-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FBkQ7z6DVLePE+1bfpV5ydWDomqQl+U/KJwYfm2YkiZqtkRZ/iFjE+sDUCdshk9j 2852RxhGdB2ySopFZCIKeQ== 0000023082-03-000051.txt : 20030813 0000023082-03-000051.hdr.sgml : 20030813 20030813115249 ACCESSION NUMBER: 0000023082-03-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20030704 FILED AS OF DATE: 20030813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER SCIENCES CORP CENTRAL INDEX KEY: 0000023082 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 952043126 STATE OF INCORPORATION: NV FISCAL YEAR END: 0402 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04850 FILM NUMBER: 03839684 BUSINESS ADDRESS: STREET 1: 2100 E GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106150311 MAIL ADDRESS: STREET 1: 2100 EAST GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 10-Q 1 csc10q_fy0401.htm FORM 10-Q 10q_fy04q1

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

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarter ended July 4, 2003

OR

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934


For the transition period from _________________ to _________________

Commission File No. 1-4850

 

COMPUTER SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)

 

Nevada
(State or Other Jurisdiction of
Incorporation or Organization)

95-2043126
(I.R.S. Employer
Identification No.)

 

 

2100 East Grand Avenue
El Segundo, California
(Address of Principal Executive Offices)


90245
(Zip Code)

Registrant's Telephone Number, Including Area Code: (310) 615-0311

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]   No [   ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes [X]   No [   ]

187,128,668 shares of Common Stock, $1.00 par value, were outstanding on July 31, 2003.


COMPUTER SCIENCES CORPORATION
INDEX TO FORM 10-Q

 

 

 Page 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Condensed Statements of Income,
   Three Months Ended July 4, 2003 and June 28, 2002

1

 

 

 

 

Consolidated Condensed Balance Sheets,
   July 4, 2003 and March 28, 2003

2

 

 

 

 

Consolidated Condensed Statements of Cash Flows,
   Three Months Ended July 4, 2003 and June 28, 2002

3

 

 

 

 

Notes to Consolidated Condensed Financial Statements

4

 

 

 

Item 2.

Management's Discussion and Analysis of
   Financial Condition and Results of Operations

10

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16

 

 

 

Item 4.

Controls and Procedures

16

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 5.

Submission of Matters to a Vote of Security-Holders

17

 

 

 

Item 6.

Exhibits and Reports on Form 8-K

17

 

i


PART I, ITEM 1. FINANCIAL STATEMENTS
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)

 

        Three Months Ended           

(In millions except per-share amounts)

  July 4, 2003  

 

  June 28, 2002  

 

 

 

 

Revenues

     $3,554.8  

 

     $2,753.7  

 

 

 

 

Costs of services

2,931.7  

 

2,231.7  

 

 

 

 

Selling, general and administrative

208.7  

 

182.6  

 

 

 

 

Depreciation and amortization

235.0  

 

195.6  

 

 

 

 

Interest expense

43.1  

 

34.3  

 

 

 

 

Interest income

           (3.0) 

 

           (1.7) 

 

 

 

 

Special items

          6.2  

 

                   

 

 

 

 

Total costs and expenses

      3,421.7  

 

      2,642.5  

 

 

 

 

Income before taxes

133.1  

 

111.2  

 

 

 

 

Taxes on income

            40.8  

 

            32.2  

 

 

 

 

Net income

$    92.3  
========

 

$    79.0  
========

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

    Basic

   $    0.49  
========

 

   $    0.46  
========

 

 

 

 

    Diluted

   $    0.49  
=========

 

   $    0.46  
=========

 


See accompanying notes.

1


COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS

(In millions)

   July 4, 2003   

 

 March 28, 2003 

 

(unaudited)

 

 

ASSETS

 

 

 

  Cash and cash equivalents

$  143.3      

 

$  299.6      

  Receivables

3,515.7      

 

3,320.2      

  Prepaid expenses and other current assets

         562.7      

 

         468.3      

      Total current assets

      4,221.7      

 

      4,088.1      

 

 

 

 

  Property and equipment, net

2,160.2      

 

1,987.6      

  Outsourcing contract costs, net

932.5      

 

923.5      

  Software, net

361.8      

 

355.6      

  Excess of cost of businesses acquired over
    related net assets, net

2,571.2      

 

2,507.3      

  Other assets

         625.2      

 

         571.1      

      Total assets

$10,872.6      
===========

 

$10,433.2      
===========

 

 

 

 

LIABILITIES

 

 

 

  Short-term debt and current
    maturities of long-term debt


$  252.7      

 


$  274.8      

  Accounts payable

552.4      

 

643.2      

  Accrued payroll and related costs

705.3      

 

638.8      

  Other accrued expenses

921.0      

 

990.0      

  Deferred revenue

276.6      

 

222.6      

  Income taxes payable

         256.8      

 

         217.8      

      Total current liabilities

      2,964.8      

 

      2,987.2      

 

 

 

 

  Long-term debt, net

2,399.6      

 

2,204.9      

  Other long-term liabilities

664.0      

 

634.7      

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

  Common stock issued, par value $1.00 per share

187.6      

 

187.2      

  Additional paid-in capital

1,512.0      

 

1,502.2      

  Earnings retained for use in business

3,170.8      

 

3,078.5      

  Accumulated other comprehensive loss

(7.2)     

 

(142.5)     

  Less common stock in treasury

         (19.0)     

 

         (19.0)     

      Total stockholders' equity

      4,844.2      

 

      4,606.4      

      Total liabilities and stockholders' equity

$10,872.6       
=========== 

 

$10,433.2      
=============


See accompanying notes.

2


COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)

 

      Three Months Ended      

(In millions)

July 4, 2003

 

June 28, 2002

Cash flows from operating activities:

 

 

 

  Net income

$   92.3  

 

$   79.0      

  Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:

 

 


      Depreciation and amortization and other
        non-cash charges

252.2  

 


206.4      

      Changes in assets and liabilities, net of
        effects of acquisitions:

 

 


          Increase in assets

(263.7)  

 

(72.8)     

          Decrease in liabilities

      (60.5)  

    (190.9)     

Net cash provided by operating activities

        20.3  

 

        21.7      

Investing activities:

 

 

 

  Purchases of property and equipment

(223.3)  

 

(175.6)     

  Acquisitions, net of cash acquired

 

 

(7.5)     

  Dispositions

 

 

73.6      

  Outsourcing contracts

(94.2)  

 

(29.0)     

  Software

(31.2)  

 

(38.0)     

  Other investing cash flows

       (10.3)  

 

       (18.9)     

Net cash used in investing activities

     (359.0)  

 

     (195.4)     

Financing activities:

 

 

 

  Borrowings (repayment) under commercial paper, net

(101.6)  

 

120.4      

  Borrowings (repayment) under lines of credit, net

(4.0)  

 

22.2      

  Proceeds from debt issuance

297.0  

 

 

  Principal payments on long-term debt

(22.6)  

 

(13.5)     

  Proceeds from stock option and other common stock transactions

9.3  

15.0      

  Other financing cash flows

         1.7  

 

         1.2      

Net cash provided by financing activities

     179.8  

 

     145.3      

Effect of exchange rate changes on cash and cash equivalents

         2.6  

         2.6      

Net decrease in cash and cash equivalents

(156.3)  

 

(25.8)     

Cash and cash equivalents at beginning of year

      299.6  

 

     149.1      

Cash and cash equivalents at end of period

  $   143.3  
========

 

$  123.3      
=========


See accompanying notes.

3


 

COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)

(A)

Basic and diluted earnings per share are calculated as follows (in millions except per share amounts):

 

      Three Months Ended        

 

  July 4, 2003  

 

June 28, 2002

          Net income

$     92.3      
===========

 

$     79.0      
===========

          Common share information:

 

 

 

            Average common shares outstanding for basic EPS

186.903      

 

171.314      

            Dilutive effect of stock options

        0.912      

 

       1.520      

            Shares for diluted EPS

187.815      
===========

 

172.834      
===========

          Basic EPS

$     0.49      

 

$     0.46      

          Diluted EPS

0.49      

 

0.46      

 

The computation of diluted EPS did not include stock options which were antidilutive, as their exercise price was greater than the average market price of the common stock of Computer Sciences Corporation ("CSC" or the "Company") during the periods presented. The number of such options was 9,890,073 and 4,681,614 at July 4, 2003 and June 28, 2002, respectively.

(B)

At July 4, 2003, the Company had eight stock incentive plans which authorized the issuance of stock options, restricted stock and other stock-based incentives to employees, which are described more fully in Note 10 of the Company's 2003 Annual Report filed on Form 10-K. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. In accordance with Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," the following pro forma net income and earnings per share information is presented as if the Company accounted for stock-based compensation awarded under the stock incentive plans using the fair value based method. Under the fair value based method, the estimated fair value of stock incentive awards is charged against income on a straight-line basis over the vesting period.

 

    Three Months Ended    

 

July 4, 2003

 

 

June 28, 2002


Net income, as reported

$92.3      

 

 

$79.0   

Add: Stock-based employee compensation
  expense included in reported net income, net
  of related tax effects

1.5      

 

 

1.4   

Deduct: Total stock-based employee
  compensation expense determined under fair
  value based method for all awards, net of
  related tax effects

  (13.1)     

 

 

  (14.6)  


Pro forma net income


$  80.7      
==========

 

 


$  65.8  
====== 

 

4


Earnings per share:

 

 

 

 

     Basic - as reported

$0.49

 

 

$0.46

     Basic - pro forma

$0.43

 

 

$0.38

 

 

 

 

 

     Diluted - as reported

$0.49

 

 

$0.46

     Diluted - pro forma

$0.43

 

 

$0.38

 

(C)

Included in the consolidated condensed balance sheets are the following accumulated depreciation and amortization amounts:

 

 

 July 4, 2003 

 

March 28, 2003

 

       Property and equipment

$2,408.7      

 

$2,184.6      

 

       Excess of cost of businesses acquired over
           related net assets ("goodwill")


318.9      

 


308.7      

(D)

No dividends were paid during the periods presented. At July 4, 2003 and March 28, 2003, there were 187,557,035 and 187,206,632 shares, respectively, of $1.00 par value common stock issued. The Company had 449,249 shares of treasury stock as of July 4, 2003 and March 28, 2003.

 

 

(E)

Cash payments for interest on indebtedness were $37.8 million and $39.5 million for the three months ended July 4, 2003 and June 28, 2002, respectively. Cash payments for taxes on income were $13.8 million and $8.1 million for the three months ended July 4, 2003 and June 28, 2002, respectively.

(F)

The components of comprehensive income, net of tax, are as follows (in millions):

 

      Three Months Ended       

 

 

July 4, 2003

 

June 28, 2002

 

Net income

$ 92.3      

 

$ 79.0      

 

Foreign currency translation adjustment

135.0      

 

84.8      

 

Unrealized gain (loss) on available for sale securities

     0.3      

 

       (0.5)     

 

Comprehensive income

$227.6      
=========

 

$163.3     
===========

 

Accumulated other comprehensive loss presented on the accompanying consolidated condensed balance sheets consists of accumulated foreign currency translation adjustments, minimum pension liability adjustments, and net unrealized gain (loss) on available for sale securities.

5


(G)

CSC provides management and information technology consulting, systems integration and outsourcing. Based on the criteria of SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," CSC aggregates operating segments into two reportable segments that consist of the U.S. Federal sector and the Global Commercial sector. The U.S. Federal sector operates principally within a regulatory environment subject to governmental contracting and accounting requirements, including Federal Acquisition Regulations, Cost Accounting Standards and audits by various U.S. Federal agencies. The U.S. Federal sector revenues reported below will vary from U.S. Federal government revenue presented elsewhere in this report due to overlapping activities between segments. Information on reportable segments is as follows (in millions):

 

 

Global
Commercial
    Sector     

 

U.S.
Federal
  Sector   

 



Corporate

 



   Total    

 

Three Months Ended
  July 4, 2003

 

 

 

 

 

 

 

 

    Revenues

$2,048.9    

 

$1,505.9    

 

 

 

$3,554.8   

 

    Earnings (loss) before special
     items, interest and taxes


88.5    

 


98.7    

 


$(7.8)   

 


179.4   

 

 

 

 

 

 

 

 

 

 

Three Months Ended
  June 28, 2002

 

 

 

 

 

 

 

 

    Revenues

$1,963.0    

 

$790.7    

 

 

 

$2,753.7   

 

    Earnings (loss) before special
     items, interest and taxes


98.6    

 


52.3    

 


$(7.1)   

 


143.8   

(H)

A summary of the changes in the carrying amount of goodwill by segment for the three months ended July 4, 2003 is as follows (in millions):

 

 

Global
Commercial
  Sector    

 

U.S.
Federal
  Sector   

 



   Total    

 

 

 

 

 

 

 

 

Balance as of March 28, 2003

$1,725.1 

 

$782.2 

 

$2,507.3 

 

Additions

0.3 

 

   

 

0.3 

 

Foreign currency translation

       63.6 

 

            

 

      63.6 

 

Balance as of July 4, 2003

$1,789.0 
=======

 

$782.2 
======

 

$2,571.2 
=======

 

 

Additions to goodwill during the three months ended July 4, 2003 related to an earnout payment associated with an acquisition made in Europe. The foreign currency translation amount relates to the impact of foreign currency adjustments in accordance with SFAS No. 52, "Foreign Currency Translation."

 6


 

A summary of amortized intangible assets as of July 4, 2003 and March 28, 2003 is as follows:

 

 

                       July 4, 2003              

 

 

Gross
Carrying Value

 

Accumulated
Amortization

 


  Net  

 

 

 

 

 

 

 

 

Software

$   828.8  

 

$   467.0  

 

$   361.8 

 

Outsourcing contract costs

1,558.4  

 

625.9  

 

932.5 

 

Other intangible assets

     252.1  

 

     63.6  

 

   188.5 

 

Total intangible assets

$2,639.3  
========

 

$1,156.5  
========

 

$1,482.8 
=======

 

 

                        March 28, 2003                   

 

 

Gross
Carrying Value

 

Accumulated
Amortization

 


  Net     

 

 

 

 

 

 

 

 

Software

$   782.7  

 

$   427.1  

 

$   355.6 

 

Outsourcing contract costs

1,503.0  

 

579.5  

 

923.5 

 

Other intangible assets

      252.1  

 

      53.9  

 

   198.2 

 

Total intangible assets

$2,537.8  
========

 

$1,060.5  
=======

 

$1,477.3 
=======

 

Amortization expense related to intangible assets was $83.9 million and $74.8 million for the three months ended July 4, 2003 and June 28, 2002, respectively. Estimated amortization expense related to intangible assets as of March 28, 2003 for each of the subsequent five fiscal years, fiscal 2004 through fiscal 2008, is as follows (in millions): $305.6, $261.8, $225.9, $191.5, and $131.1.

7


(I)

As disclosed in the Company's fiscal 2003 Annual Report on Form 10-K, the Company reviewed its operations, product strategies and the carrying value of its assets to identify any potential exit or disposal activities in connection with the DynCorp acquisition in March 2003. As a result, during the first quarter ended July 4, 2003, special items of $6.2 million ($3.9 million after tax) or 2 cents per share (diluted) were recorded. The charge represents equipment that can not accommodate the larger, integrated U.S. Federal sector business, and its use has been discontinued. The Company anticipates completing the exit and disposal activities related to the DynCorp acquisition by the end of the second quarter of fiscal 2004. The Company currently estimates any additional special charges will not exceed $16 million.

Additionally, as disclosed in the Company's fiscal 2003 Annual Report on Form 10-K, the Company incurred costs to exit and consolidate activities, involuntarily terminate employees, and other costs to integrate DynCorp into the Company. As of July 4, 2003, 37 of the 75 employees have been involuntarily terminated. The components of the acquisition integration liabilities included in the purchase price allocation for DynCorp are as follows:

 

Acquisition Integration
 Liabilities 

 


Paid as of
July 4, 2003

 

Balance
Remaining at
July 4, 2003


Severance payments

$  7.4    

 

$5.6   

 

$  1.8   

Facility consolidations

71.0    

 

4.0   

 

67.0   

Other

    6.4    

 

   0.1   

 

    6.3   

 

$84.8    
=======

 

$9.7   
=====

 

$75.1   
======

(J)

The Company guarantees working capital credit lines established with local financial institutions for its foreign business units. Generally, guarantees have one-year terms and are renewed annually. CSC guarantees up to $509.2 million of such working capital lines; however, as of July 4, 2003, the amount of the maximum potential payment is $48.5 million, the amount of the related outstanding subsidiary debt. The $48.5 million outstanding debt is reflected in the Company's consolidated financial statements.

The Company indemnifies its software license customers from claims of infringement on a United States patent, copyright, or trade secret. CSC's indemnification covers costs to defend customers from claims, court awards or related settlements. The Company maintains the right to modify or replace software in order to eliminate any infringement. Historically, CSC has not incurred any costs related to customer software license indemnification. Management considers the possibility of incurring future costs remote. Accordingly, the Company has not recorded a related liability.

(K)

In November 2002 and May 2003, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides guidance and criteria for determining when a multiple deliverable arrangement contains more than one unit of accounting. The guidance also addresses methods of measuring and allocating arrangement consideration to separate units of accounting. The guidance is effective for all revenue arrangements entered into after July 5, 2003. The Company presently intends to adopt this statement prospectively and the Company does not anticipate a material impact to the Company's financial condition or results of operations as a result of adoption.

8


(L)

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement was effective for contracts entered into or modified after June 30, 2003. Adoption of this statement did not have a significant effect on the Company's consolidated financial position or results of operations.


(M)

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement was effective for financial instruments entered into or modified after May 31, 2003. Adoption of this statement did not have a significant effect on the Company's consolidated financial position or results of operations.


(N)

In May 2003, the EITF reached a consensus on Issue No. 01-08, "Determining Whether an Arrangement Contains a Lease." EITF Issue No. 01-08 provides guidance on how to determine whether an arrangement contains a lease that is within the scope of FASB Statement No. 13, "Accounting for Leases." The guidance in Issue No. 01-08 is based on whether the arrangement conveys to the purchaser (lessee) the right to use a specific asset. Issue No. 01-08 will be effective for arrangements entered into or modified in the Company's second quarter of fiscal 2004. The guidance could require CSC and its customers to apply lease accounting to certain elements of information technology outsourcing arrangements depending on the specific terms of individual contracts. The Company is currently evaluating EITF Issue No. 01-08 and has not determined the impact this statement will have on its consolidated financial position and results of operations.

 

 

(O)

The Company has prepared the unaudited consolidated condensed financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is recommended that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's annual report on Form 10-K for the fiscal year ended March 28, 2003. In the opinion of the Company, the unaudited consolidated condensed financial statements included herein reflect all adjustments necessary to present fairly the financial position, the results of operations and the cash flows for such interim periods. The results of operations for such interim periods are not necessarily indicative of the results for the fu ll year. Certain amounts presented for prior periods have been reclassified to conform to the fiscal 2004 presentation.

9


PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
First Quarter of Fiscal 2004 versus
First Quarter of Fiscal 2003

Revenues

During the first quarter ended July 4, 2003, the Company's total revenues increased 29.1%, or $801.1 to $3,554.8 million, over the same period last year. On a constant currency basis, total revenues increased approximately 23%. The operations of DynCorp which the Company acquired on March 7, 2003, provided approximately 25 percentage points of the Company's overall revenue growth. The Company utilizes a fiscal reporting calendar and the first quarter of fiscal 2004 includes an additional week of business operations compared to the same period last year. Excluding the former DynCorp operations, the additional week of operations is estimated to have contributed approximately 4 percentage points in revenue growth with the estimate taking into account CSC's outsourcing and professional services arrangements.

