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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 18, 1998
COMPUTER SCIENCES CORPORATION
(Exact name of Registrant as specified in its charter)
NEVADA 1-4850 95-2043126
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
2100 East Grand Avenue
El Segundo, California 90245
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (310) 615-0311
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 5. Other Events.
On February 10, 1998, Computer Associates International, Inc. ("CA")
sent to Computer Sciences Corporation ("CSC") a letter in which CA offered to
acquire CSC in a merger transaction in which CSC's stockholders would receive
$108 in cash for each share of CSC's common stock (the "CA Merger Offer"). On
February 17, 1998, CAI Computer Services Corp., a wholly owned subsidiary of
CA ("CA Merger Subsidiary"), commenced a tender offer to purchase all of CSC's
outstanding common stock at a price of $108 per share in cash (the "CA Tender
Offer"). In connection with the CA Tender Offer, CA and CA Merger Subsidiary
filed a Tender Offer Statement on Schedule 14D-1 with the Securities and
Exchange Commission on February 17, 1998, and delivered a copy of the Tender
Offer Statement to CSC that evening.
At 1:00 o'clock p.m. on February 18, 1998, the Board of Directors of
CSC held a previously scheduled meeting. The Board of Directors did not
consider the CA Tender Offer at this meeting, since CSC management and the
Board had not yet had an opportunity fully to analyze the Schedule 14D-1 that
had been delivered the previous evening.
In accordance with Rule 14e-2 promulgated under the Securities
Exchange Act of 1934, as amended, CSC will, no later than March 3, 1998, file
with the Securities and Exchange Commission and send to the holders of CSC's
common stock a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the CA Tender Offer.
At its meeting on February 18, 1998, the CSC Board of Directors did,
among other things, consider the CA Merger Offer. A copy of a press release
of CSC dated February 19, 1998, which describes the response of the Board of
Directors to the CA Merger Offer, is attached as Exhibit 99.1 hereto.
At the February 18, 1998 meeting, the Board of Directors also took the
following actions:
1. Amendment of Bylaws.
-------------------
The Board amended CSC's Bylaws by adding a new Article II, Section
12, and by amending the following provisions: Article II, Sections 2, 3, 6 and
10; Article III, Sections 1, 2 and 7; Article VI; and Article VIII, Section 1.
A copy of the Bylaws, as amended and restated effective February 18, 1998, is
included as Exhibit 3.5 hereto.
2. Adoption of New Rights Agreement; Redemption of Old Rights.
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The Board authorized and declared a dividend of one preferred stock
purchase right (a "New Right") for each share of CSC's common stock. The
dividend is payable on February 27, 1998 to the holders of record of such
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common stock as of the close of business on such date. The New Rights will be
issued pursuant to a Rights Agreement dated as of February 18, 1998 by and
between CSC and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"New Rights Agreement"). A Summary of the Rights, which contains a brief
description of the New Rights and is subject to the detailed terms and
conditions of the New Rights Agreement, is included as Exhibit 10.23 hereto.
The Board also amended the first sentence of Section 3(a) of the
Rights Agreement dated as of December 21, 1988, as amended and restated as of
August 1, 1996, by and between CSC and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Old Rights Agreement"), in order to add the
following additional language at the end of such sentence:
";provided, however, that, notwithstanding anything to the contrary
in the foregoing definition of the 'Distribution Date,' clause (ii)
of the definition does not apply to the tender offer commenced by
CAI Computer Services Corp. on February 17, 1998."
In addition, the Board indicated that it will redeem the Old Rights
promptly after the dividend of the New Rights has been paid.
3. Amendment of Severance Plan.
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The Board amended CSC's Severance Plan for Senior Management and Key
Employees (the "Plan") to create a new class of employees ("Class D") to whom
the Class B level of severance benefits would be payable if both of the
following events were to occur:
(a) there were a Change in Control of CSC; and
(b) as a consequence thereof, CA Controlled CSC (as such
capitalized terms are defined in the Plan).
The Board authorized Van B. Honeycutt, Chairman, President and Chief Executive
Officer of CSC, to designate up to 150 employees of CSC as Class D
participants in the Plan.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The exhibits listed below are filed as a part of this report:
3.5 Bylaws of CSC, as amended and restated effective
February 18, 1998
10.23 Summary of the Rights
99.1 Press Release of CSC dated February 19, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
CSC has duly caused this report to be signed on its behalf by the undersigned
thereto duly authorized.
COMPUTER SCIENCES CORPORATION
Dated: February 19, 1998 By /s/ Scott M. Delanty
-----------------------------
Scott M. Delanty
Vice President and Controller
Chief Accounting Officer
EXHIBIT 3.5
BYLAWS
OF
COMPUTER SCIENCES CORPORATION
As amended February 18, 1998
<PAGE>
BYLAWS
OF
COMPUTER SCIENCES CORPORATION
ARTICLE I
OFFICES
Section 1. Principal Office.
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The principal office of the corporation in the State of Nevada shall be in the
City of Reno, County of Washoe.
Section 2. Other Offices.
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The corporation may also have offices in such other places, both within and
without the State of Nevada, as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Annual Meetings.
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Annual meetings of the stockholders shall be held at the office of the
corporation in the City of El Segundo, State of California or at such other
place, within or without the State of California, as shall be designated by
the Board of Directors.
Section 2. Date of Annual Meetings; Election of Directors.
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Annual meetings of the stockholders shall be held at such time and date as the
Board of Directors shall determine. At each such annual meeting, the
stockholders of the corporation shall elect a Board of Directors and transact
such other business as has properly been brought before the meeting in
accordance with Section 12 of this Article II.
Section 3. Special Meetings.
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Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, by the Articles of Incorporation or by these
Bylaws, may be called by the Chairman of the Board, the Board of Directors, or
by the president and not otherwise, except as provided in the following
sentence. In the event the corporation shall have failed to hold its annual
meeting of stockholders for a period of 18 months from the last preceding
annual meeting at which directors were elected or if such annual meeting shall
have been held but directors shall not have been elected at such annual
meeting, a special meeting of the stockholders shall be called by the
president or secretary at the request in writing of a majority of the Board of
Directors or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding
and entitled to vote. Such request from stockholders shall be directed to the
Chairman of the Board, the president, the vice president or the secretary.
