neil et. al., Plaintiffs v.
Curtis H. Appel et. al., Defendants. United States District Court for the
Western District of Michigan, No. 1: 94-CV-97 (RHB) (May 31, 1995).
Testimony of Charles C. Cox. Concerning Securities Litigation Reform:
Subcommittee on Securities of the Senate Banking, Housing and Urban
Affairs Committee (April 6, 1995).
Deposition of Charles C. Cox in Re: Storage Technology Securities Litigation:
United States District Court for the District of Colorado No. 92-K-750
(December 13, 14, 1994).
<PAGE> 49
-5-
Deposition of Charles C. Cox in Re: Harold J. Robins and Alan Freeberg,
Plaintiffs vs. Moore Medical Corp., et al., Defendants; United States District
Court for the Southern District of New York, No. 91 Civ. 3701 (MEL) (December
5, 1994).
Testimony of Charles C. Cox in Re: Sidney Morse, Ann Drake and Robert L.
Baumgarten, Plaintiffs vs. Abbott Laboratories, Robert A. Schoellhorn, Duane
L. Burnham and Jack W. Schuler, Defendants; United States District Court for
the Northern District of Illinois, Eastern Division, No. 90 C 1982 (February
28, March 1, 2, 3, 4, 7, 1994).
Affidavit of Charles C. Cox in Re: Sandy Liebhard, et al., Plaintiffs vs.
Square D Company and Jarre L. Stead, Defendants; United States District Court
for the Northern District of Illinois, Eastern Division, No. 91 C1103
(February 8, 1994).
Affidavit of Charles C. Cox in Re: Time Warner Inc. Securities Litigation;
United States District Court for the Southern District of New York, No. 90
Civ. 4051 (MEL) (February 1, 1994).
Deposition of Charles C. Cox in Re: Union Pacific Corporation Union Pacific
Railroad Company and Missouri Pacific Railroad Company -- Control -- Chicago
and North Western Holdings Corp. and Chicago and Northwestern Transportation
Company; Before the Interstate Commerce Commission, Finance Docket No. 32133,
(January 21, 1994).
Affidavit of Charles C. Cox in Re: Dennis E. Bentley, et al., Plaintiffs vs.
Legent Corporation, et al., Defendants; United States District Court for the
Eastern District of Virginia, Alexandria Division, No. 93-894-A (January 7,
1993).
Deposition of Charles C. Cox in Re: William R. Fry, et al., Plaintiffs vs. UAL
Corporation; United States District Court for the Northern District of
Illinois, Eastern Division, No. 90 C0999 (January 14, April 7, 1994).
Testimony of Charles C. Cox in Re: United States of America v. Gary Singer and
The Cooper Companies, Inc.; United States District Court for the Southern
District of New York, 92 Cr. 964 (RJW) (December 20, 21, 1993).
Deposition of Charles C. Cox in Re: Dennis E. Bentley, et al., Plaintiffs vs.
Legent Corporation, et al., Defendants; United States District Court for the
Eastern District of Virginia, Alexandria Division, No. 93-894-A (December 9,
1993).
Verified Statement of Charles C. Cox in Re: Union Pacific Corporation, Union
Pacific Railroad Company and Missouri Pacific Railroad Company -- Control --
Chicago and North Western Holdings Corp. and Chicago and Northwestern
Transportation Company; Before the Interstate Commerce Commission. Finance
Docket No. 32133. Dated November 29, 1993.
Affidavit of Charles C. Cox in Re: Compaq Securities Litigation; United States
District Court for the Southern District of Texas, Houston Division, Civil
Action H-91-9191 (September 27, 1993).
Deposition of Charles C. Cox in Re: American Dental Laser, Inc. Securities
Litigation; United States District Court Eastern District of Michigan,
Southern Division, No. 92-CV-71917-DT (August 19, 20, 1993).
<PAGE> 50
-6-
Deposition of Charles C. Cox in Re: Janive Holding, B.V. Plaintiff v.
Continental Bank N.A. and First Interstate Commercial Mortgage Company
of Illinois, Defendants; United States District Court for the Northern
District of Illinois, Eastern Division, No. 91C7728 (August 12 and
September 15, 1993).
Testimony of Charles C. Cox in Re: Lynn A. Schwartz, Plaintiff, vs. System
Software Associates, Inc., Roger E. Covey and David L. Harbert,
Defendants; United States District Court for the Northern District of
Illinois, Eastern Division No. 91 C1154 (June 29, 1993).
Testimony of Charles C. Cox in Re: Intervivos and Testamentary Trusts of J.E.