U.S. Federal sector revenue increased 90.5%, or $715.2 to $1,505.9 million during the first quarter. Revenue growth was fueled by the acquisition of DynCorp, which contributed approximately 87 percentage points of revenue growth in the U.S. Federal sector. Federal sector's other operations provided the remaining revenue growth.

Global Commercial sector revenue increased 4.4%, or $85.9 million to $2,048.9, over the same quarter of last year. Global Commercial revenue benefited by approximately 8 percentage points due to currency fluctuations in Europe, Australia and Asia.

U.S. Commercial revenue declined 5.9%, or $59.1 million to $937.9 million during the first quarter of fiscal 2004 compared to the same period last year. The decrease was principally driven by lower revenue in outsourcing activities due to contract completions and reduced billable outsourcing activities. Lower outsourcing activities were partially offset by several new projects, which in aggregate contributed approximately $65 million in revenue. New projects include most notably Bombardier Transportation, British Telecom North America, and Motorola.

European revenue of $819.2 million for the first quarter increased 20.7%, or $140.4 million compared to the same period in the prior year. Currency fluctuations favorably impacted revenue growth by approximately 19 percentage points. New outsourcing contracts contributed approximately $65 million in revenue growth including Royal Mail Group, Bombardier Transportation, and the United Kingdom's Department of Health. Declines in the European consulting and integration services as well as the financial services market sector were offset by revenue gains in outsourcing activities.

Other International revenue for the first quarter was up 1.6% to $291.8 million. Currency fluctuations favorably impacted revenue growth by approximately 10 percentage points. The favorable currency impact was principally offset by a $17 million decline in outsourcing activities in Australia. The remaining decline, net of currency impact, was a result of weak demand in Asia.

10


During the first quarter of fiscal 2004, the Company announced new business awards of $4.3 billion, including $474 million related to new U.S. federal contract awards and $3.8 billion related to Global Commercial activities. The Company's growth has created a broad, long-term global revenue base across numerous customers, industries, geographic regions and service offerings. CSC earned over 80% of its revenues from long-term contracts including Global Commercial outsourcing and U.S. federal government engagements.

Costs and Expenses

The Company's costs and expenses as a percentage of revenue are as follows (in millions):

 

       Dollar Amount        

 

   Percentage of Revenue  

 

       First Quarter        

 

        First Quarter         

 

             Fiscal            

 

             Fiscal          

 

   2004    

 

   2003    

 

   2004    

 

  2003   

Costs of services

$2,931.7    

 

$2,231.7    

 

82.5%   

 

81.0%    

Selling, general and administrative

208.7    

 

182.6    

 

5.9      

 

6.6       

Depreciation and amortization

235.0    

 

195.6    

 

6.6      

 

7.1       

Interest expense, net

     40.1    

 

     32.6    

 

    1.1      

 

    1.2       

Special items

        6.2    

 

              

 

    0.2      

 

                

    Total

$3,421.7    
=========

 

$2,642.5    
=========

 

96.3%   
=======

 

95.9%    
=========


Comparing the first quarter results of fiscal 2004 to fiscal 2003, total costs and expenses increased as a percentage of revenue. Higher costs of services as a percentage of revenue and the impact of the special items were partially offset by lower depreciation and amortization, and selling, general and administrative costs. The Company matches revenues and costs to the same currency. Therefore, the foreign currency impact of approximately 6 percentage points on revenues and costs did not have a material impact on costs and expenses as a percentage of revenue.

The increase in costs of services as a percentage of revenue was principally caused by the former DynCorp operations, for which the expense mix is weighted more toward cost of services. The former DynCorp operations increased CSC's consolidated cost of services as a percentage of revenue by approximately 1.6 percentage points. Other CSC operations had a slight performance improvement of .1 percentage point.

Lower selling, general and administrative expenses (SG&A) as a percentage of revenue were also significantly impacted by the former DynCorp operations, which carry a lower SG&A expense as a percentage of revenue than the composite of other CSC operations. Excluding the effects of the former DynCorp operations, the Company's SG&A expense as a percentage of revenue would have been approximately 6.4%. The remaining decrease of .2 percentage points is primarily related to European performance improvement from cost containment and centralization of back-office functions conducted during the third and fourth quarters of fiscal 2003.

The decrease in depreciation and amortization expense is attributable to the former DynCorp operations, which carry lower depreciation and amortization expense as a percentage of revenue than the composite of other CSC operations. Due to a shift in business mix that includes more long-term outsourcing and less project work, depreciation and amortization expense increased to 7.9% of revenues excluding DynCorp operations.

11


Net Interest expense remained virtually unchanged as a percentage of revenue compared to the same period in the prior year. The increase of $7.5 million is principally related to additional borrowing compared to the same period last year.

Special Items

As disclosed in the Company's fiscal 2003 Annual Report on Form 10-K, the Company reviewed its operations, product strategies and the carrying value of its assets to identify any potential exit or disposal activities in connection with the DynCorp acquisition in March 2003. As a result, during the first quarter ended July 4, 2003, special items of $6.2 million ($3.9 million after tax) or 2 cents per share (diluted) were recorded. The charge represents equipment that can not accommodate the larger, integrated U.S. Federal sector business, and its use has been discontinued. The Company anticipates completing the exit and disposal activities related to the DynCorp acquisition by the end of the second quarter of fiscal 2004. The Company currently estimates the additional special charges will not exceed $16 million.

Additionally, as disclosed in the Company's fiscal 2003 Annual Report on Form 10-K, the Company incurred costs to exit and consolidate activities, involuntarily terminate employees, and other costs to integrate DynCorp into the Company. As of July 4, 2003, 37 of the 75 employees have been involuntarily terminated. The components of the acquisition integration liabilities included in the purchase price allocation for DynCorp are as follows:

 

Acquisition Integration
 Liabilities 

 


Paid as of
July 4, 2003

 

Balance
Remaining at
July 4, 2003

Severance payments

$  7.4     

 

$5.6   

 

$  1.8   

Facility consolidations

71.0     

 

4.0   

 

67.0   

Other

   6.4     

 

   0.1   

 

   6.3   

 

$84.8     
=======

 

$9.7   
======

 

$75.1   
======

Income Before Taxes

Income before taxes increased to $133.1 million compared with $111.2 million reported for last year's first quarter. The resulting pre-tax margin was 3.7% compared with 4.0% for the same period last year.

Net Income

Net income was $92.3 million for the first quarter of fiscal 2004, up from $79.0 million for the corresponding period last year. This year's first quarter diluted earnings per share was 49 cents (including 2 cent per share impact of special items) versus 46 cents reported for last year's first quarter.

12


Cash Flows

Cash provided by operating activities was $20.3 million for the three months ended July 4, 2003, compared with cash provided by operating activities of $21.7 million during the same period last year. The decrease of $1.4 million primarily resulted from unfavorable changes in working capital and was substantially offset by an increase in earnings and an increase in depreciation and amortization expense and other non-cash charges.

The Company's net cash used in investing activities totaled $359.0 million for the most recent three months compared to $195.4 million during the same period last year. The increase principally relates to investments in property and equipment and outsourcing contract costs in support of major new contract activities including Motorola, Marconi, and the Royal Mail Group.

Cash provided by financing activities was $179.8 million for the most recent quarter versus $145.3 million for the same period a year ago. The change is principally driven by higher borrowing activity in connection with the DynCorp acquisition.

Financial Condition

During the first quarter of fiscal 2004, the Company's capital outlays included $317.5 million of business investments in the form of fixed asset purchases and outsourcing contract costs. These investments were funded from additional borrowings and existing cash balances, which decreased from $299.6 million as of March 28, 2003 to $143.3 million at July 4, 2003. The Company's debt-to-total capitalization ratio increased from 35.0% at March 28, 2003 to 35.4% at July 4, 2003. During fiscal 2002, the Company filed a shelf registration statement covering up to $1.5 billion of debt and/or equity securities. As of July 4, 2003, the shelf registration has $900 million of unissued debt or equity securities.

The Company has an option to require a subsidiary of Equifax Inc. to purchase the Company's credit reporting business as further described in Note 13 of the Company's Annual Report on Form 10-K for fiscal 2003. The exercise price of this put option is equal to the appraised value of the business.

It is management's opinion that the Company will be able to meet its liquidity and cash needs for the foreseeable future through a combination of cash flows from operating activities, cash balances, unused borrowing capacity and other financing activities, including the issuance of debt and/or equity securities, and/or the exercise of the put option described above.

The Company's sources of liquidity include the issuance of commercial paper and short-term borrowings. If the Company were unable to sell commercial paper or if the Company determined it was too costly to do so, the Company has the ability to borrow under two syndicated backstop credit facilities.

At July 4, 2003, the Company's syndicated credit facilities were comprised of a $321 million facility, which expires on August 18, 2005 and a $350.0 million facility which expires on August 15, 2003. As of July 4, 2003, the Company had no borrowings under these facilities and is in compliance with all terms of the agreements. The Company expects to renew the $350 million facility prior to its expiration date.

13


At July 4, 2003, the Company had $252.7 million of short-term debt and current maturities of long-term debt and $2.4 billion of long-term debt, including $99.4 million of commercial paper borrowings. As further described in Note 7 of the Company's Annual Report on Form 10-K for fiscal 2003, the classification of the Company's outstanding commercial paper is determined by the expiration dates of its backstop credit facilities.

Recent Accounting Pronouncements

The Company has not changed its critical accounting policies. These policies are described in "Management's Discussion and Analysis" of the Company's Annual Report on Form 10-K for fiscal 2003.

In November 2002 and May 2003, the EITF reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides guidance and criteria for determining when a multiple deliverable arrangement contains more than one unit of accounting. The guidance also addresses methods of measuring and allocating arrangement consideration to separate units of accounting. The guidance is effective for all revenue arrangements entered into after July 5, 2003. The Company presently intends to adopt this statement prospectively and the Company does not anticipate a material impact to the Company's financial condition or results of operations as a result of adoption.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement was effective for contracts entered into or modified after June 30, 2003. Adoption of this statement did not have a significant effect on the Company's consolidated financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement was effective for financial instruments entered into or modified after May 31, 2003. Adoption of this statement did not have a significant effect on the Company's consolidated financial position or results of operations.

In May 2003, the EITF reached a consensus on Issue No. 01-08, "Determining Whether an Arrangement Contains a Lease." EITF Issue No. 01-08 provides guidance on how to determine whether an arrangement contains a lease that is within the scope of FASB Statement No. 13, "Accounting for Leases." The guidance in Issue No. 01-08 is based on whether the arrangement conveys to the purchaser (lessee) the right to use a specific asset. Issue No. 01-08 will be effective for arrangements entered into or modified in the Company's second quarter of fiscal 2004. The guidance could require CSC and its customers to apply lease accounting to certain elements of information technology outsourcing arrangements depending on the specific terms of individual contracts. The Company is currently evaluating EITF Issue No. 01-08 and has not determined the impact this statement will have on its consolidated financial position and results of operations.

14


Forward-Looking Statements

All statements in this quarterly report on Form 10-Q and in the documents attached or incorporated by reference that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements represent current expectations and beliefs of CSC, and no assurance can be given that the results described in such statements will be achieved.

Forward-looking information contained in these statements include, among other things, statements with respect to the Company's financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, plans and objectives of management, and other matters. Such statements are subject to numerous assumptions, risks, uncertainties and other factors, many of which are outside of the Company's control, that could cause actual results to differ materially from the results described in such statements.

These factors include, without limitation, the following: (i) changes in the Global Commercial demand for information technology outsourcing, business process outsourcing and consulting and systems integration services; (ii) changes in U.S. federal government spending levels for information technology and other services; (iii) competitive pressures; (iv) the credit worthiness of the Company's commercial customers; (v) the Company's ability to recover its accounts receivable; (vi) the Company's ability to recover its capital investment in outsourcing contracts; (vii) the Company's ability to continue to develop and expand its service offerings to address emerging business demands and technological trends; (viii) the future profitability of the Company's long-term contracts with customers; (ix) the future profitability of the Company's fixed-price contracts; (x) the Company's ability to consummate and integrate acquisitions and form alliances; (xi) the Company's ability to attract and retain qualified personnel; (xii) early termination of client contracts; and (xiii) general economic conditions and fluctuations in currency exchange rates in countries in which the Company does business.

Forward-looking statements in this quarterly report on Form 10-Q speak only as of the date hereof, and forward-looking statement in documents attached or incorporated by reference speak only as to the date of those documents. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

15


PART I, ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK


For a discussion of the Company's market-risk associated with interest rates and foreign currencies as of March 28, 2003, see "Quantitative and Qualitative Disclosures about Market Risk" in the Part II, Item 7A, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the Company's Annual Report on Form 10-K for the fiscal year then ended. For the three months ended July 4, 2003, there has been no significant change in related market risk factors.

PART I, ITEM 4. CONTROLS AND PROCEDURES

"Disclosure controls and procedures" are the controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. "Disclosure controls and procedures" include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in its Exchange Act reports is accumulated and communicated to the issuer's management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

The Company's Chief Executive Officer and Chief Financial Officer have evaluated the Company's disclosure controls and procedures as of July 4, 2003 and, based upon this evaluation, have concluded that they are effective in all material respects.

"Internal control over financial reporting" is a process designed by, or under the supervision of, the issuer's principal executive and financial officers, and effected by the issuer's board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

(1)
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;
(2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements.

During the fiscal quarter ended July 4, 2003, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

16


Part II.  Other Information

Item 5.  Submission of Matters to a Vote of Security-Holders

  1. The Company held its Annual Meeting of Stockholders on August 11, 2003.
  2. Proxies for the Annual Meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934; there were no solicitations in opposition to management's nominees for director as listed in the Proxy Statement; and all such nominees were elected.

The directors elected were Irving W. Bailey, II, Stephen L. Baum, Rodney F. Chase, Van B. Honeycutt, William R. Hoover, Leon J. Level, Thomas A. McDonnell, F. Warren McFarlan, James R. Mellor and William P. Rutledge.

With respect to each nominee, the results of the vote were as follows:

 

 

               Votes              

          Name          

 

     For     

 

  Withheld  

 

 

 

 

 

Irving W. Bailey, II

 

157,780,374

 

10,969,854

Stephen L. Baum

 

164,929,008

 

3,821,220

Rodney F. Chase

 

165,118,994

 

3,631,234

Van B. Honeycutt

 

165,217,599

 

3,532,629

William R. Hoover

 

165,754,325

 

2,995,903

Leon J. Level

 

165,831,695

 

2,918,533

Thomas A. McDonnell

 

164,703,014

 

4,047,214

F. Warren McFarlan

 

164,922,867

 

3,827,361

James R. Mellor

 

157,546,265

 

11,203,963

William P. Rutledge

 

157,735,274

 

11,014,954

 

Item 6.  Exhibits and Reports on Form 8-K
a.  Exhibits

Exhibit Number

Description of Exhibit

 

 

2.1

Agreement and Plan of Merger dated as of December 13, 2002 and among the Company, DynCorp and Garden Acquisition LLC (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated December 13, 2002)

3.1

Restated Articles of Incorporation filed with the Nevada Secretary of State on June 11, 2003 (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2003)

3.2

Certificate of Amendment of Certificate of Designations of Series A Junior Participating Preferred Stock

 

17


 

Exhibit Number

Description of Exhibit

 

 

3.3

Bylaws, amended and restated effective November 4, 2002 (incorporated by reference to Exhibit 3.5 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 2002)

10.1

1978 Stock Option Plan, amended and restated effective March 31, 1988* (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1996)

10.2

1984 Stock Option Plan, amended and restated effective March 31, 1988* (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1996)

10.3

1987 Stock Incentive Plan* (incorporated by reference to Exhibit X(xxiv) to the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 1988)

10.4

Schedule to the 1987 Stock Incentive Plan for United Kingdom personnel* (incorporated by reference to Exhibit X(xxv) to the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 1988)

10.5

1990 Stock Incentive Plan* (incorporated by reference to Exhibit 4(a) to the Company's Registration Statement on Form S-8 filed on August 15, 1990)

10.6

1992 Stock Incentive Plan, amended and restated effective August 9, 1993* (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 1996)

10.7

Schedule to the 1992 Stock Incentive Plan for United Kingdom personnel* (incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 1996)

10.8

1995 Stock Incentive Plan* (incorporated by reference to Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 1995)

10.9

1998 Stock Incentive Plan* (incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 1998)

10.10

2001 Stock Incentive Plan* (incorporated by reference to Appendix B to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 13, 2001)

10.11

Form of Stock Option Agreement* (incorporated by reference to Exhibit 99(C)(13) to Amendment No. 2 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed on March 2, 1998)

10.12

Form of Restricted Stock Agreement* (incorporated by reference to Exhibit 99(C)(14) to Amendment No. 2 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed on March 2, 1998)

 

18


 

Exhibit Number

Description of Exhibit

 

 

10.13

Annual Management Incentive Plan, effective April 2, 1983* (incorporated by reference to Exhibit X(i) to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 1984)

10.14

Supplemental Executive Retirement Plan, amended and restated effective August 11, 2003*

10.15

Deferred Compensation Plan, amended and restated effective August 11, 2003*

10.16

Severance Plan for Senior Management and Key Employees, amended and restated effective August 11, 2003*

10.17

Severance Agreement with Van B. Honeycutt, effective February 2, 1998* (incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 26, 1997)

10.18

Employment Agreement with Van B. Honeycutt, effective May 1, 1999* (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended April 2, 1999)

10.19

Amendment of Employment Agreement with Van B. Honeycutt, effective February 3, 2003* (incorporated by reference to Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 27, 2002)

10.20

Form of Indemnification Agreement for Officers (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995)

10.21

Form of Indemnification Agreement for Directors (incorporated by reference to Exhibit X(xxvi) to the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 1988)

10.22

1997 Nonemployee Director Stock Incentive Plan (incorporated by reference to Appendix A to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 11, 1997)

10.23

Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended April 3, 1998)

10.24

Rights Agreement dated February 18, 1998 (incorporated by reference to Exhibit (c)(4) to Amendment No. 1 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed on February 26, 1998)

10.25

Second Amended and Restated Credit Agreement (Long Term Facility) dated as of August 16, 2001 (incorporated by reference to Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2001)

10.26

Second Amended and Restated Credit Agreement (Short Term Facility) dated as of August 16, 2001 (incorporated by reference to Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2001)

 

19


 

Exhibit
Number

Description of Exhibit

 

 

31.1

Section 302 Certification of the Chief Executive Officer

31.2

Section 302 Certification of the Chief Financial Officer

32.1

Section 906 Certification of the Chief Executive Officer

32.2

Section 906 Certification of the Chief Financial Officer

99

Revenue By Market Sector

 

 

 

*Management contract or compensatory plan or agreement

 

b.

Reports on Form 8-K:

 

There were three reports on Form 8-K filed during the first quarter of fiscal 2004. On April 3, 2003, the registrant filed a current report on Form 8-K reporting the issuance and sale of $300 million aggregate principal amount of its 3.5% Notes due April 15, 2008 at an initial public offering price of 98.966%. On April 3, 2003, the registrant filed a current report on Form 8-K responding to concerns raised in an analyst's research report. On May 13, 2003, the registrant filed a current report on Form 8-K reporting its financial results for the fiscal quarter and year ended March 28, 2003.