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To be in proper written form, a stockholder's notice must set forth (i) the
name and record address of such stockholder, (ii) the class or series and
number of shares of capital stock of the corporation which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the election of
directors and any material interest of such stockholder in such election and
(iv) a representation that such stockholder intends to appear in person or by
proxy at such special meeting to vote on the election of directors at such
meeting. The business transacted at such special meeting shall be confined to
the election of directors.
Section 4. Notices of Meetings.
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Notices of meetings of the stockholders shall be in writing and signed by the
president, a vice president, the secretary, an assistant secretary, or by such
other person or persons as the directors shall designate. Such notice shall
state the purpose or purposes for which the meeting is called and the time
when, and the place where, it is to be held. A copy of such notice shall be
either delivered personally or shall be mailed, postage prepaid, to each
stockholder of record entitled to vote at such meeting not less than ten (10)
nor more than sixty (60) days before such meeting. If mailed, it shall be
directed to the stockholder at his address as it appears upon the records of
the corporation and upon such mailing of any such notice, the service thereof
shall be complete, and the time of the notice shall begin to run from the date
upon which such notice is deposited in the mail for transmission to such
stockholder. If no such address appears on the books of the corporation and a
stockholder has given no address for the purpose of notice, then notice shall
be deemed to have been given to such stockholder if it is published at least
once in a newspaper of general circulation in the county in which the
principal executive office of the corporation is located. An affidavit of the
mailing or publication of any such notice shall be prima facie evidence of the
giving of such notice.
Personal delivery of any such notice to any officer of a corporation
or association, or to any member of a partnership shall constitute delivery of
such notice to such corporation, association or partnership. If any notice
addressed to the stockholder at the address of such stockholder appearing on
the books of the corporation is returned to the corporation by the United
States Postal Service marked to indicate that it is unable to deliver the
notice to the stockholder at such address, all future notices shall be deemed
to have been duly given to such stockholder, without further mailing, if the
same shall be available for the stockholder upon written demand of the
stockholder at the principal executive office of the corporation for a period
of one year from the date of the giving of the notice to all other
stockholders.
Section 5. Quorum.
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The holders of a majority of the stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business,
except as otherwise provided by the statutes of Nevada or by the Articles of
Incorporation. Regardless of whether or not a quorum is present or
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represented at any annual or special meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
in person or represented by proxy, provided that when any stockholders'
meeting is adjourned for more than forty-five (45) days, or if after
adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented by proxy, any business may be transacted which might
have been transacted at the meeting as originally noticed.
Section 6. Vote Required.
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When a quorum is present or represented at any meeting, the holders of a
majority of the stock present in person or represented by proxy and voting
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of the statutes of Nevada, the Articles
of Incorporation or these Bylaws, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
The stockholders present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.
Section 7. Cumulative Voting.
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Except as otherwise provided in the Articles of Incorporation, every
stockholder of record of the corporation shall be entitled at each meeting of
the stockholders to one vote for each share of stock standing in his name on
the books of the corporation. At all elections of directors of this
corporation, each holder of shares of capital stock possessing voting power
shall be entitled to as many votes as shall equal the number of his shares of
stock multiplied by the number of directors to be elected, and he may cast all
of such votes for a single director or may distribute them among the number to
be voted for or any two or more of them, as he may see fit. The stockholders
of this corporation and any proxyholders for such stockholders are entitled to
exercise the right to cumulative voting at any meeting held for the election
of directors if: (a) not less than forty-eight (48) hours before the time
fixed for holding such meeting, if notice of the meeting has been given at
least ten (10) days prior to the date of the meeting, and otherwise not less
than twenty-four (24) hours before such time, a stockholder of this
corporation has given notice in writing to the president or secretary of the
corporation that he desires that the voting at such election of directors
shall be cumulative; and (b) at such meeting, prior to the commencement of
voting for the election of directors, an announcement of the giving of such
notice has been made by the chairman or the secretary of the meeting or by or
on behalf of the stockholder giving such notice. Notice to stockholders of
the requirements of the preceding sentence shall be contained in the notice
calling such meeting or in the proxy material accompanying such notice.
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Section 8. Conduct of Meetings.
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Subject to the requirements of the statutes of Nevada, and the express
provisions of the Articles of Incorporation and these Bylaws, all annual and
special meetings of stockholders shall be conducted in accordance with such
rules and procedures as the Board of Directors may determine and, as to
matters not governed by such rules and procedures, as the chairman of such
meeting shall determine. The chairman of any annual or special meeting of
stockholders shall be designated by the Board of Directors and, in the absence
of any such designation, shall be the president of the corporation.
Section 9. Proxies.
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At any meeting of the stockholders, any stockholder may be represented and
vote by a proxy or proxies appointed by an instrument in writing. In the
event that such instrument in writing shall designate two or more persons to
act as proxies, a majority of such persons present at the meeting, or, if only
one shall be present, then that one shall have and may exercise all of the
powers conferred by such written instrument upon all of the persons so
designated unless the instrument shall otherwise provide. No such proxy shall
be valid after the expiration of six (6) months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force,
which in no case shall exceed seven (7) years from the date of its execution.
Subject to the above, any proxy duly executed is not revoked and continues in
full force and effect until (i) an instrument revoking it or duly executed
proxy bearing a later date is filed with the secretary of the corporation or,
(ii) the person executing the proxy attends such meeting and votes the shares
subject to the proxy, or (iii) written notice of the death or incapacity of
the maker of such proxy is received by the corporation before the vote
pursuant thereto is counted.
Section 10. Action by Written Consent.
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Any action, except election of directors, which may be taken by a vote of the
stockholders at a meeting, may be taken without a meeting and without notice
if authorized by the written consent of stockholders holding at least ninety
percent (90%) of the voting power.
Section 11. Inspectors of Election.