Barbey, also known as John E. Barbey, Deceased; Court of Common Pleas
of Berks County, Pennsylvania Orphans' Court Division, No. 46273,
47416, 47417, 47418, 47419 (April 27, 1993).
Affidavit of Charles C. Cox in Re: Sandy Liebhard, et al., Plaintiffs vs.
Square D Company and Jarre L. Stead, Defendants: United States District
Court for the Northern District of Illinois, Eastern Division, No. 91
C1103 (March 12, 1993).
Declaration of Charles C. Cox in Re: Mortgage and Realty Trust Securities
Litigation; United States District Court for the Eastern District of
Pennsylvania; Master file No. 90-1848 (March 9, 1993).
Deposition of Charles C. Cox in Re: Scott Paper Securities Litigation: United
States District Court for the Eastern District of Pennsylvania; Master
File No. 90-S192 (February 19, 20, 1993).
Deposition of Charles C. Cox in Re: Amos M. Ames, et al., Plaintiffs, vs.
Marguerite M. Paul, et al., Defendants; Circuit Court Juneau County,
State of Wisconsin, Case Nos. 92-CV-31, 92-CV-32 (January 26, 1993).
Deposition of Charles C. Cox in Re: Mortgage and Realty Trust Securities
Litigation; United States District Court for the Eastern District of
Pennsylvania; Master File No. 90-1848 (January 12, 1993).
Deposition of Charles C. Cox in Re: Sandy Liebhard, et al., Plaintiffs vs.
Square D Company and Jerre L. Stead, Defendants; United States District
Court for the Northern District of Illinois, Eastern Division No. 91
C1103 (November 18, 19, 1992).
Deposition of Charles C. Cox in Re: Estate of Technical Equities Corporation,
Plaintiff, vs. Harry C. Stern; Stern Management Associates, a general
partnership; Bear Stearns & Co.; Michael J. Doherty; Does 3-500, and
Roes 1-100, Defendants, Superior Court of California, County of Santa
Clara; Master File No. 1991, Santa Clara County Superior Court No.
600306. (September 4, 5, 1992).
Testimony of Charles C. Cox in Re: In the Matter of the Trust created by George
A. Hormel and Designated as Trusts Nos. 4, 5 and 6 and of the Trust
created by Jay C. Hormel and Designated as Trusts Nos. 101, 102, 103,
201, 202, 203, 301, 302 and 303. District Court of the State of
Minnesota, County of Mower, Third Judicial District, Nos.
C5-54-22378, C7-54-22379, C3-54-22380, C9-57-23659, C5-57-23660,
C7-57-23661, C9-57-23662, CO-57-23663, C2-57-23664, C4-57-23665,
C6-57-23666, C8-57,23667 (August 26, 27, 28, 1992).
<PAGE> 51
-7-
Deposition of Charles C. Cox in Re: in the Matter of the Trust created by George
A. Hormel and Designated as Trusts Nos. 4, 5 and 6 and of the Trust
created by Jay C. Hormel and Designated as Trusts Nos. 101, 102, 103,
201, 202, 203, 301, 302 and 303. District Court of the State of
Minnesota, County of Mower, Third Judicial District, Nos.
C5-54-22378, C7-54-22379, C3-54-22380, C9-57-23659, C5-57-23660,
C7-57-23661, C9-57-23662, C0-57-23663, C2-57-23664, C4-57-23665,
C6-57-23666, C8-57,23667 (August 19, 1992).
Affidavit of Charles C. Cox in Re: Del Monte Corporation, Plaintiff, v. Polly
Peck International, PLC; PPI Del Monte Tropical Fruit Company, North
America and DMII (International) Ltd., Defendants, PPI Del Monte
Tropical Fruit Company, North America and DMII (International) Ltd.,
Counterclaim Plaintiffs, v. Del Monte Corporation, Counterclaim
Defendant. United States District Court for the Southern District of
New York, 91 Cov. 8486 (WK)(May 11, 1992).
Affidavit of Charles C. Cox in Re: Sandy Liebhard, et al., Plaintiffs vs.
Square D Company and Jarre L. Stead, Defendants: United States District
Court for the Northern District of Illinois, Eastern Division No. 91
C1103 (April 15, 1992).
Deposition of Charles C. Cox in Re: Rospatch Securities Litigation, United
States District Court for the Western District of Michigan, Southern
Division, No. 1:90-CV-805, 1:90-CV-808, 1:91, CV-85 (April 7, 1992).