20


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

COMPUTER SCIENCES CORPORATION

 

 

 

 

 

 

 

 

 

Date: August 13, 2003

By:

 /s/ Donald G. DeBuck                        

 

 

Donald G. DeBuck
Vice President and Controller
Chief Accounting Officer

 

EX-3.2 3 exhibit3_2.htm CERTIFICATE OF DESIGNATIONS OF SERIES A JR PART PREF STK exhibit 3.2_Certificate of Designations

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF DESIGNATIONS

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

$1.00 Par Value

OF

COMPUTER SCIENCES CORPORATION

Pursuant to Section 78.195 of the General Corporation

Law of the State of Nevada

          We, Hayward D. Fisk, Vice President, and Stephen E. Johnson, Assistant Secretary, of COMPUTER SCIENCES CORPORATION, a corporation organized and existing under the General Corporation Law of the State of Nevada, in accordance with the provisions of Section 78.195 thereof, DO HEREBY CERTIFY:

          That pursuant to the authority conferred upon the Board of Directors by the Restated Articles of Incorporation of the Corporation: (i) the Board on December 21, 1988 adopted a resolution creating a series of Preferred Stock, par value $1.00 per share, designated as Series A Junior Participating Preferred Stock, and caused to be filed with the Nevada Secretary of State on January 13, 1989 a Certificate of Designations with respect thereto; and (ii) the Board on October 30, 1995 amended and restated such resolution in its entirety and caused to be filed with the Nevada Secretary of State on November 3, 1995 a Certificate of Amendment of Certificate of Designations with respect to the Series A Junior Participating Preferred Stock; and

          That on June 17, 1996, prior to the issuance of any shares of Series A Junior Participating Preferred Stock, the Board of Directors, pursuant to the authority conferred upon the Board by the Restated Articles of Incorporation, again amended and restated such resolution in its entirety, effective as of August 1, 1996, as follows:

          RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Restated Articles of Incorporation, a series of Preferred Stock of the Corporation be, and it hereby is, created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof, are as follows:


          Section 1.  Designation and Amount. The shares of such series shall be designated as Series A Junior Participating Preferred Stock, par value $1.00 per share (the "Series A Preferred Stock"), and the number of shares constituting such series shall be Two Hundred Thousand (200,000).

          Section 2.  Dividends and Distributions.

          (a)  The holders of shares of Series A Preferred Stock, in preference to the holders of shares of Common Stock, $1.00 per share, of the Corporation (the "Common Stock") and of any other junior stock of the Corporation that may be outstanding, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of January, April, July and October in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1.00 per share ($4.00 per annum), or (ii) subject to the provision for adjustment hereinafter set forth, 4,000 times the aggregate per share amount of all cash dividends, and 4,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock, or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event that the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then and in each such event, the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (ii) of th e preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event, and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

          (b)  The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (a) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided, however, that in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share ($4.00 per annum) on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

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          (c)  Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall not bear interest. Each share of Preferred Stock shall rank on a parity with each other share of Preferred Stock, regardless of series, with respect to the payme nt of dividends at the respectively designated rates. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 60 days prior to the date fixed for the payment thereof.

          Section 3.  Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:

          (a)  Each share of Series A Preferred Stock shall entitle the holder thereof to 1 vote with the right to cumulate votes in certain instances in the manner set forth in the Restated Articles of Incorporation of the Corporation on all matters submitted to a vote of the stockholders of the Corporation. In the event that the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then and in each such event, the number of votes per share to which holders of shares of Series A Preferred Stock are entitled shall be increased, in the case of a subdivision, or in the case of such a dividend, or reduced, in the case of a combination, i n the same proportion as the subdivision, increase by dividend, or combination of the Common Stock.

          (b)  Except as otherwise provided in the Restated Articles of Incorporation of the Corporation or herein or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

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          (c)  In addition, the holders of shares of Series A Preferred Stock shall have the following special voting rights:

          In the event that at any time dividends on Series A Preferred Stock, whenever accrued and whether or not consecutive, shall not have been paid or declared and a sum sufficient for the payment thereof set aside, in an amount equivalent to six quarterly dividends on all shares of Series A Preferred Stock at the time outstanding, then and in each such event, the holders of shares of Series A Preferred Stock and each other series of preferred stock now or hereafter issued that shall be accorded such class voting right by the Board of Directors and that shall have the right to elect two directors as the result of a prior or subsequent default in payment of dividends on such series (each such other series being hereinafter called "Other Series of Preferred Stock"), voting separately as a class without regard to series, shall be entitled to elect two directors at the next annual meeting of stockholders of the Corporation, in addition to the directors to be elected by the holders of all shares of the Corporation entitled to vote for the election of directors, and the holders of all shares (including the Series A Preferred Stock) otherwise entitled to vote for directors, voting separately as a class, shall be entitled to elect the remaining members of the Board of Directors, provided that the Series A Preferred Stock and each Other Series of Preferred Stock, voting as a class, shall not have the right to elect more than two directors. Such special voting right of the holders of shares of Series A Preferred Stock may be exercised until all dividends in default on the Series A Preferred Stock shall have been paid in full or declared and funds sufficient therefor set aside, and when so paid or provided for, such special voting right of the holders of shares of Series A Preferred Stock shall cease, but subject always to the same provisions for the vesting of such special voting rights in the event of any such future dividend default or defaults. At any time after such special voting rights shall have so vested in the holders of shares of Series A Preferred Stock, the Secretary of the Corporation may, and upon the written request of the holders of record of 10% or more in number of the shares of Series A Preferred Stock and each Other Series of Preferred Stock then outstanding addressed to the Secretary at the principal executive office of the Corporation shall, call a special meeting of the holders of shares of Preferred Stock so entitled to vote, for the election of the directors to be elected by them as herein provided, to be held within 60 days after such call and at the place and upon the notice provided by law and in the Bylaws for the holding of meetings of stockholders; provided, however, that the Secretary shall not be required to call such special meeting in the case of any such request received less than 90 days before the date fixed for any annual meeting of stockholders, and if in such case such special meeting is not called or held, the holders of shares of Preferred Stock so entitled to vote shall be entitled to exercise the special voting rights provided in this paragraph at such annual meeting. If any such special meeting required to be called as above provided shall not be called by the Secretary within 30 days after receipt of any such request, then the holders of record of 10% or more in number of the shares of Series A Preferred Stock and each Other Series of Preferred Stock then outstanding may designate in writing one of their number to call such

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meeting, and the person so designated may, at the expense of the Corporation, call such meeting to be held at the place and upon the notice given by such person, and for that purpose shall have access to the stock books of the Corporation. No such special meeting and no adjournment thereof shall be held on a date later than 60 days before the annual meeting of stockholders. If, at any meeting so called or at any annual meeting held while the holders of shares of Series A Preferred Stock have the special voting rights provided for in this paragraph, the holders of not less than 40% of the shares of Series A Preferred Stock and each Other Series of Preferred Stock then outstanding are present in person or by proxy, which percentage shall be sufficient to constitute a quorum for the election of additional directors as herein provided, the then authorized number of directors of the Corporation shall be increased by two, as of the time of such special meeting or the t ime of the first such annual meeting held while such holders have special voting rights and such quorum is present, and the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock, voting as a class, shall be entitled to elect the additional directors so provided for. If the directors of the Corporation are then divided into classes under provisions of the Restated Articles of Incorporation of the Corporation or the Bylaws, the two additional directors shall be members of those respective classes of directors in which a vacancy is created as a result of such increase in the authorized number of directors. If the foregoing expansion of the size of the Board of Directors shall not be valid under applicable law, then the holders of shares of Series A Preferred Stock and of each Other Series of Preferred Stock, voting as a class, shall be entitled, at the meeting of stockholders at which they would otherwise have voted, to elect directors to fill any then existing vacancies on the Board of Directors, and shall additionally be entitled, at such meeting and each subsequent meeting of stockholders at which directors are elected, to elect all of the directors then being elected until by such class vote two members of the Board of Directors have been so elected. Upon the election at such meeting by the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock, voting as a class, of the directors they are entitled so to elect, the persons so elected, together with such persons as may be directors or as may have been elected as directors by the holders of all shares (including Series A Preferred Stock) otherwise entitled to vote for directors, shall constitute the duly elected directors of the Corporation. The additional directors so elected by holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock, voting as a class, shall serve until the next annual meeting or until their respective successors shall be elected and qualified, or i f any such director is a member of a class of directors under provisions dividing the directors into classes, each such director shall serve until the annual meeting at which the term of office of such director's class shall expire or until such director's successor shall be elected and shall qualify, and at each subsequent meeting of stockholders at which the directorship of any director elected by the vote of holders of shares of Series A Preferred Stock and each other Series of Preferred Stock under the special voting rights set forth in this paragraph is up for election, said special class voting rights shall apply in the reelection of such director or in the election of such director's successor; provided, however, that whenever the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock shall be divested of the special rights to elect two directors as above provided, the terms of office of all persons elected as directors by the holders of shares of Series A

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Preferred Stock and each Other Series of Preferred Stock, voting as a class, or elected to fill any vacancies resulting from the death, resignation, or removal of directors so elected by the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock, shall forthwith terminate (and, if applicable, the number of directors shall be reduced accordingly). If, at any time after a special meeting of stockholders or an annual meeting of stockholders at which the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock, voting as a class, have elected directors as provided above, and while the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock shall be entitled so to elect two directors, the number of directors who have been elected by the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock (or who by reason of one or more resignations, deaths o r removals have succeeded any directors so elected) shall by reason of resignation, death or removal be less than two but at least one, the vacancy in the directors so elected by the holders of shares of the Series A Preferred Stock and each Other Series of Preferred Stock may be filled by the remaining director elected by such holders, and in the event that such election shall not occur within 30 days after such vacancy arises, or in the event that there shall not be incumbent at least one director so elected by such holders, the Secretary of the Corporation may, and upon the written request of the holders of record of 10% or more in number of the shares of Series A Preferred Stock and each Other Series of Preferred Stock then outstanding addressed to the Secretary at the principal office of the Corporation shall, call a special meeting of the holders of shares of Series A Preferred Stock and each Other Series of Preferred Stock so entitled to vote, for an election to fill such vacancy or vacancies, to be h eld within 60 days after such call and at the place and upon the notice provided by law and in the Bylaws for the holding of meetings of stockholders; provided, however, that the Secretary shall not be required to call such special meeting in the case of any such request received less than 90 days before the date fixed for any annual meeting of stockholders, and if in such case such special meeting is not called, the holders of shares of Preferred Stock so entitled to vote shall be entitled to fill such vacancy or vacancies at such annual meeting. If any such special meeting required to be called as above provided shall not be called by the Secretary within 30 days after receipt of any such request, then the holders of record of 10% or more in number of the shares of Series A Preferred Stock and each Other Series of Preferred Stock then outstanding may designate in writing one of their number to call such meeting, and the person so designated may, at the expense of the Corporation, call such meeting to be he ld at the place and upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation; no such special meeting and no adjournment thereof shall be held on a date later than 60 days before the annual meeting of stockholders.

           (d)  Nothing herein shall prevent the directors or stockholders from taking any action to increase the number of authorized shares of Series A Preferred Stock, or increasing the number of authorized shares of Preferred Stock of the same class as the Series A Preferred Stock or the number of authorized shares of Common Stock, or changing the par value of the Common Stock or Preferred Stock, or issuing options, warrants or rights to any class of stock of the Corporation as authorized by the Restated Articles of Incorporation of the Corporation, as it may hereafter be amended.

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          (e)  Except as set forth herein, holders of shares of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote as set forth in the Restated Articles of Incorporation of the Corporation or herein or by law) for taking any corporate action.

          Section 4.  Certain Restrictions.

          (a)  Whenever any dividends or other distributions payable on the Series A Preferred Stock as provided in Section 2 hereof are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not, directly or indirectly:

(i)     declare or pay dividends on, or make any other distributions with respect to, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;

(ii)     declare or pay dividends on, or make any other distributions with respect to any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on shares of the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii)     redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (both as to dividends and upon liquidation, dissolution or winding up) the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (both as to dividends and upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or

(iv)     purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

          (b)  The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

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          Section 5.  Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. Such shares may not be reissued as part of any series of preferred stock including Series A Preferred Stock).

          Section 6.  Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made to:

          (a)  the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received the greater of (i) $40.00 per share ($.01 per one four-thousandth of a share), plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (ii) an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 4,000 times the aggregate amount to be distributed per share to holders of shares of Common Stock (the "Series A Liquidation Preference"); or

          (b)  the holders of shares of Preferred Stock regardless of series, except distributions made ratably on the Series A Preferred Stock and all other Preferred Stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.

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          In the event that the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then and in each such event, the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (ii) at paragraph (a) of this Section 6 shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event, and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

          Section 7.  Consolidation, Merger, etc. In the event that the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, or otherwise changed, then and in each such event, the shares of Series A Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 4,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event that the Corporation shall at any time declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstandi ng shares of Common Stock (by reclassification or otherwise) into a greater or lesser number of shares of Common Stock, then and in each such event, the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event, and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

          Section 8.  No Redemption. The shares of Series A Preferred Stock shall not be redeemable. Notwithstanding the foregoing, the Corporation may acquire shares of Series A Preferred Stock in any other manner permitted by law, the Restated Articles of Incorporation of the Corporation or herein.

          Section 9.  Amendment. The Restated Articles of Incorporation of the Corporation shall not be amended in any manner that would materially and adversely alter or change the powers, preferences or special rights of the Series A Preferred Stock without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single series.

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          Section 10.  Fractional Shares. Series A Preferred Stock may be issued in fractions of a share (in one four-thousandth (1/4000) of a share and integral multiples thereof) that shall entitle the holder thereof, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of shares of Series A Preferred Stock.

          IN WITNESS WHEREOF, we have executed and subscribed this Certificate of Amendment and do affirm the foregoing as true under the penalties of perjury this 1st day of August, 1996.

 

/s/ Hayward D. Fisk
Hayward D. Fisk
Vice President

 

 

 

/s/Stephen E. Johnson
Stephen E. Johnson
Assistant Secretary

EX-10.14 4 exhibit10_14.htm SUPPLEMENTAL EXEC RETIREMENT PLAN, AMENDED & RESTATED 8/11/03 exhibit 10_14

COMPUTER SCIENCES CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AND SUMMARY PLAN DESCRIPTION

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. This document is also intended to constitute the Summary Plan Description for the Supplemental Plan.

          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 ll

Effective Date/Restatement Date

          The Supplemental Plan was effective as of September 1, 1985. It is hereby amended and restated effective August 11, 2003.

ARTICLE lll

Participants

          No person shall be a Participant in this Supplemental Plan unless (a) such individual is specifically designated as such in a written instrument executed by the Chief Executive Officer of the Company (the "Chief Executive Officer"), and (b) such individual has consented to be governed by the terms of this Supplemental Plan by execution of a written instrument in form satisfactory to the Company.

          A person shall cease to be a Participant in this Supplemental Plan in the event of (a) a Plan amendment having such effect, or (b) the occurrence of an event described in this Supplemental Plan which terminates such participation, or (c) prior to a Change in Control (as hereinafter defined), the Chief 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, except as otherwise provided in Articles XIX, XX and XXI.

          (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 an Excess Benefit under this Supplemental Plan. The Excess Benefit is an additional monthly amount calculated as follows: the additional monthly amount which the Participant would otherwise be entitled to receive as a single life annuity under the Pension Plan at the date of commencing payment of the Excess Benefit, if the limitations imposed by Sections 401(a)(17) and 415 of the Internal Revenue Code, as amended, were not applied, less any benefits that the Participant is entitled to receive at that date under Appendix M of the Pension Plan, and provided further, that in making such calculation:

(i) all deferrals of salary under the Company's Deferred Compensation Plan shall be disregarded, as if no deferrals had been made;

(ii) compensation for periods of time prior to date of first participation in this Supplemental Plan shall be disregarded and not taken into account; and

(iii) compensation from all affiliates of the Company shall be taken into account, as if such affiliates were participating employers in the Pension Plan.

In addition to the benefit described in this paragraph (a), a benefit as described in paragraph (b) following shall be payable to the Participant. The Participant may elect to commence receiving Participant's Excess Benefit on the first day of the calendar month that is on or immediately after the Participant's Separation from Service, and the Participant may elect to commence receiving the Excess Benefit on a date which is different from the date on which the Participant elects to commence benefits under the Pension Plan and/or the date on which benefits commence under paragraph (b) following; provided, however, that notwithstanding the foregoing, if the Participant is entitled to a benefit under Appendix M of the Pension Plan, then Participant's Excess Benefit under this Supplemental Plan shall automatically commence when Participant's benefit under Appendix M of the Pension Plan commences.

          (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. Monthly payments shall commence on the first day of the calendar

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month that is on or immediately after a Participant's Retirement Date. 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, 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 from the Company and all Affiliates 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 o n 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.

 

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In the event the Company acquires a corporation or other entity ("Acquisition"), and any employee of the Acquisition, by written determination of the Chief Executive Officer of the Company, becomes a Participant in the Supplemental Plan, such Participant's period of Continuous Service shall commence no sooner than the date the Acquisition becomes an Affiliate of the Company unless the Company's Chief Executive Officer otherwise determines and so confirms in writing.

          (e)  If upon Separation from Service on or after attaining age sixty-two (62), or upon the granting of a special early separation benefit pursuant to paragraph (b) of Article V, a Participant has fewer than twelve (12) years of Continuous Service, the benefit otherwise payable under this Supplemental Plan shall be proportionately reduced, except for the benefit payable under paragraph (a) of this Article IV which shall not be reduced. By way of example, if a Participant otherwise entitled to benefits hereunder commencing at age sixty-two (62) has completed only ten (10) years of Continuous Service upon attainment of age sixty-two (62), such Participant's benefit shall be 10/12, or 83.33%, of the benefit otherwise payable hereunder.

Unless expressly determined to the contrary in writing by the Chief Executive Officer, no period of service completed by a person after attainment of age sixty-five (65) and no adjustment to any person's Base Salary Rate which occurs after attainment of age sixty-five (65) shall be taken into account in computing benefits hereunder.

ARTICLE V

Eligibility for Benefits

          (a)  Except as otherwise provided in paragraph (a) of Article IV, and in paragraph (b) of this Article V, and in Articles VII, IX and X:

    1. 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;
    2. 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); and
    3. 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:

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(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 Vl

Form of Benefit Payments

          (a)  Except as provided in Articles Vll and XIX, benefits payable based on the calculations in Article IV of this Supplemental Plan shall be paid monthly for the life-time of the Participant (unless an optional form is selected under paragraphs (b) or (c) of this Article Vl).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 (and to be calculated without regard to the offset in Section IV(a) regarding Appendix M of the Pension Plan), 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 Participan t, 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 s uch 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

5


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 Vl, elect to receive benefit payments under this Supplemental Plan in the form of a joint and survivor option providing monthly benefits for the lifetime of the Participant with a stipulated percentage of such amount continued after the Participant's death to the spouse to whom the Participant is married as of the date of the Participant's Separation from Service, for the lifetime of such spouse. The amount of monthly payments available under this option shall be determined by reference to factors such as the Participant's life expectancy, the life expectancy of the Participant's spouse, prior benefits received under the Supplemental Plan, and the percentage of the Participant's monthly benefit which is continued after the Participant's death to the Participant's spouse, so that the value of the joint and survivor option is the actuarial equivalent of the benefits otherwise payable under paragraph (a) (or paragraph (b) if the Participant has elected coverage under paragraph (b) preceding) of this Article Vl 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 surv ivor 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 Vll

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 Vl, paragraphs (a) or (c), as applicable), attributable to Participant's Excess Benefit under Article IV (a) above (and to be calculated without regard to the offset in Article IV(a) regarding Appendix M of the Pension Plan), and with such spousal benefit to be reduced in an amount equal to any Qualified Pre-Retirement Survivor Annuity benefit under the Pension Plan relating to benefits on Appendix M thereof.