----------------------
In advance of any meeting of stockholders, the Board of Directors may appoint
inspectors of election to act at such meeting and any adjournment thereof. If
inspectors of election are not so appointed, or if any persons so appointed
fail to appear or refuse to act, then, unless other persons are appointed by
the Board of Directors prior to the meeting, the chairman of any such meeting
may, and on the request of any stockholder or a stockholder proxy shall,
appoint inspectors of election (or persons to replace those who fail to appear
or refuse to act) at the meeting. The number of inspectors shall not exceed
three.
The duties of such inspectors shall include: (a) determining the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies; (b) receiving votes, ballots or consents; (c)
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hearing and determining all challenges and questions in any way arising in
connection with the right to vote; (d) counting and tabulating all votes or
consents and determining the result; and (e) taking such other action as may
be proper to conduct the election or vote with fairness to all stockholders.
In the determination of the validity and effect of proxies, the dates
contained on the forms of proxy shall presumptively determine the order of
execution of the proxies, regardless of the postmark dates on the envelopes in
which they are mailed. The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability and as expeditiously
as is practical. If there are three inspectors of election, the decision, act
or certificate of a majority is effective in all respects as the decision, act
or certificate of all. Any report or certificate made by the inspectors of
election is prima facie evidence of the facts stated therein.
Section 12. Action at Meetings of Stockholders.
----------------------------------
No business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the annual meeting by or at the
direction of the Board of Directors or (c) otherwise properly brought before
the annual meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 12 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 12.
In addition to any other applicable requirements, for business
properly to be brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to
the Chairman of the Board, if any, the President, or the Secretary of the
Corporation.
To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less
than one hundred twenty (120) days nor more than one hundred fifty (150) days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the 5:00 o'clock, p.m., Los Angeles, California time
on the tenth (10th) day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice must set forth
as to each matter such stockholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of such stockholder, (iii) the class
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or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 12, provided, however, that, once
business has been brought properly before the annual meeting in accordance
with such procedures, nothing in this Section 12 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of an
annual meeting determines that business was not brought properly before the
annual meeting in accordance with the foregoing procedures, the Chairman shall
declare to the meeting that the business was not brought properly before the
meeting and such business shall not be transacted.
ARTICLE III
DIRECTORS
Section 1. Number of Directors.
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The exact number of directors that shall constitute the authorized number of
members of the Board shall be nine (9), all of whom shall be at least 18 years
of age. The authorized number of directors may from time to time be increased
to not more than fifteen (15) or decreased to not less than three (3) by
resolution of the directors of the corporation amending this section of the
Bylaws in compliance with Article VIII, Section 2 of these Bylaws. Except as
provided in Section 2 of this Article III, each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies.
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Vacancies, including those caused by (i) the death, removal, or resignation of
directors, (ii) the failure of stockholders to elect directors at any annual
meeting, and (iii) an increase in the number of directors, may be filled by a
majority of the remaining directors though less than a quorum. When one or
more directors shall give notice of his or their resignation to the Board,
effective at a future date, the acceptance of such resignation shall not be
necessary to make it effective. The Board shall have power to fill such
vacancy or vacancies to take effect when such resignation or resignations
shall become effective, each director so appointed to hold office during the
remainder of the term of office of the resigning director or directors. No
director or directors of this corporation shall be removed from office except
upon the affirmative vote of stockholders owning a fraction of the total
number of outstanding shares of the Company's voting stock equal to (a) one
(1) minus (b) the ratio of (x) one (1) divided by (y) the sum of one (1) plus
the authorized number of directors.
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Section 3. Authority.
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The business of the corporation shall be managed and all corporate powers
shall be exercised by or under the direction of the Board of Directors.
Section 4. Meetings.
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The Board of Directors of the corporation may hold meetings, both regular and
special, at such place, either within or without the State of Nevada, which
has been designated by resolution of the Board of Directors. In the absence
of such designation, meetings shall be held at the office of the corporation
in the City of El Segundo, State of California.
Section 5. First Meeting.
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The first meeting of the newly elected Board of Directors shall be held
immediately following the annual meeting of the stockholders and no notice of
such meeting to the newly elected directors shall be necessary in order
legally to constitute a meeting, provided a quorum shall be present.
Section 6. Regular Meetings.
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Regular meetings of the Board of Directors may be held without notice at such
time and place as shall from time to time be determined by the Board.
Section 7. Special Meetings.
----------------
Special meetings of the Board of Directors may be called by the Chairman of
the Board, or the president and shall be called by the president or secretary
at the written request of two directors. Notice of the time and place of
special meetings shall be given within 30 days to each director (a) personally
or by telephone, telegraph, facsimile or electronic means, in each case at
least twenty four (24) hours prior to the holding of the meeting, or (b) by
mail, charges prepaid, addressed to him at his address as it is shown upon the
records of the corporation (or, if it is not so shown on such records and is
not readily ascertainable, at the place at which the meetings of the directors
are regularly held) at least three (3) days prior to the holding of the
meeting. Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone or wireless,
to the recipient or to a person at the office of the recipient who the person
giving the notice has reason to believe will promptly communicate it to the
recipient. Any notice, waiver of notice or consent to holding a meeting shall
state the time, date and place of the meeting but need not specify the purpose
of the meeting.
Section 8. Quorum.
------
Presence in person of a majority of the Board of Directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
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business and the act of a majority of the directors present and voting at any
meeting, at which a quorum is then present, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by the statutes of
Nevada or by the Articles of Incorporation. A meeting at which a quorum is
initially present shall not continue to transact business in the absence of a
quorum.
Section 9. Action by Written Consent.
-------------------------
Unless otherwise restricted by the Articles of Incorporation or by these
Bylaws, any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if a written consent thereto
is signed by all members of the Board. Such written consent shall be filed
with the minutes of proceedings of the Board of Directors.
Section 10. Telephonic Meetings.
-------------------
Unless otherwise restricted by the Articles of Incorporation or these Bylaws,
members of the Board of Directors or of any committee designated by the Board
of Directors may participate in a meeting of the Board or committee by means
of a conference telephone network or a similar communications method by which
all persons participating in the meeting can hear each other. Participation
in a meeting pursuant to the preceding sentence constitutes presence in person
at such meeting.
