EXHIBIT 10.4
COMPUTER SCIENCES CORPORATION
1984 STOCK OPTION PLAN
As amended March 31, 1988
Section 1: PURPOSE OF PLAN
The purpose of this 1984 Stock Option Plan of Computer Sciences Corporation
(the "Plan") is to further the growth and development of Computer Sciences
Corporation and each subsidiary (as the term "subsidiary" is defined in
Section 425(f) of the Internal Revenue Code) of Computer Sciences Corporation
(herein referred to collectively with its subsidiaries as the "Company") by
providing additional incentives to certain employees who have been or will be
given responsibility for the management of the Company's business affairs, by
assisting such employees to become owners of common stock of the Company
through the issuance of options to purchase shares of common stock and thus to
benefit directly from the growth, development and financial success of the
Company.
Section 2: ADMINISTRATION
The Plan shall be administered by a committee of three members (the
"Committee") appointed by the Board of Directors, at least two of whom shall
be members of the Board of Directors of the Company, and each of whom shall be
a "disinterested person," as that term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended from time to time, or any
equivalent term defined in any law, rule or regulation which may replace Rule
16b-3. The Committee shall hold office at the pleasure of the Board of
Directors of the Company. The Committee shall have full authority, in its
discretion, to determine the employees to whom options may be granted and the
number of shares covered by such options. However, the Committee may delegate
this authority to the Executive Committee of the Board of Directors of the
Company with respect to all employees of the Company other than officers and
directors. The Committee is authorized to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to amend or revoke any such rules and to make interpretations of
the Plan and any such rules consistent with the basic purpose of the Plan.
All actions taken and all determinations made by the Committee in good faith
shall be final and binding upon any person interested in the Plan. The
Committee shall cause to be maintained such records as may be necessary to
reflect all options granted under the Plan, the dates of such grants and the
amount of shares covered thereby and may rely upon advice from the Company as
to the commencement or termination of employment of participants.
Section 3: SHARES SUBJECT TO THE PLAN
A total of 600,000 shares of the Company's common stock, $1.00 par value,
shall be available under the Plan, subject to adjustment as provided in
paragraph 4 below. Such shares shall be from either authorized but unissued
shares or issued shares reacquired by the Company. If any option expires or
is canceled without having been fully exercised, the number of shares as to
which such option was not exercised may again be optioned hereunder, provided,
however, that in no event may incentive stock options (as defined in paragraph
6(c) below) be granted after ten years from the date the Plan is adopted by
the Board of Directors of the Company or the date this Plan is approved by the
shareholders, whichever occurs earlier.
Section 4: ADJUSTMENT OF SHARES
If the outstanding shares of common stock of the Company are changed by any
stock dividend, stock split or combination of shares, the number of shares
then subject to the Plan and the option price and number of shares subject to
outstanding options granted under the Plan shall be proportionately adjusted.
If the outstanding shares of common stock of the Company shall be exchanged
for a different number or class of shares of stock of the Company by reason of
a merger, reorganization, recapitalization or other change in the corporate
stock structure, there shall be substituted for each share of common stock
then subject to the Plan and to outstanding options granted under the Plan,
the number and kind of shares of stock into which each outstanding share of
common stock of the Company shall be so exchanged (except as provided in
paragraph 6(h) below). In the event of any such adjustment, the purchase
price per share for outstanding options granted under the Plan shall be
proportionately adjusted. Any such adjustments in outstanding options shall
be made without changing the aggregate exercise price applicable to the
unexercised portions of such options.
Section 5: PARTICIPANTS
All officers and other key employees of the Company shall be eligible to
receive options and thereby become participants in the Plan, except that no
employee who, at the time such option would otherwise be granted, owns stock
possessing more than 5% Of the total combined voting power of all classes of
stock of the Company shall be eligible to participate. In granting options,
the Committee may include or exclude previous participants as the Committee
may determine.
Section 6: OPTIONS
(a) Grant of Options.
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Options to purchase shares of the common stock of the Company shall be granted
by the Committee, on behalf of the Company, commencing after approval of
shareholders. The Committee shall, from time to time and within the limits of
the Plan, designate officers and other key
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employees of the Company to whom options are to be granted, the date of grant,
the type of option, the number of shares to be optioned to each, and the
option price. As a condition of being granted an option, an employee of the
Company shall execute and deliver to the Company a Stock Option Agreement with
such provisions as to option prices and such other terms, including methods of
withholding or prepaying required taxes, not inconsistent with the Plan as the
Committee may specify.
(b) Option Price.
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The price for the shares covered by each option granted under the Plan shall
be set by the Committee in its sole discretion at an option price not less
than one hundred percent of the fair market value of such shares on the date
such option is granted, provided, however, that options for up to 100,000
shares may be granted by the Committee at option prices of $1.00 per share.
(c) Designation of Options.