6


          (b)  At the written election of the Participant, either a benefit under paragraph (i) below or a benefit under paragraph (ii) below shall be paid by the Company. Such election shall be signed by the Participant and notarized and, if the Participant is married at the time of election, the election must also be signed by the Participant's spouse and notarized. The latest election on file in the Company's records shall be controlling.

(i) A lump sum death benefit shall be payable by the Company to the Participant's designated beneficiary or, if no such beneficiary is then living or no such beneficiary can be located, to the Participant's estate. The amount of such death benefit shall be two (2) times the Participant's Base Salary Rate in effect on the date of the Participant's death. On the written request of a beneficiary but subject to the approval in writing of the Chief Executive Officer, the amount payable under this paragraph (b)(i) may be paid to a beneficiary in monthly or other installments over a period not exceeding one hundred and twenty (120) months.

(ii) Participant's spouse shall receive a spousal fifty percent (50%) or the actuarial equivalent spousal benefit (as determined pursuant to Article Vl, paragraphs (a) or (c), as applicable), attributable to Participant's benefit under Article IV(b) above. 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 Vlll

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:

7


          (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

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 Ex change 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

 

8


after, but within thirty-six (36) full calendar months following, such Change in Control, such Participant shall be entitled to receive immediately upon such Separation from Service benefits hereunder in accordance with Articles IV, Vl and Vll, as applicable, without regard to approval by the Chief Executive Officer or any other person(s). Such benefits shall be calculated as if, on the date of such Separation from Service, the Participant (i) had completed a number of years of Continuous Service equal to the greater of twelve (12) or the actual number of years of his or her Continuous Service, and (ii) had attained an age equal to the greater of sixty-two (62) or his or her actual age.

          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

9


          (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; 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 Partici pant, 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 Xl

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 Xll

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 Chief Executive Officer's participation shall be taken by the Compensation Committee of the Board of Directors of the Company.

10


ARTICLE Xlll

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

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.

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ARTICLE XVII

Claim Review Procedure

           Benefits will be provided to each Participant or beneficiary as specified in this Supplemental Plan.

     (a)  If such person (a "Claimant") believes that the Claimant has not been provided with benefits due under this Supplemental Plan, then the Claimant has the right to make a written claim for benefits under the Plan. If such a written claim is made, and the Administrator wholly or partially denies the claim, the Administrator shall provide the Claimant with written notice of such denial, setting forth, in a manner calculated to be understood by the Claimant:

      1. the specific reason or reasons for such denial;
      2. specific reference to pertinent Plan provisions on which the denial is based;
      3. a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and
      4. an explanation of the Plan's claims review procedure and time limits applicable to those procedures, including a statement of the Claimant's right to bring a civil action under ERISA Section 502(a) if the claim is denied on appeal.

     (b)  The written notice of any claim denial pursuant to paragraph (a) of this Article XVII shall be given not later than thirty (30) days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim, in which event:

      1. written notice of the extension shall be given by the Administrator to the Claimant prior to thirty (30) days after receipt of the claim;
      2. the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day period for giving notice of a claim denial; and
      3. the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Administrator expects to render the benefit determination.

     (c)  The decision of the Administrator shall be final unless the Claimant, within sixty (60) days after receipt of notice of the claims denial from the Administrator, submits a written request to the Board of Directors of the Company, or its delegate, for an appeal of the denial. During that sixty (60) day period, the Claimant shall be provided, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits. The Claimant shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits as part of the Claimant's appeal. The Claimant may act in these matters individually, or through his or her authorized representative.

 

12


     (d)  After receiving the written appeal, if the Board of Directors of the Company, or its delegate, shall issue a written decision notifying the Claimant of its decision on review, not later than thirty (30) days after receipt of the written appeal, unless the Board of Directors of the Company or its delegate determines that special circumstances require an extension of time for reviewing the appeal, in which event:

      1. written notice of the extension shall be given by the Board of Directors of the Company or its delegate prior to thirty (30) days after receipt of the written appeal;
      2. the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day review period;
      3. the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Board of Directors of the Company or its delegate expects to render the appeal decision.

The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is received by the Board of Directors of the Company or its delegate, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing of the appeal. If the period of time for reviewing the appeal is extended as permitted above, due to a claimant's failure to submit information necessary to decide the claim on appeal, then the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

     (e)  In conducting the review on appeal, the Board of Directors of the Company or its delegate shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Board of Directors of the Company or its delegate upholds the denial, the written notice of decision from the Board of Directors of the Company or its delegate shall set forth, in a manner calculated to be understood by the Claimant:

      1. the specific reason or reasons for the denial
      2. specific reference to pertinent Plan provisions on which the denial is based;
      3.  

        13


      4. a statement that the Claimant is entitled to be receive, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits.
      5. A statement of the Claimant's right to bring a civil action under ERISA 502(a).

     (f)  If the Plan or any of its representatives fail to follow any of the above claims procedures, the Claimant shall be deemed to have duly exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under ERISA Section 502(a), including but not limited to the filing of an action for immediate declaratory relief regarding benefits due under the Plan.

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.

Article XIX

Lump-Sum Acceleration

          (a)  This Article XIX applies to benefits payable under paragraph (a) of Article IV and under paragraph (b) of Article IV.

14


          (b)  At any time within three (3) years after the occurrence of a Change in Control, a Participant or the Participant's Surviving Spouse may elect to receive a lump sum payment, in an amount determined below, sixty (60) days after giving written notice of the Participant's desire or the Participant's Surviving Spouse's desire to receive such lump sum benefit, to the person designated to administer this Supplemental Plan under Article XII. The date which is sixty (60) days after the notice is given shall be the "Commencement Date." The lump sum payment shall be determined in accordance with paragraphs (c) and (d) of this Article XIX, and then shall be reduced by a penalty equal to ten percent (10%) of such payment which shall be irrevocably forfeited.

          (c)  The lump sum payment shall equal the lump sum value of the Participant's (or the Participant's Surviving Spouse's, if applicable) remaining Benefit as of the Commencement Date. The lump sum value shall be computed by using the present value basis as is required under Section 417(e) of the Internal Revenue Code, as amended, at the Commencement Date for determining lump sums under qualified plans.

          (d)  In calculating the lump sum payment, the Cost of Living Adjustment called for under Article XXI shall be taken into account as follows: The Company shall determine the average of the 3 most recent adjustments under Article XXI (or the 3 most recent adjustments that would have occurred had Article XXI been in effect for all relevant periods). That average so-determined shall be deemed to apply for purposes of all future years for purposes of making the lump sum calculation.

Article XX

Hardship Withdrawal

          (a)  This Article XX applies to benefits payable under paragraph (a) of Article IV and under paragraph (b) of Article IV, and is applicable only to Participants who have commenced receiving retirement benefits under this Supplemental Plan.

          (b)  Hardship" of a Participant shall mean an unforeseeable emergency which constitutes a severe financial hardship resulting from any one or more of the following:

(i) sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Section 152(a)of the Internal Revenue Code, as amended) of the Participant;

(ii) loss of the Participant's property due to casualty; or

(iii) any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant's control.

          (c)  Whether a Participant has incurred a Hardship shall be determined by the person designated to administer this Supplemental Plan under Article XII, in his discretion on the basis of all relevant facts and circumstances and in accordance with nondiscriminatory and objective standards, uniformly interpreted and consistently applied.

15


          (d)  A Participant may make a withdrawal from the Participant's account, in the form of a lump sum, on account of the Participant's Hardship, only to the extent that the Hardship is not otherwise relievable:

    1. through reimbursement or compensation by insurance or otherwise, or
    2. by liquidation of the Participant's assets (to the extent that such liquidation does not itself cause a Hardship).

          (e)  The amount of the lump sum hardship withdrawal shall not exceed the current lump sum value of the remaining benefits otherwise due determined immediately prior to the hardship distribution, as determined by using the methodology described in paragraphs (c) and (d) of Article XIX, without regard to the penalty provision of paragraph (a) of Article XIX.

         (f)  If a hardship lump sum distribution is made to a Participant, the amount of future benefits under this Supplemental Plan shall be reduced, as follows:

    1. First, the current lump sum value of the benefits otherwise due shall be determined immediately prior to the hardship distribution by using the methodology described in paragraphs (c) and (d) of Article XIX, without regard to the penalty provision of paragraph (a) of Article XIX.
    2. Second, the amount of the lump sum hardship distribution to be made shall be subtracted from the amount so determined. The resulting net amount is called the "Resulting Net Value."
    3. Third, all future benefit payments shall be adjusted downward, to an amount that has a lump sum present value equal to the Resulting Net Value. Such lump sum present value shall be calculated using the methodology described in paragraphs (c) and (d) of Article XIX, without regard to the penalty provision of paragraph (a) of Article XIX.

          (g)  Participants may request a Hardship withdrawal from either benefits otherwise payable under paragraph (a) of Article IV or under paragraph (b) of Article IV, or from benefits payable under both paragraphs (a) and (b).

          (h)  The provisions of this Article XX shall be equally applicable to Participant's Surviving Spouse.

 

16


Article XXI

Cost of Living Adjustment

          (a)  This Article XXI applies to benefits payable on or after August 13, 2001 under paragraph (b) of Article IV, but does not apply to benefits payable under paragraph (a) of Article IV.

          (b)  On the first day of each fiscal year of the Company, following commencement of payment of benefits to the Participant (or that Participant's Surviving Spouse, as applicable) hereunder, the benefits payable to that Participant (or that Participant's Surviving Spouse) shall be subject to an upward adjustment, as follows:

    1. Benefits payable shall be increased by an amount equal to the lesser of (A) the greater of zero or the most recently published annual percent change in the Consumer Price Index (as defined below), as computed to the nearest one-tenth of one percent (0.1) for the twelve consecutive reference months of March of the prior calendar year through and including February of the current calendar year ; or (B) five percent (5%).
    2. Such adjustments, if any, shall be calculated for each year, irrespective of any other year's adjustment. For example, if the CPI change in four successive years is 3%, 6%, 7% and 3%, the Company would implement corresponding increases equal to 3%, 5%, 5% and 3%.

          (c)  The "Consumer Price Index" is "The Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100" as published by the Bureau of Labor Statistics.

          (d)  In the event that the Bureau of Labor Statistics reissues CPI data to correct an error in previously published CPI data, any affected benefits will be recalculated by the Company.

Article XXII

Certain Further Payments By the Company

          (a)  This Article XXII applies to benefits payable under paragraph (a) of Article IV and under paragraph (b) of Article IV.

          (b)  The Company shall be obligated to make certain further payments to Participants as set forth in this Article XXII.

          (c)  In the event that any amount or benefit payable to the Participant by the Company on or after August 13, 2001 pursuant to this Supplemental Plan (collectively, the "Taxable Benefits") is subject on or after August 13, 2001 to the tax imposed under Section 3121 of the Internal Revenue Code, as amended (the "FICA Tax"), or any similar tax that may hereafter be imposed, the Company shall pay to the Participant at the time specified in paragraph (d) below, the Tax Reimbursement Payment (as defined below). The "Tax Reimbursement Payment" is defined as an amount, which when reduced

17


by any FICA Tax paid by the Participant on the Taxable Benefits (but without reduction for any Federal, state or local income taxes on such Taxable Benefits), shall be equal to the amount of any Federal, state or local income taxes payable because of the inclusion of the Tax Reimbursement Payment in the Participant's adjusted gross income, by applying the highest applicable marginal rate of Federal, state and local income taxation, respectively, for the calendar year in which the Tax Reimbursement Payment is to be made.

          (d)  For purposes of determining the amount of the Tax Reimbursement Payment, the Participant shall be deemed:

    1. to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made; and
    2. to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Participant's adjusted gross income.)

          (e)  The Tax Reimbursement Payment attributable to a Taxable Benefit shall be paid to the Participant not more than thirty (30) days following the incurrence of the FICA Tax. If the amount of such Tax Reimbursement Payment cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Participant an amount estimated in good faith by the Company to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment as soon as the amount thereof can be determined.

 

18


EX-10.15 5 exhibit10_15.htm DEFERRED COMPENSATION PLAN, AMENDED & RESTATED 08/11/2003 Exhibit 10.15 - Amendment & Restatement of the CSC Deferred Comp Plan & SPD

AMENDMENT AND RESTATEMENT OF THE

COMPUTER SCIENCES CORPORATION

DEFERRED COMPENSATION PLAN

AND

SUMMARY PLAN DESCRIPTION

AUGUST 11, 2003

 

 

TABLE OF CONTENTS


Page

ARTICLE I - DEFINITIONS

Section 1.1 - General

1

Section 1.2 - Account

1

Section 1.3 - Administrator

2

Section 1.4 - Board

2

Section 1.5 - Change in Control

2

Section 1.6 - Chief Executive Officer

3

Section 1.7 - Code

3

Section 1.8 - Committee

3

Section 1.9 - Company

3

Section 1.10- Deferred Compensation

3

Section 1.11- Delegate

3

Section 1.12- Election Form

3

Section 1.13- Eligible Key Executive

3

Section 1.14- Employee

3

Section 1.15- ERISA

4

Section 1.16- Exchange Act

4

Section 1.17- Hardship

4

Section 1.18- Key Executive

4

Section 1.19- Key Executive Plan

4

Section 1.20- Nonemployee Director

4

Section 1.21- Nonemployee Director Plan

5

Section 1.22- Partial First Plan Year

5

Section 1.23- Participant

5

Section 1.24- Payday

5

Section 1.25- Plan

5

Section 1.26- Plan Year

5

Section 1.27- Predecessor Plan

5

Section 1.28- Qualified Bonus

5

Section 1.29- Qualified Director Compensation

6

Section 1.30- Qualified Salary

6

Section 1.31- Retirement

6

Section 1.32- Section 401(a)(17) Limitation

6

Section 1.33- Separation from Service

6


ARTICLE II - ELIGIBILITY

Section 2.1 - Requirements for Participation

7

Section 2.2 - Deferral Election Procedure

7

Section 2.3 - Content of Election Form

7


ARTICLE III - PARTICIPANTS' DEFERRALS

Section 3.1 - Deferral of Qualified Bonus and
                      Qualified Director Compensation

8

Section 3.2 - Deferral for Partial First Plan Year

8

Section 3.3 - Deferral for Qualified Salary

8


ARTICLE IV - DEFERRED COMPENSATION ACCOUNTS

Section 4.1 - Deferred Compensation Accounts

9

Section 4.2 - Crediting of Deferred Compensation

9

Section 4.3 - Crediting of Earnings

10

Section 4.4 - Applicability of Account Values

10

Section 4.5 - Vesting of Deferred Compensation Accounts

10

Section 4.6 - Assignments, Etc. Prohibited

10


ARTICLE V - DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS

Section 5.1 - Distributions upon a Key Executive's Retirement
                         and a Nonemployee Director's Separation from Service

11

Section 5.2 - Distributions upon a Key Executive's Pre-Retirement
                         Separation from Service

11

Section 5.3 - Distributions upon a Participant's Death

12

Section 5.4 - Optional Distributions

12

Section 5.5 - Applicable Taxes

13


ARTICLE VI - WITHDRAWALS FROM DEFERRED COMPENSATION
                        ACCOUNTS

Section 6.1 - Hardship Withdrawals from Accounts

13

Section 6.2 - Elective Distributions after a Change in Control

13

Section 6.3 - Other Elective Distributions

14

Section 6.4 - Payment of Withdrawals

14

Section 6.5 - Effect of Withdrawals

14

Section 6.6 - Applicable Taxes

14


ARTICLE VII - ADMINISTRATIVE PROVISIONS

Section 7.1 - Administrator's Duties and Powers

15

Section 7.2 - Limitations Upon Powers

15

Section 7.3 - Final Effect of Administrator Action

15

Section 7.4 - Delegation by Administrator

16

Section 7.5 - Indemnification by the Company; Liability Insurance

16

Section 7.6 - Recordkeeping

16

Section 7.7 - Statement to Participants

17

Section 7.8 - Inspection of Records

17

Section 7.9 - Identification of Fiduciaries

17

Section 7.10- Procedure for Allocation of Fiduciary Responsibilities

17

Section 7.11- Claims Procedure

17

Section 7.12- Conflicting Claims

19

Section 7.13- Service of Process

20


ARTICLE VIII - MISCELLANEOUS PROVISIONS

Section 8.1 - Termination of the Plan

20

Section 8.2 - Limitation on Rights of Participants

20

Section 8.3 - Consolidation or Merger; Adoption of Plan by
                       Other Companies

21

Section 8.4 - Errors and Misstatements

21

Section 8.5 - Payment on Behalf of Minor, Etc

21

Section 8.6 - Amendment of Plan

21

Section 8.7 - Funding

22

Section 8.8 - Governing Law

22

Section 8.9 - Pronouns and Plurality

22

Section 8.10 - Titles

22

Section 8.11 - References

23

 


AMENDMENT AND RESTATEMENT OF THE
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN

AND

SUMMARY PLAN DESCRIPTION

as Amended and Restated Effective August 11, 2003

          Computer Sciences Corporation, a Nevada corporation, by resolution of its Board of Directors dated August 14, 1995, has adopted the Computer Sciences Corporation Deferred Compensation Plan (the "Plan"), which constitutes a complete amendment and restatement of the Computer Sciences Corporation Nonqualified Deferred Compensation Plan (the "Predecessor Plan"), effective as of September 30, 1995, for the benefit of its Nonemployee Directors, as defined below, and certain of its Key Executives, as defined below.

          The Plan was amended and restated effective as of February 2, 1998, as of August 13, 2001 and as of December 9, 2002, and is hereby amended and restated effective as of August 11, 2003.

          The Plan shall constitute two separate plans, one for the benefit of Nonemployee Directors and one for the benefit of Key Executives. The plan for Key Executives is a nonqualified deferred compensation plan which is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as defined below. The plan for Nonemployee Directors is not subject to ERISA. This document is also intended to constitute the Summary Plan Description for the Plan.

ARTICLE I

DEFINITIONS

Section 1.1  General

          Whenever the following terms are used in the Plan with the first letter capitalized, they shall have the meaning specified below unless the context clearly indicates to the contrary.

Section 1.2  Account

          "Account" of a Participant shall mean the Participant's individual deferred compensation account established for his or her benefit under Article IV hereof.

1


Section 1.3  Administrator

          "Administrator" shall mean Computer Sciences Corporation, acting through its Chief Executive Officer, except that if the Chief Executive Officer has appointed a Delegate under Section 7.4, the term "Administrator" shall mean the Delegate as to those duties, powers and responsibilities specifically conferred upon the Delegate.

Section 1.4  Board

          "Board" shall mean the Board of Directors of Computer Sciences Corporation. The Board may delegate any power or duty otherwise allocated to the Administrator to any other person or persons, including a Committee appointed under Section 7.4.