Section 11. Adjournment.
-----------
A majority of the directors present at any meeting, whether or not a quorum is
present, may adjourn any directors' meeting to another time, date and place.
If any meeting is adjourned for more than twenty-four (24) hours, notice of
any adjournment to another time, date and place shall be given, prior to the
time of the adjourned meeting, to the directors who were not present at the
time of adjournment. If any meeting is adjourned for less than twenty-four
(24) hours, notice of any adjournment shall be given to absent directors,
prior to the time of the adjourned meeting, unless the time, date and place is
fixed at the meeting adjourned.
Section 12. Committees.
----------
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees of the Board of Directors. Such
committee or committees shall have such name or names, shall have such duties
and shall exercise such powers as may be determined from time to time by the
Board of Directors.
Section 13. Committee Minutes.
-----------------
The committees shall keep regular minutes of their proceedings and report the
same to the Board of Directors.
Section 14. Compensation of Directors.
-------------------------
The directors shall receive such compensation for their services as directors,
and such additional compensation for their services as members of any
committees of the Board of Directors, as may be authorized by the Board of
Directors.
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Section 15. Mandatory Retirement of Directors.
---------------------------------
Notwithstanding anything to the contrary in these Bylaws, a director shall not
serve beyond, and shall automatically retire at, the close of the first
meeting of the Board of Directors held during the month in which such director
shall become age 70; provided, however, that any person who was a director on
December 6, 1996 and who was age 65 or older on such date may serve until, but
shall automatically retire at, the close of the first meeting of the Board of
Directors held during the month in which such director shall become age 72.
If no meeting of the Board of Directors is held during such month, the
director shall automatically retire as of the last day of such month.
ARTICLE IV
OFFICERS
Section 1. Principal Officers.
------------------
The officers of the corporation shall be elected by the Board of Directors and
shall be a president, a secretary and a treasurer. A resident agent for the
corporation in the State of Nevada shall be designated by the Board of
Directors. Any person may hold two or more offices.
Section 2. Other Officers.
--------------
The Board of Directors may also elect one or more vice presidents, assistant
secretaries and assistant treasurers, and such other officers and agents, as
it shall deem necessary.
Section 3. Qualification and Removal.
-------------------------
The officers of the corporation mentioned in Section 1 of this Article IV
shall hold office until their successors are elected and qualify. Any such
officer and any other officer elected by the Board of Directors may be removed
at any time by the affirmative vote of a majority of the Board of Directors.
Section 4. Resignation.
-----------
Any officer may resign at any time by giving written notice to the
corporation, without prejudice, however, to the rights, if any, of the
corporation under any contract to which such officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. Powers and Duties; Execution of Contracts.
-----------------------------------------
Officers of this corporation shall have such powers and duties as may be
determined by the Board of Directors. Unless otherwise specified by the Board
of Directors, the president shall be the chief executive officer of the
corporation. Contracts and other instruments in the normal course of business
may be executed on behalf of the corporation by the president or any vice
president of the corporation, or any other person authorized by resolution of
the Board of Directors.
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ARTICLE V
STOCK AND STOCKHOLDERS
Section 1. Issuance.
--------
Every stockholder shall be issued a certificate representing the number of
shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more than one series of
any class, the certificate shall contain a statement setting forth the office
or agency of the corporation from which stockholders may obtain a copy of a
statement or summary of the designations, preferences and relative or other
special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights. The corporation
shall furnish to its stockholders, upon request and without charge, a copy of
such statement or summary.
Section 2. Facsimile Signatures.
--------------------
Whenever any certificate is countersigned or otherwise authenticated by a
transfer agent or transfer clerk, and by a registrar, then a facsimile of the
signatures of the officers of the corporation may be printed or lithographed
upon such certificate in lieu of the actual signatures. In case any officer
or officers who shall have signed, or whose facsimile signature or signatures
shall have been used on, any such certificate or certificates shall cease to
be such officer or officers of the corporation, before such certificates shall
have been delivered by the corporation, such certificates may nevertheless be
issued as though the person or persons who signed such certificates, had not
ceased to be an officer of the corporation.
Section 3. Lost Certificates.
-----------------
The Board of Directors may direct a new stock certificate to be issued in
place of any certificate alleged to have been lost or destroyed, and may
require the making of an affidavit of that fact by the person claiming the
stock certificate to be lost or destroyed. When authorizing such issue of a
new certificate, the Board of Directors may, in its discretion and as a
condition precedent, require the owner of the lost or destroyed certificate to
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
Section 4. Transfer of Stock.
-----------------
Upon surrender to the corporation or the transfer agent of the corporation of
a certificate for shares duly endorsed for transfer, it shall be the duty of
the corporation to issue a new certificate, cancel the old certificate and
record the transaction upon its books.
Section 5. Record Date.
-----------
The directors may fix a date not more than sixty (60) days prior to the
holding of any meeting as the date as of which stockholders entitled to notice
of and to vote at such meeting shall be determined; and only stockholders of
record on such day shall be entitled to notice or to vote at such meeting. If
no record date is fixed by the Board of Directors (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
10
<PAGE>
stockholders shall be the sixtieth (60th) day preceding the day on which the
meeting is held; (b) the record date for determining stockholders entitled to
give consent to corporate action in writing without a meeting, when no prior
action by the Board has been taken, shall be the day on which the first
written consent is given; and (c) the record date for determining stockholders
for any other purpose shall be the day on which the Board of Directors adopts
the resolution relating thereto, or the sixtieth (60th) day prior to the date
of such action, whichever is later. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting unless the Board of Directors fixes a new
record date for the adjourned meeting, but the Board of Directors shall fix a
new record date if the meeting is adjourned for more than forty-five (45) days
from the date set for the original meeting.
Section 6. Registered Stock.
----------------
The corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends, and to
vote as such owner and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the statutes of Nevada.
Section 7. Dividends.
---------
In the event a dividend is declared, the stock transfer books will not be
closed but a record date will be fixed by the Board of Directors and only
shareholders of record on that date shall be entitled to the dividend.