Affidavit of Charles C. Cox in Support of Shearson's Motion for Summary
Judgment in Re: General Acquisition, Inc., et. al., Plaintiffs v.
GenCorp Inc., et. al., Defendants, GenCorp Inc.,
Defendant-Counterclaimant, v. Wagner & Brown, et. al., Defendants on the
Counterclaims and Shearson Lehman Brothers Inc. and Shearson Lehman
Brothers Holdings Inc., New Party Defendants on the Amended
Counterclaims, United States District Court for the Southern Division of
Ohio, Eastern Division, C2-87-348 (February 28, 1992).
Deposition of Charles C. Cox in Re: General Acquisition, Inc., et. al.,
Plaintiffs v. GenCorp Inc., et. al., Defendants, GenCorp Inc.,
Defendant-Counterclaimant, v. Wagner & Brown, et. al., Defendants on the
Counterclaims and Shearson Lehman Brothers Inc. and Shearson Lehman
Brothers Holdings Inc., New Party Defendants on the Amended
Counterclaims, United States District Court for the Southern Division of
Ohio, Eastern Division, 2-87-CV-348 (November 20, 21, 22 and December
19, 20, 1991).
Deposition of Charles C. Cox in Re: DBA Securities Litigation, United States
District Court for the Middle District of Florida, Orlando Division,
No. 89-032-Civ-Orl-19 (August 30, 1990).
Affidavit of Charles C. Cox: Submitted on behalf of all defendants in Re: David
Jacobson, et al., against Bear Stearns & Co., Inc. No. 90/7333; Richard
Moose, et al., against Merrill Lynch, Pierce Fenner & Smith, Inc. No.
90/15650; Michael Hecht, et al., against Shearson Lehman Hutton
Holdings, Inc., No. 90/15852; David Jacobson and Samuel Brach, et al.,
against Prudential-Bache Securities Inc., No. 90/8408; M&L Partnership,
Milton Mandelblatt and Leah Mandelblatt, et al., against Pain Webber
Incorporated, No. 90/15851; M & L Partnership, et al., against Regional
Clearing Corp., No. 90/7240; Supreme Court of the State of New York,
County of New York (July 27, 1990).
<PAGE> 52
Securities and Exchange Commission Proposed Legislation "The Insider Trader Act
of 1987" And Memorandum of Support, Subcommittee on Securities of the
Senate Banking, Housing and Urban Affairs Committee (August 7, 1997).
Internationalization of the Securities Markets. Subcommittee on
Telecommunications and Finance of the House Committee on Energy and
Commerce (August 5, 1987).
Program Trading. Subcommittee on Telecommunications and Finance of the House of
Committee on Energy and Commerce (July 23, 1987).
Corporate Takeover Legislation. Committee on Banking, Housing and Urban Affairs,
United States Senate (June 23, 1987).
Legislation to Define Insider Trading. Subcommittee on Securities of the Senate
Banking, Housing and Urban Affairs Committee (June 19, 1987).
The Commissions's Authorization Request for Fiscal Years 1988-90. Subcommittee
on Telecommunications and Finance of the House Committee on Energy and
Commerce (June 4, 1987).
The Commission's Market Oversight, Surveillance, and Enforcement Programs.
Subcommittee on Telecommunications and Finance of the House Committee on
Energy and Finance (May 5, 1987).
Federal Regulation of Tender Offers. Subcommittee on Antitrust, Monopolies and
Business Rights of the Senate Judiciary Committee (April 2, 1987).
Oversight Hearings. Subcommittee on Telecommunications, Consumer Protection, and
Finance of the House Committee on Energy and Commerce (March 5, 1986).
Tender Offer Process. Subcommittee on Taxation and Debt Management of the Senate
Committee on Finance (April 22, 1985).
The Current Legislative Framework Governing the Financial Services Industry.
Subcommittee on Telecommunications. Consumer Protection, and Finance of
the House Committee on Energy and Commerce (April 2, 1985)
Oversight Hearings. Subcommittee on Telecommunications. Consumer Protection, and
Finance of the House Committee on Energy and Commerce (March 21, 1985).
Title I of H.R. 4557, the Proposed Secondary Mortgage Market Enhancement Act.
Subcommittee on Telecommunications, Consumer Protection, and Finance of
the House Committee on Energy and Commerce (March 14, 1984).
Oversight Hearings. Subcommittee on Telecommunications, Consumer Protection, and
Finance of the House Committee on Energy and Commerce (February 23, 1984).
Nomination of Charles Coleman Cox. Committee on Banking, Housing, and Urban
Affairs, United States Senate (November 9, 1983).