Section 1.5  Change in Control

          "Change in Control" means, after September 30, 1995, (a) the acquisition by any person, entity or group (as defined in Section 13(d)3 of the Exchange Act), as beneficial owner, directly or indirectly, of securities of Computer Sciences Corporation representing twenty percent (20%) or more of the combined voting power of the then outstanding securities of Computer Sciences Corporation, (b) a change during any period of two (2) consecutive years of a majority of the Board as constituted as of the beginning of such period, unless the election of each director who was not a director at the beginning of such period was approved by vote of at least two-thirds of the directors then in office who were directors at the beginning of such period, (c) a sale of substantially all of the property and assets of Computer Sciences Corporation, (d) a merger, consolidation, reorganization or other business combination to which Computer Sciences Corporation is a party and the consummation of which results in the outstanding voting securities of Computer Sciences Corporation being exchanged for or converted into cash, property and/or securities not issued by Computer Sciences Corporation, (e) a merger, consolidation, reorganization or other business combination to which the Company is a party and the consummation of which does not result in the outstanding voting securities of the Company being exchanged for or converted into cash, property and/or securities not issued by the Company, provided that the outstanding voting securities of the Company immediately prior to such business combination (or, if applicable, the securities of the Company into which such voting securities are converted as a result of such business combination) represent less than 50% of the voting power of the Company immediately following such business combination, or (f) any other event constituting a change in control of Computer Sciences Corporation for purposes of Schedule 14 A of Regulation 14A under the Exchange Act.

2


Section 1.6  Chief Executive Officer

          "Chief Executive Officer" shall mean the Chief Executive Officer of Computer Sciences Corporation.

Section 1.7  Code

          "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, together with regulations thereunder.

Section 1.8  Committee

          "Committee" shall mean the Committee, if any, appointed in accordance with Section 7.4.

Section 1.9  Company

          "Company" shall mean Computer Sciences Corporation and all of its affiliates, and any entity which is a successor in interest to Computer Sciences Corporation and which continues the Plan under Section 8.3(a).

Section 1.10  Deferred Compensation

          "Deferred Compensation" of a Participant shall mean the amounts deferred by such Participant under Article III of the Plan.

Section 1.11  Delegate

          "Delegate" shall mean the Delegate, if any, appointed in accordance with Section 7.4.

Section 1.11  Election Form

          "Election Form" shall mean the form of election provided by the Administrator to each Eligible Executive and Nonemployee Director pursuant to Section 3.1 or Section 3.3.

Section 1.12  Eligible Key Executive

          "Eligible Key Executive" shall mean any Key Executive who has been designated as eligible to participate in the Plan with respect to any Plan Year by the Chief Executive Officer.

Section 1.13  Employee

          "Employee" shall mean any person who renders services to the Company in the status of an employee as that term is defined in Code Section 3121(d), including officers but not including directors who serve solely in that capacity.

3


Section 1.14  ERISA

          "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, together with regulations thereunder.

Section 1.15  Exchange Act

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

Section 1.16  Hardship

          (a) "Hardship' of a Participant, shall mean an unforeseeable emergency which constitutes a severe financial hardship resulting from any one or more of the following:

(i) sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Code Section 152(a)) of the Participant;

(ii) loss of the Participant's property due to casualty; or

(iii) any other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant's control.

          (b) Notwithstanding subsection(a) above, a financial need shall not constitute a Hardship unless it is for at least $1,000.00 (or the entire principal amount of the Participant's Accounts, if less).

          (c) Whether a Participant has incurred a Hardship shall be determined by the Administrator in its discretion on the basis of all relevant facts and circumstances and in accordance with nondiscriminatory and objective standards, uniformly interpreted and consistently applied.

Section 1.17  Key Executive

          "Key Executive" shall mean any Employee of the Company who is an officer or other key executive of the Company and who qualifies as a "highly compensated employee or management employee" within the meaning of Title I of ERISA.

Section 1.18  Key Executive Plan

          "Key Executive Plan" shall mean the portion of this Plan which is maintained or the benefit of the Company's Key Executives.

Section 1.19  Nonemployee Director

          "Nonemployee Director" shall mean a member of the Board who is not an Employee.

Section 1.20  Nonemployee Director Plan

          "Nonemployee Director Plan" shall mean the portion of this Plan which is maintained for the benefit of the Company's Nonemployee Directors.

4


Section 1.21  Partial First Plan Year

          "Partial First Plan Year" shall mean that portion of the first Plan Year of the Plan subject to its amendment and restatement effective as of September 30, 1995, which shall begin on September 30, 1995 and end on March 29, 1996.

Section 1.22  Participant

          "Participant" shall mean each Key Executive and Nonemployee Director who elects to participate in the Plan as provided in Article II and who defers Qualified Bonus, Qualified Director Compensation or Qualified Salary under the Plan. Each of such persons shall continue to be a "Participant" until they have received all benefits due under the Plan.

Section 1.23  Payday

          "Payday" of a Key Executive shall mean the regular and recurring established day for payment of Qualified Salary to such Key Executive.

Section 1.24  Plan

          "Plan" shall mean the Computer Sciences Corporation Deferred Compensation Plan.

Section 1.25  Plan Year

          "Plan Year" shall mean the fiscal year of the Company.

Section 1.26  Predecessor Plan

          "Predecessor Plan" shall mean the Computer Sciences Corporation Nonqualified Deferred Compensation Plan as in effect and maintained by the Company for the benefit of its Nonemployee Directors prior to the amendment and restatement of the Plan effective as of September 30, 1995.

Section 1.27  Qualified Bonus

          "Qualified Bonus" of a Key Executive shall mean the Key Executive's annual bonus which may be payable to the Key Executive under the Computer Sciences Corporation Annual Incentive Plan or such other bonus or incentive compensation plan of the Company which may be designated from time to time by the Administrator.

Section 1.28  Qualified Director Compensation

          "Qualified Director Compensation" of a Nonemployee Director shall mean the retainer, consulting fees, committee fees and meeting fees which are payable to the Nonemployee Director by the Company.

5


Section 1.29  Qualified Salary

          "Qualified Salary" of a Key Executive shall mean the Key Executive's gross base salary which may be payable to the Key Executive on a Payday, including any portion thereof payable in the form of sick pay, vacation pay, pay in lieu of notice or jury pay, and determined before any exclusions, deductions or withholdings therefrom,

Section 1.30  Retirement

          "Retirement" shall mean, with respect to a Key Executive, a Separation from Service of such Key Executive (a) on or after attainment of age sixty-two (62) or (b) prior to attainment of age sixty-two (62) if the Chief Executive Officer shall designate such Separation from Service as Retirement for purposes of the Plan.

Section 1.31  Section 401(a)(17) Limitation

          "Section 401(a)(17) Limitation" with respect to a Key Executive's Qualified Salary for a Payday shall mean the amount equal to:

(a) the annual compensation limit under Code Section 401(a)(17) in effect for the calendar year in which such Payday occurs, divided by

(b) the total number of Paydays in a year for which such Key Executive's gross base salary would be payable to such Key Executive, based on the regular and recurring manner of payment for such Key Executive in effect on such Payday, as determined by the Administrator.

Section 1.32  Separation from Service

          (a) "Separation from Service" of a Key Executive shall mean the termination of his or her employment with the Company by reason of resignation, discharge, death or Retirement. A leave of absence or sick leave authorized by the Company in accordance with established policies, a vacation period or a military leave shall not constitute a Separation from Service; provided, however, that failure to return to work upon expiration of any leave of absence, sick leave, military leave or vacation shall be considered a resignation effective as of the date of expiration of such leave of absence, sick leave, military leave or vacation.

          (b) "Separation from Service" of a Nonemployee Director shall mean the Nonemployee Director's ceasing to serve as a member of the Board for any reason.

ARTICLE II

ELIGIBILITY

Section 2.1  Requirements for Participation

          Any Eligible Key Executive and any Nonemployee Director shall be eligible to be a Participant in the Plan.

6


Section 2.2  Deferral Election Procedure

          For each Plan Year, the Administrator shall provide each Eligible Key Executive and each Nonemployee Director with an Election Form on which such person may elect to defer his or her Qualified Bonus or Qualified Director Compensation under Article III and, in the case of an Eligible Key Executive, to defer his or her Qualified Salary under Article III. Each such person who elects to defer Qualified Bonus, Qualified Director Compensation or Qualified Salary under Article III shall complete and sign the Election Form and return it to the Administrator.

Section 2.3  Content of Election Form

          Each Participant who elects to defer Qualified Bonus, Qualified Director Compensation or Qualified Salary under the Plan shall set forth on the Election Form specified by the Administrator:

(a)   the amount of Qualified Bonus or Qualified Director Compensation to be deferred under Article III and the Participant's authorization to the Company to reduce his or her Qualified Bonus or Qualified Director Compensation by the amount of the Deferred Compensation,

(b)   in the case of a Participant who is an Eligible Key Executive, the amount of Qualified Salary to be deferred under Article III and the Participant's authorization to the Company to reduce his or her Qualified Salary by the amount of the Deferred Compensation,

(c)   the length of time with respect to which the Participant elects to defer the Deferred Compensation,

(d)   the method under which the Participant's Deferred Compensation shall be payable, and

(e)   such other information, acknowledgements or agreements as may be required by the Administrator.

7


ARTICLE III

PARTICIPANTS' DEFERRALS

Section 3.1  Deferral of Qualified Bonus and Qualified Director Compensation

          (a) Each Eligible Key Executive and Nonemployee Director may elect to defer into his or her Account all or any portion of the Qualified Bonus and the Qualified Director Compensation, respectively, which would otherwise be payable to him or her for any Plan Year in which he or she has not incurred a Separation from Service as of the first day of the Plan Year in question. Such election shall be made by the Eligible Key Executive or Nonemployee Director by completing and delivering to the Administrator his or her Election Form for such Plan Year no later than the last day of the next preceding Plan Year, except (i) with respect to the Partial First Plan Year, in which case such election shall be made not later than September 29, 1995, and (ii) with respect to a person who first becomes an Employee or Nonemployee Director during a Plan Year, which person may make such election within 30 days after first becoming an E mployee or Nonemployee Director, respectively.

          (b) Any such election made by a Participant to defer Qualified Bonus or Qualified Director Compensation shall be irrevocable and shall not be amendable by the Participant, except:

(i) as set forth in Sections 6.2 and 6.3 hereof; or

(ii) in the event of a Hardship, a Participant may terminate the Participant's deferral election for the Plan Year in which the Hardship occurs with respect to all Qualified Bonus or Qualified Director Compensation which has not yet been deferred.

Section 3.2  Deferral for Partial First Plan Year

          For the Partial First Plan Year, Participants may defer any or all of the Qualified Bonus or Qualified Director Compensation which is earned by them after September 29, 1995 and before March 30, 1996. Deferral elections previously made by Nonemployee Directors for the 1996 Plan Year shall only remain effective with respect to Qualified Bonus or Qualified Director Compensation earned prior to September 30, 1995.

Section 3.3  Deferral of Qualified Salary

          (a) Each Eligible Key Executive may elect to defer into his or her Account all or a portion of the Qualified Salary which would otherwise be payable to him or her for any Plan Year in which he or she has not incurred a Separation from Service as of the first day of the Plan Year in question. Such Eligible Key Executive may elect to defer his or her Qualified Salary for such Plan Year as follows:

    1. such Eligible Key Executive may elect to defer all or any portion of the amount by which his or her Qualified Salary exceeds the Section 401(a)(17) Limitation, or

8


(ii) such Eligible Key Executive may elect to defer all of the amount by which his or her Qualified Salary exceeds the greater of: (A) the dollar amount specified by such Eligible Key Executive under such election, or (B) the Section 401(a)(17) Limitation.

Such election shall be made by the Eligible Key Executive by completing and delivering to the Administrator his or her Election Form for such Plan Year no later than the last day of the next preceding Plan Year. Notwithstanding the foregoing, with respect to the period commencing on August 13, 2001 and ending on March 29, 2002, an Eligible Key Executive may only elect to defer Qualified Salary under this Section 3.3 if the Administrator designates such Eligible Key Executive as eligible to make such deferrals. The Administrator shall determine the manner in which such Eligible Key Executive's deferral election shall be made for the period described in the preceding sentence, and an Eligible Key Executive's deferral election shall be made within 30 days of the designation of such Eligible Key Executive and shall only apply to Qualified Salary which would otherwise be payable after such deferral election is made.

          (b) Any such election made by a Participant to defer Qualified Salary shall be irrevocable and shall not be amendable by the Participant, except:

(i) as set forth in Section 6.2 and 6.3; or

(ii) in the event of Hardship, a Participant may terminate the Participant's deferral election for the Plan Year in which the Hardship occurs with respect to all Qualified Salary which has not yet been deferred.

ARTICLE IV

DEFERRED COMPENSATION ACCOUNTS

Section 4.1  Deferred Compensation Accounts

          The Administrator shall establish and maintain for each Participant an Account to which shall be credited the amounts allocated thereto under this Article IV and from which shall be debited the Participant's distributions and withdrawals under Articles V and VI.

Section 4.2  Crediting of Deferred Compensation

          Each Participant's Account shall be credited with an amount which is equal to the amount of the Participant's Qualified Bonus, Qualified Director Compensation and Qualified Salary which such Participant has elected to defer under Article III at the time such Qualified Bonus, Qualified Director Compensation or Qualified Salary, whichever is applicable, would otherwise have been paid to the Participant.

Section 4.3  Crediting of Earnings

          (a)   Beginning on March 29, 2003 and subject to amendment by the Board, for each Plan Year earnings shall be credited to each Participant's Account (including the Accounts of Nonemployee Directors under the Predecessor Plan), at a rate equal to the 120-month rolling average yield to maturity of the index called the "Merrill Lynch U.S. Corporates, A Rated, 15+ Years Index" as of December 31 of the preceding Plan Year, compounded annually.

9


          (b)   Beginning on September 30, 1995 and until March 28, 2003, for each Plan Year earnings shall be credited to each Participant's Account (including the Accounts of Nonemployee Directors under the Predecessor Plan), at a rate equal to 120% of the 120-month rolling average yield to maturity on 10-year United States Treasury Notes as of December 31 of the preceding Plan Year, compounded annually.

          (c)  Earnings shall be credited on such valuation dates as the Administrator shall determine.

Section 4.4  Applicability of Account Values

          The value of each Participant's Account as determined as of a given date under this Article, plus any amounts subsequently allocated thereto under this Article and less any amounts distributed or withdrawn under Articles V or VI shall remain the value thereof for all purposes of the Plan until the Account is revalued hereunder.

Section 4.5  Vesting of Deferred Compensation Accounts

          Subject to the possible reductions provided for in Section 6.2 and 6.3 with respect to certain Participant withdrawals, each Participant's interest in his or her Account shall be 100% vested and non-forfeitable at all times.

Section 4.6  Assignments, Etc. Prohibited

          No part of any Participant's Account shall be liable for the debts, contracts or engagements of the Participant, or the Participant's beneficiaries or successors in interest, or be taken in execution by levy, attachment or garnishment or by any other legal or equitable proceeding, nor shall any such person have any rights to alienate, anticipate, commute, pledge, encumber or assign any benefits or payments hereunder in any manner whatsoever except to designate a beneficiary as provided in Section 5.3.

ARTICLE V

DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS

Section 5.1  Distributions upon a Key Executive's Retirement and a Nonemployee Director's
                      Separation from Service

          (a) The Account of a Key Executive who incurs a Separation from Service upon his or her Retirement, and the Account of a Nonemployee Director who incurs a Separation from Service, in each case other than on account of death, shall be paid to the Participant as specified in any election made by the Participant pursuant to Section 5.4 hereof. Any remaining balance of the Participant's Account shall be paid to the Participant, as specified by the Participant in an election made pursuant to this Section 5.1. Such election shall specify (i) whether payment shall be made in a lump-sum distribution and/or in

10


approximately equal annual installments over 5, 10 or 15 years, and (ii) whether payment(s) shall commence on the first, second, third, fourth or fifth anniversary of the date of such Separation of Service, or shall commence within thirty (30) days following the date of such Separation from Service. A Participant may elect to receive payment of a portion of the amount distributable under this Section 5.1 in a lump-sum distribution and the balance of the amount distributable under this Section 5.1 in approximately equal annual installments over 5, 10 or 15 years. A Participant may elect a distribution pursuant to this Section 5.1 in such other forms, or payable upon such other commencement dates, as are specified by the Administrator; provided, however, that no such election shall provide for payments to be made more than 20 years after such Participant's Separation from Service.

          (b) At the time a Participant first elects to defer Qualified Bonus, Qualified Director Compensation or Qualified Salary under the Plan, he or she shall make an election pursuant to this Section 5.1. Such election shall remain in effect and shall apply to the Participant's total Account, as the same may increase or decrease from time to time. An election pursuant to this Section 5.1 may be superseded by a subsequent election, which subsequent election shall then apply to the Participant's total Account, as the same may increase or decrease from time to time. Notwithstanding the foregoing, no subsequent election pursuant to this Section 5.1 shall be effective unless it is made at least 13 months prior to the Participant's Separation from Service.

Section 5.2  Distributions upon a Key Executive's Pre-Retirement Separation from Service

          The Account of a Key Executive who incurs a Separation from Service prior to his or her Retirement and other than on account of his or her death shall be paid to the Participant in a lump-sum distribution within thirty (30) days following the date of such Separation from Service, notwithstanding any election to the contrary made by the Participant pursuant to Section 5.4 hereof.

Section 5.3  Distributions upon a Participant's Death

           (a)   Notwithstanding anything to the contrary in the Plan, the remaining balance of the Account of a Participant who dies (i) shall be paid to the persons and entities designated by the Participant as his or her beneficiaries for such purpose and (ii) shall be paid in the manner set forth in this Section 5.3. With respect to a Participant who does not incur a Separation from Service prior to his or her death, such balance shall be paid, as specified by the Participant in an election made pursuant to this Section 5.3. Such election shall specify whether payment shall be made (i) in a lump-sum distribution within thirty (30) days following the date of death or (ii) in accordance with the distribution election made pursuant to Section 5.1 hereof (in which case such Participant's death shall be considered the date of such Participant's Retirement for purposes of determining the date of commence ment of distribution under such election). With respect to a Participant who does incur a Separation from Service prior to his or her death, such balance shall be paid, as specified by the Participant in an election made pursuant to this Section 5.3. Such election shall specify whether payment shall be made (1) in a lump-sum distribution within thirty (30) days following the date of death or (2) in accordance with the distribution election made pursuant to Section 5.1 hereof (with respect to the payments not yet made under such election).

11


          (b)   At the time a Participant first elects to defer Qualified Bonus, Qualified Director Compensation or Qualified Salary under the Plan, he or she shall make an election pursuant to this Section 5.3. Such election shall remain in effect and shall apply to the Participant's total Account, as the same may increase or decrease from time to time. An election pursuant to this Section 5.3 may be superseded by a subsequent election, which subsequent election shall then apply to the Participant's total Account, as the same may increase or decrease from time to time. Notwithstanding the foregoing, no subsequent election pursuant to this Section 5.3 shall be effective unless it is made at least 13 months prior to the Participant's Separation from Service.

Section 5.4  Optional Distributions

          (a)   At the time a Participant elects to defer Qualified Bonus, Qualified Director Compensation or Qualified Salary for any Plan Year, he or she may also elect, pursuant to this Section 5.4, to receive a special, lump-sum distribution of any or all of the amount deferred for such Plan Year on a date specified by the Participant in such election, which date must be at least 24 months after the date of such election. Any such special distribution shall be made within five (5) business days after the date therefor specified by the Participant, unless the Participant shall have died on or prior to such date, in which case no such special distribution shall be made.