ARTICLE VI
INDEMNIFICATION
Section 1. Indemnity of Directors, Officers and Agents.
-------------------------------------------
The corporation shall indemnify and hold harmless any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he or she is or was or has agreed
to become a director or officer of the corporation or is serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
or by reason of actions alleged to have been taken or omitted in such capacity
or in any other capacity while serving as a director or officer. The
indemnification of directors and officers by the corporation shall be to the
fullest extent authorized or permitted by applicable law, as such law exists
or may hereafter be amended (but only to the extent that such amendment
permits the corporation to provide broader indemnification rights than
permitted prior to the amendment). The indemnification of directors and
officers shall be against all loss, liability and expense (including attorneys
fees, costs, damages, judgments, fines, amounts paid in settlement and ERISA
excise taxes or penalties) actually and reasonably incurred by or on behalf of
a director or officer in connection with such action, suit or proceeding,
11
<PAGE>
including any appeals; provided, however, that with respect to any action,
suit or proceeding initiated by a director or officer, the corporation shall
indemnify such director or officer only if the action, suit or proceeding was
authorized by the board of directors of the corporation, except with respect
to a suit for the enforcement of rights to indemnification or advancement of
expenses in accordance with Section 3 hereof.
Section 2. Expenses
--------
The expenses of directors and officers incurred as a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative shall be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding; provided, however, that if applicable law so requires, the advance
payment of expenses shall be made only upon receipt by the corporation of an
undertaking by or on behalf of the director or officer to repay all amounts as
advanced in the event that it is ultimately determined by a final decision,
order or decree of a court of competent jurisdiction that the director or
officer is not entitled to be indemnified for such expenses under this
Article VI.
Section 3. Enforcement
-----------
Any director or officer may enforce his or her rights to indemnification or
advance payments for expenses in a suit brought against the corporation if his
or her request for indemnification or advance payments for expenses is wholly
or partially refused by the corporation or if there is no determination with
respect to such request within 60 days from receipt by the corporation of a
written notice from the director or officer for such a determination. If a
director or officer is successful in establishing in a suit his or her
entitlement to receive or recover an advancement of expenses or a right to
indemnification, in whole or in part, he or she shall also be indemnified by
the corporation for costs and expenses incurred in such suit. It shall be a
defense to any such suit (other than a suit brought to enforce a claim for the
advancement of expenses under Section 2 of this Article VI where the required
undertaking, if any, has been received by the corporation) that the claimant
has not met the standard of conduct set forth in the Nevada General
Corporation Law. Neither the failure of the corporation to have made a
determination prior to the commencement of such suit that indemnification of
the director or officer is proper in the circumstances because the director or
officer has met the applicable standard of conduct nor a determination by the
corporation that the director or officer has not met such applicable standard
of conduct shall be a defense to the suit or create a presumption that the
director or officer has not met the applicable standard of conduct. In a suit
brought by a director or officer to enforce a right under this Section 3 or by
the corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the burden of proving that a director or officer is not
entitled to be indemnified or is not entitled to an advancement of expenses
under this Section 3 or otherwise, shall be on the corporation.
Section 4. Non-exclusivity
---------------
The right to indemnification and to the payment of expenses as they are
incurred and in advance of the final disposition of the action, suit or
proceeding shall not be exclusive of any other right to which a person may be
12
<PAGE>
entitled under these articles of incorporation or any bylaw, agreement,
statute, vote of stockholders or disinterested directors or otherwise. The
right to indemnification under Section 1 hereof shall continue for a person
who has ceased to be a director or officer and shall inure to the benefit of
his or her heirs, next of kin, executors, administrators and legal
representatives.
Section 5. Settlement
----------
The corporation shall not be obligated to reimburse the amount of any
settlement unless it has agreed to such settlement. If any person shall
unreasonably fail to enter into a settlement of any action, suit or proceeding
within the scope of Section 1 hereof, offered or assented to by the opposing
party or parties and which is acceptable to the corporation, then,
notwithstanding any other provision of this Article VI, the indemnification
obligation of the corporation in connection with such action, suit or
proceeding shall be limited to the total of the amount at which settlement
could have been made and the expenses incurred by such person prior to the
time the settlement could reasonably have been effected.
Section 6. Purchase of Insurance.
---------------------
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against such liability
under the provisions of this Article VI.
Section 7. Conditions
----------
The corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the corporation or to any director,
officer, employee or agent of any of its subsidiaries to the fullest extent of
the provisions of this Article VI subject to the imposition of any conditions
or limitations as the Board of Directors may deem necessary or appropriate.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Exercise of Rights.
------------------
All rights incident to any and all shares of another corporation or
corporations standing in the name of this corporation may be exercised by such
officer, agent or proxyholder as the Board of Directors may designate. In the
absence of such designation, such rights may be exercised by the Chairman of
the Board or the president of this corporation, or by any other person
authorized to do so by the Chairman of the Board or the president of this
corporation. Except as provided below, shares of this corporation owned by
any subsidiary of this corporation shall not be entitled to vote on any
matter. Shares of this corporation held by this corporation in a fiduciary
13
<PAGE>
capacity and shares of this corporation held in a fiduciary capacity by any
subsidiary of this corporation, shall not be entitled to vote on any matter,
except to the extent that the settler or beneficial owner possesses and
exercises a right to vote or to give this corporation or such subsidiary
binding instructions as to how to vote such shares.
Solely for purposes of Section 1 of this Article VII, a "subsidiary"
of this corporation shall mean a corporation, shares of which possessing more
than fifty percent (50%) of the power to vote for the election of directors at
the time determination of such voting power is made, are owned directly, or
indirectly through one or more subsidiaries, by this corporation.
Section 2. Interpretation.
--------------
Unless the context of a Section of these Bylaws otherwise requires, the terms
used in these Bylaws shall have the meanings provided in, and these Bylaws
shall be construed in accordance with the Nevada statutes relating to private
corporations, as found in Chapter 78 of the Nevada Revised Statutes or any
subsequent statute.
ARTICLE VIII
AMENDMENTS
Section 1. Stockholder Amendments.