<PAGE> 53
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HONORS AND AWARDS
Charles R. Walgreen Foundation for the Study of American Institutions
Fellowship, 1970-1972.
National Defense Education Act Title IV Graduate Fellowship, 1967-1970.
Graduate Magna Cum Lauda with Distinction in Economics, 1967.
Phi Beta Kappa, 1966.
OTHER ACTIVITIES
Member, American Economic Association, Mont Pelerin Society.
Referee, Journal of Political Economy, American Economic Review, Journal of
Money, Credit, and Banking, Economic Inquiry, National Science Foundation,
Review of Social Economy, Social Science Quarterly.
Participant and speaker at multiple conferences on the Economics of Corporate,
Securities and Commodities Law, Mergers and Acquisitions, and the Regulation of
Markets.
<PAGE> 54
B
<PAGE> 55
Percentage of Shares Voted in Proxy Fights*
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Date of Number of Shares % of
Company Vote Shares Voted Outstanding Shares Voted
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American General Corp. 05/02/90 85,633,262 119,548,194 71.63%
CNW Corp. 05/16/89 13,038,202 17,414,627 74.87%
Compass Bancshares Inc. 04/11/95 33,916,927 38,051,664 89.13%
Diceon Electronics, Inc. 01/16/91 4,555,723 5,194,010 87.71%
Kollmorgan Corp. 05/31/90 9,385,272 10,711,000 87.62%
Moore Medical Corp. 05/22/91 2,053,845 2,825,088 72.70%
Teledyne Inc. 04/26/95 41,944,137 55,684,248 75.32%
Wallace Computer
Svcs Inc. 12/08/95 19,462,508 22,834,772 85.23%
- --------------------------------------------------------------------------------
</TABLE>
*As defined by SDC
Source: SDC, WSJ, SEC Company Forms 10-Q, CRSP.
1
<PAGE> 56
C
<PAGE> 57
Targets of Hostile Offers Acquired by White Knights
1996-1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
White Knight White Knight
Hostile Offer Offer Merger Approximate
Announcement Announcement Completion Time to
Target Company Date Date Date Completion
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Teledyne Inc. 02/19/96 04/02/96 08/15/96 6 months
ADT Ltd. 12/18/96 03/17/97 07/02/97 6 1/2 months
ITT Corp. 01/27/97 10/20/97 02/24/98 13 months
Wascana Energy Inc. 02/12/97 03/18/97 06/30/97 4 1/2 months
Great Western Financial Corp. 02/18/97 03/06/97 07/02/97 4 1/2 months
Giddings & Lewis Inc. 04/25/97 06/12/97 10/01/97 5 months
Fisher Scientific Intl. Inc. 06/05/97 08/07/97 01/16/98 7 1/2 months
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Sources: SDC; DJNS.
<PAGE> 58
[HUNTERTON & ASSOCIATES LOGO]
TELECOPY COMMUNICATIONS
Date: 2/25/98 Fax No.: (714) 475-4709
------------------------------- -----------------------------
Transmission to: Wayne W. Smith, Esq.
----------------------------------------------------------------
Firm: Gibson Dunn & Crutcher LLP
--------------------------------------------------------------------------
Transmission from: Terry John Care, Esq.
--------------------------------------------------------------
No. of pages: (including cover sheet)
----------------
If any difficulty is experienced with this transmission,
please contact Shannon at (702) 388-0098.
---------------
Message: Enclosed please find Computer Associates' Reply to Computer
Sciences' Response to the Court's February 18 Order and in Support
of Computer Associates' Motion for Expedited Declaration and on the
Merits of the Relief Requested.
CONFIDENTIALITY NOTE: The information transmitted in this facsimile message is
sent by an attorney and is intended to be confidential and for the use of only
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<PAGE> 1
EXHIBIT (c)(18)
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
COMPUTER ASSOCIATES ) CV-S-98-00278-LDG (RLH)
INTERNATIONAL, INC., )
)
Plaintiff )
)
v. ) ORDER
)
COMPUTER SCIENCES CORPORATION, )
et al., )
)
Defendants )
)
- -------------------------------
Before the court is plaintiff's motion for an expedited briefing schedule
and hearing on claims for expedited relief (#2). Because the motion was
originally brought ex parte, this court entered an order on February 18, 1998
requiring plaintiff Computer Associates International, Inc. ("CA"), to serve
the motion on defendant Computer Sciences Corporation ("CSC"), and shortening
the time for Computer Science's response. The court has now received CSC's
response (#12) and CA's reply brief.