          (b)   An election pursuant to this Section 5.4 may be superseded by one subsequent election; provided, however, that such subsequent election shall not be effective unless: (i) it is irrevocable; (ii) it is made at least 13 months prior to the Participant's Separation from Service and at least 24 months prior to the date upon which the special distribution will be made; and (iii) the date of the special distribution specified in the subsequent election is earlier than the date specified in the initial election.

          (c)   Notwithstanding the foregoing, an election pursuant to this Section 5.4 with respect to the Partial First Plan Year may be superseded by two subsequent elections; provided, however, that: (i) the first such subsequent election shall not be effective unless it is made prior to March 30, 1996 and at least 13 months prior to the Participant's Separation from Service and at least 24 months prior to the date upon which the special distribution will be made; and (ii) the second such subsequent election satisfies all the requirements set forth in paragraph (b)(i), (ii) and (iii) of this Section 5.4.

Section 5.5  Applicable Taxes

          All distributions under the Plan shall be subject to withholding for all amounts which the Company is required to withhold under federal, state or local tax law.

12


ARTICLE VI

WITHDRAWALS FROM DEFERRED COMPENSATION ACCOUNTS

Section 6.1  Hardship Distributions from Accounts

          By delivering a written election to such effect to the Administrator, at any time a Participant may elect to take a distribution from the Participant's Account on account of the Participant's Hardship, but only to the extent that the Hardship is not otherwise relievable:

          (a) through reimbursement or compensation by insurance or otherwise,

          (b) by liquidation of the Participant's assets (to the extent that such liquidation does not itself cause a Hardship), or

          (c) by cessation of deferrals under the Plan.

Section 6.2  Elective Distributions after a Change in Control

          At any time within three years after the occurrence of a Change in Control, any Participant, other than one who on the date of the change of control is a Nonemployee Director, may elect to take a distribution of all or any part of such Participant's Account by delivering a written election to such effect to the Administrator, provided, however, that if such a Participant makes such an election (i) the Participant shall forfeit, and the Participant's Account shall be debited with, an amount equal to 5% of the amount of the distribution; (ii) the Participant's deferral election for the Plan Year in which the distribution occurs shall be terminated with respect to any Qualified Bonus, Qualified Director Compensation and Qualified Salary which has not yet been deferred; and iii) the Participant shall not be permitted to defer Qualified Bonus or keep Qualified Salary under the Plan for the two Plan Years immediately following the P lan Year of the distribution.

Section 6.3  Other Elective Distributions

          At any time, a Participant may elect to take a distribution of all or any part of the Participant's Account by delivering a written election to such effect to the Administrator, provided, however, that if a Participant makes such an election, (i) the Participant shall forfeit, and the Participant's Account shall be debited with, an amount equal to 10% of the amount of the distribution, (ii) the Participant's deferral election for the Plan Year in which the distribution occurs shall be terminated with respect to any Qualified Bonus, Qualified Director Compensation and Qualified Salary which has not yet been deferred and (iii) the Participant shall not be permitted to defer Qualified Bonus, Qualified Director Compensation and Qualified Salary under the Plan for the two Plan Years immediately following the year of the distribution.

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Section 6.4  Payment of Withdrawals

          All withdrawals under this Article VI shall be paid within fifteen (15) days after a valid election to withdraw is delivered to the Administrator, except that thirty (30) days shall apply to withdrawals under Section 6.1. The Administrator shall give prompt notice to the Participant if an election is invalid and is therefore rejected, identifying the reason(s) for the invalidity. If the Administration has not paid but has not affirmatively rejected an election within the applicable fifteen (15) or thirty (30) day deadline, then the election shall be deemed rejected, on the fifteenth (15th) day, or thirtieth (30th) day, as applicable. If a withdrawal election is rejected, the Participant may bring a claim for benefits under Section 7.11.

Section 6.5  Effect of Withdrawals

          If a Participant receives a withdrawal under this Article VI after payments have commenced under Section 5.1, the remaining payments shall be recalculated, by reamortizing the remaining payments over the remaining term and applying the then-current rate used to credit earnings under Section 4.3.

Section 6.6  Applicable Taxes

          All withdrawals under the Plan shall be subject to withholding for all amounts which the Company is required to withhold under federal, state or local tax law.

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ARTICLE VII

ADMINISTRATIVE PROVISIONS

Section 7.1  Administrator's Duties and Powers

          The Administrator shall conduct the general administration of the Plan in accordance with the Plan and shall have all the necessary power, authority and discretion to carry out that function. Among its necessary powers and duties are the following:

          (a) To delegate all or part of its function as Administrator to others and to revoke any such delegation.

          (b) To determine questions of eligibility of Participants and their entitlement to benefits, subject to the provisions of Section 7.11.

          (c) To select and engage attorneys, accountants, actuaries, trustees, appraisers, brokers, consultants, administrators, physicians, or other persons to render service or advice with regard to any responsibility the Administrator or the Board has under the Plan, or otherwise, to designate such persons to carry out fiduciary responsibilities under the Plan, and (together with the Committee, the Company, the Board and the officers and Employees of the Company) to rely upon the advice, opinions or valuations of any such persons, to the extent permitted by law, being fully protected in acting or relying thereon in good faith.

          (d) To interpret the Plan and any relevant facts for purpose of the administration and application of the Plan, in a manner not inconsistent with the Plan or applicable law and to amend or revoke any such interpretation.

          (e) To conduct claims procedures as provided in Section 7.11.

Section 7.2  Limitations Upon Powers

          The Plan shall be uniformly and consistently administered, interpreted and applied with regard to all Participants in similar circumstances. The Plan shall be administered, interpreted and applied fairly and equitably and in accordance with the specified purposes of the Plan. Notwithstanding the foregoing, the distribution forms and commencement dates specified in Section 5.1(a) shall apply to such Participants, and in such manner, as the Administrator determines in its sole discretion.

Section 7.3  Final Effect of Administrator Action

          Except as provided in Section 7.11, all actions taken and all determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and any person interested in the Plan.

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Section 7.4  Delegation by Administrator

          (a) The Administrator may, but need not, appoint a delegate (the "Delegate") which may be a single individual or a Committee consisting of two or more members, to hold office during the pleasure of the Administrator. The Delegate shall have such powers and duties as are delegated to it by the Administrator. The Delegate and/or Committee members shall not receive payment for their services as such.

          (b) Appointment of the Delegate and/or Committee members shall be effective upon filing of written acceptance of appointment with the Administrator.

          (c) The Delegate and/or Committee member may resign at any time by delivering written notice to the Administrator.

          (d) Vacancies in the Delegate and/or Committee shall be filled by the Administrator.

          (e) If there is a Committee, the Committee shall act by a majority of its members in office; provided, however, that the Committee may appoint one of its members or a delegate to act on behalf of the Committee on matters arising in the ordinary course of administration of the Plan or on specific matters.

Section 7.5  Indemnification by the Company; Liability Insurance

          The Company shall pay or reimburse any of the Company's officers, directors, Committee members or Employees who are fiduciaries with respect to the Plan for all expenses incurred by such persons in, and shall indemnify and hold them harmless from, all claims, liability and costs (including reasonable attorneys' fees) arising out of the good faith performance of their duties under the Plan. The Company may obtain and provide for any such person, at the Company's expense, liability insurance against liabilities imposed on such person by law.

Section 7.6  Recordkeeping

          (a) The Administrator shall maintain suitable records of each Participant's Account which, among other things, shall show separately deferrals and the earnings credited thereon, as well as distributions and withdrawals therefrom and records of its deliberations and decisions.

          (b) The Administrator shall appoint a secretary, and at its discretion, an assistant secretary, to keep the record of proceedings, to transmit its decisions, instructions, consents or directions to any interested party, to execute and file, on behalf of the Administrator, such documents, reports or other matters as may be necessary or appropriate under ERISA and to perform ministerial acts.

          (c)  The Administrator shall not be required to maintain any records or accounts which duplicate any records or accounts maintained by the Company.

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Section 7.7  Statement to Participants

          By March 15 of each year, the Administrator shall furnish to each Participant a statement setting forth the value of the Participant's Account as of the preceding December 31 and such other information as the Administrator shall deem advisable to furnish.

Section 7.8  Inspection of Records

          Copies of the Plan and records of a Participant's Account shall be open to inspection by the Participant or the Participant's duly authorized representatives at the office of the Administrator at any reasonable business hour.

Section 7.9  Identification of Fiduciaries

          The Administrator shall be the named fiduciary of the Plan and, as permitted or required by law, shall have exclusive authority and discretion to operate and administer the Plan.

Section 7.10  Procedure for Allocation of Fiduciary Responsibilities

          (a)  Fiduciary responsibilities under the Plan are allocated as follows:

(i) The sole duties, responsibilities and powers allocated to the Board, any Committee and any fiduciary shall be those expressly provided in the relevant Sections of the Plan.

(ii) All fiduciary duties, responsibilities, and powers not allocated to the Board, any Committee or any fiduciary, are hereby allocated to the Administrator, subject to delegation.

          (b)  Fiduciary duties, responsibilities and powers under the Plan may be reallocated among fiduciaries by amending the Plan in the manner prescribed in Section 8.6, followed by the fiduciaries' acceptance of, or operation under, such amended Plan.

Section 7.11  Claims Procedure

          (a)  Any Participant or Beneficiary has the right to make a written claim for benefits under the Plan. If such a written claim is made, and the Administrator wholly or partially denies the claim, the Administrator shall provide the claimant with written notice of such denial, setting forth, in a manner calculated to be understood by the claimant:

    1. the specific reason or reasons for such denial;
    2. specific reference to pertinent Plan provisions on which the denial is based;
    3. a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and
    4. an explanation of the Plan's claims review procedure and time limits applicable to those procedures, including a statement of the claimant's right to bring a civil action under ERISA Section 502(a) if the claim is denied on appeal.

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          (b)  The written notice of any claim denial pursuant to Section 7.11(a) shall be given not later than thirty (30) days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim, in which event:

    1. written notice of the extension shall be given by the Administrator to the claimant prior to thirty(30) days after receipt of the claim;
    2. the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day period for giving notice of a claim denial; and
    3. the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Administrator expects to render the benefit determination.

          (c)  The decision of the Administrator shall be final unless the claimant, within sixty (60) days after receipt of notice of the claims denial from the Administrator, submits a written request to the Board, or its delegate, for an appeal of the denial. During that sixty (60) day period, the claimant shall be provided, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits. The claimant shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits as part of the claimant's appeal. The claimant may act in these matters individually, or through his or her authorized representative.

          (d)  After receiving the written appeal, if the Board, or its delegate, shall issue a written decision notifying the claimant of its decision on review, not later than thirty (30) days after receipt of the written appeal, unless the Board or its delegate determines that special circumstances require an extension of time for reviewing the appeal, in which event:

(i) written notice of the extension shall be given by the Board or its delegate prior to thirty (30) days after receipt of the written appeal;

(ii) the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day review period;

(iii) the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Board or its delegate expects to render the appeal decision.

          The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is received by the Board or its delegate, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing of the appeal. If

18


the period of time for reviewing the appeal is extended as permitted above, due to a claimant's failure to submit information necessary to decide the claim on appeal, then the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

          (e)  In conducting the review on appeal, the Board or its delegate shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Board or its delegate upholds the denial, the written notice of decision from the Board or its delegate shall set forth, in a manner calculated to be understood by the claimant:

    1. the specific reason or reasons for the denial
    2. specific reference to pertinent Plan provisions on which the denial is based;
    3. a statement that the claimant is entitled to be receive, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits.
    4. A statement of the claimant's right to bring a civil action under ERISA 502(a).

          (f)  If the Plan or any of its representatives fail to follow any of the above claims procedures, the claimant shall be deemed to have duly exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under ERISA Section 502(a), including but not limited to the filing of an action for immediate declaratory relief regarding benefits due under the Plan.

Section 7.12  Conflicting Claims

          If the Administrator is confronted with conflicting claims concerning a Participant's Account, the Administrator may interplead the claimants in an action at law, or in an arbitration conducted in accordance with the rules of the American Arbitration Association, as the Administrator shall elect in its sole discretion, and in either case, the attorneys' fees, expenses and costs reasonably incurred by the Administrator in such proceeding shall be paid from the Participant's Account.

Section 7.13  Service of Process

          The Secretary of Computer Sciences Corporation is hereby designated as agent of the Plan for the service of legal process.

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ARTICLE VIII

MISCELLANEOUS PROVISIONS

Section 8.1  Termination of the Plan

          (a) While the Plan is intended as a permanent program, the Board shall have the right at any time to declare the Plan terminated completely as to the Company or as to any group, division or other operational unit thereof or as to any affiliate thereof.

          (b) Discharge or layoff of any Employees without such a declaration shall not result in a termination of the Plan.

          (c) In the event of any termination, the Board, in its sole and absolute discretion may elect to:

(i) maintain Participants' Accounts, payment of which shall be made in accordance with Articles V and VI; or

(ii) liquidate the portion of the Plan attributable to each Participant as to whom the Plan is terminated and distribute each such Participant's Account in a lump sum or pursuant to any method which is at least as rapid as the distribution method elected by the Participant under Section 5.4.

Section 8.2  Limitation on Rights of Participants

          The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a contract between the Company and any Employee or any Nonemployee Director, or consideration for, or an inducement or condition of, the employment of an Employee or service of a Nonemployee Director. Nothing contained in the Plan shall give any Employee or Nonemployee Director the right to be retained in the service of a Company or to interfere with or restrict the right of the Company, which is hereby expressly reserved, to discharge or retire any Employee or Nonemployee Director, except as otherwise provided by a written employment agreement between the Company and the Employee or Nonemployee Director, at any time without notice and with or without cause. Inclusion under the Plan will not give any Employee or Nonemployee Director any right or claim to any benefit hereunder except to the extent such right has specifically become fixed under the terms of the Plan. The doctrine of substantial performance shall have no application to Employees, Nonemployee Directors, Participants or any other persons entitled to payments under the Plan.

Section 8.3  Consolidation or Merger; Adoption of Plan by Other Companies

          (a) In the event of the consolidation or merger of the Company with or into any other entity, or the sale by the Company of substantially all of its assets, the resulting successor may continue the Plan by adopting it in a resolution of its Board of Directors. If within 90 days from the effective date of such consolidation, merger or sale of assets, such successor corporation does not adopt the Plan, the Plan shall be terminated in accordance with Section 8.1.

          (b) There shall be no merger or consolidation with, or transfer of the liabilities of the Plan to, any other plan unless each Participant in the Plan would have, if the combined or successor plans were terminated immediately after the merger, consolidation, or transfer, an account which is equal to or greater than his or her corresponding Account under the Plan had the Plan been terminated immediately before the merger, consolidation or transfer.

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Section 8.4  Errors and Misstatements

          In the event of any misstatement or omission of fact by a Participant to the Administrator or any clerical error resulting in payment of benefits in an incorrect amount, the Administrator shall promptly cause the amount of future payments to be corrected upon discovery of the facts and shall cause the Company to pay the Participant or any other person entitled to payment under the Plan any underpayment in cash in a lump sum, or to recoup any overpayment from future payments to the Participant or any other person entitled to payment under the Plan in such amounts as the Administrator shall direct, or to proceed against the Participant or any other person entitled to payment under the Plan for recovery of any such overpayment.

Section 8.5  Payment on Behalf of Minor, Etc.

          In the event any amount becomes payable under the Plan to a minor or a person who, in the sole judgment of the Administrator, is considered by reason of physical or mental condition to be unable to give a valid receipt therefor, the Administrator may direct that such payment be made to any person found by the Administrator in its sole judgment, to have assumed the care of such minor or other person. Any payment made pursuant to such determination shall constitute a full release and discharge of the Company, the Board, the Administrator, the Committee and their officers, directors and employees.

Section 8.6  Amendment of Plan

          The Plan may be wholly or partially amended by the Board from time to time, in its sole and absolute discretion, including prospective amendments which apply to amounts held in a Participant's Account as of the effective date of such amendment and including retroactive amendments necessary to conform to the provisions and requirements of ERISA or the Code; provided, however, that no amendment shall decrease the amount of any Participant's Account as of the effective date of such amendment. Notwithstanding the foregoing, Section 8.7 shall not be amended in any respect on or after a Change in Control and no amendment to this Plan shall reduce, limit or eliminate any rights of a Participant to distributions pursuant to Article VI for deferrals for which elections under Article III occurred prior to the effective date of the amendment, without the Participant's prior written consent, except for amendments necessary to conform to t he provisions and requirements of ERISA or the Code.

Section 8.7  Funding

          (a) Subject to Section 8.7(b), all benefits payable under the Plan will be paid from the general assets of the Company and no Participant or beneficiary shall have any claim against any specific assets of the Company.

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          (b) Not later than the occurrence of a Change in Control, the Company shall cause to be transferred to a grantor trust described in Section 671 of the Code, assets equal in value to all accrued obligations under the Plan as of one day following a Change in Control, in respect of both active employees of the Company and retirees as of that date. Such trust by its terms shall, among other things, be irrevocable. The value of liabilities and assets transferred to the trust shall be determined by one or more nationally recognized firms qualified to provide actuarial services as described in Section 4 of the Computer Sciences Corporation Severance Plan for Senior Management and Key Employees. The establishment and funding of such trust shall not affect the obligation of the Company to provide benefits payments under the terms of the Plan to the extent such benefits are not paid from the trust.

Section 8.8  Governing Law

          The Plan shall be construed, administered and governed in all respects under and by the laws of the State of California, except to the extent such laws may be preempted by ERISA.

Section 8.9  Pronouns and Plurality

          The masculine pronoun shall include the feminine pronoun, and the singular the plural where the context so indicates.

Section 8.10  Titles

          Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

Section 8.11  References

          Unless the context clearly indicates to the contrary, a reference to a statute, regulation or document shall be construed as referring to any subsequently enacted, adopted or executed statute, regulation or document.

 

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EX-10.16 6 exhibit10_16.htm SEVERANCE PLAN FOR SENIOR MANAGEMENT & KEY EMPLOYEES exhibit10_16

COMPUTER SCIENCES CORPORATION

SEVERANCE PLAN FOR SENIOR MANAGEMENT
AND KEY EMPLOYEES

And Summary Plan Description

as Amended and Restated Effective August 11, 2003

          This Severance Plan (the "Plan") shall become effective with respect to any particular Designated Employee (as defined below) as of the date a Senior Management and Key Employee Severance Agreement, incorporating all or any portion of the terms hereof, is executed between such Designated Employee and Computer Sciences Corporation (the "Company"). This document is also intended to constitute the Summary Plan Description for the Plan.

1. Purpose

          The principal purposes of the Plan are to (i) provide an incentive to the Designated Employees to remain in the employ of the Company, notwithstanding any uncertainty and job insecurity which may be created by an actual or prospective Change of Control, (ii) encourage the Designated Employee's full attention and dedication to the Company currently and in the event of any actual or prospective Change of Control, and (iii) provide an incentive for the Designated Employees to be objective concerning any potential Change of Control and to fully support any Change of Control transaction approved by the Board of Directors.

2. Definitions

          Certain terms not otherwise defined in this Plan shall have the meanings set forth in this Section 2.

          (a)  "CA Control Event" shall mean a Change of Control (as hereinafter defined), as a consequence of which Computer Associates International, Inc., or any of its Affiliates or Associates, acquires Control (as such three capitalized terms are defined in Rule 405, as presently in effect, promulgated under the Securities Act of 1933, as amended) of the Company.