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Options granted under the Plan may be incentive stock options (as such term is
defined in Section 422A of the internal Revenue Code of 1954, as amended) or
non-incentive stock options, as designated at the time of grant by the
Committee. Any option granted under the Plan at an option price equal to or
greater than the fair market value of the shares of stock on the date the
option is granted shall be an incentive stock option to the extent permitted
by law, unless otherwise designated by the Committee.
(d) Limitation on Grant of Incentive Stock Options.
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The aggregate- fair market value (determined as of the date the option is
granted) of the shares of stock for which any employee of the Company may be
granted incentive stock options in any calendar year under all stock option
plans of the Company shall not exceed $100,000.00 plus any unused limit
carryover to such year. The unused limit carryover may be carried over for
three years and shall apply to any year after 1980. The unused limit
carryover shall be one-half of the amount by which $100,000.00 exceeds the
value on the date of grant of the shares of stock for which incentive stock
options were granted in such prior year or years.
Notwithstanding the foregoing, in the case of any option or options granted
after December 31, 1986, the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by such individual during any
calendar year (under all such plans of the Company) shall not exceed
$100,000.00.
(e) Commencement of Exercisability.
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Each option shall become exercisable at such time or times as the Committee
shall determine in its sole discretion, subject, however, to the following
limitations: (i) the option shall not be exercisable as to any shares covered
thereby for a period of at least one year from the date the option is granted;
(ii) the option may become exercisable as to not more than 20% of the shares
covered thereby at the expiration of at least one year after the date the
option is granted and may become exercisable as to not more
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than an additional 20% of the shares covered thereby at the expiration of each
of the second, third, fourth and fifth years after the date the option was
granted; and (iii) the option shall become exercisable as to all shares
covered thereby not later than the expiration of the applicable time period
set forth in paragraph 6(f) below. Notwithstanding the foregoing, but subject
to the provisions of paragraph 7 below, options shall become exercisable in
full pursuant to the provisions of paragraph 6(h) below. In addition, options
granted to an employee who has (i) died; (ii) suffered a permanent and total
disability, (iii) retired at age 65 or older, or (iv) retired at age 55 or
older (but less than age 65) with more than ten years of continuous employment
with the Company, and whose contributions to the affairs of the Company have
been determined by the Board of Directors of the Company to be outstanding
may, at the discretion of the Board of Directors of the Company, be
exercisable immediately in full. As used in this Plan, a permanent and total
disability shall mean than an option holder is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve months. An option holder shall not be considered to be permanently and
totally disabled unless he or she furnishes proof of existence thereof to the
satisfaction of the Board of Directors of the Company in such form and manner,
and at such times, that the Board of Directors of the Company may require.
The decision of the Board of Directors of the Company as to a condition or
non-condition of permanent and total disability shall be final and binding on
the Company and the option holder.
(f) Termination of Exercisability.
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Upon the first to occur of the following events, each then unexercised option
or part thereof shall expire: (i) ten years from the date such option was
granted with respect to an incentive stock option; (ii) ten years plus thirty
days from the date such option was granted with respect to a non-incentive
stock option; or (iii) the date of termination of employment for any reason
whatsoever. However, in the event of termination of employment by reason of
death or permanent and total disability, any unexercised option which was
exercisable on the date of termination of employment may, within one year
thereafter, to the extent the option was exercisable upon termination of
employment, be exercised in full or in part by such holder or, in the case of
death, by any person empowered to do so under the deceased option holder's
will or under the then applicable laws of descent and distribution; provided,
however, that if the option is an incentive stock option and employment was
terminated by reason of death of the holder, the option or part thereof may be
exercised within one year from the date of death of the holder or ten years
from the date such option was granted, whichever occurs earlier.
(g) Exercise of Options.
Each option shall be exercisable during the lifetime of an option holder, only
by the option holder or a court appointed representative in the event of an
option holder's incapacity. In the event of termination of employment of an
option holder because of death, any option may, prior to cancellation or
expiration of such option, be exercised in whole or in part by
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any person empowered to do so under any deceased option holder's will or under
the then applicable laws of descent and distribution. Any exercisable option
may be exercised in whole or in part, provided, however, the Company shall not
be required to issue fractional shares. Subject to the foregoing, all or any
part of the shares with respect to which the right to purchase has accrued may
be purchased at the time of such accrual or at any time or times thereafter
during the term of the option in addition to other shares with respect to
which the right to purchase has accrued. An option may be exercised only by
delivery to the Secretary or the Corporate Controller of the Company, in a
manner prescribed by the Committee, of a notice in writing (an "Exercise
Notice") stating that such option or a specified part thereof is exercised.
