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
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.
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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
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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.
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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.
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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.
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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
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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.