          (b)  Compensation. "Compensation" shall mean the sum of:

(i) the Designated Employee's annual base salary as in effect immediately prior to the date the Notice of Termination provided for in Section 3(c) of the Plan is given or in effect immediately prior to the date of the Change of Control, whichever is greater, and


(ii) the average annual "short-term incentive compensation bonus," as defined below, for the Designated Employee, whether pursuant to a then existing plan of the Company or otherwise, (x) over the three most recent fiscal years preceding the year in which the Date of Termination occurs for which a "short-term incentive compensation bonus" was paid or deferred or for which the amount of "short-term incentive compensation bonus," if any, was finally determined; or (y) for a Designated Employee employed by the Company for less than the three fiscal years to which reference is made in (i), over the most recent complete fiscal year or years prior to the Date of Termination during which such Designated Employee was employed and for which a "short-term incentive compensation bonus" was paid or for which the amount of "short-term incentive compensation bonus," if any, was finally determined; or (z) for a Designated Employee employed by the Company for less than a single complete fiscal year prior to the year in which the Date of Termination occurs, the average annual cash "short-term incentive compensation bonus" shall be based on the target annual bonus for the fiscal year during which the Date of Termination occurs. Notwithstanding the foregoing, "short-term incentive compensation bonuses" determined after the Change of Control are not taken into account in determining the average annual "short-term incentive compensation bonus" for the Designated Employee unless the inclusion of all such bonuses increases the average, in which case all such bonuses are taken into account.

          (c)  Short-Term Incentive Compensation Bonus. For purposes of this Plan, a "short-term incentive compensation bonus" shall mean a lump sum cash amount or other form of payment, including discount stock options and other payment in kind, whether contingent or fixed, and whether or not deferred, determined on an annual basis under the Company's Annual Management Incentive Plan dated April 2, 1983 or such successor plan or plans as shall be in effect for the whole or partial fiscal year or years applicable under Section 2(a) of this Plan. A discount stock option granted in lieu of a cash bonus shall be deemed to have the same value as such cash bonus.

          (d)  Change of Control. The term "Change of Control" shall have the same meaning that the term "Change in Control" has in the SERP (as defined in Section 4, below), as such definition may be amended or modified from time to time; provided, however, that such amendment or modification shall only be effective for purposes of this Plan if made prior to the Change of Control to which such amended or modified definition is sought to be applied.

          (e)  Designated Employees. "Designated Employees" shall refer to those employees of the Company and its subsidiaries who are parties to agreements with the Company, substantially in the form of Exhibit A (with respect to employees in Group A, Group B or Group C) or Exhibit B (with respect to employees in Group D) attached hereto (with such changes as may be approved by the Board of Directors or the Compensation Committee or other duly authorized committee thereof),

2


incorporating the terms and provisions of this Plan. Each such agreement shall indicate whether the particular Designated Employee is in one or more of Group A, Group B, Group C or Group D, or such other Group as may hereafter be duly defined by amendment of this Plan.

          (f)  Good Reason. A Designated Employee's termination of employment with the Company shall be deemed for "Good Reason" if it occurs within six months of any of the following without the Designated Employee's express written consent:

(i) A substantial change in the nature, or diminution in the status, of the Designated Employee's duties or position from those in effect immediately prior to the Change of Control;

(ii) A reduction by the Company in the Designated Employee's annual base salary as in effect on the date of a Change of Control or as in effect thereafter if such compensation has been increased and such increase was approved prior to the Change of Control;

(iii) A reduction by the Company in the overall value of benefits provided to the Designated Employee, as in effect on the date of a Change of Control or as in effect thereafter if such benefits have been increased and such increase was approved prior to the Change of Control. As used herein, "benefits" shall include all profit sharing, retirement, pension, health, medical, dental, disability, insurance, automobile, and similar benefits;

(iv) A failure to continue in effect any stock option or other equity-based or non-equity based incentive compensation plan in effect immediately prior to the Change of Control, or a reduction in the Designated Employee's participation in any such plan, unless the Designated Employee is afforded the opportunity to participate in an alternative incentive compensation plan of reasonably equivalent value;

(v) A failure to provide the Designated Employee the same number of paid vacation days per year available to him or her prior to the Change of Control, or any material reduction or the elimination of any material benefit or perquisite enjoyed by the Designated Employee immediately prior to the Change of Control;

(vi) Relocation of the Designated Employee's principal place of employment to any place more than 35 miles from the Designated Employee's previous principal place of employment;

(vii) Any material breach by the Company of any provision of the Plan or of any agreement entered into pursuant to the Plan or any stock option or restricted stock agreement;

(viii) Conduct by the Company, against the Designated Employee's volition, that would cause the Designated Employee to commit fraudulent acts or would expose the Designated Employee to criminal liability; or

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(ix) Any failure by the Company to obtain the assumption of the Plan or any agreement entered into pursuant to the Plan by any successor or assign of the Company;

provided that for purposes of clauses (ii) through (v) above, "Good Reason" shall not exist (A) if the aggregate value of all salary, benefits, incentive compensation arrangements, perquisites and other compensation is reasonably equivalent to the aggregate value of salary, benefits, incentive compensation arrangements, perquisites and other compensation as in effect immediately prior to the Change of Control, or as in effect thereafter if the aggregate value of such items has been increased and such increase was approved prior to the Change of Control, or (B) if the reduction in aggregate value is due to reduced performance by the Company, the business unit of the Company for which the Designated Employee is responsible, or the Designated Employee, in each case applying standards reasonably equivalent to those utilized by the Company prior to the Change of Control.

          (g)  Cause. For purposes of this Plan and any agreements entered into pursuant to the Plan only, Cause shall mean:

(i) fraud, misappropriation, embezzlement or other act of material misconduct against the Company or any of its affiliates;

(ii) conviction of a felony involving a crime of moral turpitude;

(iii) willful and knowing violation of any rules or regulations of any governmental or regulatory body material to the business of the Company; or

(iv) substantial and willful failure to render services in accordance with the terms of this Agreement (other than as a result of illness, accident or other physical or mental incapacity), provided that (A) a demand for performance of services has been delivered to the Designated Employee in writing by or on behalf of the Board of Directors of the Company at least 60 days prior to termination identifying the manner in which such Board of Directors believes that the Designated Employee has failed to perform and (B) the Designated Employee has thereafter failed to remedy such failure to perform.

3. Termination Following Change of Control

          (a) Termination of Employment.

(i) In the event a Designated Employee in Group A, Group B or Group C, following the date of a Change of Control, either (A) has a voluntary employment termination for Good Reason within twenty-four (24) full calendar months following such Change of Control, (B) has

4


a voluntary termination of employment with or without Good Reason more than twelve (12) full calendar months after, but within thirteen (13) full calendar months following, such Change of Control, or (C) has an involuntary employment termination for any reason other than for Cause within thirty-six full calendar months following such Change of Control, such Designated Employee shall be entitled to receive immediately upon such employment termination such payments and benefits hereunder as such Designated Employee shall be entitled to receive upon such employment termination in accordance with Sections 2(e) and 5 of this Plan.

(ii) In the event a Designated Employee in Group D, following the date of a CA Control Event, either (A) has a voluntary employment termination for Good Reason within twenty-four (24) full calendar months following such CA Control Event or (B) has an involuntary employment termination for any reason other than for Cause within thirty-six full calendar months following such CA Control Event, such Designated Employee shall be entitled to receive immediately upon such employment termination such payments and benefits hereunder as such Designated Employee shall be entitled to receive upon such employment termination in accordance with Sections 2(e) and 5 of this Plan.

(iii) Notwithstanding any other provision of this Plan, no payments shall be made under or measured by this Plan in the event that the Designated Employee's employment is terminated by his Disability or by his death or for Cause.

          (b) Disability. If, as a result of the Designated Employee's incapacity due to physical or mental illness, accident or other incapacity (as determined by the Board in good faith, after consideration of such medical opinion and advice as may be available to the Board from medical doctors selected by the Designated Employee or by the Board or both separately or jointly), the Designated Employee shall have been absent from his duties with the Company on a full-time basis for six consecutive months and, within 30 days after written Notice of Termination thereafter given by the Company, the Designated Employee shall not have returned to the full-time performance of the Designated Employee's duties, the Company may terminate the Designated Employee's employment for "Disability".

          (c) Notice of Termination. Any purported termination of the Designated Employee's employment by the Company or the Designated Employee hereunder shall be communicated by a Notice of Termination to the other party in accordance with the terms of the agreement entered into pursuant to the Plan. For purposes of the Plan and any agreement entered into pursuant hereto, a "Notice of Termination" shall mean a written notice which shall indicate those specific termination provisions in the Plan applicable to the termination and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for application of the provisions so indicated.

5


          (d) Date of Termination. "Date of Termination" shall mean (i) if the Designated Employee is terminated by the Company for Disability, thirty (30) days after Notice of Termination is given to the Designated Employee (provided that the Designated Employee shall not have returned to the performance of the Designated Employee's duties on a full-time basis during such thirty (30) day period) or (ii) if the Designated Employee's employment is terminated by the Company for any other reason or by the Designated Employee, the date on which a Notice of Termination is given.

4. Funding of SERP Obligations Upon Change Of Control

          Upon the occurrence of a Change of Control, the Company shall fund that portion, if any, of the obligations of the Company to each Designated Employee, under any supplemental executive retirement plan ("SERP") that may then cover the Designated Employee, that is not then irrevocably funded by establishing and irrevocably funding a trust for the benefit of the Designated Employee. Such trust shall be a grantor trust described in Internal Revenue Code Section 671. The trust shall provide for distribution of amounts to Designated Employee in order to pay taxes, if any, that become due prior to payment of supplemental pension benefit amounts pursuant to the trust. The amount of such fund shall equal the then present value of the supplemental pension obligation due as determined by a nationally recognized firm qualified to provide actuarial services which has not rendered services to the Company during the two years preceding s uch determination. The actuary shall be selected by the Company, subject to approval by the Designated Employee (which approval shall not unreasonably be withheld), and paid by the Company. The establishment and funding of such trust shall not affect the obligation of the Company to provide supplemental pension payments under the terms of the applicable SERP.

5. Severance Compensation upon Termination of Employment

          If the employment with the Company of a Designated Employee in Group A, Group B or Group C shall be terminated following a Change of Control as set forth in Section 3 of the Plan, or the employment with the Company of a Designated Employee in Group D shall be terminated following a CA Control Event as set forth in Section 3 of the Plan, then the Company shall pay and provide as follows to such Designated Employee:

          (a)  For a Designated Employee in Group A or Group B, upon voluntary termination for Good Reason within twenty-four (24) full calendar months following a Change of Control, or upon involuntary employment termination for any reason other than for Cause within thirty-six (36) full calendar months following such Change of Control, the Company shall:

6


(i) Pay to the Designated Employee as severance pay in a lump sum, in cash, on or before the tenth business day following the Date of Termination, an amount equal to the multiple specified on Exhibit C and made applicable to such Designated Employee by this Plan and such Designated Employee's agreement hereunder, multiplied by the Designated Employee's Compensation; and

(ii) Provide the Designated Employee, for the number of years calculated for such Designated Employee pursuant to Section 5(a)(i) of this Plan (or such shorter period as the Designated Employee may elect) with disability, health, life and accidental death and dismemberment benefits substantially similar to those benefits which the Designated Employee is receiving immediately prior to the Change of Control or, if greater, immediately prior to the Notice of Termination (followed by the period of COBRA continuation if COBRA benefits are elected by the Designated Employee at such Designated Employee's expense). Benefits otherwise receivable by the Designated Employee pursuant to this Section 5(a)(ii) shall be reduced to the extent comparable benefits are actually received by the Designated Employee during such period as the result of his or her employment with another person.

          (b) For a Designated Employee in Group C:

          A Designated Employee in Group C shall receive severance pay under Section 5(a)(i) and the benefits under Section 5(a)(ii) as shown on Exhibit C in the circumstance of voluntary termination with or without Good Reason more than twelve (12) full calendar months after, but within thirteen (13) full calendar months following, a Change of Control, as such Designated Employee's exclusive entitlement to payment and benefits in such circumstance under this Plan.

          (c) For a Designated Employee in Group D, upon voluntary termination for Good Reason within twenty-four (24) full calendar months following a CA Control Event, or upon involuntary employment termination for any reason other than for Cause within thirty-six (36) full calendar months following such CA Control Event, the Company shall:

        1. Pay to the Designated Employee as severance pay in a lump sum, in cash, on or before the tenth business day following the Date of Termination, an amount equal to the multiple specified on Exhibit C and made applicable to such Designated Employee by this Plan and such Designated Employee's agreement hereunder, multiplied by the Designated Employee's Compensation; and
        2. Provide the Designated Employee, for the number of years calculated for such Designated Employee pursuant to Section 5(c)(i) of this Plan (or such shorter period as the Designated Employee may elect) with disability, health, life and accidental death and dismemberment benefits substantially similar to those benefits which the Designated

7


Employee is receiving immediately prior to the CA Control Event or, if greater, immediately prior to the Notice of Termination (followed by the period of COBRA continuation if COBRA benefits are elected by the Designated Employee at such Designated Employee's expense). Benefits otherwise receivable by the Designated Employee pursuant to this Section 5(c)(ii) shall be reduced to the extent comparable benefits are actually received by the Designated Employee during such period as the result of his or her employment with another person.

6. Certain Further Payments By the Company

          The Company shall be obligated to make certain further payments or contributions to or for the benefit of the Designated Employees as set forth in this Section 6. With respect to a Designated Employee in Group A, Group B or Group C, such obligations of the Company shall arise upon a Change of Control. With respect to a Designated Employee in Group D, such obligations of the Company shall arise upon a CA Control Event.

          (a) Tax Reimbursement Payment. In the event that any amount or benefit that may be paid, distributed or otherwise provided to the Designated Employee by the Company or any affiliated company, whether pursuant to this Plan or otherwise (collectively, the "Covered Payments"), is or may become subject to the tax imposed under Section 4999 of the Code (the "Excise Tax") or any similar tax that may hereafter be imposed, the Company shall either pay to the Designated Employee or irrevocably contribute for the benefit of the Designated Employee to a trust conforming with the requirements of Section 4 above (and may be part of that trust) established by the Company prior to the Change of Control giving rise to the Excise Tax, at the time specified in Section 6(e) below, the Tax Reimbursement Payment (as defined below). The Tax Reimbursement Payment is defined as an amount, which when reduced by any Excise Tax on t he Covered Payments and any Federal, state and local income taxes, employment and excise taxes (including the Excise Tax) on the Tax Reimbursement Payment (but without reduction for any Federal, state or local income or employment taxes on such Covered Payments), shall be equal to the product of any deductions disallowed for Federal, state or local income tax purposes because of the inclusion of the Tax Reimbursement Payment in Designated Employee's adjusted gross income and the highest applicable marginal rate of Federal, state and local income taxation, respectively, for the calendar year in which the Tax Reimbursement Payment is to be made.

          (b) Determining Excise Tax. For purposes of determining whether any of the Covered Payments shall be subject to the Excise Tax and the amount of such Excise Tax:

(i) such Covered Payments shall be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount"

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(as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the opinion of the "Accountants" (as defined below), such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and

(ii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code.

For the purposes of this Section 6 the "Accountants" shall mean the Company's independent certified public accountants serving immediately prior to the Change of Control. In the event that such Accountants decline to serve as the Accountants for purposes of this Section 6 or are serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Designated Employee shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accountants hereunder). All fees and expenses of the Accountants in connection with matters relating to this Section 6 shall be paid by the Company.

          (c) Applicable Tax Rates and Deductions. For purposes of determining the amount of the Tax Reimbursement Payment, the Designated Employee shall be deemed:

(i) to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made; and

(ii) to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Designated Employee's adjusted gross income.)

          (d) Subsequent Events.

        1. In the event that the Excise Tax is subsequently determined by the Accountants to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Designated Employee shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that has been paid to the Designated Employee or to Federal, state or local tax authorities on the Designated Employee's behalf and that would not have
        2. 9


          been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Designated Employee, and interest payable to the Company shall not exceed interest received or credited to the Designated Employee by such tax authority for the period it held such portion.

        3. In the event that the Excise Tax is later determined by the Accountants to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess which Tax Reimbursement Payment shall include any interest or penalty (any such payment in respect of interest or penalty to be subject to the gross-up principles set forth in this Section 6) payable with respect to such excess, at the time that the amount of such excess is finally determined. For purposes of this Section 6(d)(ii), if a final determination as to the Excise Tax applicable to a Covered Payment is made by the Internal Revenue Service, or a court with jurisdiction, such determination shall be deemed to be determined by the Accountants.
        4. In the event it is later determined by the Accountants that Designated Employee owes additional Federal, state or local income or employment taxes with respect to any Tax Reimbursement Payment, the Company shall promptly pay him the difference between (A) the Tax Reimbursement Payment determined based on the Federal, state and local income and employment taxes due in respect of the Tax Reimbursement Payment as so determined by the Accountants and (B) the Tax Reimbursement Payment that had been previously paid to him or for his benefit. For purposes of this Section 6(d)(iii), determination by the Accountants shall include a final determination by the Internal Revenue Service, a state or local government or tax agency or a court with jurisdiction.

          (e)     Date of Payment. The portion of the Tax Reimbursement Payment attributable to a Covered Payment shall be paid to the Designated Employee or remitted to the appropriate tax authority or irrevocably contributed for the benefit of the Designated Employee to a trust as described in Section 4 above within ten (10) business days following the payment, distribution or other provision of the Covered Payment. If the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment, distribution or

10


provision is due, the Company shall either pay to the Designated Employee or contribute for the benefit of the Designated Employee to the trust described in the preceding sentence, an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (which Tax Reimbursement Payment shall include interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than forty-five (45) calendar days after payment, distribution or other provision of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall be repaid or refunded pursuant to the provisions of Section 6(d)(i) above.

          (f)  The establishment and funding of the trust described in Section 4 above shall not affect the obligations of the Company to provide the benefits subject to this Section 6.

 

7. Dispute Resolution; Claims Procedure; Arbitration

    1. Claims Procedure.

(i) Benefits will be provided to each Designated Employee as specified in this Plan. If a Designated Employee believes that he has not been provided with benefits due under the Plan, then the Designated Employee may elect the arbitration procedure in Section 7(b) of this Plan, or alternatively, the Designated Employee (who is hereafter referred to as the "Claimant") has the right to make a written claim for benefits under the Plan. Written claims for severance pay benefits shall be governed by the following procedures; any written claims for health or welfare benefits shall be governed by the claims procedures of the applicable health or welfare plan. If such a written claim is made, and the Administrator wholly or partially denies the claim, the Administrator shall provide the Claimant with written notice of such denial, setting forth, in a manner calculated to be understood by the Claimant:

      1. the specific reason or reasons for such denial;
      2. specific reference to pertinent Plan provisions on which the denial is based;
      3. a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and
      4. an explanation of the Plan's claims review procedure and time limits applicable to those procedures, including a statement of the Claimant's right to bring a civil action under ERISA Section 502(a) if the claim is denied on appeal.

11


 

          (ii) The written notice of any claim denial pursuant to Section 7.11(a)(I) shall be given not later than thirty (30) days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim, in which event:

          1. written notice of the extension shall be given by the Administrator to the Claimant prior to thirty (30) days after receipt of the claim;
          2. the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day period for giving notice of a claim denial; and
          3. the extension notice shall indicate (1) the special circumstances requiring an extension of time and (2) the date by which the Administrator expects to render the benefit determination.