In mid-February 1998, CA formally commenced an unsolicited tender offer,
filed preliminary proxy materials with the SEC, and initiated this action
seeking declaratory and injunctive relief. In their lawsuit, CA asked the court
to interpret the CSC bylaws and declare, inter alia, that
(a) a majority of the outstanding voting shares are sufficient to amend
the bylaws by written consent;
<PAGE> 2
(b) two-thirds of the outstanding voting shares, acting by consent, are
sufficient to remove at least a majority of the directors; and
(c) a majority of the outstanding voting shares are sufficient to fill
vacancies caused by removal of directors by written consent.
On February 18, 1998, CSC's board of directors convened. At that time, the
board rejected CA's offer as ill-conceived, and undertook to alter CSC's
corporate governance structure. Among other things, the board amended its
bylaws relating to action by vote at a stockholder meeting and by written
consent. Previously, Article VIII, Section 1 previously provided that a
majority of outstanding voting shares were sufficient to amend the bylaws by
written consent. The board action revised the bylaw to require an 80% vote of
stockholders to amend the bylaws. Furthermore, Article II, Section 10 of the
bylaws was amended to provide that any action, except the election of
directors, could be taken without a meeting and without notice if authorized by
the written consent of stockholders holding at least 90% of the voting power.
The CSC board also (1) amended Article III, Section 2 of the bylaws to
provide that a director may only be removed by a 90% shareholder vote, (2)
amended the bylaws to "opt out" of the provisions of the "Acquisitions of
Controlling Interest" component of Nevada General Corporation Law, thus
eliminating shareholder's power to call a special meeting, and (3) amended
Article II, Section 2 of the bylaws to remove the default date of August 10,
1998, for the next annual meeting, and provide that the scheduling of the
annual meeting rested with the sound discretion of the board. Thus, CSC claims
that most of CA's claims for relief in this action are moot under the new
governance structure.
CA argues that the CSC board amendments are an attempt to prevent the CSC
shareholders from voting on CA's proposals, and to render CA's consent
solicitation ineffectual, and should be declared an invalid attempt to
disenfranchise the shareholders of a proxy contest without justification.
Further, CA argues that the CSC boards actions makes expedited review in this
matter all the more essential.
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Because this case has now taken on the added inquiry of the validity of
the CSC board actions, and because a material delay carries the potential of
impeding the tender offer, the court concludes that an expedited disposition of
the issues is warranted. While the parties have raised arguments in support of
and against the CSC board's amendment actions, the order of the court did not
request briefing on that matter, and the court will not presume that the
parties' arguments have been fully developed. Therefore, the court will allow
further supplemental briefing, and schedule a hearing date on the matter.
Finally, CSC does not object to the prompt consideration of CA's section 14
claim for declaratory relief. Section 14 of the Exchange Act prohibits fraud or
misrepresentation in connection with tender offers. CSC asserts that it must
conduct preliminary discovery before deposing CA's principals regarding this
aspect of the case. Though CA urges that no discovery is necessary for the
section 14 analysis, the court is not convinced that at least limited discovery
may not be needed for development of that claim. The court sees no reason,
however, why discovery on the section 14 issues cannot proceed during the
briefing and arguments on the remaining claims. Therefore, the court will defer
to the magistrate judge to manage the discovery of the section 14 aspects of
this litigation, with the recommendation from this court that the discovery of
those aspects be completed within 60 days, if possible, so that the section 14
issues may be timely and meaningfully addressed.
Based on the above,
IT IS HEREBY ORDERED that plaintiff's motion for an expedited briefing
schedule and hearing on claims for expedited relief (#2) is GRANTED.
IT IS FURTHER ORDERED that no later than March 6, 1998, defendants shall
file (with a courtesy copy delivered to chambers) a supplemental response to
the briefs now on file.
IT IS FURTHER ORDERED that no later than March 11, 1998, plaintiff shall
file (with a courtesy copy delivered to chambers) a supplemental reply to
defendants' supplemental response.
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IT IS FURTHER ORDERED that a hearing on plaintiff's claims for declaratory
relief shall be conducted at 1:00 p.m. on March 16, 1998.
IT IS FURTHER ORDERED the magistrate judge shall manage the discovery of
the section 14 aspects of this litigation, with the recommendation from this
court that the discovery as to those aspects be completed within 60 days, if
possible, so that the section 14 issues may be timely and meaningfully
addressed.
DATED this 26th day of February, 1998
LLOYD D. GEORGE
--------------------------
Lloyd D. George
United States District Judge
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