----------------------
Bylaws may be adopted, amended or repealed by the affirmative vote of more
than ninety percent (90%) of the outstanding voting shares of this
corporation.
Section 2. Amendments by Board of Directors.
--------------------------------
Subject to the right of stockholders as provided in Section 1 of this Article
VIII, Bylaws may be adopted, amended or repealed by the Board of Directors.
ARTICLE IX
"ACQUISITION OF CONTROLLING INTEREST" PROVISIONS OF
THE NEVADA GENERAL CORPORATION LAW SHALL NOT APPLY
On and after February 16, 1998, the provisions of Section 78.378 to
78.3793, inclusive, of the Nevada Revised Statutes shall not apply to the
corporation.
14
EXHIBIT 10.23
SUMMARY OF THE RIGHTS
On February 18, 1998 the Board of Directors of Computer Sciences
Corporation (the "Company") authorized and declared a dividend of one
preferred stock purchase right (a "Right") for each share of common stock, par
value $1.00 per share, of the Company (the "Common Shares"). The dividend is
payable on February 27, 1998 (the "Record Date") to the holders of record of
Common Shares as of the close of business on such date.
The following is a brief description of the Rights. It is intended
to provide a general description only and is subject to the detailed terms and
conditions of a Rights Agreement (the "Rights Agreement") dated as of February
18, 1998 by and between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent").
1. Common Share Certificates Representing Rights
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights shall not be exercisable, (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates
representing Common Shares shall also represent the Rights attached to such
Common Shares. Common Share certificates issued after the Record Date and
prior to the Distribution Date shall contain a notation incorporating the
Rights Agreement by reference.
2. Distribution Date
The "Distribution Date" is the date, after the date of the Rights
Agreement, that is the earliest of (a) the first date of public announcement
that any person, together with such person's affiliates and associates (other
than the Company or certain related entities, and with certain additional
exceptions), has become the beneficial owner of 10% or more of the then
outstanding Common Shares and other capital stock of the Company entitled to
certain voting rights (together, the "Voting Shares") (such person is a "10%
Stockholder" and the date of such public announcement is the "10% Ownership
Date"), (b) the tenth business day (or such later day as shall be designated
by the Board of Directors) following the date of the commencement of, or the
first public announcement of an intention to make, a tender offer or exchange
offer, the consummation of which would cause any person to become a 10%
Stockholder or (c) the first date, on or after the 10% Ownership Date, upon
which the Company shall consolidate or merge with another person in a
transaction in which the Company is not the surviving corporation or in which
all or part of the outstanding Common Shares are changed into or exchanged for
<PAGE>
stock or other securities of another person or cash or any other property, or
upon which 50% or more of the Company's consolidated assets or earning power
are sold or transferred (other than in transactions in the ordinary course of
business). Notwithstanding anything in the definition of the Distribution
Date to the contrary, clause (b) of the definition does not apply with respect
to the tender offer commenced by CAI Computer Services Corp. on February 17,
1998. In calculating the percentage of outstanding Voting Shares that are
beneficially owned by any person, such person shall be deemed to beneficially
own any Voting Shares issuable upon the exercise, exchange or conversion of
any options, warrants or other securities beneficially owned by such person;
provided, however, that such Common Shares issuable upon such exercise shall
not be deemed outstanding for the purpose of calculating the percentage of
Common Shares that is beneficially owned by any other person.
Upon the close of business on the Distribution Date, the Rights
shall separate from the Common Shares, Right certificates shall be issued, and
the Rights shall become exercisable to purchase Preferred Shares as described
in Section 5 below.
3. Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and
such separate Right certificates alone shall represent such Rights from and
after the Distribution Date.
4. Expiration of Rights
The Rights shall expire on February 18, 2008 unless earlier redeemed
or exchanged.
5. Exercise of Rights
Unless the Rights have expired or been redeemed or exchanged, they
may be exercised, at the option of the holders, pursuant to paragraphs (a),
(b) or (c) below. No Right may be exercised more than once or pursuant to
more than one of such paragraphs. From and after the first event of the type
described in paragraphs (b) or (c) below, each Right that is beneficially
owned by a 10% Stockholder or that was attached to a Common Share that is
subject to an option beneficially owned by a 10% Stockholder shall be void.
(a) Right to Purchase Preferred Shares.
----------------------------------
From and after the close of business on the Distribution Date, each Right
(other than a Right that has become void) shall be exercisable to purchase one
four-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $1.00 per share, of the Company (the "Preferred Shares"), at an
2
<PAGE>
exercise price of $500 (Five Hundred Dollars) (the "Exercise Price"). The
Preferred Shares are nonredeemable and may not be issued except upon exercise
of Rights. The holder of a Preferred Share is entitled to receive when, as
and if declared, the greater of (a) cash and non-cash dividends in an amount
equal to 4,000 times the dividends declared on each Common Share or (b) a
preferential annual dividend of $4.00 per Preferred Share ($.001 per one four-
thousandth of a Preferred Share). In the event of liquidation, the holders of
Preferred Shares will be entitled to receive a liquidation payment in an
amount equal to the greater of (x) $40.00 per Preferred Share ($.01 per one
four-thousandth of a Preferred Share), plus all accrued and unpaid dividends
and distributions on the Preferred Shares, or (y) an amount equal to 4,000
times the aggregate amount to be distributed per Common Share. Each Preferred
Share has one vote, voting together with the Common Shares. In the event of
any merger, consolidation or other transaction in which Common Shares are
exchanged, the holder of a Preferred Share will be entitled to receive 4,000
times the amount received per Common Share. The rights of the Preferred
Shares as to dividends, voting and liquidation preferences are protected by
anti-dilution provisions.
(b) Right to Purchase Common Shares of the Company.
----------------------------------------------
From and after the 10% Ownership Date, each Right (other than a Right that has
become void) shall be exercisable to purchase, at the Exercise Price
(initially $500), Common Shares with a current market price equal to two times
the Exercise Price. If the Company does not have sufficient Common Shares
available for all Rights to be exercised, the Company shall substitute for the
portion of the Common Shares that would otherwise be issuable upon the
exercise of the Rights, cash, assets or other securities having the same
aggregate current market price as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation.