The purchase price on each exercise of an option shall be the option price
times the number of shares with respect to which such option or part thereof
is exercised. Except as hereinafter provided with respect to option holders
who exercise options prior to termination of employment with the Company, the
purchase price shall be paid in cash or by good and sufficient check
accompanying the Exercise Notice. If the option is exercised by an option
holder prior to termination of employment with the Company, he or she may
elect in the Exercise Notice to pay the purchase price for shares with respect
to which the option is exercised (i) by cash or good and sufficient check, or
(ii) by the surrender to the Company of outstanding whole shares of the
Company's common stock of the same class, or (iii) a combination of (i) and
(ii), having an aggregate value of not less than the total purchase price for
shares with respect to which the option is exercised. If such option holder
so elects to surrender whole shares of the Company's common stock in payment
of all or any portion of the purchase price, certificates evidencing common
stock so surrendered, properly endorsed or assigned to the Company, shall
accompany the Exercise Notice. Such stock will be valued for this purpose at
a price equal to the closing price on the New York Stock Exchange on the date
that the Exercise Notice is delivered. The election to pay the purchase price
in whole or in part by the surrender of outstanding whole shares of the
Company's common stock is available to such option holder provided that such
Exercise Notice is delivered on a day on which the New York Stock Exchange is
open for business and that the Company's common stock has not been suspended
from trading at any time during that day. The obligation of the Company to
issue shares upon exercise of an option is subject to the provisions of
paragraph 7 below and to compliance with all applicable requirements of law
with respect to the issuance and sale of such shares.
(h) Cancellation of Options.
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In the event of the dissolution or liquidation of the Company (whether or not
as part of a corporate reorganization) or upon a merger, consolidation or
other reorganization in which the Company is not the surviving corporation (a
"Cancellation Event"), then all unexercised options, or portions thereof which
remain outstanding on the date of consummation of the Cancellation Event shall
be canceled and be of no further force and effect, provided, however, that
upon the approval of the Cancellation Event by the shareholders of the
Company, or the approval of the Cancellation Event by the Board of Directors
of the Company if shareholder approval is not required, each option will
become
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exercisable as to all of the shares covered thereby, irrespective of the
provisions of paragraph 6(e) above. The holder of each option shall be given
prompt notice of such approval by the shareholders of the Company or its Board
of Directors. To the extent that any option is exercised after the giving of
such notice and prior to the consummation of the Cancellation Event with
respect to shares as to which the option, but for the provisions of this
paragraph, would not otherwise be exercisable (the "Unexercisable Portion of
the Option") then any exercise of the Unexercisable Portion of the Option
under this paragraph 6(h) shall not be effective until immediately prior to
the consummation of the Cancellation Event. After the giving of such notice
and prior to the consummation of the Cancellation Event, any option holder may
also make his exercise of any exercisable portion of his option contingent on
the consummation of the Cancellation Event. If the parties to the
Cancellation Event should terminate it or if either of such parties is unable
to meet the conditions precedent to the consummation of the Cancellation Event
within the time scheduled therefor or any extension thereof mutually agreed
upon by such parties, then any exercise of the Unexercisable Portion of the
Option pursuant to this paragraph 6(h) and any contingent exercise of the
exercisable portion of any option pursuant to the preceding sentence will be
of no force and effect. Thereafter, outstanding options will be exercisable
only to the extent permitted under other provisions of this Plan.
(i) Options Not Transferable.
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No option shall be transferable by the option holder other than by will or the
applicable laws of descent and distribution.
Section 7: CONDITIONS
Until satisfaction of each of the following conditions, options issued under
the Plan shall not become exercisable and the Company shall have no obligation
to issue shares upon exercise of any option at any time when any of the
following conditions are not satisfied:
(a) The Plan has been approved by the affirmative vote of the holders of
a majority of the outstanding shares of common stock of the Company present,
or represented, and entitled to vote at a meeting of shareholders of the
Company at which a quorum was present in person or by proxy;
(b) The completion and continued effectiveness of registration and other
qualification under all applicable federal and state laws, rules and
regulations, including the Securities Act of I933, of the shares of common
stock issuable upon exercise of options granted under the Plan;
(c) The shares issuable upon exercise of options granted under the Plan
shall have been (and shall continue to be) admitted to trading upon official
notice of issuance on any stock exchange on which the other shares of the
Company's common stock are listed; and
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(d) The option holder has complied with all of the provisions of the
applicable Stock Option Agreement.
Section 8: AMENDMENT OF PLAN
Without the prior approval of shareholders, the Plan may not be amended so as
to (i) increase the number of shares available under the Plan, except in
accordance with the terms of the Plan as set forth in paragraph 4 hereof, (ii)
decrease the option price except in accordance with the terms of the Plan as
set forth in paragraph 4 hereof, and/or (iii) accelerate the initial
commencement of exercisability except in accordance with paragraphs 6(e) and
6(h) hereof. Except for instances where such shareholder approval is
required, the Board of Directors of the Company may amend or discontinue the
Plan at any time. However, no such amendment or discontinuance shall change
or impair any option previously granted without the consent of the option
holder.
Section 9: NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in the Plan or in any Stock Option Agreement hereunder shall confer
upon any employee any right to continue in the employ of the Company or
interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to discharge any employee at any time, with or
without cause.
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