          (iii) The decision of the Administrator shall be final unless the Claimant, within sixty (60) days after receipt of notice of the claims denial from the Administrator, submits a written request to the Board of Directors of the Company, or its delegate, for an appeal of the denial. During that sixty (60) day period, the Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits. The Claimant shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits as part of the Claimant's appeal. The Claimant may act in these matters individually, or through his or her authorized representative.

          (iv) After receiving the written appeal, if the Board of Directors of the Company, or its delegate, shall issue a written decision notifying the Claimant of its decision on review, not later than thirty (30) days after receipt of the written appeal, unless the Board of Directors of the Company or its delegate determines that special circumstances require an extension of time for reviewing the appeal, in which event:

(A) written notice of the extension shall be given by the Board of Directors of the Company or its delegate prior to thirty (30) days after receipt of the written appeal;

(B) the extension shall not exceed a period of thirty (30) days from the end of the initial thirty (30) day review period; and

        1. the extension notice shall indicate (1) the special circumstances requiring an extension of time and (2) the date by which the Board of Directors of the Company or its delegate expects to render the appeal decision.

12


 

The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is received by the Board of Directors of the Company or its delegate, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing of the appeal. If the period of time for reviewing the appeal is extended as permitted above, due to a claimant's failure to submit information necessary to decide the claim on appeal, then the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

(v) In conducting the review on appeal, the Board of Directors of the Company or its delegate shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Board of Directors of the Company or its delegate upholds the denial, the written notice of decision from the Board of Directors of the Company or its delegate shall set forth, in a manner calculated to be understood by the Claimant:

          1. the specific reason or reasons for the denial;
          2. specific reference to pertinent Plan provisions on which the denial is based;
          3. a statement that the Claimant is entitled to be receive, upon request and free of charge, reasonable access to , and copies of, all documents, records and other information relevant to the claim for benefits; and
          4. a statement of the Claimant's right to bring a civil action under ERISA 502(a).

(vi) If the Plan or any of its representatives fail to follow any of the above claims procedures, the Claimant shall be deemed to have duly exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under ERISA Section 502(a), including but not limited to the filing of an action for immediate declaratory relief regarding benefits due under the Plan.

      1. If the Board of Directors of the Company or its Delegate upholds the denial on review of a severance pay claim, or if a health or welfare benefit claim is denied on review under the applicable health or welfare plan and/or the administrative remedies thereunder have been exhausted, then the Claimant shall have the right to bring a civil action under ERISA Section 502(a) or, alternatively, the Claimant may invoke the arbitration provisions of Section 7(b) of this Plan.

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(b) Arbitration

          (i) In the event of any dispute between the parties concerning the validity, interpretation, enforcement or breach of this Agreement or in any way related to any termination of the Designated Employee's employment (including any claims involving any officers, managers, directors, employees, shareholders or agents of the Company) excepting only any rights the parties may have to seek injunctive relief, the dispute shall be resolved by final and binding arbitration administered by JAMS/Endispute in Los Angeles, California in accordance with the then existing JAMS/Endispute Arbitration Rules and Procedures for Employment Disputes. Resolution by arbitration, either in lieu of or after exhausting the procedures of Section 7(a) of this Plan, shall be at the election of the Designated Employee with respect to any claim to which Section 7(a) shall apply. In the event of such an arbitration proceeding, the parties shall select a mut ually acceptable neutral arbitrator from among the JAMS/Endispute panel of arbitrators. In the event the parties cannot agree on an arbitrator, the Administrator of JAMS/Endispute shall appoint an arbitrator. Neither party nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties, except as may be compelled by court order. Except as provided herein, the Federal Arbitration Act shall govern the interpretation and enforcement of such arbitration and all proceedings. The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the State of California, or Federal law, or both, as applicable and the arbitrator is without jurisdiction to apply any different substantive law. The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arb itrator shall render an award and a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof. The parties intend this arbitration provision to be valid, enforceable, irrevocable and construed as broadly as possible. Pending the resolution of any dispute between the parties, the Company shall continue prompt payment of all amounts due the Designated Employee under this Agreement and prompt provision of all benefits to which the Designated Employee is otherwise entitled.

     (ii) Costs of arbitration, including reasonable attorney fees and costs and the reasonable fees and costs of any experts incurred by the Designated Employee, shall be borne and paid by the Company if the Designated Employee prevails on any portion of his claims. Such fees and costs shall be paid by the Company in advance of the final disposition of such claims, as such fees are incurred, upon receipt of an undertaking by the Designated Employee to repay such amounts if it is ultimately determined that he did not prevail on any portion of his claims.

14


Not later than the occurrence of a Change of Control, the Company shall deposit not less than $5 million in a grantor trust, as described in Internal Revenue Code Section 671, which shall provide for distribution of amounts to Designated Employees in fulfillment of the Company's obligations to pay their fees and costs as provided in the preceding sentence. The funding of such trust shall be maintained at not less than $5 million by further deposits by the Company as such payments of fees and costs are made by the trustee or trustees of the trust. The arbitrator shall make such interim awards respecting the funding of the trust and payment of the fees and costs as shall be necessary and appropriate to assure the prompt, regular interim payment of fees and costs as provided in this Section 7(b)(ii). Judgments upon any such interim awards may be entered in any court having jurisdiction thereof. Such trust by its terms shall be irrevocable but shall terminate up on the later of (x) the expiration of three years following a Change of Control or (y) the disposition of all then pending claims under the Plan by final arbitration award and final judgment, all time for appeals having expired, in any judicial proceedings respecting any such claims. Immediately after termination of the trust, any funds remaining in the trust and accumulated interest thereon shall revert to the Company.

          (iii) Notwithstanding the foregoing provisions of this Section 7, the Designated Employee and the Company agree that the Designated Employee or the Company may seek and obtain otherwise available injunctive relief in Court for any violation of obligations concerning confidential information or trade secrets that cannot adequately be remedied at law or in arbitration.

8. Mitigation of Damages; Effect of Plan

(a) The Designated Employee shall not be required to mitigate damages or the amount of any payment provided for under the Plan by seeking other employment or otherwise, nor shall the amount of any payment provided for under the Plan, including without limitation Section 5 of the Plan, be reduced by any compensation earned by the Designated Employee as a result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise except as expressly provided herein.

(b) Except as provided in Section 10, the provisions of the Plan, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the Designated Employee's existing rights, or rights which would accrue solely as a result of the passage of time, under any benefit plan, employment agreement or other contract, plan or arrangement.

16


 

9. Term; Amendments; No Effect On Employment Prior To Change Of Control

          (a) The Plan shall have an initial term of two years, which shall be automatically extended by one year beginning on the first anniversary of the date of adoption of the Plan and on each anniversary thereafter. The Plan with respect to all Designated Employees or any particular Designated Employee may be terminated or amended by the Board of Directors of the Company or by its Compensation Committee or any other duly authorized Committee thereof; provided that a termination or any amendment that reduces the benefits to the Designated Employee provided hereunder or otherwise adversely affects the rights of the Designated Employee, without the Designated Employee's prior written consent: (i) may only be approved after the completion of the initial two year term and prior to a Change of Control, and (ii) may not be effected prior to the provision of 24 months' advance notice thereof to the Designated Employee. Termination o r amendment of the Plan shall not affect any obligation of the Company under the Plan which has accrued and is unpaid as of the effective date of the termination or amendment. Notwithstanding the foregoing, the Company may change the definition of "Change of Control" as provided in Section  2(d), above, subject to the limitations therein stated.

          (b) Nothing in the Plan or any agreement entered into pursuant to the Plan shall confer upon the Designated Employee any right to continue in the employ of the Company prior to (or, subject to the terms of the Plan, following) a Change of Control of the Company or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved except as may otherwise be provided under any other written agreement between the Designated Employee and the Company, to discharge the Designated Employee at any time prior to (or, subject to the terms of the Plan, following) the date of a Change of Control of the Company for any reason whatsoever, with or without cause. The Designated Employee and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Designated Employee and the Company, the employment of the Designated Employee by the Company is "at will ," and if, prior to a Change Of Control, the Designated Employee's employment with the Company terminates for any reason or for no reason, then the Designated Employee shall have no further rights under this Plan.

          (c) The Company may withhold from any amounts payable under this Plan such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

    1. The Designated Employee's or the Company's failure to insist upon strict compliance with any provision hereof or the failure to assert any right the Designated Employee or the Company may have hereunder, including, without limitation, the right of the Designated Employee to terminate employment for Good Reason, as defined herein, shall not be deemed to be a waiver of such provision or right or any other provision or right under this Plan.

16


 

10. Effect Of Other Agreements

Notwithstanding anything to the contrary provided in the Plan, (i) any amounts payable to a Designated Employee pursuant to Section 5 of the Plan shall be reduced by any amounts actually paid to such Designated Employee following a termination of employment either pursuant to applicable law or under any contract between the Designated Employee and the Company, in either case that provides for or requires the payment of compensation or severance benefits following a termination of employment and (ii) any benefits that may be provided to a Designated Employee for three years or another period following a termination of employment pursuant to Section 5 of the Plan shall be reduced to the extent that substantially identical benefits are actually received by the Designated Employee during such three year or other period under an existing severance agreement or requirement. It is expressly understood, however, that no amounts payable hereunder shall be reduced by amounts payable under th e Company's pension or deferred compensation plans or the SERP (as defined in Section 4, above) or by amounts payable as accrued vacation or because of the acceleration of the benefits under the Company's stock option and restricted stock plans.


 

Exhibit A

COMPUTER SCIENCES CORPORATION
SENIOR MANAGEMENT AND KEY EMPLOYEE
SEVERANCE AGREEMENT

 

          This SENIOR MANAGEMENT AND KEY EMPLOYEE SEVERANCE AGREEMENT (this "Agreement"), dated as of _______________ is made and entered into by and between Computer Sciences Corporation, a Nevada corporation (the "Company"), and _____________________ (the "Executive").

R E C I T A L S

          This Agreement is being entered into in accordance with the Severance Plan attached hereto as Annex 1 (the "Plan") in order to set forth the specific severance compensation which the Company agrees that it will pay to the Executive if the Executive's employment with the Company terminates under certain circumstances described in the Plan.

A G R E E M E N T

          NOW, THEREFORE, in consideration of the continued service of the Executive as an employee of the Company, the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

          1. Agreement to Provide Plan Benefits. The Plan (as it may hereafter be amended or modified in accordance with the terms thereof) is hereby incorporated into this Agreement in full and made a part hereof as though set forth in full in this Agreement. The Executive is hereby designated a member of Group(s) ___________ under the Plan and shall be entitled to all of the rights and benefits applicable to employees of the Company in such Group(s) under the Plan. The Company agrees to be bound by the Plan and to provide to the Executive all of the benefits provided to employees of the Company who are members of Group(s) __________ under the Plan subject to the terms and conditions of the Plan. Terms not otherwise defined in this Agreement shall have the meanings set forth in the Plan.

          2. Heirs and Successors.

          (a) Successors of the Company. The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession transaction shall be a breach of this Agreement and shall entitle the Executive to terminate his or her employment with the Company within six months thereafter for Good Reason and to receive the benefits provided under the Plan in the event of termination for Good Reason following a Change of


Control. As used in this Agreement, "Company" shall mean the Company as defined above and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 2 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) Heirs of the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. If the Executive should die after the conditions to payment of benefits set forth in Section 5 of the Plan have been met and any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's beneficiary, successor, devisee, legatee or other designee or, if there be no such designee, to the Executive's estate. Until a contrary designation is made to the Company, the Executive hereby designates as his beneficiary under this Agreement the person whose name appears below his signature on page 3 of this Agreement.

         3. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: if to the Company -- Computer Sciences Corporation, 2100 East Grand Avenue, El Segundo, California 90245 Attention: Vice President, General Counsel and Secretary; and if to the Designated Employee at the address specified at the end of this Agreement. Notice may also be given at such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

          4. Miscellaneous. No provisions of this Agreement or the Plan may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Designated Employee and the Company, except as provided in Section 9(a) of the Plan. No waiver by any party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

          5. Validity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

  1. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

2


          7. Gender. In this Agreement (unless the context requires otherwise), use of' any masculine term shall include the feminine.

          8. Rescission. The Company agrees that this Agreement and the right to receive payments pursuant to the Plan and this Agreement may be rescinded at any time by the Executive giving written notice to such effect to the Company in accordance with Section 3 above.

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

COMPUTER SCIENCES
CORPORATION

 

EXECUTIVE

By:___________________

 

______________________

(Signature)

 

 

_______________________

(Name)

 

 

________________________
________________________
(Address for Notice)

 

 

________________________

(Designated Beneficiary)

 

 

________________________
________________________
(Address for Beneficiary)

 

3


Exhibit B

COMPUTER SCIENCES CORPORATION
SENIOR MANAGEMENT AND KEY EMPLOYEE
SEVERANCE AGREEMENT

 

          This SENIOR MANAGEMENT AND KEY EMPLOYEE SEVERANCE AGREEMENT (this "Agreement"), dated as of _______________ is made and entered into by and between Computer Sciences Corporation, a Nevada corporation (the "Company"), and _____________________ (the "Executive").

R E C I T A L S

          This Agreement is being entered into in accordance with the Severance Plan attached hereto as Annex 1 (the "Plan") in order to set forth the specific severance compensation which the Company agrees that it will pay to the Executive if the Executive's employment with the Company terminates under certain circumstances described in the Plan.

A G R E E M E N T

          NOW, THEREFORE, in consideration of the continued service of the Executive as an employee of the Company, the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

          1. Agreement to Provide Plan Benefits. The Plan (as it may hereafter be amended or modified in accordance with the terms thereof) is hereby incorporated into this Agreement in full and made a part hereof as though set forth in full in this Agreement. The Executive is hereby designated a member of Group D under the Plan and shall be entitled to all of the rights and benefits applicable to employees of the Company in such Group under the Plan. The Company agrees to be bound by the Plan and to provide to the Executive all of the benefits provided to employees of the Company who are members of Group D under the Plan subject to the terms and conditions of the Plan. Terms not otherwise defined in this Agreement shall have the meanings set forth in the Plan.

          2. Heirs and Successors.

          (a) Successors of the Company. The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession transaction shall be a breach of this Agreement and shall entitle the Executive to terminate his or her employment with the Company within six months thereafter for Good Reason and to receive the benefits provided under the Plan in the event of termination for Good Reason following a CA Control Event.


As used in this Agreement, "Company" shall mean the Company as defined above and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 2 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) Heirs of the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. If the Executive should die after the conditions to payment of benefits set forth in Section 5 of the Plan have been met and any amounts are still payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's beneficiary, successor, devisee, legatee or other designee or, if there be no such designee, to the Executive's estate. Until a contrary designation is made to the Company, the Executive hereby designates as his beneficiary under this Agreement the person whose name appears below his signature on page 3 of this Agreement.

          3. Notice. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows: if to the Company -- Computer Sciences Corporation, 2100 East Grand Avenue, El Segundo, California 90245 Attention: Vice President, General Counsel and Secretary; and if to the Designated Employee at the address specified at the end of this Agreement. Notice may also be given at such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

          4. Miscellaneous. No provisions of this Agreement or the Plan may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Designated Employee and the Company, except as provided in Section 9(a) of the Plan. No waiver by any party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

          5. Validity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

         6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

2


 

          7. Gender. In this Agreement (unless the context requires otherwise), use of' any masculine term shall include the feminine.

          8. Rescission. The Company agrees that this Agreement and the right to receive payments pursuant to the Plan and this Agreement may be rescinded at any time by the Executive giving written notice to such effect to the Company in accordance with Section 3 above.

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

COMPUTER SCIENCES
CORPORATION

 

EXECUTIVE

By:___________________

 

______________________

(Signature)

 

 

_______________________

(Name)

 

 

________________________
________________________
(Address for Notice)

 

 

________________________

(Designated Beneficiary)

 

 

________________________
________________________
(Address for Beneficiary)

 


 

Exhibit C

 

Group

 

A

B

C

D

Multiple of compensation under Sections 3 and 5

3

2

3

2

EX-31.1 7 exhibit31_1302cert.htm VBH 302 CERTIFICATION ex31_1_vbh_302cert

EXHIBIT 31.1

Certification

 

I, Van B. Honeycutt, Chairman and Chief Executive Officer of the Company, certify that:

  1. I have reviewed this quarterly report on Form 10-Q of Computer Sciences Corporation;
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
  4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e) for the registrant and we have:

    1. Designed such disclosure controls and procedures, or caused such disclosures controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
    2. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
    3. Disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

     5.   The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal
           control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of            directors (or persons performing the equivalent function):

    1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
    2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

 

 

Date: August 13, 2003

By:

/s/ Van B. Honeycutt
Van B. Honeycutt
Chairman and Chief Executive Officer

EX-31.2 8 exhibit31_2302cert.htm LJL 302 CERTIFICATION ex31_2_ljl_302cert

EXHIBIT 31.2

Certification

 

I, Leon J. Level, Chairman and Chief Financial Officer of the Company, certify that:

  1. I have reviewed this quarterly report on Form 10-Q of Computer Sciences Corporation;
  2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
  3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
  4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e) for the registrant and we have:

    1. Designed such disclosure controls and procedures, or caused such disclosures controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
    2. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
    3. Disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

     5.   The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal
           control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of            directors (or persons performing the equivalent function):

    1. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
    2. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

 

 

Date: August 13, 2003

By:

/s/ Leon J. Level
Leon J. Level
Chairman and Chief Financial Officer

EX-32.1 9 exhibit32_1906cert.htm VBH 906 CERTIFICATION exhibit32.1

EXHIBIT 32.1

Certification

 

Pursuant to 18 U.S.C. Section 1350, I, Van B. Honeycutt, Chairman and Chief Executive Officer of Computer Sciences Corporation (the "Company"), hereby certify that:

(1)

the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

 

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: August 13, 2003

/s/Van B. Honeycut                              
Van B. Honeycutt
Chairman and Chief Executive Officer

 

 

 

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

 

EX-32.2 10 exhibit32_2906cert.htm LJL 906 CERTIFICATION exhibit32.2

EXHIBIT 32.2

Certification

 

Pursuant to 18 U.S.C. Section 1350, I, Leon J. Level, Vice President and Chief Financial Officer of Computer Sciences Corporation (the "Company"), hereby certify that:

(1)

the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2003 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

 

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Dated: August 13, 2003

/s/Leon J. Level                                        
Leon J. Level
Vice President and Chief Financial Officer

 

 

 

 

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

 

EX-99 11 exhibit99.htm REVENUE BY MARKET SECTOR EXHIBIT 99

EXHIBIT 99

COMPUTER SCIENCES CORPORATION
REVENUES BY MARKET SECTOR
(In millions)

 

First Quarter Ended

 

     % of Total     

 

July 4,
2003

 

June 28,
2002

 

Fiscal
2004

 

Fiscal
2003

 

 

 

 

 

 

 

 

Global commercial:

 

 

 

 

 

 

 

    U.S. commercial

$   962.1

 

$   996.1

 

27%

 

36%

    Europe

819.2

 

678.8

 

23   

 

25   

    Other International

    293.3

 

    287.5

 

     8   

 

    10   

        Total

  2,074.6

 

 1,962.4

 

   58   

 

   71   

 

 

 

 

 

 

 

 

U.S. federal government:

 

 

 

 

 

 

 

    Department of Defense

904.6

 

472.5

 

26   

 

17   

    Civil agencies

     575.6

 

     318.8

 

   16   

 

   12   

        Total

  1,480.2

 

     791.3

 

   42   

 

   29   

Total Revenues

$3,554.8
=======

 

$2,753.7
======

 

100%
=====

 

100%
=====

 

 

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