---------------------------------------------------------
If, on or after the 10% Ownership Date, (i) the Company shall consolidate or
merge with another person in a transaction in which the Company is not the
continuing or surviving corporation, (ii) the Company is the continuing or
surviving corporation in a merger or other consolidation in which all or part
of the Common Shares are changed into or exchanged for stock or securities of
another person or cash or any other property or (iii) 50% or more of the
Company's consolidated assets or earning power are sold or transferred (other
than in transactions in the ordinary course of business), then each Right
(other than a Right that has become void) shall thereafter be exercisable to
purchase, at the Exercise Price (initially $500), shares of common stock of
the surviving corporation or purchaser, respectively, with an aggregate
current market value equal to two times the Exercise Price.
3
<PAGE>
6. Adjustments to Prevent Dilution
The Exercise Price, the number of outstanding Rights and the number
of Preferred Shares or other securities issuable upon exercise of the Rights
are subject to adjustment from time to time as set forth in the Rights
Agreement in order to prevent dilution. With certain exceptions, no
adjustment in the Exercise Price shall be required until cumulative
adjustments require an adjustment of at least 1%.
7. Cash Paid Instead of Issuing Fractional Securities
The Company shall not be required to issue fractional securities
upon exercise of a Right (other than fractions of Preferred Shares that are
integral multiples of one four-thousandth of a Preferred Share and that may,
at the election of the Company, be evidenced by depositary receipts) and in
lieu thereof, an adjustment in cash shall be made based on the market price of
such securities on the last trading date prior to the date of exercise.
8. Redemption
At any time prior to the earlier of (a) of the 10% Ownership Date or
(b) the first event of the type giving rise to exercise rights under Section
5(c) above, the Board of Directors may, at its option, direct the Company to
redeem the Rights in whole, but not in part, at a price of $.001 per Right, as
such redemption price shall be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of the
Rights Agreement (the "Redemption Price"), and the Company shall so redeem the
Rights; provided, however, that from and after the 10% Ownership Date, the
Rights are not redeemable. Immediately upon such action by the Board of
Directors or at such time and date thereafter as it may specify (the date of
such action is the "Redemption Date"), the only right of the holders of Rights
thereafter shall be to receive the Redemption Price.
9. Exchange
At any time after the 10% Ownership Date and prior to the first date
thereafter upon which a 10% Stockholder, together with its affiliates and
associates, shall be the beneficial owner of 50% or more of the outstanding
Voting Shares, the Board of Directors may, at its option, direct the Company
to exchange all, but not less than all, of the then outstanding Rights for
Common Shares at an exchange ratio per Right equal to that number of Common
Shares which, as of the date of the Board of Directors' action, has a current
market price equal to the difference between the Exercise Price and the
current market price of the shares that would otherwise be issuable upon
4
<PAGE>
exercise of a Right on such date (the "Exchange Ratio"), and the Company shall
so exchange the Rights. Immediately upon such action by the Board of Directors
or at such time and date thereafter as it may specify, the right to exercise
Rights shall terminate and the only right of the holders of Rights thereafter
shall be to receive a number of Common Shares equal to the Exchange Ratio.
10. No Stockholder Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, shall have
no rights as a stockholder of the Company (other than rights resulting from
such holder's ownership of Common Shares), including, without limitation, the
right to vote or to receive dividends.
11. Amendment of Rights Agreement
The Board of Directors may, from time to time, without the approval
of any holders of Rights, supplement or amend any provision of the Rights
Agreement in any manner, whether or not such supplement or amendment is
adverse to any holder of Rights, and direct the Rights Agent to supplement or
amend such provision, and the Rights Agent shall so supplement or amend such
provision; provided, however, that from and after the earliest of (a) the 10%
Ownership Date, (b) the first event of the type giving rise to exercise rights
under Section 5(c) above, (c) the Redemption Date, or (d) February 18, 2008,
the Rights Agreement shall not be supplemented or amended in any manner that
would materially and adversely affect any holder of outstanding Rights other
than a 10% Stockholder, provided, further that from and after the 10%
Ownership Date, the Rights Agreement shall not be supplemented or amended in
any manner.
EXHIBIT 99.1
Contact: Bruce Plowman FOR IMMEDIATE RELEASE
or Spencer Davis Moved on PR Newswire
310.615.0311 February 19, 1998
COMPUTER SCIENCES CORPORATION BOARD REJECTS
COMPUTER ASSOCIATES' UNSOLICITED ACQUISITION OFFER
EL SEGUNDO, Calif., Feb. 19 -- Computer Sciences Corporation (NYSE: CSC)
(the "Company") announced today that its Board of Directors voted unanimously
to reject an unsolicited acquisition offer from Computer Associates
International, Inc. (NYSE:CA) and that Computer Sciences will not enter into
negotiations with Computer Associates.
Computer Sciences said that its Board's action was in response to an
unsolicited offer contained in a letter from Computer Associates dated
February 10, 1998, and subsequent indications from Computer Associates that it
would offer $114 per share for the stock of Computer Sciences in a friendly
acquisition. The Company said that its Board is not formally responding to
Computer Associates' tender offer, filed February 17, 1998, but rather to all
other materials that CSC's Board has seen, read and deliberated on, and that
the Company's formal response to the tender offer will be made in a filing
with the Securities and Exchange Commission within the requisite ten business
days.
In a letter from Computer Sciences' Chairman and CEO, Van Honeycutt, to
Computer Associates' Chairman and CEO Charles Wang, Computer Sciences said
that the terms of Computer Associates' proposal do not represent fair value
for CSC shareholders and that any effort to combine Computer Sciences and
Computer Associates would not make business sense. CSC also advised CA that
the Company has moved to strengthen its protections against CA's attempt to
force an acquisition by threatening damage to the value of CSC and that it
would use every legal means necessary to defeat that attempt.
-more-
<PAGE>
Computer Sciences Corporation - page 2 February 19, 1998
In his letter to Wang, Honeycutt said: "We believe that CSC has far
greater near- and long-term prospects than are reflected in your bid. Based on
our assessment of CSC's opportunities for growth in revenues and earnings per
share, and the potential such growth has to effect significant appreciation in
our stock price, we do not believe your offer rewards our shareholders for the
true value of their investment."
Computer Sciences said that a combination with Computer Associates does
not make business sense because it would result in a lower credit rating for
the combined company, compromise CSC's "platform neutrality", and trigger the
departure of key CSC employees.
"CSC's strong financial condition, as reflected by our 'A' credit rating,
is critical to our ability to secure the large, long-term outsourcing
contracts that are a key to growth in IT services," said Honeycutt in the
letter. "A combined CSC and CA would be irresponsibly leveraged and thus have
a much lower credit rating and be at a distinct disadvantage in the
competition for such business."
In the letter, Honeycutt said that the loss of platform neutrality, or
the ability of CSC consultants to recommend a variety of software products to
meet customers' individual needs, "would be severely compromised if CSC were
to be acquired by CA, and, as a result, we would lose credibility in the
marketplace."
CSC will be filing today with the Securities and Exchange Commission a
periodic report on Form 8-K disclosing specific measures approved by its Board
of Directors.
CSC provides clients with a wide range of professional services,
including management consulting, information systems consulting and
integration, and operations support. The company has more than 44,000
employees in nearly 600 offices worldwide. For the 12 months ended December
26, 1997, CSC had $6.3 billion in revenue. More information about CSC,
including a copy of the letter to Computer Associates referred to herein, is
available at www.csc.com.
-more-
<PAGE>
Computer Sciences Corporation - page 3 February 19, 1998
Computer Sciences Corporation cautions that any statements in this
document as to future business results are forward looking statements and by
their nature are necessarily subject to uncertainties concerning events beyond
the company's control, and no assurances can be given that such results will
be achieved.
-0-
Media Contact: C. Bruce Plowman, Computer Sciences Corporation
(310) 615-0311
Robert Mead, Bozell Sawyer Miller Group
(212) 445-8208
Investor Contact: J. Spencer Davis, Computer Sciences Corporation
(310) 615-0311
Editors: please see attached letter.
------------------------------------
<PAGE>
February 19, 1998
Mr. Charles Wang
Chairman and Chief Executive Officer
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788
Dear Charles:
Our Board of Directors has met and carefully considered the offer contained in
your letter of February 10, 1998 and your subsequent indications that you
would offer $114 per share for the stock of Computer Sciences Corporation in a
friendly transaction. We have not had the time to review the disclosures in
your tender offer and will furnish you our further responses to the tender
offer at a later time.
Our board voted unanimously to reject your proposal and not to enter into
negotiations with Computer Associates on the sale of Computer Sciences. We
believe that the terms of your proposal do not represent fair value for our
shareholders and that any effort to combine Computer Sciences and Computer
Associates does not make business sense.
On the advice of counsel, we have moved to strengthen our protections against
your ill-considered and unwelcome attempt to force an acquisition by
threatening damage to the value of our company. We will utilize every legal
means necessary to defeat your attempt and will hold you and your company
responsible for any damages we sustain.
Our rationale for rejecting a merger of our companies is clear and compelling.
Your Offer Does Not Represent Fair Value
We believe that CSC has far greater near-and long-term prospects than are
reflected in your bid. Based on our assessment of CSC's opportunities for
growth in revenues and earnings per share, and the potential such growth has
to effect significant appreciation in our stock price, we do not believe your
offer rewards our shareholders for the true value of their investment. In
addition, your offer fails to recognize that CSC shareholders own a unique
asset that is impossible to replicate in the information technology
marketplace.
<PAGE>
CSC is in robust financial condition with a compound annual growth rate of
20.4 percent in revenue over the past five years, and a 26.3 percent increase
in income before special items for the same period. We have made larger gains
in market share and revenue than our primary competitor in fifteen of the last
sixteen quarters. We have won or implemented $6.7 billion in large
outsourcing contracts over the past twelve months and our pipeline of major
new business prospects is extremely promising.
CSC is on course to grow our business in all of our markets through strong
internal growth and an acquisition strategy designed to enhance our growth in
geographic markets, key vertical industries and specialized service segments.
Combining CSC and CA Does Not Make Sense
CSC's strong financial condition, as reflected by our 'A' credit rating, is
critical to our ability to secure the large, long-term outsourcing contracts
that are a key to growth in IT services. A combined CSC and CA would be
irresponsibly leveraged and thus have a much lower credit rating and be at a
distinct disadvantage in the competition for such business.
CSC's ability to provide independent solutions is a threshold issue for
customers who demand platform neutrality. This neutrality would be severely
compromised if CSC were to be acquired by CA and, as a result, we would lose
substantial credibility in the marketplace. You have already stated publicly
that you would redirect the efforts of many CSC employees to sales and service
of CA's software products, a prospect that both our customers and employees
would find unacceptable.
More than 25 percent of CSC's total anticipated revenues for fiscal 1999 are
derived from outsourcing contracts that contain change in control provisions
which would allow customers who are concerned about such issues to move to
another services firm. We have already been notified by a number of such
clients that they will either exercise such provisions or curtail or reduce
the flow of new business to CSC should a CA takeover occur. In addition,
software critical to CSC's data centers and other operations is licensed to
CSC under contracts which are terminable by the licensor if CA acquires CSC.
The most important asset of Computer Sciences is our people. They create
sustainable competitive advantage in customer satisfaction and revenue
generation, and are the best in the business. It is widely recognized that
CSC and CA have dramatically different cultures, and it is clear that many of
the very assets you are trying to buy - our employees - will decline to join
your company.
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Our Board of Directors and our management are committed to maximizing the
value of our stockholders' investment, consistent with the highest standards
of responsibility to our customers and employees. Consistent with our
fiduciary duty to stockholders, we are always prepared to give serious
consideration to strategic options which fairly reflect the value of our
corporation and which make business sense. Clearly, your offer does neither.
Charles, we respectfully suggest that you withdraw your offer immediately and
move on.
Sincerely,
Van B. Honeycutt
cc: Computer Associates Board of Directors
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